Big in specialitiesBrenntag has all but completed its transition to being more of a speciality player. Andrew Warmington met the top management of its UK arm

Supply Chain Management

www.specchemonline.com32 Speciality Chemicals Magazine March 2016

“There is still a perception of Brenntag as a large company, a go-to for industrial chemicals and chlor-alkali,”

says Russel Argo, president of Brenntag UK & Ireland. This is not surprising, he admits, because in the UK, Europe and worldwide, Brenntag is the largest distributor of chemicals of all kinds. It is active across Europe, North and Latin America and the Asia-Pacific, with sales topping €10 billion in 2014.

Brenntag UK & Ireland is also a highly multifaceted operation in its own right. Active in most major industries served by chemical distribution, it has 22 distribution and manufacturing sites, nearly 900 employees and a fleet of over 100 vehicles. 18 new units have been added recently, supporting the bulk liquid chemical business, both directly to customers and servicing its own distribution sites and general packed goods distribution.

Argo’s own career encapsulates the company’s recent growth and diversity. He joined Hays Chemicals, a major chlor-alkali manufacturer, in 2001. Following the management buy-out that created Albion Chemicals, he worked in the sales and distribution network, was briefly with the solvents business and trained as an assistant general manager at several sites.

He then became general manager at the Lutterworth site when Brenntag acquired Albion in 2006 and merged their operations. Later still, he became a regional manager in the south of England, then supply chain director and business services director, taking on his present role in 2013.

Similarly, the company’s operations director Fred Worle had joined Hays Chemicals in 1999 as regional manager for the South-West. The role soon extended to all operations in the South and East as regional director. Worle moved to his current role in 2007.

The perception of Brenntag as a commodity player is perhaps more pronounced in the UK than other European markets because of Hays’ manufacturing heritage and Brenntag’s enduring strength in inorganic chemicals, despite its increasing activity in specialities.

“We had such a huge market share in packed inorganics it could only go sideways at best. Now the major focus is to be seen as a go-to full-line speciality and commodity chemical supplier that also offers customer support and technical services,” Argo says.

This strategy, he adds, has been operating for at least ten years but took a major step forward from 2012, following the acquisition of Multisol, which enabled Brenntag UK to offer technical services in performance fluids as well as distribution solvents. Since then, the focus has been mainly on organic growth and the company has taken on 17 new speciality chemical distribution agreements, all dedicated to specific portfolios in specific markets.

2013 also saw the launch of a European-scale reorganisation of sales called ‘One Brenntag’. In essence, the project’s result is that today all departments present the same face to customers and suppliers. This was particularly demanded by multinationals who wanted a single point of

contact, the certainty that Brenntag in Europe could deliver on a pan-European scale and more service than simple logistics and who wanted the firm to be more industry-focused and offer more technical expertise.

This was a big step change and was not immediately welcomed by all employees. “There were six months of transition, it took a lot of internal communication, roadshows, training and talking to employees and customers, but by the end of 2015, the process was essentially complete,” Argo says.

Formerly Brenntag UK & Ireland, had been divided into three arms: Distribution, Inorganics and Brenntag Colours. The sub-division is now done by end-use market, with account managers focused on specific sub-sectors within each of them:

Life Sciences (comprising animal nutrition, pharmaceuticals, food and cosmetics) Environmental (comprising AdBlue, a

high-purity 32.5% aqueous urea solution for exhaust gas treatment, leisure (i.e. swimming pools) and water treatment, which has a significant overlap with leisure) Material Sciences (comprising cleaning,

coatings & construction, industrial sales & services, oil & gas, polymers, pulp & paper, rubber and solvents)

In Material Sciences, some regional account managers continue to work alongside the account managers on a geographical basis, supported by a business development team of technical specialists at the head office near Leeds. This was done, Argo says, partly because the level of regulation in the Life Sciences division is similar, whereas significant differences exist in the industries covered by Material Sciences, and partly because customers asked for it.

“This approach has enabled us to tackle the impression of Brenntag being a generalist and helped us to shape the teams to focus on specific industries, from business development to technical marketing and account managers,” Argo says. “It has been an exciting time generally because there has been a lot of investment to expand an already strong set-up and growth in our developing sectors in 2014-15 was good.”

Chlor-alkali and industial chemicals remain a significant and important part of the business in the UK and Ireland. In some cases, they give Brenntag an entry into certain areas, like effluent treatment. Recently, the company concluded a pan-European deal with BASF for flocculant polymers, enabling its specialists to work with BASF’s technologists and be seen as a total service provider.

Brenntag UK has added 18 new vehicles to its fleet

Brenntag UK & Ireland has invested heavily to expand its speciality chemicals capabilities in recent years. The food industry has been the biggest target over the past 18 months. The team has doubled in size since 2012, with plans to grow it further in 2016-17. Pharma – where Brenntag supplies excipients – and cosmetics are both smaller markets, but this team has also doubled since 2012, with a new business development manager joining in February.

“In Material Sciences, we are number one in some areas, not in others, but our intention is to be number one in all the fields we operate in,” Argo says. “This will mean increasing team numbers, bolstering the technical sales and marketing team and presenting these capabilities to potential suppliers such that they will want to work with us.”

