All forms – more precious than gold

16.3.2004
12:54
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no 1 | 2004
522685.qxd
KEMIRA TO CONTINUE
CURRENT STRATEGY P. 8
OPINIONS DIVERGE OVER
CHEMICAL LEGISLATION P. 12
EU EXPANSION BRINGS
STIFF COMPETITION P. 24
Water
All forms – more precious than gold
1/2004 Kemira News 1
KEMIRA STAKEHOLDER MAGAZINE
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editorial
Knowledge is hard currency
wherever you go
KEMIRA
is a magazine for stakeholders,
published four times a year.
The knowledge-intensive chemical services business has room to develop. InvestPUBLISHER
Kemira Oyj
ment in knowledge and skills fosters a competitiveness that is hard currency
P.O. Box 330,
throughout the globe. This investment can also be applied to realise new solutions
00101 Helsinki, Finland
when major changes occur in business conditions.
tel. +358 10 8611
Kemira's strategy involves developing chemical industry operations in which
fax +358 10 862 1119
www.kemira.com
competitiveness is based on knowledge and ability. These fields involve neither large
EDITOR-IN-CHIEF
production volumes nor major plant investments. One such new line for Kemira
Helena Laaksonen
comprises specialty chemicals for the paper industry, and we are now in a position to
Kemira Oyj
say that particular attention to develop-
PRODUCTION
Sanoma Magazines Finland
P.O.Box 2
00040 Sanoma Magazines,
Finland
www.sanomamagazines.fi
Editor-in-Chief
ment in this field has paid rapid divi-
OUR GOAL CONTINUES TO BE
dends. We are currently one of the glo-
TO INCREASE R&D EFFORTS IN OUR
bal leaders in this industry.
As our turnover rises in these growth
SPEARHEAD INDUSTRIES
Veijo Käyhty
areas due to acquisitions and organic
Editor
growth, we are also increasing our R&D
Anu Piippo
Layout
efforts. Even though R&D investment for the group as a whole is currently two
Veera Näsänen
per cent of our turnover, we have achieved a good international standard of three
English Editors
per cent in the growth areas, and we should bear in mind that this percentage inclu-
Elisabeth Clement
des the continually rising growth of turnover in these sectors. We aim to increase
Peter Marten
Translator
R&D still further in these spearhead industries.
Daryl Taylor
While the focus on traditional chemicals manufacture is on our own output, in the
PRINTED BY
Hansaprint Oy,
world of specialty chemicals this has shifted onto the customer’s production, and on-
Vantaa 2003
to how we can optimally serve our customers and make them successful.
ISSN 0356-5122
This means that the specialty chemicals business is a service based on chemical
PAPER
Galerie One Gloss 90 g/m
expertise that seeks to help customers achieve their objectives. Success in this area de-
coated with Kemira’s CoCoat-
mands an advanced understanding of the customer's technology and the ability to ap-
2
calcium sulphate pigment
COVER: Photonica
ply chemicals innovatively in order to develop the solutions that are needed in the
customer’s processes or to improve the quality of the customer’s product.
KEMIRA IN BRIEF
Kemira’s main products are paper and pulp chemicals, water
Hannu Toivonen
treatment chemicals, paints and
Senior Vice-President, Research and Technology
coatings. Other areas include
fertilisers and industrial chemicals. Net sales in 2002 amounted to 2.6 million euros. Kemira
has production plants in over
30 countries and has over
10,000 employees.
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12
24
THE SHADOW OF
THE NEW WINDS
THE LEGISLATION
OF EUROPE
Director General
See how the new
Alain Perroy of
EU member coun-
CEFIC calls for a
tries are shaping
thorough analysis
their chemical
of the effects of
industries.
the EU’s new chemical legislation.
29
SINGING THE
SAME TUNE
The Kempower
programme aims
to save 100 million euros a year.
47
TAMB
OUR
NEWS
Israeli
paint
manu
factu
rer do
es we
thank
ll
s to K
emira
.
Contents
8
Kemira treads its chosen path
29 Kempower brings in results
The company will continue to develop
The Kempower programme will decrease
all business units.
expenditure. Results are already visible.
12 New chemical legislation due
34 The battle over water
The Commission’s proposal has sharply
While there is plenty of water to go
divided opinions.
around, find out why North America is
16 Football culture in the UK
Kemira’s paint and expertise perks up
Bolton’s football stadium.
21 Paint galore
Tikkurila used tonnes of paint for the
widest paper machine in the world.
24 The Baltic chemical race
The impact of eastward expansion on
the European chemicals industry.
experiencing a water shortage.
38 Aiming high
IN EVERY ISSUE
4
Current topics
The chemical industry
and news about Kemira.
41 Chemical industry
survey
The industry is slowly
making a comeback.
Juhani Lindholm gives clues about the
Pulp & Paper Chemicals unit’s future plans.
42 Bright future awaits titanium
The cycle of titanium dioxide is experiencing an upswing.
44 Kemira gets patent award
Patience and hard work result in
innovations for the forest industry.
1/2004 Kemira 3
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news
SHORT NEWS
»
Kemira
GrowHow is modernising ammonia
production at its
Ince plant in the UK
by reducing energy
consumption at the
facility and thereby improving the
competitiveness of the unit. The project will be completed during the first
quarter of 2005. The investment will
cost more than 7 million euros.
»
Matti Lapinleimu has been appointed Senior Vice President, HR
and member of Kemira Oyj’s internal
management board. He will also
continue in his current position as Executive Vice President of Kemira Service. Ulf Koivula has been appointed
President of Tikkurila Coatings Oy as
of January 1, 2004.
» Kemira GrowHow is expanding its
seed sales business. The company will
build a seed treatment plant in Lithuania to facilitate its business in the
Baltic States. Kemira
GrowHow has also
concluded a distribution agreement
with the American
company Monsanto
concerning their cereal and rape seed
varieties.
» Verdera Oy of Finland and e-nema
GmbH of Germany have signed a
strategic partnership agreement covering manufacturing, marketing and
development of biological plant protection products for forestry, horticulture and amenity.
4 Kemira 1/2004
Expanding Italian water
treatment operations
K
emira Chimica S.p.A. in Italy has
signed an agreement with Ageco
in Lucca, Italy, to use Ageco’s plant
for ferric chloride production and take
over Ageco’s water treatment business.
Kemira will thereby become one of the
leading companies for ferric coagulants
in Italy.
Kemira’s production facilities are located in Cremona and Lucca. The company
also sells aluminium coagulants, activated
carbon and polymers to the water treatment market and the pulp and paper industry. Kemira Chimica S.p.A. has net
sales of about 10 million euros.
A new process will be introduced in
Lucca to remove zinc from pickling acid
and to recycle the acid as a raw material
for ferric chloride production. The recovered zinc will be returned to the galvanis-
AN EXTENSION TO PLANT
CAPACITY IS BEING PLANNED
ing industry. An extension to plant capacity is being planned in order to receive
larger quantities of pickling acid from the
I.S.P. steelworks in Cremona, which is also
extending its plant capacity.
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news
NEW CALCIUM SULPHATE
PIGMENT PRODUCTION
LINE IN FINLAND
Kemira has started up a second calcium sulphate
pigment production line at the Siilinjärvi plant in
Finland. Annual capacity is now 150,000 tonnes
of pigment in slurry form. Each day about ten
slurry trucks leave the plant to supply customers
in the paper industry.
“The market situation for calcium sulphate
pigment is very promising,” says Application
Manager Kari Lehtinen. “We already have customers for the entire new capacity.”
WORLDWIDE EXCLUSIVE RIGHTS TO
VERDERA IN GREENSTIM
Kemira’s subsidiary Verdera Oy and
Danisco Animal Nutrition have
signed a global licensing and distribution agreement granting Verdera
worldwide exclusive rights to sell
and market betaine applications for
plant production, which are sold under the trade mark
Greenstim.
FINANCIAL STATISTICS
Greenstim is a well-known growth stimulant that is
mainly used in cultivating tomato, sweet pepper and
watermelon crops. There is also major potential for cultivating olive trees and for turf and golf courses.
Ecocat: new name reflects
larger product range
Kemira Metalkat has decided to change its name to Ecocat Oy
following an expansion of operations and product range.
“We have produced catalytic converters mainly for passenger motor vehicles since 1989,” says Reijo Kuvaja, Managing
Director of Ecocat. “The product has been based on our own
R&D and on an open foil coating process for metallic foil. This
original concept has allowed only the production and sale of
complete catalysts.”
The company will now also coat substrates or other catalyst
carriers made by other producers, using either Ecocat’s own
washcoat formulations or those of the customer. The production
range also has been expanded. Ecocat makes catalysts for passenger motor vehicles, lorries, motorcycles, mopeds, chainsaws,
garden trimmers and industrial applications regardless of the
type of fuel, which may be petrol, diesel or an alternative.
During the past ten years the supplier structure of motor vehicle production plants has changed considerably. A small number of globally operating system suppliers are now the main
suppliers for the automotive industry, and the development and
production of complete systems is based on extensive cooperation between several subcontractors.
“The production of substrates, their coating and installation
into metallic casings (known as canning), and the production of
purification systems are interdependent nowadays,” Kuvaja explains. “The essential thing is to be able to organise all of the elements logistically so as to optimise the cost-effective benefit to
the customer. Versatile and flexible operations will significantly
improve Ecocat’s prospects in the global automotive subcontractor business.”
KEMIRA 2004 TIMETABLE
February 10
March 12
financial statement bulletin (9 am)
annual report
May 4
3-month interim report
August 3
6-month interim report
November 3
9-month interim report
April 6
Kemira Oyj’s Annual
General Meeting (4 pm)
1/2004 Kemira 5
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news
506 MILLION EUROS VIA
REVOLVING CREDIT FACILITY
NANOTECH THE NEXT WAVE
TO SWEEP THE WORLD
Kemira has taken out a 506-million-euro
revolving credit facility for five years with
a syndicate of 11 banks. The arrangement
is the Group’s largest ever revolving credit facility, and the syndicate consists of
the Group’s core banks. All of the banks
have made an equal commitment to the
arrangement.
The company will use the proceeds of
the loan for general corporate purposes.
The loan replaces a corresponding
arrangement that was finalised in June
1997 at a value of 825 million German
marks.
Nanotechnology is forecast to follow in
the wake of IT and biotechnology as the
next global technological boom.
Nanotechnology is the manufacture,
study and application of tiny functional
structures 0.1 to 100 nanometres in size.
These structures have uses in magnetic
multilayered structures for mass data
storage devices, lasers, electronic displays
and applications in more traditional fields
of chemistry. Examples of the latter include self-cleaning surfaces, non-abrading
surfaces, and even sunblock containing
nanoparticles.
The secretary of the nanotechnology
working group set up by Nordisk Industrifond in the Nordic countries is research
scientist Dr Vesa Myllymäki of Kemira’s
Espoo Research Centre.
RHODIA’S PAPER CHEMICALS
STRENGTHEN KEMIRA
ON THE CONTINENT
Kemira has acquired Rhodia’s industrial
additives business, which includes the
Rhodia plant near Mulhouse in France.
The net sales of this business equal 16
million euros and consist mainly of products and services for the pulp and paper
industry, together with some toll manufacturing for Rhodia.
The acquisition makes Kemira a major
supplier of process chemicals for the pulp
and paper industry in continental Europe.
It will give Kemira a broader product offering in Europe, including defoamers,
deinking chemicals, and deposit control
and dispersing agents.
MORE NEWS IN BRIEF
» Kemira has started operations at a
new specialty chemicals plant in
Washougal, Washington State, on the
west coast of the US. The plant will
enable direct supplies of AKD sizes to
paper industry customers in North
America.
