Coating Resins

Coating Resins
Europe, (Middle East & Africa)
March 6 2006
Paul E. Kieffer
Content
• Market & trends Europe
• Nuplex CR Europe
• Action Program
2
Market size
2004 (mln.t)
%/y
W Europe
• industrial
• deco
3.0
1.4
1.6
1.1
C&E Europe
• industrial
• deco
1.5
0.5
1.0
4-6
W Europe mature, growth in C&E Europe
3
Technology shift
Technology shift from SB-resins to WB and Powder,
driven by:
• (Appearance and costs)
• EU legislation (VOC,Cobalt, Reach, BAT etc.)
• Local legislation (Manufacturing requirements)
4
Technology shift - Western Europe
3500
Other
UV
3000
Powder
2500
2000
WB
1500
1000
500
SB
0
2001
2010E
5
Technology Split - Industrial
2004
2010
Other
5%
Other
UV
6%
5%
UV
7%
Powder
16%
SB
52%
WB
21%
SB
43%
Powder
20%
WB
25%
1.4 mln t
1.3 mln t
1.7 mln t
WB and Powder will grow > 4% py
6
Technology Split - Deco
2004
2010
SB
15%
WB
85%
SB
3%
WB
97%
1.7 mln t
WB will replace SB Alkyds (LS)
7
Competition
• # (Coating) Resin suppliers (Europe): > 50
(Sp + It)
> 25
• Acquisitions/consolidation:
• Up to 2002:
- acquisitions to consolidate market
• After 2002
- some (internal) consolidation
- acquisitions for technology base
8
Competition
•
Major Resin suppliers:
DSM/NeoResins, Cytec, CVP
Hexion, Nuplex, Bayer
•
All major Resin suppliers active in SB, WB and Powder
Cytec
Rhodia
DSM
CVP
DSM
Solutia
ANR
UCB Eastman Bayer NeoR Synth DH/MR AB
CVP Solutia ANR
DSM/NeoR
Cytec Nuplex
J
DIC
UCB Eastman Bayer NeoR Synth DH/MR AB
J
DIC
Hexion
9
Competition
• Trends:
• W Europe
- shut down old/inefficient plants (Alkyds)
- shake out small players (Alkyds)
- acquisition/investment in WB & Powder
• C&E Europe - shut down old/inefficient plants (Alkyds)
- investment in WB & Powder
• ME
- investment in SB
10
Margins under pressure
• Coating resin producers still fragmented
• Overcapacity Alkyds (VOC legislation)
• RM prices high and volatile
• Other cost also increasing (energy, utilities & transportation)
11
Y0
2M
0
Y0 1
2M
0
Y0 3
2M
0
Y0 5
2M
0
Y0 7
2M
0
Y0 9
2M
1
Y0 1
3M
0
Y0 1
3M
0
Y0 3
3M
0
Y0 5
3M
0
Y0 7
3M
0
Y0 9
3M
1
Y0 1
4M
0
Y0 1
4M
0
Y0 3
4M
0
Y0 5
4M
0
Y0 7
4M
0
Y0 9
4M
1
Y0 1
5M
0
Y0 1
5M
0
Y0 3
5M
0
Y0 5
5M
0
Y0 7
5M
0
Y0 9
5M
1
Y0 1
6M
01
Margins under pressure
130,0
Index Dec. 2001 = 100
120,0
110,0
100,0
90,0
Index BoZ
80,0
12
Content
• Market & trends Europe
• Nuplex CR Europe
• Action program
13
Market Position
• Top 5 Resin supplier in Western Europe
• Leading Position in Automotive OEM and Vehicle Refinish
• Technology leadership, broad technology base
• Highly respected “Solution Provider”
14
Organisation
Functional Areas
Business Teams
Operations
Sales
Paul Kieffer
R&D
Automotive OEM,
Vehicle Refinish
& Plastics
Regional Manager Europe
Purchasing
Marketing
Metal, Wood
& Decorative
Powder
Market focused, P&L responsible
15
Organisation
Operations
• Sites in Bergen op Zoom (NL) and London (UK)
• Toll-in activities in Barcelona (Sp) and Vilvoorde (B)
• Supply chain organisation
Sales
• Central key account management
• Local sales network
• Distributors (WE) and Agents (C&EE, ME, AF)
R&D
• Technical support sales
• Product development (new technologies, specialties)
• Innovation Research
16
Site Bergen op Zoom (NL)
Capacity
115 kt
Reactors
13 + 2 *
Employees
353
Resin Type
SB, WB, SCA
R&D
SB, WB, SCA
Certification
ISO 9001, 14001
* modification units (SCA)
Large scale, highly automated resin plant. R&D centre
17
Site Silvertown (UK)
Capacity
40 kt
Reactors
10
Employees
84
Resin Type
Powder, SB
R&D
Certification
Powder
ISO 9001, 14001
Modern resin facilities
18
Sales by Technology
Sales by Technology 2004A
Powder
15%
Water Borne
6%
Solvent Borne
79%
Present in alternative technologies
19
Specialty vs. Volume Business
Europe Sales Volume 2004A
Specialty
33%
Volume
67%
Europe CM 2004A
Volume
41%
Specialty
59%
59% of margin from specialty segments
20
Key Customer Relationships
Trusting supplier to leading coatings companies
21
Content
• Market & trends Europe
• Nuplex CR Europe
• Action program
22
Action program
• Grow position and maintain profitability in Automotive market
• Increase sales and market share in WB and Powder markets
