Moore carries forward Hexpol's vision to be market leader

BEACHWOOD, Ohio—The virtues that define a well-run business—experience, flexibility, consistency and the willingness to change tack—are embodied in Gary Moore, the soft-spoken, newly appointed CEO and president of Hexpol Compounding Americas.

Moore, a 15-year veteran of Hexpol Group, the Malmo, Sweden-based parent company to both the compounding segment and Hexpol Engineered Products, took the position in October, succeeding Ken Bloom.

He takes over a 1,751-person segment that comprised about 55 percent of Hexpol Group's $2.1 billion in 2022 net sales.

"Hexpol's vision is to be a market leader, ranking number one or two, in selected technological or geographical segments to generate growth and shareholder value," Moore told Rubber News Feb. 8 at the AC Marriott in Beachwood. "We do this by being decentralized and highly coordinated."

Moore, based in Southlake, Texas, was in Northeast Ohio to visit the compounder's facilities in Burton.

The retiring Bloom, head of Compounding Americas since the beginning of 2020, will remain as a senior adviser at Hexpol until the end of the first quarter, the company said.

"Ken is truly an inspirational leader and steadied the ship through very turbulent times," Moore said. "First (there was) COVID, followed by unprecedented market conditions of raw material inflation and scarcity.

"It is an honor to accept this role, and I would like to thank Ken for all of his guidance over the last three years. I look forward to expanding on Ken's achievements moving forward."

Moore already has put his stamp on the company as HCA undertakes a major restructuring, transitioning from a regional philosophy to a market-centric tack.

It is indicative of the flexibility and consistency that Moore brings to the table.

"I would say that we at Hexpol are working toward operational excellence through standardization," Moore said. "We are a decentralized company, but highly coordinated. We strive to be better than we were the day before.

"Our objective is to be the supplier of choice within the markets we serve."

Within HCA, those markets now include, in an even one-third apiece, automotive (weather strip, air and fluid management and NVH), industrial (wire and cable, architectural sealing and highway construction) and specialty compounds (water management and oil and gas).

"We want to provide consistency to the customer," Moore said. "We now have people who are a 'master of one' rather than a jack-of-all-trades structure. Again, we are decentralized but highly coordinated—and we do not just want to say that. We want to be intentional about it, have accountability for that.

"This, overall, provides a better customer experience."

Moore joined Avon Rubber (now Avon Protection P.L.C.) as a technical assistant out of university in the United Kingdom in 1993. He progressed to process engineer before moving to vendor development, strategic purchasing engineer and finally strategic sourcing manager before joining Hexpol in January 2007.

His relationship with Hexpol, however, stretches back to 2002 when Avon Rubber, via its automotive and tire division, outsourced some of its compounding to Hexpol.

Ultimately, Moore relocated from England to Belgium with Hexpol as global purchasing manager through May 2014.

At that point he moved to his current home, which sits about two hours from Dallas-Fort Worth, an airport he has come to know well in his travels.

Through June 2019, Moore worked as chief procurement officer for Hexpol, where he witnessed "some inconsistencies"—and the seeds of restructuring were planted.

"My role was to take a strategic focus on raw material procurement," Moore said. "We originally were broken down into regions. As chief procurement officer, this was an opportunity to see how the company developed materials with customers. My focus was entirely regional."

At the time, Hexpol had four facilities in Europe, one in Canada and one in the U.S.

"This quickly became nine total (compounding sites), including greenfields in Mexico and China," Moore said.

Following the acquisition of the Ken Bloom-led Preferred Compounding in July 2019, Moore transitioned to commercial roles as director of sales and as chief commercial officer for Hexpol.

Looking back, he said his time at Trowbridge Technical College, Brunel University in Uxbridge (in London) and the University West of England in Bristol has served him well as he ascends on his career path.

"Absolutely it fits today," Moore said. "All of that background ... it took a long toll. I took the long path, as everything associated with that training was technical."

Moore added he could have remained with Avon, working in purchasing.

"I got the offer letter from Hexpol, and there was no future in purchasing for me," he said. "I knew nothing about it. And (Hexpol's) offer was too good to refuse. This was exactly what I wanted to do with my career."

As Moore analyzed supply chain similarities from his procurement perch at Hexpol, a stark contrast stood out in the company's business structure.

Hexpol's upstream suppliers were market-driven, as were downstream customers. Hexpol, somewhere in the middle, was regionally-focused, in the U.S., Europe and Asia.

It seemed to make sense, Moore said, to standardize Hexpol both in its software processing systems and by topical market—the aforementioned automotive, industrial and specialty segments.

"It just made sense," he said.

Hexpol began developing best practices at all its locations with standardized equipment and planning production processes, so that the software "harmonized with the business on a commercial level."

"There was far too much regionalization," Moore said. "There were silos or pockets that did their best to service customers, but customers were seeing inconsistencies.

"By no means are we perfect, but we need to do things better than we did them the day before. The customer should not be impeded by our internal challenges—and now we will ultimately provide a better experience for them."

As part of the new look at HCA, Bruce Wynd has been promoted from director of automotive to chief commercial officer.

Under Wynd will be four commercial directors who are responsible for automotive, specialty, industrial and silicone/performance additives markets.