»
Kemira GrowHow’s Kemapco plant
in Jordan is now fully operational, fol-
6 Kemira 1/2004
lowing start-up of a nitric acid production unit. Kemapco produces potassium nitrate and dicalcium phosphate
for the Middle Eastern, Mediterranean
and Asian markets.
» The development programme for
Kemira’s plant in Pori on the west
coast of Finland allows for the
long-term possibility of in-
creasing annual titanium dioxide output capacity beyond the current level
of 130,000 tonnes. Options are also
being reviewed for recycling the ferrous sulphate that arises as a byproduct of this process. The
principal use of ferrous
sulphate at the moment is in water purification.
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news
Polargas minority
holding sold off
Kemira has sold its 30 per cent minority holding
in the air gas company Oy Polargas Ab to the
French company L’Air Liquide S.A., the majority
shareholder in Polargas. Polargas supplies air
gases and related services mainly to the metal,
pulp and paper, food and chemical industries.
The deal is in line with Kemira’s strategy.
“To support its growth strategy, Kemira has
increased its presence significantly in its specialty paper chemicals business through acquisitions in both continental Europe and North
America over the past three years,” says Juhani
Lindholm, Executive Vice President, Kemira Pulp
& Paper Chemicals.
COLLODIN ACQUISITION
PROVIDES REINFORCED
POSITION IN EUROPE
The paper chemicals business deal
between Kemira and Klebstoffwerke Collodin Dr. Schultz & Nauth
GmbH of Frankfurt, Germany has
been finalised following approval
by German competition authorities.
The acquired business has annual
sales of about 3.5 million euros,
mainly in Germany and France.
The acquisition reinforces Kemira’s market position in continental
Europe as a provider of paper sizes
and other specialty chemicals for
the paper industry.
CONTROLLING INTEREST
IN KEMIRON
RISE IN KEMIRA SHARE
PRICES SURPASSES HEX
US economic growth, rising expectations in Europe and low interest rates
have been increasing global share
prices since summer 2003. The HEX index has also begun to recover and has
remained above 6,000 since the end
of October. The rise in Kemira’s share
price has clearly exceeded the increase
in the HEX index over the year.
The average earnings of Finnish listed companies have risen since last
year. The most encouraging surprises
have come in basic industry. Kemira’s
result for the third quarter exceeded
the forecasts of market analysts and
the share price continued to rise after
the result was published on November
4. A new share price jump occurred on
November 24 when the appointment
of a new CEO was announced. Since
then Kemira’s share price has remained above the nine-euro level. This
is a 40 per cent increase from the
share price at the start of year .
The writer is Ritva Sipilä, Manager,
Funding and IR , Kemira Oyj
HEX/KEMIRA
PRICE DEVELOPMENT
¤
10,0
Kemira
8,0
6,0
HEX
4,0
2,0
0,0
10.03
07.03
04.03
01.03
10.02
07.02
04.02
01.02
10.01
07.01
04.01
01.01
Kemira has taken a significant step forward in its water treatment business by
expanding its holdings in the US-based
company Kemiron Companies Inc. from
15 to 60 per cent. The parties have also
agreed on terms whereby Kemira is
obliged to buy the remaining 40 per cent
of the shares. Kemiron has 250 employees and annual sales of 90 million dollars.
The former majority owner and
founder of Kemiron, Mr. Lawrence Hjersted, will remain as a minority shareholder in the company, and will continue to
serve as its president and CEO.
Kemiron Companies Inc. is the USA’s
largest producer and marketer of a complete product range of iron and aluminium coagulants for municipal and industrial customers. The Florida-based company
has 14 manufacturing and distribution
sites. Its primary production units are in
Bartow, Florida; Mojave, California;
Fontana, California; St Louis, Missouri;
Rowley, Utah; Houston, Texas; Gastonia,
North Carolina; Savannah, Georgia; and
Spokane, Washington. The company was
founded in 1992.
STOCK MARKETS
1/2004 Kemira 7
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According to Kemira’s Board of Directors, the company’s strategy will continue along current lines by
developing all business units. Kemira’s CEO Tauno
Pihlava, who will continue until his newly appointed
successor Lasse Kurkilahti takes office, explains
what kind of company Kemira is nowadays.
8 Kemira 1/2004
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BY JORMA LEPPÄNEN
ILLUSTRATION BY VEERA NÄSÄNEN
PHOTOS BY JUKKA RAPO AND JUHA SALMINEN
More
The news about Kemira’s
new CEO was announced
on November 24, 2003.
than the sum of its parts
K
emira’s strategy took on the main features of its current shape four years ago. At the same time the
Kemira Capital Market Day international investor
meeting was arranged. The next occasion on which investors were offered such a broad and profound impression
of the Group’s business was in September 2003. What has
been achieved over those four years, and what kind of enterprise is being presented?
“When talking to investors I also begin with the importance and values of our operations. Improving the quality of
life is the goal that justifies our work. For all of our business
activities this is also the common objective supported by
our values,”says CEO Tauno Pihlava.
Kemira’s staff is committed to working together to develop the business environment in accordance with the
chosen values. Operations based on trusting interaction
reinforce synergy benefits and generate high social capital.
“The values that guide our work are highly important
to a global combine like Kemira. Aside from helping us to
get all of our five business areas in their various roles to
serve the overall undertaking harmoniously, the values
help integrate the businesses that we acquire into the
Kemira family.”
Kemira’s staff have identified the Group's principal values as working together, respect for individuals, result orientation and innovation.
“All of our businesses share a common quest for increas-
ingly refined product and service packages. Innovation is
needed at all levels. Each business must naturally have its
own R&D people. In addition the parent company finances
water quality, recycling and fibre technology centres of expertise that generate mutual synergies of their own.”
It is the common objective, values and synergies that
unite Kemira’s various business operations, says Pihlava.
APPLICATIONS EXPERTISE GIVES A COMPETITIVE EDGE
Kemira’s Pulp & Paper Chemicals division (turnover: 600
million euros) and its water chemicals unit Kemwater
(turnover: 260 million euros) are global market operators
that the Group is also seeking to enlarge through strategic
acquisitions. In recent years these divisions have shown rising turnover and a steadily growing range of products and
services.
“Global customers require a certain size in their suppliers. They have also begun to demand comprehensive service. This means that we must offer a broad range of products and a great deal of expertise. Particularly in the US giant forest combines favour a single sourcing approach,
whereby a supplier takes sole care of a certain segment of
the process. In the case of Pulp & Paper Chemicals, this
segment is sizing and the wet end of the paper machine.”
Pihlava explains that profit seeking at Kemira means
that the growth of business operations must progress hand
in hand with financial efficiency. A high rate of organic
»
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growth must be maintained in both
old and new units.
“When acquiring enterprises we
must carefully analyse how they’ll assist our existing units.
“As business expands, we need to
monitor Kemira’s internal synergies.
Kemwater and Pulp & Paper Chemicals gain a great deal from one another when serving the forest industry.
Kemwater gained access to the US
market this autumn following the
Kemiron deal, and will now be able to
offer its expertise in that market together with Pulp & Paper Chemicals.”
menting our strategy of seeking a
transition to increasingly refined
products. Specialty pigments and second generation formic acid products
are good examples of this. We should
also note that superior technology is a
source of added value. We have mastered the exceptionally demanding
business of manufacturing formic acid
and percarbonate. And we have a sulphate-based titanium dioxide production process that is the world's most
efficient.”
The products and services of Industrial Chemicals go to dozens of cus-
tomer groups, ranging from oil refineries to the detergent industry and
from the foodstuffs sector to printing
houses. Just over half of this business
operation’s 404 million euros in annual turnover comes from titanium dioxide pigments.
GrowHow generates an annual
turnover of 1,165 million euros in its
work to improve the quality of life as a
specialist in the food chain. To enhance its profitability, this company
seeks to follow the Kemira line by
providing customised products and
services.
“IMPROVING THE QUALITY OF LIFE IS THE GOAL
THAT JUSTIFIES OUR WORK”
Both Pulp & Paper Chemicals and
Kemwater are global leaders in their
respective fields of business.
The strategic aim of Paints & Coatings is to become the leading enterprise in consumer paints for the Baltic
Sea region, including Russia.
“On discontinuing our colour processing business at the turn of the century, we focused exclusively on paints.
Later we purchased the Alcro-Beckers paint business, nearly doubling
our turnover to 450 million euros. We
now have very strong local brands and
are expecting rapid growth, especially
in Eastern Europe and Russia.”
Four of the five units in Kemira's
Industrial Chemicals division have
synergies with other Kemira production operations. Lately the Group has
invested heavily in the processes of Industrial Chemicals. Its role within
Kemira has been to accelerate organic
growth and to serve as a source of
cash flow. Industrial Chemicals is the
European market leader in calcium
chloride, holds third place in the global percarbonate market and second
place in the global formic acid market.
“Industrial Chemicals is also imple10 Kemira 1/2004
Tauno Pihlava points out that you can
always seek to improve profitability,
regardless of what the market is doing.
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“The European fertiliser market is shrinking, and so
GrowHow has been forced to reduce its capacity. Operations have been streamlined through restructuring and by
improving distribution networks. Our objective is to make
GrowHow the best enterprise in the sector for services.”
Pihlava emphasises that you can always seek to improve
profitability, regardless of what the market is doing. An important objective of the entire staff is to increase Kemira's
productivity more rapidly than the average for enterprises
operating in the sector.
“We have launched the kEmpower programme with a
view to achieving a 50 million euros improvement in our
cost position by the end of 2005. Within the same time frame
we are seeking to realise savings of 30 million euros
through a development programme for procurement and
logistics. We shall also gain a further 20 million euros by
improving our structural efficiency,” Pihlava explains.
NO COMPROMISE ON OBJECTIVES
In recent years Kemira has implemented its strategy by
both purchasing and divesting business operations.
“There have been changes in the structure of Kemira
since we last organised the Capital Market Day in 1999. The
aggregate net sales of our acquired business operations
has amounted to about 300 million euros in pulp and paper,
about 100 million euros in water treatment and about 200
million euros in the paints business. At the same time we
have divested turnover capacity of 130 million euros in CPS
business operations and 370 million euros in titanium dioxide operations. Last year Kemira increased its year-on-year
consolidated net sales by some six per cent to a level of
2,600 million euros. The aim is to achieve an annual growth
rate of ten per cent by the year 2005.”
When Kemira refocused its business operations four
years ago it imposed four separate ten per cent objectives:
“Beginning in 2001 net sales were to rise by 10 per cent each
year and operating profit was to exceed 10 per cent of net
sales. Earnings per share were to grow by more than 10 per
cent annually and the cash flow return on invested capital
had to exceed 10 per cent.
“We had already come close to our target, but the recent
economic recession and especially GrowHow's difficult situation in Europe has forced us to revise our schedule. I
think it's realistic to say that we'll achieve our financial
aims by 2005.”
Does this mean that we can expect to see a more profitable, more global and larger company when the next
Kemira Capital Market Day is organised?
“Improving the quality of life is an objective that imposes
no limits on growth. Success will depend on how well we realise our purpose and values in practice,” Pihlava explains. STRATEGIC FUNDAMENTALS
Pulp & Paper Chemicals
Juhani Lindholm
To become established as one of the Big Three
suppliers of chemicals for the paper industry.
Comprehensive solutions for the papermaking
process; expanding our market area to keep
pace with global customers; developing applications to meet customers’ needs.
Kemwater
Lennart Johansson
Global market leadership in water treatment
chemicals for the municipal sector. The aim is to
increase market coverage still further. Business
operations will be based on low costs of raw material and efficient logistics in the local and regional market. Developing solutions for industrial waste water treatment and sludge processing.