• Structurally develop business in Central & Eastern Europe
(+Turkey)
• Further improve operational efficiency
23
Human Resources Management
Coating Resins
Nuplex HR vision
Our success in business heavily depends on having employees
with the right experience, skills and potential at the right time
and at the right place in the organization
We cover the activities intended to select, develop and retain
these people and taking of the very best advantage of their
talents
HR priorities
• Developing leadership competences of our managers
• Performance management (target setting and follow-up)
• Competence management
• HR Reviews
– Succession planning
– Management Development
• Culture: (re) define and implement the Nuplex culture
• Implement Nuplex HR vision and HR strategy
3
Key areas for improving our organization
• Performance management and development
• Communication: informing people on issues affecting them
• Culture:
– Nuplex stimulates people to challenge the current way of doing
things
– Nuplex is a great and safe place to work
– Nuplex employees are proud of what they do
• Creating synergy across the departments
• Being disciplined with corporate directives
4
Nuplex HR Strategy
• Implement Nuplex Group Policies
• Implement Corporate Competences System
– Quality focus
– Customer focus
– Organizational awareness
– Commitment
– Capability needed for the job
• Define Key people and Key positions
– Management Development system
– Succession planning
5
Doing business in Europe
• Consensus economy / pragmatic
• Long tradition of trade and distributions
• Open borders and strong external orientation
• Stable social climate
• Advanced technological structure
• Favorable tax climate
• Well educated internationally oriented workforce
6
Employee Organization
• NL: 26% of employees are trade union members
• BoZ: about 60% ; Silvertown: about ??
• Trade unions are represented in BoZ and in SVT
– negotiate collective labour agreement at company level
• Every company in NL with more than 50 employees is required
to set up a works council
– represent the interests of the employees
– contribute towards proper functioning of the company
– advisory powers: decisions on mercers, acquisitions,
reorganization etc
– powers for approval for decisions affecting social policy
7
Others
• Works council plays an important part in assessing the
economic and financial aspects and consequences for
employees in case of a reorganization
• In case of reorganization negotiate a social plan with unions has
a positive influence on the acceptance
– redundancy payment
– supplementing benefits: outplacement and retraining
• Dismissal procedure in case of more than 20 employees is
based on the balanced distribution principle
8
Research & Development
March 2006
Ger Hemke
March 6, 2006
Strategic role of R&D
• Strategy
• Technology background
2
Strategic role of R&D
Strategy
To deliver the technological basis to enable
Nuplex Resins to be a leading global player
in selected market segments.
3
Strategic role of R&D
Technology background
• Over 50 years of intensive co-development and co-operation with
the no. 1 coatings company in the world.
• In depth know-how of extensive range of products and
applications with high added value.
• Unique coating qualities built-in (rheology)
• Solid experience in emulsion polymerisation
4
Organization of R&D
R&D Team
• R&D staff: ab.130 (ab. 20% PhD / MSc)
• R&D centers in:
Bergen op Zoom, The Netherlands
Louisville, KY, USA
Arnhem, The Netherlands
Sydney, Australia
Auckland, New Zealand
• Further R&D resources in:
Silvertown, United Kingdom
East St. Louis, IL, USA
Surabaya, Indonesia
Melaka, Malaysia
Sao Paulo, Brazil
Suzhou, China
5
Organization of R&D
Steering of R&D
• KPI’s / Innovation Index
• Stage gating
• Portfolio management
• Milestones reviews
6
R&D Capabilities
• Resin type
• Technology
• Application area/market
• Processes
7
R&D Capabilities
Product / Application Capabilities
Resin Type
Market Segments
Technology
Liquid
Solvent
Water
Acrylics
Solid
Automotive OEM
Powder
Plastics
Vehicle Refinish
Metal
Alkyds
Marine & Protect.
