Specialty chemicals maker Chemtura Corp. took the wraps off its new China production facility Oct. 31, its largest single investment globally since the company was formed in 2005, as it outlined strategies to try to dramatically boost Asia-Pacific sales.
The $95 million facility in Nantong, Jiangsu province, is seen as a key part of the company's target of boosting Asia-Pacific sales from 18 percent of revenues now to 33 percent by 2018, company executives said.
Nantong "is our biggest single investment since Chemtura was formed in 2005 and it is really the centerpiece of our overall manufacturing plans for Asia Pacific," said Craig Rogerson, chairman, president and CEO, during an Oct. 31 interview with Plastics News in Nantong. "We look at this site as an opportunity to grow."
Chemtura, which employs 4,000 and had 2012 sales of $2.6 billion, designed Nantong with the intent of expansion, and will make a decision within the next 12 months whether to purchase an empty plot of land next to the current site that could double the size of the facility, he said.
Rogerson said that the company's goal of increasing fast-growing markets to up to 50 percent of its total market within five years has not gone as well as hoped so far.
"We're a couple of years into that and haven't made much progress," he said. "Part of the reason is that we sell a lot of products in the electronics market, [like] flame-retardants, and electronics has been soft since basically 2010. So that's been a challenge."
But, he adds, he has no plans to change his targets: "If we're going to grow then we need to grow where the customers are growing the fastest. And that's here."
"The challenge we have is continuing to be innovative and differentiate ourselves from the competition," he said. "We've been pretty good at that traditionally, we just have to prove that we're good at it here."
Substitution will be a key part of the company's strategy for penetration in the Asia-Pacific market, Rogerson said.
Chemtura plans to bring mid-level products to the market and then later introduce more high-level innovative products that are unavailable from local competitors, he said: "You come in and get in and then you sell up, that's the strategy."
The plant will have four production units, including grease, refrigerator oil and finished fluids, and urethane. The fourth unit has yet to be determined, but Rogerson said "the most likely fourth business on this site is organic metallic. That would most likely be a storage or filling facility."
It will help the company address Chinese customer concerns about supply chains, said Chet Cross, executive vice president for supply chain and operations.
"Now one issue that our customers have in China is they're really cautious about the long supply chain," he said. "If we have this filling station and supply hub, you can cut that time to a matter of days vs. weeks. That's much more conducive to our customer base here in China."
"We've looked at the economics of having the refill station here," he said. "'We have space here to do that and it would be relatively cost-effective. It would really help us on our supply chain."
During a tour of the facility with suppliers and government officials, while construction workers continued to work on the 100,000-square-meter site, Nantong site manager Niu Limin said that first phase of the facility will finish in 2015, and cover about two-thirds of the site. The second phase will contain more plastics-related products.
In addition to Nantong, Chemtura has regional headquarters and a shared services center in Shanghai, an application development center in Nanjing and facilities in Nanjing, Korea, and Taiwan.