Paints & Coatings
Visa Pekkarinen
To remain the leading manufacturer of consumer paints in the Nordic countries and Eastern Europe. Consumer paints will account for
about 70 per cent and coatings for about 30
per cent of sales. Strong regional brands. Profitable growth in Eastern Europe and Russia.
Industrial Chemicals
Harri Kerminen
Utilising Kemira's synergies. Combining organic growth with good productivity and healthy
cash flow. A solid technological foundation. Specialty products that stand out from the crowd. A
leading position in several special fields.
GrowHow
Heikki Sirviö
Operational leadership. Added value for various consumer segments through focused
service packages. Organic growth and development work based on our own cash flow.
1/2004 Kemira 11
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BY LEENA MARTTINEN PHOTOS BY LEHTIKUVA AND PEKKA KESKITALO
This is a balanced package, insisted EU Commissioners Erkki Liikanen and Margot Wallström
when presenting the Commission’s proposal for new Community legislation on chemicals. Not
everyone agrees. Opinions of the proposal are sharply divided, and a long process lies ahead
before this major legislative undertaking finally reaches the European statute book.
OPINIONS DIVIDED OVER
CHEMICAL LEGISLATION
A
Commissioner
Margot Wallström
says a uniform
system that will
improve consumer
confidence is now
being introduced.
12 Kemira 1/2004
t the end of October the European Commission released its proposal for new legislation on chemicals,
which is intended to replace more than 40 directives
and other statutes while leaving 20 others in place. The
main objective is to register the chemical substances that
are used within the European Union according to an
agreed set of rules. The burden of proof will shift from public authorities to industry, which will have to show that substances can be used safely.
“The current legislation is more than 20 years old,” comments environment commissioner Margot Wallström of
Sweden. She and industry commissioner Erkki Liikanen of
Finland are the chief architects of the new legislation.
“Chemical production has grown enormously over this period, as has concern over the impact of chemicals on human health and the environment. Modern society needs
chemicals, but it also needs to know more about them. We
are now introducing a uniform system that will improve
consumer confidence, and we shall all benefit from this.”
When preparing the proposal the two commissioners
had to reconcile sharply opposing points of view.
Liikanen believes that the Commission’s proposal has
struck the right balance between economic and social requirements.
“The European chemical industry employs 1.2 million
people and has a positive annual foreign trade balance of
more than 60 billion euros. It’s one of the three leading industries in eleven of the present fifteen member states,”
Liikanen points out.
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He explains that the mechanisms incorporated into the
legislative proposal are cost-effective, and will stimulate innovative capacity in the chemical industry. For example, a
dispensation from the registration requirement may be
granted for up to 15 years for products that are still at the
research and development stage.
TENS OF THOUSANDS OF CHEMICALS TO BE REGISTERED
The new provisions are based on the need to gather more
comprehensive data about substances placed on the market. This particularly applies to existing substances that
were already on the market in 1980, of which more than
100,000 have been catalogued. Only some 3,000 thoroughly
tested new substances have subsequently been placed on
the market.
The burden will now be on the chemical industry to
demonstrate that the substances it manufactures or imports into the territory of the European Union are safe. A
quantitative limit will exclude chemicals with annual production volumes of less than one tonne.
It is estimated that some 30,000 substances will have to
be registered in the database of the new European Union
Before making its current proposal at the end of October, the Commission arranged a broad Internet consultation on the general guidelines for chemicals legislation.
More than 6,000 responses, many of them highly critical,
persuaded the Commission to rework its final proposal in a
new light. So great was the shift that environmental organisations accused the Commission of making excessive concessions to the industry.
Wallström responds to this criticism by arguing that the
current system works in practice, and if the new legislation
is made too restrictive then it will choke on its own unworkability.
Liikanen says that the Commission was seeking to minimise costs and reduce bureaucracy.
“In response to the Internet consultation we have made
changes resulting in an 80 per cent reduction in estimated
costs,” he explains. The Commission believes that the
»
THE COMMISSION ESTIMATES THAT BETWEEN
ONE AND TWO PER CENT OF THE CHEMICALS ON
THE MARKET WILL HAVE TO BE WITHDRAWN
Chemicals Agency. This will require time-consuming tests
and probably considerable expense that the industry will
have to defray. It has been proposed that registration
should be introduced in stages: three, six and 11 years after
the new legislation takes effect.
About 1,500 substances classified as hazardous will require a special license, issued only if the enterprise is able
to show that the risks can be adequately controlled.
The 40,000 so-called intermediate substances, which
are created in production processes but then reprocessed
into other substances, will also have to be registered, but
the mechanism will be less onerous than in the case of
other chemicals. Some intermediates will not be covered
by the new legislation, as is currently the situation with
polymers.
The Commission estimates that between one and two
per cent of the chemicals on the market will have to be
withdrawn because they fail to comply with safety requirements. The chemical industry fears that the proportion of
such chemicals will be considerably higher.
Commissioner Erkki
Liikanen believes that
the Commission’s proposal has struck the
right balance between
economic and social
requirements.
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new, improved proposal will considerably reduce inconvenience to the customers of the chemical industry and
will encourage the industry to keep its
added-value chain is more uncertain, and even the Commission is
willing to admit this. It estimates that
the ultimate cost to users of industry
THE CHEMICAL INDUSTRY FEARS THAT THE PROPORTION OF THE
CHEMICALS THAT WILL HAVE TO BE WITHDRAWN WILL BE HIGH
products on the market.
The Commission estimates that
the direct costs of new system to the
chemical industry will amount to 2.3
billion euros spread over a period of
11 years. The impact on the entire
THE MAIN CONCERNS
OF INDUSTRY
• Costs are high in proportion
to benefits
• Impact on competitiveness of
the European chemicals industry,
World Trade Organization
• Workability, timetables
• Reaction of customers
• Removal of chemicals from the
marketplace
• Copyright protection of test results
• Consortia and sharing of
information
• Major need for information,
resources
• Hampering of innovation
• Transfers of production to non-EU
locations
• Survival of small and medium-sized
enterprises
CEFIC Director General
Alain Perroy feels that
the Commission’s
calculations of the
likely effects of the
legislation are
insufficient in scope.
14 Kemira 1/2004
products will fall somewhere between 2.8 and 5.2 billion euros. The
higher end of this cost range reflects
a scenario in which adaptation by the
users of chemical industry products
proves more costly than is currently
anticipated. Customers will at least
have to find substitutes for any chemicals that are withdrawn from the
market.
CHEMICAL INDUSTRY CALLS FOR
MORE THOROUGH ANALYSIS
While prepared to admit the need for
reform in legislation, the European
chemical industry has feared all along
that the new system will become costly and bureaucratic.
The European Chemical Industry
Council (CEFIC) has taken the lead in
expressing these fears publicly. Both
CEFIC and the Union of Industrial and
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Employers’ Federations in Europe
(UNICE), which represents European
industry as a whole, feel that the Commission’s calculations of the likely effects of the legislation are insufficient
in scope.
The organisations are calling for a
thorough analysis of these effects, considering not only the chemical industry but also the entire added-value
chain, and taking into account such
factors as employment impact in major customer sectors such as the automotive and electronics industries.
“The primary aim of such an analysis would be to identify opportunities
to improve the legislative proposal
and to rectify any elements that will
impede its smooth and cost-effective
implementation,” says Alain Perroy,
Director General of CEFIC. “An essential aspect of the analysis would be
the inclusion of chemical industry
subsectors and consideration of their
customers.”
The Commission’s proposal for
new chemicals legislation is only the
first step on a long journey. The proposal will now be submitted for further review by representatives of the
governments of the member states in
the Council of Ministers and by the
European Parliament. The current
parliament is not expected to have
enough time to complete its reading
of the proposal, and so the matter will
be carried over to the new parliament
due to be elected next June.
The member states will also be unwilling to accept the proposal as it
stands, and are expected to call for
quite substantial amendments. The
European chemical industry has previously won support for its criticism of
new legislation from the political leaders of three member states with extensive chemical industries: Germany,
France and the United Kingdom. A
similarly critical line is expected at
various stages of consideration by the
Council of Ministers.
PHOTO BY JUHA SALMINEN
523203.qxd
Helena Huttunen
KEMIRA PREPARES FOR THE NEW LAW
The proposal of the European Commission for new chemicals legislation will
impose new obligations on manufacturers, importers and users. The most
significant of these duties will be registration of all substances on the market,
authorisation of the most hazardous
substances and assessment of the
chemical safety of substances or
preparations containing them.
“Kemira is preparing for the new law
by identifying 120 substances that
would be subject to registration,” says
Helena Huttunen, Product Stewardship
Manager at Kemira Group. “The duty of
registration will considerably increase
the information requirements for ‘existing’ substances that have already been
on the market for a long time. This will
be a major undertaking for us.”
The safety of downstream uses of
substances must also be assessed.
“If a substance has already been
registered for a certain use, then we
shall need to review its chemical safety
assessment and safety data sheet. We
shall ensure that adequate protective
measures will be taken. However, if the
manufacturer or importer has not registered a substance for a certain use,
then we shall have to do this ourselves.”
Kemira will also need to ensure in
good time that the new chemicals leg-
islation does not bring unpleasant surprises to end users.
“We shall be working with our customers to investigate whether any critical substances will be withdrawn from
the market after Reach enters into
force. Various alternatives will have to
be considered so that complex processes do not fail for want of some crucial
ingredient.”
Besides surveying substances subject to registration, Kemira will take
part in voluntary testing programs. A
third strategically important challenge
will be development of product information systems.
“The new legislation will create substantial additional expenses for the
chemical industry in the European Union.
The total cost to Kemira of merely registering 120 substances and testing 30 of
them could amount to as much as 30
million euros. A considerable financial
investment will also be needed for improving information systems.
“Naturally we hope that customers
around the globe would look
favourably on products that have been
tested in this way. Sometimes, however, sheer costs weigh more heavily
than safety aspects in the mind of the
customer,” Huttunen warns.
BY JORMA LEPPÄNEN
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BY PEKKA SÄILÄ PHOTOS BY LEHTIKUVA
Soccer
For many people in Britain, soccer is almost a religion.
At Bolton Wanderers the Premier League football club,
it’s a Finn that minds the home team's goal and Finnish
paint that protects the stands. Tikkurila Coatings does
an equally fine job shielding the Reebok Stadium from
the rain and wind of Northwest England. »
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is life
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Many youngsters in the UK are raised to support a particular soccer club. The game is one of the
most important pastimes in British life.
A
straw poll of the fundamental
values of regulars in an English
pub would be sure to find soccer among the top four along with
Family, Queen and Country. Soccer or
“football” as it is commonly referred to
in the UK is the favourite recreational
sport of nine out of ten English schoolboys, and children are raised early on
to support a particular club.
Soccer regularly makes national
and local news headlines, and also influences fashions and individual attitudes. David Beckham’s latest hairstyle is discussed everywhere, and
even Prime Minister Tony Blair makes
sure to mention his interest in Newcastle United from time to time.
One of Finland’s most successful
club managers is Keith “Keke” Armstrong, an Englishman who chose to
pursue his playing and subsequent
career in Finland. Originally from
Newcastle, Armstrong has developed
into something of a Finnish soccer guru over the recent years. He is the on18 Kemira 1/2004
ly manager at the highest level in Finland to win five league championships, the most recent this year
with the Helsinki club HJK. He also
won a good many such championships as a player in Finland.
In the almost 25 years spent in Finland, Armstrong has also gained some
perspective on the culture of the English game. He visits the UK regularly
He thinks that the influx of foreign
players and the cultural exchange that
this has fostered have been good for
the English game. Soccer has become
more professional in Britain. Local
stars now have to compete with talented foreign challengers just to get into
the team for Saturday's match.
