DETROIT—Chem-Trend L.P. has set the foundation for growth with a number of expansions recently coming online.
The firm has added production in Brazil and India to go along with a new research and development center in China, projects initially announced in 2014 that are now operational. President and CEO Devanir Moraes said this, along with the firm's solid financial performance, contributed to a strong 2015.
“It was a good year overall for Chem-Trend, both in terms of growth performance and overall profitability, which aligned with previous years,” Moraes said. “It was an especially important year because we concluded some major investments for the business. Long ago we identified China, India and Brazil as three major markets where we wanted to have major brick-and-mortar type of investment.”
Chem-Trend is a member of the Freudenberg Group, producing release agents for seven core industry segments—polyurethane, die-casting, rubber (non-tire), tire, composites, thermoplastics and wood composites. Most of the firm's business consists of rubber-related products. The company has sales offices in 17 countries with manufacturing in Sao Palo; Munich and Hamburg, Germany; Qingpu, China; Hongseong, South Korea; Mysore, India; and Howell, Mich., its global headquarters.
“We have equipped ourselves manufacturing and R&D wise pretty much evenly across the seven core industry segments,” Moraes said. “The focus of these facilities cuts across pretty much all industry segments.”
The firm moved into a greenfield facility in Brazil right next door to its Sao Palo operations. Moraes said the new building is two and a half times the size of the former facility.
In China, the company made multiple stages of investments that culminated into a new R&D facility. Moraes said initially Chem-Trend will adapt products for the Chinese market and eventually make products from scratch for niche applications within the Chinese market, such as electronic castings for laptops, tablets and smart phones, or in the sporting goods areas of composites.
In India, the first phase of the new manufacturing and R&D facility was completed in late 2015. Moraes said the next phase will be concluded in the spring. The executive said the firm already had sales well structured in the region, but needed manufacturing and development to keep up with the growth.
Each expansion manufactures products across all seven of the group segments and utilizes synergies within the Freudenberg Group, co-housing with other group companies in Brazil and India. Moraes said by leveraging its placement within the Freudenberg Group, the company was able to afford a higher level of infrastructure investment.
He added that each of these projects allows Chem-Trend to add jobs proportionally. “All three projects are off to a great start,” Moraes said. “We were serving these markets with products being exported from the U.S. or Germany before some of these projects in an OK way, no problems at all. But this investment allows us to replicate our business model of being intimately close to customers and being able to respond extremely fast. That's part of what we need to do to add value and quickly solve problems in the industry.”
Focus on growth
Moraes said Chem-Trend is off to a very good start in 2016.
“Organic growth is significantly exceeding our operative plan,” he said. “So far a great, great start to the year. We are involved in some acquisition projects. The Freudenberg Group supports both organic and acquisition investments for Chem-Trend, and has been supporting us for awhile.”
The executive, however, would not address acquisitions Chem-Trend was pursuing.
Moraes added that Chem-Trend's manufacturing footprint is solid and does not foresee the firm starting up in another country, but rather focusing on investments in its current facilities. However, the firm could enhance its sales footprint with some new legal entities—Moraes mentioned Romania and Russia as possible locations.
As for North America, John Lundin, president of Chem-Trend North America, said the company's performance in the region was solid for 2015, adding that Mexico has become a key market for the firm with all of the country's automotive growth.
“Mexico is booming with respect to automotive,” Lundin said. “When I get on a plane heading to Mexico or inside of Mexico, it's evident that folks from Japan and Germany are flocking there as this begins to build. Our response to that is that we're really well-suited with a global sales organization in Queretaro building our technical service staff and our sales folks so that we can continue to operate in the business model that we have here in the U.S.”
The firm does not have manufacturing in Mexico, but it operates a logistics center in Queretaro. Moraes said customers in almost all industry segments can send rubber that they're working with to Chem-Trend's Howell facility for further development. “We can respond very, very well from Michigan using developing technology there,” Lundin said.