Powder
Polyesters
Wood
Deco
Aminos
Composites
Printing Inks
Rheology Modif.
Adhesives
Textile
Extensive product-application range
Paper
8
R&D Capabilities
Processes
• Polyaddition
• Emulsion polymerization
• Polycondensation
• Vacuum / pressure processes
• SCA-technology (Rheology)
Highly efficient production / broad range of process capabilities
9
R&D Core Competences
• Technology leader in solvent borne rheology
• Strong and innovative product development
• Problem solvers - strong application know-how
• Focus on high added value products
• Strongly driven by environmental demands
(water!)
• Integrated process and product development
10
Trends in the market
• Legislation on emission of Volatile Organic Compounds will
result in a shift towards (mainly) waterborne systems, higher
solids products and powder. Relatively limited role for UVcuring systems.
• Increased accent on Waterborne developments, especially for
the market for Decorative coatings.
• Automotive coatings need improved etch and scratch
resistance.
11
Some recent R&D successes
• New patented rheology control agents and measurement
• New patented high quality aqueous dispersions for higher
added value applications (including nano particles)
• New patented resin concepts for scratch resistant coatings, also
using nano particles
12
Paint stability test
13
R&D Approach
End-use industries
R&D Initiative
Challenge
Coatings
Producer
R&D Initiative
CR
Solution
Proactive customer and end-use industry driven R&D initiatives
Focused "solution-provider" with innovative technology
Recognized "solution-provider" to customers
14
Nuplex Resins
Global Purchasing Update
March 2006
Robert Skarvan
Group Purchasing Manager
1
Group Purchasing Mission
1. Secure the best overall raw material value
proposition for our total business
2. Meet required quality and service levels
3. Provide our organization with the highest
level of buying power in our business
2
Group Purchasing Strategy
1. Leverage our global raw material market
knowledge and requirements
2. Maximize and perpetuate the benefits of our
CPA with Akzo Nobel
3. Increase our purchasing power via expanded
joint purchasing relationships-outside our
industry
3
Tactical Issues & Methodology
1. Raw material index reporting and forecasting
2. Maximize market knowledge and focus via
purchasing specialization, supported with
effective communication
3. Foster a market perception that we are tough but
fair and expect (and get) nothing but the lowest
prices in the market
4
Global Raw Material Mix-Euro Basis-Resins
~NZ $700M / $400 M Euro
~800 Raw Materials
20%
27%
15%
19%
19%
Monomers
Acids
Solvents
Polyols
Natural & Misc
5
Raw Material Group Overview
Volatility
Rating
(1-5)
Price
Protection
(Days)
4
Polyols
Primary
Cost Driver
Secondary
Cost Driver
45
Crude
Propylene
3,5
90
Crude
Methanol
Monomers
2,5
90
Propylene
Acids
2,5
45
Crude
1
90+
Crop Yields
Raw Material
Solvents
Natural Raw Materials
Crude
Supply-Demand; a big undercurrent
6
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M - 04
ay
Ju 0 4
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Ju 4
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Au -04
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S e - 04
pO 04
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No -04
v
De -04
c
De -04
c
Ja -04
nF e 05
bM 05
ar
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b06
Fe
Two year look at Crude and Natural Gas
Nymex Light Sweet Crude
Nymex Natural Gas
$18
$70
$65
$16
$60
$14
$55
$12
$50
$45
$40
$30
$25
$10
$8
$35
$6
$4
7
Raw Material Index Movement
CREU
160
CRAS
CRAM
CROC
Composite
calc
155
150
GLOBAL
Actual
Forecast
145
140
135
130
125
120
115
110
Decem ber 2003 = 100
105
100
July 05
Aug-05
Sep-05
Oct 05
Nov-05
Dec-05
Jan-06
Feb-06
Mar 06
8
Solvent Indicies
CREU
CRAS
CRAM
CROC
GLOBAL
190
180
170
160
150
140
130
120
110
Decem ber 2003 = 100%
Euro basis
100
July 05
Aug-05
Sep-05
Oct 05
Nov-05
Dec-05
Jan-06
Feb-06
Mar 06
9
Monomer Indicies
CREU
CRAS
CRAM
CROC
GLOBAL
170
160
150
140
130
120
110
Decem ber 2003 = 100
Euro basis
100
July 05
Aug-05
Sep-05
Oct 05
Nov-05
Dec-05
Jan-06
Feb-06
Mar 06
10
Global Index vs. Crude Movement
Nuplex Global Index
134
Brent Crude
70
132
68
66
130
64
128
62
60
126
58
124
56
122
54
52
120
50
Jul-05 Aug-05 Sep-05 Oct 05 Nov-05 Dec-05 Jan-06 Feb-06 Mar 06
Jul-05
Aug-05
Sep-05
Oct-05
Nov-05
Dec-05
Jan-06
Feb-06
•Expectations to see our index return to pre-Katrina levels in March not
expected due to January run up in crude oil pricing
•The impact of crude has been mitigated in all regions by softness in the acrylic
monomer markets
11
Global Raw Material Markets
• Chinese markets are becoming more self sufficient. Global
market pricing for a number of key raw materials has been
pushed downward as a result.
