North American distributors watch the market cautiously

The worst period of economic recession has passed and North American chemical distributors are currently waiting for a signal of recovery. After summing up strategies and analyzing future challenges, Chris Yan, chairman of the American Chemical Distributors Association (NACD), said: “The industry is filled with cautious optimism.” North American chemical distributors have adopted a flexible strategy over the past year. Responding to the crisis, and future public offerings are expected to activate the distribution and M&A market.
Yann said that due to the active "downsizing" campaign, NACD members have stood the test of the crisis. However, “only when the paint or electronic market starts to pick up, does it indicate a real recovery of the economy. When the downstream manufacturers begin to produce more products, our sales will grow.”
Robert Cole, President of Ashland Distribution, USA, said: "The life sciences and energy markets have also declined, but they have been more stable than other areas. General-purpose products are facing the greatest challenge."
Different approaches to survival Mart Formont, consultant to a consulting firm in Switzerland, said that cutting costs, reducing inventory, and laying off staff are the most common distributor survival rules.
Terry Hill, senior vice president and chief commercial officer of U.S. distribution company Univar, said: “The economic recession is also an opportunity. It has enabled us to help suppliers and customers better cope with the plight, and they have Differentiated strategic dialogue. According to reports, the economic downturn forced Univille to make an unusual response. Due to the diversity of industries faced by distributors, the company has increased its technical support, such as resetting experts and food science researchers. “Diversified operations and additional technical support are the result of the dialogue between Univar and our customers. We started doing this during the economic crisis of 2001-2002. When we saw the disappearance of the traditional manufacturing base, we started Looking for an 'eternal youth' industry."
Carlo Picau, president of US Chemicals, said that under the protection of cost control, fund management, and diversification, we performed well during the economic downturn and we also increased our advertising budget to obtain new customers. And suppliers. She thinks: “The slowdown in economic growth is a warning to the company and reminds us to pay attention to expenditures and tightening loans. In times of economic prosperity, these are often easily overlooked.” Piccao pointed out that the key to coping with the economic downturn is The company's differentiated special services. She said: "In order to meet customer requirements for product shipments, special packaging, and import from overseas, our employees' requirements are more stringent, which in turn saves customers time and money." At present, the company is planning to increase marketing and Business operations staff.
Eugene Manzano, executive director of the Mexican distributor Pochteca, said that although Mexico’s GDP forecast is down 6% this year, they will also try to maintain a 12.5% ​​sales growth, thanks to diversification. , Good profit management and focus on profitable customer groups, products and market segments.
IPO appeared around the future mergers and acquisitions
In the first half of 2010, BC Partners, an international financial investment agency, planned for the initial public offering (IPO) of Germany's Brentag (North America's Brentage parent company). It is estimated that the raised funds will reach US$2.2 billion, which is the largest in German history. . A senior consultant said: "This is good for other equity investors in the distribution industry. They are likely to follow suit, and this is exactly the success of the Brenttag IPO." However, he cautioned: "If the cloth Lontag’s IPO failure will trap some distributors and may hinder large-scale mergers and acquisitions in the short term.”
Formont pointed out that the uncertainty of the credit crunch and the withdrawal of private equity has stifled mergers and acquisitions in chemical distribution in 2009. "From a historical point of view, mergers and acquisitions in the field of chemical distribution are all external funds, and if there is no IPO way to obtain funds, the distributor M&A market will remain weak."
In the minds of distributors in North America, profitability comes first. In this regard, Yann pointed out: "The government's regulation of the distribution industry is also very worthy of attention." Distributors must deal with the relationship with many major federal agencies, such as the Environmental Protection Agency, Occupational Safety and Health Administration, traffic Departments and various national security agencies also have to deal with state and local government agencies.
Manzano also pointed out: "Distribution of chemicals has become the most regulated industry." In the United States, in addition to the credit crunch and the slow economic recovery, the main challenge for chemical distributors in 2010 will be increasing regulations.

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