One of the foreigners who has managed to make his mark in the English
SOCCER IS A LEADING TREND-SETTER AND INFLUENCES
INDIVIDUAL ATTITUDES IN BRITAIN
to follow the sport, generally spending
a week there in the spring and autumn. He also actively maintains contact with many clubs in the English
Premier league.
“Nowadays I am more interested in
the training than the actual games; in
how the top clubs arrange their coaching
and practical affairs,” Armstrong says.
Premier league is Jussi Jääskeläinen,
who was originally transferred from
Finland in 1997 to serve as goalkeeper
for the Bolton Wanderers in the English First Division.
Jääskeläinen has been playing in
England for six years and his club is
now contesting its third season in the
Premier League.
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Over the years he has become one of the club's most reliable servants. He estimates that he has kept goal for
Bolton in about 180 first class games so far.
“Based on my own experience I feel that new players are
warmly welcomed in England. At Bolton I was given
enough time to train and develop to my full potential. Over
the first 3 to 4 months I must have played the worst matches of my life, as the game is played quite differently over
PLAYERS AT LEADING CLUBS CAN CALL ON THE EXPERT SERVICES OF A DIETICIAN OR EVEN A PASTOR
here: players trap the ball with a single touch, and the pace
of play is much faster than in Finland.”
Jääskeläinen is now the most experienced player in his
team.
“My contract runs until 2007. I'm 28 years old now, and I
hope that the next 4 to 5 seasons will be the finest of my
playing career,” he says.
Jääskeläinen argues that a player starting out in the
English Premier league can spend as much as half a season
simply discovering his own role, depending on the type of
player concerned.
He reports that the playing squad at Bolton has
changed quite a lot over the years. As its fortunes have
improved, the club has been able to spend more in the
transfer market.
“But even though the players have changed over the years,
we have always had a marvellous team spirit at Bolton.
Whenever a new player joins the club, the others help him to
settle in, for example by helping him look for a place to live.”
Such matters have meant a lot to Jääskeläinen, as
Bolton has also become home to his wife and two sons aged
two and five.
Keith Armstrong considers Jääskeläinen to be a fine example of a professional player with not only the required
ability, but also the right attitude.
“For many top players the most important adjustments
in the professional game happen in the mind. The English
Premiership is a tough challenge for any player. If you don’t
retain a healthy self-esteem, then you simply won’t get over
the setbacks that are bound to come.”
corporating the club office, a gymnasium and dining facilities.
It also retains the services of a psychological counsellor who
helps the players sustain their will to win and manage their ambitions in life. Further assistance can be obtained from a goalkeeping coach, a fitness and stamina trainer, a dietician, and
even a pastor when necessary.
When Jääskeläinen came to Bolton in 1997 the club was playing its first few games in a brand new home ground. He highly
praises the Reebok Stadium, and although it is by no means the
largest, he considers it one of the finest soccer grounds in
Britain. The stands have a capacity of about 30,000.
With the club doing so well, every home game has been
sold out.
“Clubs playing at home in the Premier league have a definite
advantage, as the fans are totally dedicated. I think we have
definitely managed to make more chances in home games simply because of the fabulous atmosphere. By contrast, the away
matches are always harder, depending on where you go,”
Jääskeläinen explains.
Armstrong recalls the same feelings from his days as a
youngster in his home city of Newcastle.
“If there were 50,000 spectators in St. James’ Park, then you
could be sure that at least 30,000 of them would be wearing the
home team’s colours, with football scarves, flags and other
black and white paraphernalia. There's no way to describe the
atmosphere – you just have to go there and experience it.”
Jussi Jääskeläinen helped Bolton Wanderers win promotion from the
English First Division to the Premier League. At 28, he is now the club's
most experienced player.
THE FANS MAKE THE ATMOSPHERE
Bolton Wanderers have now managed to stay in the English
Premier league for three years. This success on the field has
also improved the club’s financial standing. Besides its own
Reebok Stadium, the club has a training ground complex in1/2004 Kemira 19
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BY PEKKA SÄILÄ PHOTO BY TIKKURILA
COATINGS CENTRALISES IN UK
T
he general décor and steelwork of
Bolton’s Reebok Stadium offer a
marvellous display of bright colours
by Tikkurila Coatings. Ulf Koivula, the
present CEO of Tikkurila Coatings Oy, has
also lived in Bolton. He remains a strong
supporter of the Bolton Wanderers.
“I’ve been there often and watched
Jussi Jääskeläinen pull off some great
saves,” Koivula says.
Nigel Smith, the Managing Director of
Tikkurila Coatings Ltd, points out that the
company’s strong business presence in
West Bromwich is also ideal for soccer
fans, with the home grounds of many top
clubs all within easy reach.
“It’s not unusual for Monday business
meetings to begin with discussion of the
weekend's results,” he says with a smile.
The UK has been one of Tikkurila's
main market areas since as far back as the
1980s, even though sales of industrial
paints and coatings have recently been
below par. To date, the company's production and administration have been shared
between two sites. Now all operations are
to be transferred from the Northwest
town of Bury to West Bromwich near
Birmingham, West Midlands.
“As the UK industrial paints and coatings market shrinks, we face tougher
price competition and pressure to improve productivity,” Smith observes.
20 Kemira 1/2004
“While we have continuously streamlined our operations, maintaining two
sites in the current market situation simply gives us an additional cost factor
compared to our competitors. We shall
continue to exert an increasingly powerful influence in the UK market,” Smith
insists.
Koivula feels that it is important to assure the company's competitiveness in
the UK, Ireland and the Benelux countries.
“In practice this means improving our
sales organisation and R&D so that we
can serve our customers more effectively,” he says.
Tikkurila Coatings, which is a part of
Kemira Group, is an important supplier of
paints to Northern and Eastern Europe.
“In the future we shall be focusing our
resources increasingly on Eastern Europe,
in countries such as Russia, Poland, Hungary and the Czech Republic. There are
good growth prospects in Russia and it’s
worth bearing in mind that Tikkurila is
currently the best known paint brand in
Russia,” Koivula observes.
On the whole Koivula feels that Coatings has had a favourable year. He is
pleased to report a clear increase in
turnover.
“This success is largely thanks to our
staff. They have enabled us to adapt to a
changing market.”
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White, the basic colour of the factory, provides
a clean and bright effect. Other colours, such
as red and blue, are used sparingly for specific
purposes.
A showpiece of
coordination
Housing the widest paper
machine in the world
required over 70,000 litres of
Tikkurila industrial coatings.
Seventeen different products
were used for walls, floors
and ceilings.
BY JANIE JEFFREYS
PHOTOS BY STORA ENSO
AND ATSO KUPIAINEN
T
he new newsprint machine at
Stora Enso’s L4 Project in
Langerbrugge, Belgium, started
up last May with its first paper rolls
reaching the market in June 2003.
Raw material for this machine which
produces 400,000 tonnes per year is
recovered paper collected within a
300 kilometre radius of the mill.
The project also included the construction of a new de-inking plant, a 75
MW biofuel power plant, new warehouses for raw material and paper
and a new office building on the site.
The production line was supplied by
Metso Paper. The combined length of
the new machine and winder section is
154 metres. The wire width is 11.1 me-
tres – currently the widest in the world
and, when reaching full capacity, the
machine will produce standard 45g/m2
newsprint at 2 000m/min.
Stora Enso’s total investment in the
project is 500 million euros. Almost
200 suppliers and contractors from
several different countries have been
involved in the project, a massive one
by any standards.
OVER 70,000 LITRES OF PAINT
One of the many suppliers at Langerbrugge is the Finland-based Tikkurila
Coatings Oy. More than 70,000 litres of
industrial coatings have been applied to
over 100,000 m2 of the walls, floors and
ceilings of the vast new machine hall »
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and in more than 90 service rooms for
electrics, ventilation, etc.
Sales of Tikkurila paints and coatings in Benelux are handled by
Tikkurila Coatings b.v. based in
Rozenburg, the Netherlands.
The paints and coatings used
throughout the building play a significant role in its maintenance, safety
and aesthetic appeal. Atso Kupiainen,
project engineer in overall charge of
surface treatment at Langerbrugge,
worked on the site from May 2002 to
August 2003. As he explains:
“It is a major logistical operation to
coordinate the work of the painters
with that of the construction teams,
equipment suppliers and the electrical and mechanical contractors. At its
peak, we had over 1,000 people working on the site, so everyone has had to
understand each other.
“There are other problems too,
which are harder to plan for, such as
the weather. Last year there was a real
winter in Belgium. The drying times
for the epoxy coatings were long and
we could not use the epoxy paints at
all until they were able to switch on
the heating in the machine hall.”
CONSULTING ARCHITECTS
AND COLOUR
Olli Terho, a representative of the
Finnish consulting architects for the
project, UKI Arkkitehdit Oy, describes
their colour concept:
“The principal criteria in defining
the colours were to provide an efficient and pleasant working environment and good visibility, as well as a
sense of order and safety. We also
had to ensure that the paper machine looked impressive and, of
course, reinforces Stora Enso’s company image.”
“The basic colour is white to support
the lighting. For the eye, it is necessary
to adapt to light, adapt to dusk, fixate
and recognize depth of field. For the
Langerbrugge staff, this means the ability to see everything of importance
quickly and in sharp focus,” Terho continues.
“Because dust and powder are
white or nearly white, dark surfaces
appear dirty when they are dusty,
whereas white surfaces do not. White
is also the colour that conveys a sense
of newness and dignity and is therefore appropriate for the paper machine itself,” he explains. “It is also
the best background for colourful
company logos, graphics and informative signs.”
“Other colours, red and blue, for
example, are used sparingly and
specifically to emphasize specific
equipment or elements of the building
– such as down-draught channels in
the machine hall – or in some of the
many small control rooms and so on,”
Terho concludes.
The painting contractors at Langerbrugge were a new consortium
formed for the project – TVER Rinaldide Medts – comprised of two local
companies – Rinaldi NV and de Medts.
Fourteen different
painting systems
were used for the
floor areas. Here
workers are applying
epoxy screed.
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Tikkurila’s local sales manager Stanley Peters and site manager Jürgen
Langerbrugge was by far the biggest painting project in Belgium in 2003.
van Hecke admire the new floor of the paper machine hall.
With 250 employees, they constituted
one of the largest specialist painting
contractors in Belgium.
A HIGH-SPEED PROJECT
It is not only the paper machine which
has to work fast. Jürgen van Hecke,
project engineer and Langerbrugge
site manager for Rinaldi-de Medts,
spent most of his waking hours on site
since the painting project began in July 2002.
“When it is comes to floor painting,
we must first blast-clean the area,
then apply the first layer of primer; after that we level the floor and apply a
second layer of primer before applying the finishing coat,” says van Hecke.
“And during this whole process, no
one else can walk or work in the area.
We had the same sort of problems with
ceilings where we also had to take the
movements of gantry cranes into account.
“All this, of course, meant that we
were always working to tight and fixed
schedules. Planning is crucial. By Belgian standards, the time frame for
completing the project from the
ground up to final finishing within 18
months is fast,” explains van Hecke.
“We started painting in July 2002
and finished in May 2003, aside from
some touch-up jobs and finishing
painting which were completed in August.”
“Our cooperation with Tikkurila
Coatings was good, mainly through
Stanley Peters in their Dutch office
who also works with the company’s experts in Finland. We were not obliged
to use Tikkurila products. However,
they have a big range of paints and
coatings, which had been used on other
Stora Enso projects and met the specifications for the job.”
“Fast delivery always seemed to be
possible. If the products were not in
stock in the Netherlands, then an order placed on Friday would result in
delivery the following Tuesday,” says
van Hecke. “Tikkurila was faster than
local suppliers would have been,
which really surprised me. I was very
happy with delivery times.”