• Europe continues to be a market distinguished by vigorous
trader activity as well as raw material supply from Eastern
Europe.
• The US market continues to be plagued by high natural gas
costs and a more consolidated supply base with few traders.
• Asia/Oceana continue to be relatively diverse, long markets with
low but relatively volatile prices where geographic and VAT
issues tend to play a stronger role in sourcing decisions.
12
Going forward-summary & conclusions
• Most markets are balanced to being oversupplied
• Monomer markets are long and expected to stay that way
through 2006
• If crude stays close to 60 through the first of March, solvents
and acids should come down by approximately 5% for the
month
• If crude stays close to 60 through March:
–Europe & Asia’s proplyene pricing should ease
–Q2 raw material buys will benefit (IPA, Phthalic, Oxo-alcohols)
–Overall monomer softness trend will be perpetuated
13
Going forward… Oil
Financial Times (Jan 19, 2006)
• 60 economists and oil analysts forecasted that oil will be
$56/barrel in January of 2007…. The price is expected to drift to
$59/barrel in three months time, roughly in April 2006
• Crude dropped to below $58 three weeks ago but closed last
Friday at over $63
14
Macro Issues
• Stability in Iran and the Middle East
• European market picking up; Eastern Block
• US market easing
• China growing in a predictable manner
• Avian flu
15
Powder Resins
P J Youle
Silvertown – 7th March 2006
Powder Resins - Background
• Originally a Courtaulds powder paint & resin business
• 1997 New resin capacity (Part) installed
• 1998 Akzo acquisition
• 2001 Akzo Coatings – 5 year Sales Contract & License agreed
• 2002 Third party business plan and new Laboratory
• 2003 Own product range development
• 2004 first non Akzo sales – Capacity limitation
• 2005 Non-Akzo sales expansion – Capacity (tolling)
2
Polyester Powder
• Powder resin is polyester Resin in a solid granular form
• Sold to powder paint manufacturers
• Paint is applied by electro-static spray and oven cured
• Typical Applications
• Domestic appliance – white goods - radiators
• Architectural – window frames, shutters, cladding
• General metal
• Non –body Automotive
3
Powder Market
• Powder is driven by environmental superiority (no solvent, 100% use)
• World resin market growth 6% pa from 500kmt
• European region growth 3-4% from 240kmt (inc Central & Eastern
Europe & Middle East)
• Western Europe has 70 paint producers & 90 sites
• Average resin consumption per site 3kmt
• Our current share 8-9% - planned share 9-10%
• Technology is still advancing ensuring continued market growth
4
Customers
• Akzo relationship
• Preferred supplier status
• New supply contract in negotiation
• Open Market
• Sales at 2000tpa rate
• Introduction at 30% of the market
• Pipeline of approvals
• Expansion of product range 2006
5
Key points of plan
• Business capacity limited for two years
• Plant opportunity to increase capacity
• Akzo contract provides sales to fill new capacity quickly
• Own product range developed
• Open market business developed
• Pipeline of customers
We will continue the open market growth to provide maximum margins
and minimise risk of Akzo dependency
6
Welcome to Silvertown Site: March 2006
1
Our Ambition
We specialise in the manufacture of resins for use in coating applications.