Saul Reyes will succeed Wynd as director of automotive; Chris Airhart (from Safety Clean/Ergon) will continue as director of industrial; Chris Poirier will continue to direct the silicone and additives business; and Brad Donat (from Cabot Corp.) will serve as director of specialty markets.

The specialty division includes outsourced contracts from Goodyear and Bridgestone, "a way to bolster volume in the specialty industry," Moore said.

While Moore noted that demand for custom mixes in the medical industry has not subsided—an industry that "almost seems recession-proof," Moore said—demand for housing products (within HCA's industrial segment) has declined.

"That demand has subsided," Moore said. "That won't change through 2023. We will see a suppressed market."

Demand is strong once again in automotive and auto-related components, industries that are projected to grow between 5 and 10 percent in 2023 over 2022.

"Labor is still an issue, so parts-makers are likely to prioritize fabrication," Moore said.

Growth continues in Mexico, Moore said, as Asian and European Union parts makers move fabrication capacity there.

"EV production capacity is also growing in North America," Moore said. "However, the 2023 outlook is mixed. We are looking at a small decline in industrial production. Housing starts are down significantly versus 2022, with only a moderate increase in 2024. And U.S. (oil) rig counts are up 35 percent year-over-year."

While the business philosophy of a company is critical, partnerships certainly help in mitigating supply chain challenges.

And contrary to some thought in the custom mixing world, those problems have not abated completely, Moore said.

In fact, Moore argued that the rubber compounding industry has been one of the hardest hit.

"The short answer is no, we are not done with the supply chain nightmare yet," he said. "But we have a global reach, and that really does help. The reality is we have strong, strategic upstream partnerships.

"But if you have 15 of 16 ingredients, you still cannot make your compound. You need 16 of 16. So, it is very challenging."

In addition to those macro-problems, force majeures at Zeon Chemical and Lion Elastomer that should last at least until early March (for Lion) and later this year (for Zeon) have impeded upstream supply.

"Challenges still exist there, for sure," Moore said.

He added that costs have abated "slightly" from a freight standpoint, though there still are challenges in timing and availability.

"There are raw material challenges, yes, and there are personnel challenges as well," Moore said. "No other industry has seen the vast majority of issues as the compounding world."

There is light at the bottom of the Battaglia mixer, however.

From a commodities standpoint, there actually has been somewhat of a price reduction, and HCA works with just about every polymer, from natural rubber to FKMs.

"Inflation has somewhat subsided, especially with commodity products. We are seeing a reduction in price there. However, inflation is still rife with specialty products," Moore said. "Things are still very much challenged in the specialties market, from HNBR to FKMs."

The problem with FKMs is the multi-year qualification process, Moore said.

"So, if you haven't started now, it's too late," he said. "And customers are risk-averse in choosing alternative polymers or making a change.

"But you better qualify an alternative or have a contingency plan. The challenge with FKMs is that producers have a competing market—the FKM market is competing with the EV market (for some of the same upstream materials). If you are shoehorned or just focus on one product, you're going to have some challenges."

The war being waged by Russia in Ukraine has presented its own difficulties in Europe, Moore said.

"I would just say that we are invested heavily in technical processing," he said. "We can go from cradle to grave with products in many cases."

In other cases, Moore said, Hexpol may suggest alternatives if a customer is seeking a lower carbon footprint.

"They may come to us and ask us to make Nana's cake, which has been made the same way for years," Moore said. "Maybe she used eggs from this farm and sourced flour from a specific place.

"But Nana's cake is really good, right, and they want that cake. This is where we might suggest something with less risk. The customer says these (ingredients) need to come from the Netherlands, Russia or China, and perhaps we suggest a domestic carbon black or a domestic polymer."

The notion of proximity-to-customer, embodied in Hexpol's decentralized structure, can help a customer's CO2 footprint decrease.

"This is if you want to go with Hexpol proprietary stuff," Moore said.

Hexpol itself is eying a 75-percent emissions reduction by 2025.

"Hexpol is active in all market segments, and we certainly see growth potential in EV and sustainability/climate change initiatives. The Inflation Reduction Act of 2022 makes the single largest investment in climate and energy in American history.

"This should provide a benefit for Hexpol in automotive, which is seeking greener options everywhere."

Moore noted that while Hexpol is focused on Scopes 1 and 2 for its emissions (measurements of production GHGs and energy-generating fossil fuels), the Scope 3 emissions (supply chain emissions for freight and transport) has to be part of the equation, Moore said.

"We are already seeing reductions in Scope 1 and Scope 2," he said. "It may not be negative, but it's better than it was the day before. It is going to be a long journey to sustainability.

"Right now we have a lot of conflicting information, and we have to caution against greenwashing the results. We need a line in the sand. We should be reporting all scopes. If anyone says they are net zero, be skeptical. But our ultimate goal is to go net zero from receiving dock to external dock."

As Hexpol Compounding Americas moves through the morass of supply chain, sustainability and inflationary challenges, Moore said the company will lean on what it does best: improvising and overcoming.

And he will do what he does best, leading "with a balance of participation and authority."

"I think it is important to demonstrate that you can lead and make decisions," he said. "However, we have a great team at Hexpol and ... it's important to listen and involve (people) in the decision-making process.

"As a larger company, we have a global reach and high demands. That can leverage our position—and we have a number of strategic suppliers that support our needs."