“We had no problems with the
Tikkurila products although they were
new to us. At the outset, when we
asked for some advice, an expert was
sent out from Finland and he spent 3
or 4 days with us,” van Hecke explains.
PRAISE FOR TEMAFLOOR
200 AND 220
“The products which impressed us
most were Temafloor 200 and 220. We
liked using them because they seal the
concrete really well. There are none of
the pinholes caused by small air bubbles coming up from the concrete that
you can get with some local products,”
comments van Hecke.
“There were many additions to our
work as the project progressed. At
first, the plan was to paint only the
ceiling over the wet end of the paper
machine; then the ceiling and walls of
the whole wet end and over the paper
machine, plus the walls on the operator's side, were to be painted too. It
was always part of the plan to paint
the walls and ceiling in dry end and
finishing areas. TVER Rinaldi-de
Medts were also asked to paint various steel structures in the main buildings as well as external steel doors, silos and all ready-primed steel construction for the boiler house in the
power plant,” says van Hecke.
At Langerbrugge, fourteen different painting systems were used for the
floor areas and four different systems
for wall and ceiling areas; minimum
thicknesses were specified in every
case, down to the last micron. In all,
seventeen different Tikkurila products have been used.
For TVER Rinaldi-de Medts, there
was a lot to do in a short space of time.
They did their own checks as work progressed, but at every stage it also had
to pass close inspection by Stora Enso.
“This is how we like it,” explains
van Hecke. “After all, in theory anyone
can paint, but a project like Langerbrugge involves so much more. It was
the biggest painting project in Belgium in 2003.”
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New European Union Member States increase
competition
24 Kemira 1/2004
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BY HANNA JÄMSÄ
PHOTOS BY JUHA SALMINEN
The accession of the Baltic States
and the countries of Central and
Eastern Europe to the European
Union will have a considerable
impact on the European chemical
industry. Finland should urgently
seek partners in the new Member
States that are capable of working
together in Russia, explains Hannu
Vornamo, Director General of the
Chemical Industry Federation of
Finland.
C
oncern for Finland's industrial competitiveness has been expressed this autumn as record redundancies were announced in the industry. About five per cent
of Finland's industrial jobs were lost in 2003.
“I am highly concerned about Finnish industrial jobs in general,” Hannu Vornamo
comments.
The accession of Estonia next spring is
the most immediate threat.
“Tallinn is already becoming a region in
which the European Union will probably invest the highest level of subsidies. It will be
quite astonishing if small, labour-intensive
businesses fail to relocate to Estonia. Of
course this will also depend on Finland's
taxation policies.”
Estonia could remain a minor threat for
Finland although this country has problems
of its own, chiefly arising from its small size
and demographic structure.
The Confederation of Finnish Industry and
Employers has reckoned that over the period
from 1997 to 2002 Finnish enterprises have
established an exceptionally large number of
production plants in developing countries
such as China, Russia and Brazil.
This trend is visible throughout the »
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PHOTO BY JUKKA RAPO
523209.qxd
Latvia will become a new European Union Member State in spring 2004. These photos depict the
country's colourful capital, Riga. Hannu Vornamo is shown above.
European Union and the US. A shift is
occurring towards countries with low
production costs.
The giant corporations of the German chemical industry will also focus
huge new investment programmes on
growth markets such as China and
Southeast Asia. For example, Bayer is
constructing a polymer production
plant in Shanghai at a total cost of 3.4
billion euros.
26 Kemira 1/2004
Obviously it is not possible to relocate all chemical industry production
to the other side of the globe, nor always even over distances of a few hundred miles. The logistics costs of basic
chemical processes and the fact that
labour costs account for only a small
fraction of the price of the end product
dictate that it is more cost-effective to
maintain production where the customers are.
Even so, the chemical industry will
have to think carefully about how the
world is changing. The conditions
required for keeping industrial production in Finland and securing sufficient new investment should also be
considered.
“Eastern Europe is less familiar
than we had imagined, and we are not
as competitive as we would like to
think. Nobody is going to come here
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looking for a place to set up in business unless we market ourselves as a
place for investment and fruitful partnership,” Vornamo explains.
HOW TO COMPETE FOR VENTURE
CAPITAL?
Vornamo is fully familiar with the
problems of Central and Eastern Europe. He has travelled extensively
within the Accession States on behalf
of the European Chemical Industry
Council – CEFIC. He has come to know
EASTERN EUROPE IS NOT AS
FAMILIAR TO US AS WE THOUGHT,
NOR ARE WE AS COMPETITIVE AS
WE WOULD LIKE TO THINK
the Baltic States, Poland, Hungary and
even Ukraine.
CEFIC has been implementing the
European Union Phare project,
which involves establishing chemical
industry confederations in East European countries. “I’ve been out and
about building new networks,” he explains.
On these excursions Vornamo has
found out for himself just how aggressively and proficiently the countries of
Central and Eastern Europe have
been marketing themselves to investors.
“We are accustomed to viewing
the new Member States as a blank
void on the map of the continent,” he
comments.
This way of thinking quickly disappears when studying Invest in Poland
advertisements, for example. This
country offers extraordinary benefits:
a central location in Europe, a large
home market, capable workers, relatively low labour costs, prospects for
building extensive subcontractor networks, promisingly rapid
»
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Hallar Meybaum
works at Eesti
Keemiatööstuse
Liit, the Estonian
Chemical Industry
economic growth, upcoming European Union membership, an investor-friendly atmosphere and political and
social stability.
Labour costs in Poland are only about 4.50 euros an hour,
compared to 8.10 in Portugal, 14.20 in Spain, 26.50 in Germany and 28.50 in Sweden.
“And when the Poles show us where their university
towns are, we find that the map is filled with them. Educational standards are rising and large numbers of engineers
are graduating all the time,” Vornamo notes.
As a new European Union Member State, Poland is permitted to grant subsidies of between 30 and 50 per cent of
the value of a direct investment. The terms of such subsidies are clear and decisions are made quickly. Investors
have taken this opportunity – and following his travels in
Poland Vornamo reports that the entire country has become one huge construction site.
Even so, the pressure of global competition is also felt in
Eastern Europe.
“The Hungarians, for example, fear further job losses
to China and relegation to the status of a mere transit
country.”
Eastern Europeans are also amazed at the power and
pace with which major Russian corporations have penetrated their markets.
“One Hungarian expert commented that where the Russians formerly came in with tanks, now they use banks and
businesses.”
QUICK REFLEXES NEEDED
Slow operating procedures may be a more serious obstacle
to competition than the costs of a production site.
Vornamo lists Finland's failings: “we have become inflexible, resistant to change and expensive.”
Everyone saw how the Russians took only a few months
to decide on the construction of a major new harbour on
the Gulf of Finland. By contrast, the Finns will probably
spend a decade processing various appeals before serious
work gets under way on a corresponding new facility in
Helsinki.
Under such conditions Vornamo feels that partners in
the East are worth looking for. The most skilled and linguistically gifted partners are available in Estonia and
Poland.
The best strategy is to seek out new ideas and people,
and to be willing to take risks. Anyone hoping to adapt to
endlessly increasing competition will have to adapt their
own production ad infinitum. It's not difficult to see how
that will turn out.
“There really is no longer any such thing in this world as
a risk-free option,” Vornamo insists.
28 Kemira 1/2004
Federation.
ESTONIA SEEKS LONG-TERM BENEFITS
FROM EU MEMBERSHIP
“In the short term Estonian businesses expect the
country's accession to the European Union to have a
negative impact on their operations, but long term
expectations are favourable,” says Hallar Meybaum,
Managing Director of the Estonian Chemical Industry
Federation.
Enterprises and public authorities will have to learn
and adapt a great deal in the immediate future
because new environmental regulations will lift
requirements to much the same standard as in
Finland. Another problem to be tackled at the very
beginning is that the products manufactured from
Estonian bituminous shale will be new in the European
Union, and the notification process for them will have
to be managed quickly. This will require a considerable
amount of work and inconvenience.
“The Estonian chemical industry remains immature.
When the country joins the European Union it will
certainly attract new investment,” Meybaum says.
One widespread view in Finland is that many
businesses could relocate to the Southern side of the
Gulf of Finland after Estonian accession in search of
cheaper labour and lower taxation. While Meybaum is
sure that some firms will make the move to Estonia,
he is not anticipating any major influx.
Meybaum is also mildly concerned about business
taxation. The Estonian tax system, whereby the
retained earnings of businesses are zero-rated, may
come in for criticism in Brussels.
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BY HANNU VIRTANEN
ILLUSTRATION BY CAMILLA PENTTI
Fine-tuning
productivity
Kemira aims to improve productivity and reap in 100 million
euros a year through reduced variable costs and improved capacity that can be harvested by increased sales. Experiences gained
so far suggest that this objective is not just a dream. »
1/2004 Kemira News 29
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I
n February 2003 Kemira launched its Kempower Productivity programme, focusing on increasing production capacity and reducing variable costs. The initial pilot districts for the programme in the early spring were
Oulu in Finland and Helsingborg in Sweden. Since then the
Pori, Vaasa and Kokkola plants in Finland have joined as
well. By the end of 2005 the productivity programme will
cover most of the Group's main operating sites.
“Once winter came around, the value of the idea bank
created by the productivity programme had already
reached 22 million euros for the sites involved. At that
time only the two plants in Oulu, two of the seven production plants in Helsingborg and the Pori plant had been re-
BY THE END OF 2005 THE PRODUCTIVITY PROGRAMME
WILL COVER MOST OF THE MAIN OPERATING SITES
viewed. If similar results can be achieved in the other districts, then it's clear that the annual productivity growth
target of 50 million euros imposed for the entire Group will
be reached,” says Tomas Forsgård, Senior Vice President,
Strategy and Performance at Kemira Oyj.
“The manufacturing processes at the plants reviewed
so far vary widely, and few common production bottlenecks have been found. On the contrary, the control system for maintenance is one area where solutions that are
capable of being applied at many different sites can be
created. Co-operation in procurement and purchasing
will likewise provide common benefits to several operating sites.”
Besides increasing production volumes, Kemira is seeking annual cost savings of 30 million euros in procurement
and logistics. Preliminary experiences suggest that this is
also a realistic target. Average savings of 10 to 15 per cent
can reasonably be expected in many functions.
The targets for productivity enhancement and cost savings must be reached by the year 2005. Kemira is also seeking to save 20 million euros through restructuring, as in
uniting the plants of its UK Paints & Coatings unit.
ALL PERSONNEL INVOLVED IN THE PROJECT
Production plants are seeking solutions that can be implemented without substantial financial investment. The aim
of the development programme is not to rebuild plants
from scratch, but to tackle the internal and external problems of processes by improving working methods. Techniques should also be developed for continually enhancing
operations and sharing information between various oper30 Kemira 1/2004
ating sites. The personnel are fully committed to the project, which entails no workforce reductions.
The productivity project begins with a preliminary
analysis (design phase) at each production plant. Small
task forces made up of staff members identify problem areas by holding discussions with the employees who are responsible for various functions and who work in different
processes, and by examining production logbooks and
monitoring reports. The preliminary study leads to an
analysis of the reasons for fluctuations in production and
materials consumption. These analyses are followed by a
brainstorming stage in which proposals for improvement
are requested from the entire staff. The proposals are then
examined and prioritised. All ideas are entered into an internal Kemira Group database so that any staff member
can monitor and follow-up the progress of implementation
of the proposals for improvement.
The largest district to undertake the project so far has
been Pori, on the west coast of Finland. There more than
360 feasible ideas were identified, and their combined value has been reckoned at 15 million euros. The most outstanding results, relatively speaking, came at the small
Ecox plant in Helsingborg, which has managed to increase
its productivity remarkably. Productivity enhancements in
Oulu were also accompanied by improved environmental
protection.