Marketing is becoming a major focus for the first time, because of the need to change perceptions and to communicate the aspects of capabilities that the company already did but did not communicate about. This has included the recruitment of Natalia McDonagh, formerly of Cornelius and Surfachem, as head of marketing, but also Argo and other senior managers going to the shop floor and getting input from employees about what was and was not working.

The move towards specialities is also reflected in the 18 newly acquired additional trucks. As well as safety investments like vehicle telematics, metered bulk tankers and enhancements to tail lifts and load security that have built-in flexibility, “allowing us to address customers increasing need for short-term ordering and reduced shipment size”, Worle says. Although Brenntag UK also uses third party logistics, “we are in control of our own destiny”.

The company has embarked on a number of investments in the speciality arena and has planned various others for the next 18 months. The aim of all of them is the same, Argo continues, “to be a real solution provider – by which I mean addressing whatever challenge our customers are faced with, be it cost structure, getting the blend correct, stocking and storing”.

At Lutterworth, a Material Science division site in the heart of England where materials are stored to be shipped on to the internal distribution network or direct to customers, the speciality chemical warehousing facility is to be extended once a newly acquired building is upgraded. This ties in with a chlor-alkali and industrial chemicals facility that was enhanced in 2013-14.

In addition, this year will see the laboratory facility at Lutterworth upgraded and a new large-scale industrial blending facility built to serve the Material Science and AdBlue sectors. This capability, says Worle, “will include very significant raw material and finished products storage as well as extensive equipment dedicated to solutionising and multi-component blends”.

A major upgrade of the Brenntag Blending Solutions facility at Bradford has just been commissioned. This site focuses on high value,

low volume, technically complex lots. In addition, a new application laboratory will be completed by the end of 2016. This ties in with the BASF deal and two former BASF employees are transerring there, enabling the site to work on water treatment product development

In the Life Sciences division, a new hub warehouse will be built in Bristol to service the south-west region and another in the Greenwich area of London will be expanded. This is the largest warehouse the company has other than the central one at the Widnes hub site.

A new GMP filling facility will be built at the Scunthorpe site by the end of the year for solvents going into the pharmaceutical and cosmetics sectors. This, Worle says, complements the existing GMP-accredited laboratory and dedicated filling systems for pharmaceutical customers in Germany and the cosmetics formulation and development laboratory in France.

Meanwhile construction will begin in April on a new food application laboratory at Widnes. “We never had a large-scale food application laboratory before, we had to rely on facilities in continental Europe,” Argo says. The laboratory will feature formulation, product and stability testing and covering both flavour and ingredient development, once again with a view to offering added value rather than just being a product supplier.

Worle adds: “We are making significant investments in our warehousing and associated infrastructure to ensure compliance with even the most exacting of requirements whether they be related to third party accreditations or commercial demands. We have used technology from the food processing and pharmaceutical sectors to adapt our warehouses, creating high quality, clean space within our existing network.”

Following on from a rebuild and upgrade of the tank farm in 2014-15, there will also be further investments at the upper tier COMAH site in Manchester to comply with new regulations. Here and at Lutterworth, Scunthorpe and Bristol, office upgrades are under way or planned. All of these sites also have clean rooms or plans for them.

Finally, the company will also move out from its current head offices to a new facility about 8 km away by the end of the year. “We are running out of space because of the expansion in personnel, mainly in the Life Science and

Material Science businesses,” Argo says. “Currently there are about 80 people here on any given day and we will need about 50% more space, as well as a centralised training facility for all UK and Ireland employees.”

One other key trend is towards third party accreditations, a vital if complex and costly undertaking for a firm supplying so many different industries. Internally, the company has developed its own supplier approval system, requiring mandatory food certification, audit reports, production details and product testing for food additives and ingredients supplied via its network in Europe.

Externally, FEMAS accreditations haven been achieved for all Brenntag UK & Ireland sites during the last 18 months, followed by certification to the British Retail Consortium (BRC) Global Standard for Storage & Distribution, which covers the storage, distribution and wholesaling of ambient, packaged, food grade ingredients, additives and processing aids.

“The Widnes site has maintained its A Grade certification against the BRC7 Global Standard since 2014. Lutterworth, London, Glasgow, Bristol and Belfast have now received BRC accreditation, and it is our intention to have all of the Brenntag UK & Ireland sites BRC-certified by the end of 2016,” Worle says. In addition, all of the sites have been assessed for ESAD II.

After two years of mainly organic growth, Argo also envisages acquisition playing a bigger role going forward. Although any deals require approval from the board in Germany, this is a key part of his role as president.

“They could be geographic, in areas where we could be stronger – Ireland, perhaps – or bolt-on additions to our capabilities which can be done more effectively than through organic growth. We are looking at the Life Science division in general, water treatment and also polymers and rubber – wherever a step change is required to get us to where we want to be.”

Supply Chain Management

Follow us on Twitter www.twitter.com/specchemonline March 2016 Speciality Chemicals Magazine 33

Mark StaffordMarketing ExecutiveBrenntag UK Ltd.Tel: +44 113 387 9200E-mail: mark.stafford@brenntag.co.ukWebsite: www. brenntag.co.uk

Contact

A GMP filling station facility is to be added at the Scunthorpe site