Our primary task is to safely convert raw materials into resins that conform
to customer specification, to deliver these on time and in full, and to do so at
a cost that enables the company to make a profit and grow.
2
Site Background
• Founded in 1904
• Acquired by Courtaulds 1967
• Investment in new Powder and Acrylic plant 1997 (Project 2000)
• Acquired by Akzo Nobel 1998
• Dunston site closed and transfer to Silvertown (old HT plant 2003)
• Acquired by Nuplex 2005
3
Project 2000
• £46 Million investment in B85, B93 and the warehouse
• Best practice approach
–Process automation
–Quality
–Productivity
–Environment
• Emphasis on training
• Targeted at the powder and packaging markets
4
Building 85 Powder Resin Facilities
Bulk materials in
Glycol
Organic acid
Silo 2
Water Cooling Tower.
Silo 1
Water Chiller Unit
Slurry
Tank.
Charging Floor
Silo 2
Silo 3
Granulator Floor
Reactor Floor
Reactor 4
Reactor 2
Reactor 1
Sampling
Floor
Offices, Control Room
& Laboratory.
Plant room and MCC
Bagging Hall
25kg Bagging Line
Cooling Band No.3
Cooling Band No.2
Ground Floor
Pallet loads out
Cooling Band No.1
1 Tonne Bagging Line
Band Hall
Main Entrance & Stairwell 2.
5
Silvertown Site 1994
6
Silvertown Site 1999
7
Good Neighbours
• Area zoned for mixed industrial, commercial and residential use
• Concrete factory and working wharf planned for adjacent site
• Compliance with new European directive on Integrated Pollution Control from March
2006
• Chemicals identified as dangerous to the environment stored off-site
• Long term plan to close the old HT plant and transfer these resins to BoZ/NL,
takes the site out of the environmental risk zone
• Regular and good contact with local government (Newham Borough Council), the
London Development Agency, the Health and safety Executive and the Environment
Agency
8
Market Segments
• Powder
• General Metal
• Marine & Protective Coatings
• Deco/Vehicle Refinishes/Wood
9
Current Site Activities
Production
• Polyester powder
17000 Tonnes
• Modified Alkyds and Polyesters
8000 Tonnes
• Acrylics
2000 Tonnes
• Rosin solution
1000 Tonnes
Leased premises
• ANNP Research and Sales
• PPG R&D plus Sales/Marketing
10
Organisation Structure
Site Manager
Nigel Gibney
Laboratory Manager
Paul Jones
R&D
Factory Support
Production Manager
Gerry Doyle
Resin Shift Leaders
Customer Services Manager
Robert Squires
Order desk
Chief Engineer
Andy Lee
Financial Controller
John Cavalli
Q,H,S & E
Mick Frost
Warehouse
11
Safety
• Managers/team leaders qualified in National Safety Certificate
Course (NEBOSH)
• Site ‘Safety Teams’
–Site Emergency Team/ Duty Manager
–Fire team
–First Aiders
–Authorised Permit Issuers/Competent Persons
• Safety training target of 8 hours per person per annum
12
Environment Activity
• Authorised by the Environment Agency under the Integrated
Pollution Prevention and Control regulations
• Responsible to Local Water Authorities - water streams go to
inland sewer for treatment
• Effluent streams measured and controlled - air stacks, water
streams, waste streams, olfactory assessments
• Emissions measurements available to the public on the
Environment Agency website
13
Training
• 6 weeks class room and plant training for project 2000 followed by
3 day assessments
• On the job completion of log books
• Ongoing NVQ 3 and NVQ 4 qualifications
• IIP Award-Outstanding Performance using Standards
14
Awards and Accreditations
• Achieved ISO 9000 (2000) certification in 2003
• Achieved ISO14001 certification in 2001
• Achieved Investors in People certification in 1999 and received
award for outstanding progress using IPP standards in 2000
• Registered with City & Guilds for NVQ 2
• Registered with VQSET for NVQ3
• Registered with Institute of Management for NVQ4
15
Lean Thinking Principles
PERFECTION
VALUE STREAM
In pursuit of, continuously
identifying and reducing
waste
Identified, movement of
materials and information
through the supply chain
VALUE
Specified, as perceived by
the customer
PULL
FLOW
At the pull of the customer,
fast response
Of the value
uninterrupted through
the supply chain
16