WORKING TOGETHER, LEARNING TOGETHER
Productivity enhancements come from reducing production throughput times, improving materials management
and eliminating various interruptions and stoppages in
production. Personnel working in production processes on
a daily basis have the best grasp of how well these processes function, and so the success of the project has required
the involvement of the entire staff in a collective development effort.
“Kemira has experienced and capable employees who
are fully aware of how things should be done. When they
are given a chance to put forward their ideas and a structure for putting them into practice, then they rise to the
challenge,” Forsgård says.
“We may well ask why this has not always been done.
Production and management have been structured hierarchically so that people had the tendency to remain within
their own domain. We have been content to do our jobs in
the same old way. Now we have joined forces to consider
how everything affects everything else and how operations
can be optimised as a whole.”
At the first plants to be reviewed Kemira was assisted by
consultants. The methodology that has subsequently been
learned has now been transferred by the company's per-
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KEMPOWER PRODUCTIVITY PROGRAMME
sites: Helsingborg / Oulu / Pori
The goal for the Kempower program is an
annual run rate im-
60
provement level of
Run-rate level in MEUR
50
50 million euros in
50
improved productivity
by the end of 2005.
40
This means reduced
costs for production
30
(excluding personnel
22
costs) and improvement in throughput
20
capacity that can be
10
harvested by in-
4
creased sales volume.
0
Implemented
sonnel from one site to the next, and
they are taking charge of the entire
undertaking. The aim is that the principle of continual improvement take
root in the everyday operations of the
plant, even after the productivity project has ended.
“We hope that this will become a
permanent way of working and a culture of operations. I think there will be
real prospects of this when people discover that they are being listened to,
and that their ideas are also being implemented. We have now uncovered
bottlenecks and solutions, some of
which may have been at the back of
our minds for some time. I am sure
that we shall continue to discover
anomalies of varying significance and
to come up with insights for fixing
them.”
IDEAS AVAILABLE TO ALL
“An operating culture is largely a
matter of individual attitudes towards work and the workplace,” says
Carl Rietz, Global Program Director,
Kempower. The operating culture reflects the meaning that people find in
their own work and the influence
that they feel they are exerting on
Planned for implementation
Target by end of 2005
their own success and that of the enterprise.
“At Ecox, for example, there has
been a clearly favourable development in this respect. Everyone now
knows how much production stoppages cost, and what it takes for the
process to run smoothly. The personnel are being empowered, with in-
duction plant must be effectively
brought to the attention of other company personnel and made available to
them. The database established along
with the projects will support in this
respect. Recording ideas in the database is also an important aspect of
providing transparency so everyone
involved in the project can see how
“WE HOPE THAT THIS WILL BECOME A PERMANENT WAY
OF WORKING AND A CULTURE OF OPERATIONS”
creased motivation as a result. They
are becoming more aware of potential
improvement potentials and have the
means to implement them.”
Obviously a business culture does
not change overnight, nor is a single
project enough to make this happen.
However, a well-implemented productivity enhancement programme may
organise functions and influence attitudes so that any aspects that are
found to be effective are not readily
forgotten.
Rietz underlines that the improvements devised at any particular pro-
the different plants are progressing.
“The productivity programme has
got off to a good start. The interest
and involvement of the personnel has
increased as the project has progressed and awareness has improved. Far from being perceived by
individuals as a threat to their jobs,
the programme has been viewed as a
means of ensuring that work can continue. Without continual improvement in its productivity Kemira will
not be able to match the pace of competition in the chemical industry,”
concludes Rietz.
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Major overhaul in the U.S.
water supply
34 Kemira 1/2004
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Water sports on Leech Lake in Minnesota.
Badlands National Park in South Dakota suffers from extreme drought.
North America contains as much as 13 per cent of the world's renewable freshwater reserves.
However, the continent faces serious water conservation issues and pressure to increase prices.
BY JORMA LEPPÄNEN PHOTOS BY PHOTONICA AND ILKKA LUUKKONEN
A
t the end of the last decade annual water consumption per capita in North America stood at 1,693 cubic
metres, the highest in the world. The great bulk of
the water was used for artificial irrigation in agriculture.
Despite a growing population, water consumption in the
US has been falling since the 1980s. By contrast, the rate of
consumption in Canada in recent years has grown considerably more rapidly than the population, and is now already double the corresponding average in Europe.
The Great Lakes on the Canadian-US border are the
world's largest reservoir of surface water. However, by the
1970s this water system was so badly polluted that surface
water purification became more costly than extracting
groundwater, which then became the favoured approach
of municipal water plants in the US. On the other hand,
discharges from industry and agriculture have also impaired the quality of groundwater in many areas.
MAJOR DISPUTES OVER WATER RIGHTS
Despite the huge water resources of North America, many
of its regions suffer from drought. Water shortages are most
severe in the West, and particularly the South-West of the
US. Public concern over the availability of clean drinking
water imposes pressures on politicians and the legislature.
There are also ongoing disputes over the right to use water, many of which have been an enduring theme of Western films. Perhaps the best known film describing a corrupt
water policy was Roman Polanski's Chinatown.
Profound complications arose in water disputes involving two or more states. For example, the materials exam-
ined by the court in the 1906 dispute between Kansas and
Colorado over the right to use the Arkansas River ran to
8,559 typewritten pages.
Currently Kansas is engaged in legal action against Nebraska and Colorado over the use of the Republican River.
Georgia, Alabama and Florida are also vigorously negotiating over the use of their common rivers. Such disputes
WATER SHORTAGES IN THE US
HAVE LED TO DISPUTES BETWEEN STATES
have a tendency to continue regardless of any settlement.
Even the largest groundwater reserves provide no sustainable solution to the water shortage. For example, the
Ogallala groundwater formation that stretches from South
Dakota to Northwest Texas has begun to dry up in an
alarming manner due to over-extraction. The more deeply
you have to drill, the more costly the water becomes. It may
take thousands or even tens of thousands of years for a
groundwater formation like the Ogallala to replenish.
As the most rapidly growing metropolis in the US, Las
Vegas, Nevada has endeavoured to resolve its water shortage by artificially replenishing its over-extracted water reserves with water from nearby Lake Mead. Water from the
Colorado River is also piped into the city.
For decades the US has studied the prospects for diverting water from such rivers as the Missouri and
»
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Arkansas along canals to drought-ridden areas of Colorado, Kansas, New Mexico, Oklahoma, Texas and Nebraska. None of these plans have been implemented, however,
as the transfer of huge quantities of water to an elevation
thousands of metres higher than the starting point would
require an annual energy expenditure estimated to fall be-
THE COST IS LOW, PEOPLE TEND TO USE IT WASTEFULLY
finally reaching the sea. While the general public is
favourably disposed to this kind of recycling, the idea of recycling water from waste water treatment plants directly
into new drinking water is repugnant to most people.
Since the end of the 1960s the US industry has rapidly increased the degree of recycling the water required in its
processes. The objective is to close the water cycle completely. As environmentally hazardous individual hot spots
have been brought under control, public authorities have
had time to focus on problems that are more difficult to
manage, such as non-point discharges from agriculture.
LEAVING TOO LITTLE FOR THE AREAS WITH SHORTAGES
LEGISLATION REQUIRES INVESTMENT
IN PLACES WHERE THERE IS PLENTY OF WATER AND
tween seven and fifty million megawatt hours.
Although recycling would be a natural response to a water shortage, the WateReuse Association finds that in the
US this approach has been implemented on a large scale
only in California, Arizona, Texas and Florida. The water
from the largest rivers in the US is recycled 20 times before
About one fifth of the US residents live in areas where local
authority water plants are unable to meet Federal water
quality requirements. According to a recent estimate of the
United States Environmental Protection Agency, local authorities will have to invest no less than 300 billion dollars
over the next 20 years in renovating old, inefficient water
purification and waste water treatment plants, improving
water quality and serving a growing number of consumers.
KEMIRA STRENGTHENS ITS POSITION IN THE US WATER CHEMICALS MARKET
Kemira increased its holding in the US
based Kemiron from 15 to 60 per cent in
August 2003. Lawrence Hjersted, its
founder and former principle owner, will
continue as President and CEO.
Established in 1992, Kemiron rapidly
became the largest producer of iron coagulants in the US and offers the most comprehensive range of iron and aluminium
based coagulation chemicals on the market. Its clientele includes water purification and waste water treatment plants,
and industrial enterprises.
Kemiron commands 20 per cent of the
world's largest water chemicals market,
in which 3 to 5 per cent growth is expected over the next few years.
“Kemiron has given Kemira Kemwater
a firm foothold in the US. Our joint venture is in a position to give rise to new expertise that we shall also be able to
utilise globally,” says Kemwater Executive
Vice President Lennart Johansson.
36 Kemira 1/2004
“With Kemira's Pulp & Paper Chemicals
resources become more challenged, the
division, Kemiron can begin to offer a
market will continue to grow in North
comprehensive service to the US forest
America. One example in the US is the inindustry. Many interesting synergies exist
creased use of coagulants due to more
between these business operations.”
stringent regulations in the removal of arOne example is that Kemsenic and disinfection byprodiron will now be able to use
ucts in drinking water.”
Our joint
polymers made by Pulp & PaKemiron’s business depends
venture gives
per Chemicals in water proon providing added value for
cessing. At the same time
the customer, which means
rise to new
Kemiron's inorganic coagudeveloping new solutions and
expertise
lants will open up new prodapplications on a broad product opportunities for Pulp &
uct base. The enterprise has
Paper Chemicals in North America. The
patented its production processes, and
new products will provide opportunities
one of its best-known innovations is refor new, innovative solutions.
placement of the aluminium-based coag“North America has been a very roulants used for purifying drinking water
bust market area for water chemicals, but
with iron-based coagulants.
has actually trailed Europe in per capita
Kemiron's products and applications
consumption of these chemicals,” Hjerstare backed by a staff of 250 employees.
ed explains.
The enterprise operates in 14 districts
“As water treatment standards continthroughout the USA. Its Head Office is in
ue to become more stringent and water
Bartow, Florida.
523218.qxd
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Sivu 37
Horseshoe Falls on the
Canadian side of the
Niagara Falls is the most
breathtaking area.
While NGOs have applied steadily increasing pressure
on politicians over the years, the latter have been faced
with an impossible dilemma. The investments of local authority water plants in improved water quality and service
will have to be recouped from the consumer – and the voter
– in the form of higher water rates and taxes.
Part of the problem stems from the low price of water.
Areas enjoying a great deal of fresh water tend to use it
wastefully leaving too little for areas with shortages. The
price of water would have to rise considerably to have any
impact on consumption patterns. This was clear, for example, last summer when the price of water in Santa Fe, New
Mexico rose by 50 per cent because of a drought.
The need to improve water quality and equitable distribution are forces for change in the long term. This change
is already happening as increases in water prices have exceeded the general rate of inflation for some time now.
THE CHALLENGE OF PRODUCTIVITY
Efforts have been made to improve the productivity of local
authority water plants through privatisation. This has
saved politicians from the need to impose tax hikes. However, private businesses seeking to maximise their profits
have generally proved to be no more efficient than the local
authority operations that preceded them.
The American Water Works Association believes that
the privatisation of water plants will continue in the US re-
gardless of the problems that have arisen. Naturally, this
will not prevent local authority plants from improving their
operations and taking part in the competition. What is most
important is to effect an improvement in the quality of service and in cost-effectiveness in order to meet the future
challenges.
With an annual turnover of about 100 billion dollars, the
US water industry views a world of stricter legislation and
regulations as a major opportunity. Industry estimates suggest that in this situation the greatest business growth will
occur in enterprises with products and services that improve the productivity and cost-effectiveness of the
processes involved in water treatment and distribution.
To the consumer this productivity and cost-effectiveness
will translate into clean water at an affordable price. Marketing will have to begin from scratch, however, as in their
disappointment with poor water quality many consumers
have begun to purchase bottled drinking water.
Sources:
Peter J. Longo and David W. Yoskowitz: Water on the Great
Plains; Peter H. Gleick: Water in Crisis; Frits van der Leeden, Fred Troise and David Keith Todd: The Water Encyclopedia, Second Edition; U.S. Geological Survey - water.usgs.gov; American Water Works Association www.awwa.org
1/2004 Kemira 37
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The lucrative growth of
Pulp
Magazines can not be produced
without chemicals. Juhani Lindholm
says that one of Kemira’s goals is
aside from offering customers bulk
products, to offer them a whole
spectrum of special pigments.
38 Kemira 1/2004
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Paper
Chemicals
BY JORMA LEPPÄNEN PHOTOS BY JUKKA LEHTINEN
Kemira is one of the world's leading suppliers of chemicals for the forest industry.
This rapidly growing business is based on applications expertise and comprehensive service.
I
n July Kemira purchased the US-Canadian Vulcan pulp
and paper chemicals business, thereby becoming the
third largest supplier in North America. “We are aiming
to achieve a similar status in the global market,” says
Juhani Lindholm, Executive Vice President of Kemira’s
Pulp & Paper Chemicals unit.
Operations in North America will now generate nearly
half of the roughly 600 million euro annual turnover of
Kemira’s Pulp & Paper Chemicals. Lindholm feels that the
time is ripe to begin reinforcing the company's position in
Continental Europe, Asia and South America.
“The main aim of these acquisitions is to increase our
market coverage and product range. The acquisitions must
also make our overall operations more efficient.”
The turnover of Kemira Pulp & Paper Chemicals has
doubled since the year 2000. Lindholm explains that times
have been favourable for purchasers.
“It's a buyer's market at the moment. Only a few years
ago you had to pay the equivalent of two or three times the
annual turnover to buy a good business. We paid about half
of the annual turnover for Vulcan paper chemicals.”
Kemira has been a considerably more active purchaser
than its competitors. Lindholm feels that this sustained
rapid pace is justified.
“It's essential to enlarge business operations rapidly, as
our global customers are increasingly centralising their
purchasing on a few key suppliers with the capacity to provide a comprehensive service. In North America, for example, giant forest companies have begun to favour a single
sourcing philosophy whereby all orders for chemicals are
sent to a sole supplier.”
APPLICATIONS EXPERTISE GIVES A COMPETITIVE EDGE
You might think that such centralised ordering would deprive the forest industry of the benefits of competitive tendering. Lindholm emphasises, however, that competition
remains fierce even in single sourcing situations.
“Before any deal is signed the customer thoroughly examines the businesses of all of the bidding enterprises.”
Lindholm underlines that the customer is nowadays primarily interested in securing a comprehensive service
from a chemicals supplier, and expects this service to provide steadily improving added value as the years go by.
“By adding the chemicals and expertise of Vulcan to our
portfolio we shall be able to fill the role of sole supplier for
the wet end of the paper machine for an increasing number
of producers. This is an extremely demanding area of application for specialty chemicals.”
Kemira appoints customer service teams. Customer
processes are highly individual, and they require carefully
tailored solutions.
“Controlling deposits, for example, is a very service-intensive business.”
If application expertise is the most important element in
competitiveness, what role remains for production?
“In order to optimise quality and costs there are certain
fundamental products that we must manufacture in-house.
These include the polymers required in retention and
»
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the basic components of sizing. It turns
out, however, that we can purchase
some products for less than they cost to
manufacture in our own production
plants. On the other hand, we must
continue to enlarge our product range
through strategic acquisitions.”
Lindholm
describes
corporate
growth as a jigsaw puzzle in which the
geographical location and technology
of new acquisitions must be carefully
assessed. Kemira’s strategists specify
the positions of all enterprises on the
chart and set out the paths to follow in
pursuit of the overall objective.
“The aim is to achieve a single sourcing situation in each market area.”
The full significance of a strategic
acquisition often emerges, however,
only as the game progresses.
The production lines of special interest to Kemira also soon appear on the
chart. “We need to strengthen our position in surface sizing, to improve our
wet and dry strength technology, and to
do some homework in retention…”
Lindholm notes that even though
growth seems a simple matter in theory, it takes a great deal of effort and innovation for business operations to remain profitable.
“This is an industry in which profitability and organic growth go hand in
hand. We therefore invest heavily in
research and development, and we expect a similar attitude from the businesses that we acquire.”
40 Kemira 1/2004
ONE OF THE LATEST BUSINESS
VENTURES OF KEMIRA’S PULP &
PAPER CHEMICALS CENTRES ON
A PRODUCT THAT DATES BACK
TO THE 1920S
Partnership with the customer is
the cornerstone of the Pulp & Paper
Chemicals unit’s strategy. While the
partnership emerges naturally, when
it comes to solving problems at the
wet end of a paper machine, how are
the other production lines responding
to the challenge?
“In pulp operations we have historically focused on the bulk production
business. To be able to serve our customers properly, we will have to reinforce our specialty chemicals offering
for pulp production.”
“The same applies to coatings. Calcium sulphate business is going well,
and organic growth in this area is
healthy. We are developing special
grades of titanium dioxide and calcium carbonate. The aim is to offer our
customers a range of top quality specialty pigments that can be incorporated with bulk products.”
Environmental protection is also a
sector in which forest industry businesses are seeking a capable partner.
“There will be sustained demand for water treatment chemicals and hydrogen
peroxide as a substitute for chlorine in
bleaching. Water cycles cannot be
closed if there is chlorine in the water.”
It is interesting that one of the latest businesses for Pulp & Paper
Chemicals centres on the oldest product that Kemira has provided for the
forest industry, dating back to the
1920s.
“We provide sulphur recovery
plants for our customers and recycle
used sulphuric acid. This takes us into
an area that has historically been the
domain of consultants and equipment
manufacturers.”
Lindholm explains that the entire
forest industry cluster is now passing
through a period of rapid transition,
giving businesses an opportunity to
reposition themselves.
“There is a clear trend for forest industry enterprises to outsource an increasing proportion of their operations. This may give direction to the
strategy of Kemira’s Pulp & Paper
Chemicals unit in future years.”
Enlarging the service business
would be a natural move to be made at
the latest when Kemira has achieved
its growth targets in traditional pulp
and papermaking operations.
“Size would give us the capacity to
extend our business into other areas.
The chemicals business will eventually
reach the stage at which further
growth is barred by competition authorities,” Lindholm explains.
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forecast
RECOVERY SPREADS SLOWLY TO THE CHEMICAL INDUSTRY
T
he US economy grew rapidly durchemical industry enterprises, partly
ing the third quarter of 2003 and
because the weakened US dollar had a
global growth was otherwise
negative impact on the prices and
brisk. The underlying factors in the US
profitability of their products.
recovery are low interest rates, inBased on the poor third quarter, anacreased public expenditure and tax cuts.
lysts have reduced their estimates for
Doubts about how long the rise can be
growth in the chemical industry in 2004.
sustained have been expressed, howNaturally this could prove premature.
ever, as the US performance is largely
The prevailing consensus nevertheless
based on increased public borrowing.
seems to be that the European chemical
There are clearer signs of renewed
industry has no reason to expect espegrowth in the European
cially rapid growth in 2004.
Union
countries,
even
In the USA, too, until reThe chemical
though the weakened US
cently there have been few
industry
dollar is obstructing the ansigns of favourable develcontinues to
ticipated export-driven reopment in the chemical incovery. The currencies of
dustry, despite accelerating
enjoy greater
significant
countries
in
growth in the economy as a
success than
Southeast Asia are also
other branches whole. However, the manupegged to the US dollar,
facturing output has risen
of industry
and the countries are thererapidly in very recent
fore unlikely to provide
months, both in chemicals
more than limited support for any rise
and chemical products, and in plastics.
in exports from the euro zone.
US estimates suggest that this rapid
“If the dollar continues to fall, then
growth will continue in 2004.
exports may run into problems and reThe business tendency survey indicovery in the euro zone may slow
cates that autumn business outlook for
down,” was the view of economist
chemical industry enterprises in Finland
Pasi Ahde of the Chemical Industry
remain almost as poor as they were
Federation of Finland.
during the summer. Many economic
“However, we should not lay too
survey variables such as order books,
much emphasis on the weak US dollar.
exports and commodity prices, have
The falling dollar also reduces price
shown favourable rises since the sumpressures in the euro zone and enables
mer, however.
sustained low interest rates, which will
In terms of production output the
stimulate domestic demand and inchemical industry continues to enjoy
vestment.”
greater success than other branches of
The European chemical industry
industry. A slight growth in chemical
was forecast to grow by 1 to 2 per
industry output can be detected in the
cent in 2003. Despite the general ecomonth-to-month figures.
nomic recovery, growth in the chemical
BY KEMIRA MAGAZINE
industry in recent months has been so
feeble that even the lowest estimates
may not be realised. Performance in
the third quarter was poor for many
GROWTH OF GDP
%
8
6
4
2
0
-2
96/4 97/4
98/4
99/4
00/4
01/4
02/4 03/4
Source: Statistics Finland
Finland
EU
USA
2000=100
PRODUCTION OF CHEMICALS
AND CHEMICAL PRODUCTS
120
110
100
90
80
12/96 12/97 12/98 12/99 12/00 12/01 12/02 12/03
Source: Statistics Finland, Eurostat, ACC
(Last six months partly estimated)
lnd
PRODUCTION OF BASIC
CHEMICALS IN THE EU
105
100
95
90
85
80
12/96 12/97 12/98 12/99 12/00 12/01 12/02 12/03
Source: Eurostat
original volume index of production
12-month average
1/2004 Kemira 41
13:45
Sivu 42
for the titanium dioxide market
16.3.2004
Brighter outlook
523221.qxd
42 Kemira 1/2004
Clas Gripenberg believes in
the future of titanium dioxide
pigments.
523221.qxd
16.3.2004
13:45
Sivu 43
Signs of a brighter future await the titanium dioxide market. Kemira will win in the long run
for having a deliberate strategy focus on specialty products.
BY LEENA SERETIN PHOTO BY JUHA SALMINEN
T
he long sustained global economic recession has had a direct
impact on the titanium dioxide
market as this product is highly sensitive to market fluctuations. As a major manufacturer of titanium dioxide
pigments, Kemira's Pori plant takes
care to monitor global economic
progress and the outlook for other
players in the sector.
“The sustained difficult period can
be seen in the performance of our
competitors. According to our information, three of them are already
making poor or very poor earnings,”
says Clas Gripenberg, Vice President,
Sales and Marketing, titanium dioxide pigments.
“Nor do we live in a vacuum. The
global situation is also reflected in our
own results. However, we are still
making a profit and our operations
are firmly established.”
The normal cycle between recession and boom for titanium dioxide is
three years, which suggests that the
upswing is now due. Even though prediction is difficult, Gripenberg feels
that there are signs of a recovery
coming in 2004.
“Many factors upset the global balance, such as the war in Iraq and the
SARS epidemic in the Far East. There
are significant background pressures,
however. At least three competitors
have poor economic results, there is
no substitute for titanium dioxide
products, no significant new manufacturing capacity is being built and long
term consumption continues to grow.
“At some stage we shall reach a situation in which supply and demand
are balanced, but at a very high operating rate. This, in turn, cannot be sustained indefinitely. All of the indications seem to be in our favour.”
“Nominal capacity is now 130,000
tonnes per year. When the market begins to rise, as we are expecting to
happen in 2004, prices will increase.
Larger production volumes and higher prices will mean improved earnings.”
The poor performance of our competitors may offer new opportunities
for Kemira's titanium dioxide production.
“Some producers may withdraw
from the market altogether or partially for reasons of profitability. This is a
global business in which everything affects everything else. If some manufacturer bows out or closes a production plant, then this has a favourable
impact on the overall situation and
creates new opportunities for us,”
Gripenberg explains.
Kemira commands about three per
cent of the world's titanium dioxide
market, and about six per cent of the
corresponding market throughout Europe. Its share of the global market for
specialty products is considerably
larger than this, however.
About 75 per cent of Kemira’s titanium dioxide is sold in Europe, and
the remaining 25 per cent is shared
ment to the printing ink industry and
an increasing volume goes into specialty products such as cosmetics,
foodstuffs and pharmaceuticals.
“The strategy of focusing on specialty titanium dioxide products has
been a wise choice,” says Gripenberg
with satisfaction.
For an investment of about eight
million euros in Pori, the specialty
product capacity will be increased,
high quality standards will be assured
and further quality improvements effected.
“I think we can claim to be among
the top companies in the industry in
R&D. White titanium dioxide is a mature product nowadays and R&D is
mainly focusing on final steps of processing the pigment to influence the
properties of the end product. These
are tiny modifications, as opposed to
reinventing the wheel. Kemira has an
exceptionally strong R&D programme in Pori,” says Gripenberg
enthusiastically.
He envisages major opportunities
especially in the cosmetics and catalyst industries.
Fortunately for Kemira, its titani-
THE MAJOR OPPORTUNITIES FOR TITANIUM DIOXIDE PIGMENT
ARE IN THE COSMETICS AND CATALYST INDUSTRIES
equally between the Asian, North
American and Latin American markets. The major competitors are US
companies that also have production
plants on this side of the Atlantic.
Over the years Kemira has made its
way into specialised fields that are less
sensitive to market trends than, for example, the paints industry. Kemira
supplies considerable amounts of pig-
um dioxide production also employs
the sulphate method – many specialty products simply cannot be made
with the chloride method. This aspect also bears witness to a successful strategy.
“I personally believe that we shall
have very many opportunities and
that there are few limits to what can
be achieved.”
1/2004 Kemira 43
523219.qxd
16.3.2004
15:18
Sivu 2
New molecules bring
AWARD FOR
A team of Kemira scientists
has spent eight years developing metal ion binders at
the Group’s Espoo Research
Centre and Vaasa Bleaching
Laboratory. This dedicated
determination has resulted in
new, prize-winning products
for the forest industry.
BY HARRIET ÖSTER
PHOTO BY JUHA SALMINEN
T
he Kemira team has developed
environmentally friendlier chemicals to bind metal ions found in
the cellulose pulp used in papermaking. The new compounds degrade
more rapidly in biological waste water treatment and reduce nitrogen
loading in effluent. They enable recycling of waste water from the bleaching process. The result is reduced water consumption.
The chemical research work is
now approaching the commercialisation stage, with two molecule patents
already issued and 14 method patents
pending for a series of new compounds. An unusually extensive university research network has formed
around the project, with five doctoral
theses in progress and several other
student dissertations completed.
44 Kemira 1/2004
The work also won a Chemical Industry innovation prize of 10,000 euros
in November. The prize for successful
development work was awarded to
the entire project team: Ilkka Renvall,
Reijo Aksela, Aarto Parén, Jukka Jäkärä, Riitta Ilmoniemi, Iisa Walavaara,
Merja Jäntti, Helka Ljungberg, Ritva
Björkqvist and Reetta Puska.
Oxygen compounds such as hydrogen peroxide are increasingly preferred in pulp bleaching for environmental reasons. Peroxide bleaching is
especially common when manufactur-
523219.qxd
16.3.2004
15:18
Sivu 3
INNOVATION
ing pulp for high-grade glossy magazine paper known as LWC. Cellulose
pulp contains varying amounts of iron
and manganese, depending on the
type of wood used. These metal ions
interfere in the bleaching process by
decomposing the peroxide. When the
peroxide is decomposed by metal
ions, the quality of the fibres also suffers.
Therefore, iron and manganese
ions are washed away or deactivated
in the pulp bleaching processes by using chelating agents. The chelating
Members of the successful team (from left):
Ritva Björkqvist, Merja
Jäntti, Kari Kurki, Aarto
Parén, Ilkka Renvall,
Hannu Toivonen, Reijo
Aksela, Helga Ljungberg
and Iisa Walavaara.
agents can bind around the metal
ions, making them more water soluble
for washing. Also, when the metal ions
are wrapped up in the chelating
agent, they may no longer decompose
peroxide.
The chelating agents currently
used in industry are water soluble,
stable compounds that biodegrade either slowly or not at all. These compounds can remain harmful to the environment even after waste water
treatment, as they pass through the
purification process unchanged but
may later release toxic heavy metals
from the bottom sediment of natural
waters. Findings in Germany and elsewhere indicate that the concentration
of chelation agents in natural waters
has risen.
MISSION: TO BUILD A BIODEGRADABLE CHELATING AGENT
Ilkka Renvall was in charge of Kemira’s R&D project in bleaching and paper chemicals.
“Chelating agents have long been
used for other purposes,” he explains.
“For example, you find them in detergents, shampoo, photographic film development and mineral diet supplements.”
Back in 1995, when Renvall was given the job of studying biodegradable
chelating agents that could replace
the stable chemicals used in the forest
industry, there were no biodegradable
metal ion binding materials for any
purpose on the market.
»
1/2004 Kemira 45
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15:18
Sivu 4
There were three objectives. “Our
starting point was to develop new
chelating agents for bleaching wood
pulp with better biodegradability, containing less nitrogen than the substances used in industry, and with no
phosphate content,” explains principal scientist Reijo Aksela of Kemira's
Espoo Research Centre.
“The new substances also had to at
least match the effectiveness of existing substances as metal ion binders,”
he adds.
SOLUTION: BUILD IT FROM
NATURALLY OCCURRING ELEMENTS
“We conducted the first tests at the Espoo Research Centre in 1996,” Renvall
says.
“Soon after that we applied for and
were awarded a research grant from
the National Technology Agency of
Finland (Tekes). Subsequently we
took part in the Tekes ‘Marketing
Molecules’ research program from
1997 to 2000.
“We started by studying the chelating agents used in detergents and
then considered various candidates
for use in bleaching applications. The
non-biodegradable compounds used
in detergents are gradually being replaced with biodegradable substances.”
The first biodegradable chelating
agent introduced in detergents was
EDDS, a molecule comprising a hydrocarbon chain and two aspartic acid
groups. Aspartic acid is a naturally occurring amino acid. A molecule consisting of naturally occurring groups
generally biodegrades more rapidly
than an entirely synthetic substance.
Microbes can then exploit biologically
“familiar” structures when they attack
such chemicals.
Kemira’s researchers started by
developing molecules based on naturally occurring structures. They began by testing already known molecules and then began to exchange
46 Kemira 1/2004
their individual structural components, preferably in ways that also reduced the nitrogen content of the
molecule.
“We designed, prepared and tested
about a hundred different molecular
structures, including isomers,” Aksela
explains.
“One of the new structures that we
had developed was of a type displaying the desired behaviour.”
As a result of the research work
Kemira has experimented on an industrial scale with three new
biodegradable chelating agents. Two
of these are molecules of a previously
known structure for which a new ap-
are already in use. You have to be able
to demonstrate their benefits.”
The nitrogen content of the new
chelating agent is only one-third of
that contained in existing substances.
As it also biodegrades more effectively, bacteria in the waste water treatment plant can also use the nitrogen
in their metabolic processes. Virtually
none of the nitrogen from the
biodegradable substance remains in
the effluent from the plant. Stable
chelation agents, on the other hand,
pass straight though the treatment
process and their nitrogen content
counts towards the nitrogen discharges of the plant.
BRINGING A NEW MOLECULE TO THE MARKET IS A HISTORICAL
OCCASION: IN 2002, ONLY 29 NEW MOLECULES WORLDWIDE WERE
INTRODUCED ON THE MARKET, MOST OF THEM IN ASIA
plication has been found. Kemira has
applied for method patents covering
their use in the forest industry.
The third product is one of the
home-made molecules previously unknown in scientific literature. Kemira
has obtained a molecule patent for the
new compound. A second molecule
patent protects a group of derivatives
and close relatives to prevent competitors from directly exploiting Kemira’s research findings.
Bringing a new molecule to the
market is a historical occasion. For example in 2002, only 29 new molecules
worldwide were introduced on the
market, most of them in Asia.
“A product based on our own
patented molecule is nearing commercialisation, but no decision has yet
been made on this,” says Renvall.
“The question concerns whether
the right price will be paid for the
product – new products are always
more expensive than products that
If a decision is taken to commercialise the new product, then it will be
produced using a manufacturing
method developed by Kemira’s
Japanese partner. Renvall explains
that in order to minimise the investment risk the production will be started by toll manufacturing in some
third country.
Before building the plant it would
be necessary to test the product to European Union standards and secure
approval for its release on the market.
The tests for small-scale production
will take about a year, and at least a
further year of testing will be needed
for full-scale manufacturing.
The Nordic forest industry uses
about 10,000 tonnes of chelation agent
every year.
“I’m sure that we should be able to
secure a substantial percentage of
this market,” Renvall observes.
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16.3.2004
13:49
Sivu 1
The Israeli paint manufacturer Tambour Ltd has grown from
a local market leader into a substantial international player.
BY AR JA LIIKALA PHOTOS BY TAMBOUR
TAMBOUR GROWS
with pigments from Pori
I
n 1936 a group of Jewish émigrés
from Germany set up a small paint
business in Haifa, Israel; it later became known as Tambour Ltd. In the
1960s the plant was transferred from
Haifa to Acre.
By the 1970s Tambour Ltd had
grown into one of Israel’s most important paint manufacturers and also began trading beyond the country’s borders. In 1993 Tambour Ltd became a
listed company.
Nowadays the company manufactures more than 50 million litres of
paint annually. It makes more than
half of all paint sold in Israel. Tambour Ltd also imports about 1,200
tonnes of titanium dioxide pigment
annually from Kemira’s Pori plant for
use in its paints.
FOR INDUSTRY AND CONSUMERS
Tambour Ltd has two manufacturing
plants near Akko, Israel. The company’s 12,000-square-metre paint store is
one of the largest in the country and
houses about 3,000 types of paint.
Tambour Ltd manufactures paints
for both enterprises and consumers.
Its industrial paints are used for a
wide range of purposes, including engineering, automobile and road sign
painting, and fire-resistant surfaces.
The consumer range includes prod-
ucts suitable for both interior and exterior use. There is also a range of
high-quality paints for ships.
A growing proportion of Tambour’s
output now goes to export, for example to Ukraine, Uzbekistan, Kazakhstan, Turkey, Switzerland, Germany,
Poland and the Far East. The enterprise has three subsidiaries: Tzah,
which manufactures printing inks,
Serafon, which makes emulsions and
binders, and Tambour Ecology, which
operates in the waste water treatment
sector.
A MEMBER OF THE NOVA PAINT CLUB
Tambour Ltd belongs to the international Nova Paint Club of 15 independent paint manufacturers operating in
various countries. The syndicate includes a total of 57 production plants
around the globe, and its activities focus explicitly on the exchange of technical data and technology, and on
sharing experience and information
among the members.
The Nova Paint Club was established in 1983. This cooperation has improved competitiveness, reduced costs
and enhanced customer service in its
member enterprises. Each member of
Nova, including Tambour Ltd, may be
considered an important player on the
international paint market.
1/2004 Kemira 47