Proactive in all phases: Efficiency in freight, right automotive platforms, wire and cable critical for Hexpol

BURTON, Ohio—Hexpol Compounding Americas continues its journey toward uniformity in operations and logistics, a deliberate approach that has resulted in faster, more efficient delivery times and a reduction in CO2 emissions.

North America's largest custom mixer says it will continue to work toward sustainable solutions and a shorter, more manageable supply chain, even as the environmental regulatory landscape and automotive markets shift once again under a new administration.

"Gone are the days of having small, frequent deliveries, as this seriously impacts the environment," Gary Moore, CEO and president of HCA, told Rubber News Feb. 4. "Hexpol recognizes that environmental responsibility is a precondition for the survival and prosperity of human beings.

"The overall aim is that our impact on the environment, related to our activities, products and services, should be minimized. We therefore support a proactive approach to environmental challenges."

Amongst a range of topics, Moore highlighted HCA's 10-year partnership with Orrville, Ohio-based Jarrett Logistics Systems as evidence of HCA's environmental compass.

"We have a quarterly review with them," Moore said. "They might say, 'You're moving this compound from here to there, but wouldn't it be more beneficial to move it from there to there?'

"They breed a bit of common sense into your business as a third-party contractor. We use these ideas as a platform to make these (logistical) maneuvers, and they allow us to be a lot more responsible."

Internal efficiencies are as critical as logistics, Moore said, noting that HCA's CapEx spending is set at $24.4 million for 2025.

This includes machinery and equipment, which HCA has upgraded year-over-year. The company will implement $15 million in ERP and MES software and hardware upgrades this year across all 14 North American locations.

"We continue to make great progress in our journey of operational excellence through standardization," Moore said. "This not only benefits Hexpol, but also our customers that will have a single interface with all 14 locations."

Moore added that reducing the company's environmental impact is "the right thing to do."

"Supply chains need to get shorter," he said. "When we are severely challenged, the constraints within the supply network break down. It's the traffic jam effect.

"There's an accident, but you're sitting in the back of the queue. You get going once again and the accident is long gone ... and you say, what was the issue again? Supply lines are so fragile and can be impacted so quickly."

Near-shoring for HCA represents a "value proposition."

"Our 14 (North American) locations should be able to meet customer needs in a short amount of time," Moore said. "We have a corporate responsibility to drive business forward in a responsible and sustainable way. It's just the right thing to do."

HCA is part of Hexpol A.B., a Swedish multinational company. North America represents about 55 percent of group sales.

Freight transportation represents about 8 percent of overall global CO2 emissions, according to the MIT Supply Chains Initiative. That figure increases to 11 percent when warehousing, common for a large company like Hexpol, is included.

As such, the partnership that began with Jarrett in 2015 has proved fruitful on a number of levels.

"Scope 3 emissions represent the largest chunk of emissions for many sectors," Moore said. "This partnership was born out of procurement as I was transitioning from Europe to North America. The easy thing was to stay with the incumbent (Keystone Logistics) ... but when we looked at the RFP outlay, Jarrett provided things we had not seen before.

"And we implemented their services across the entirety of our business, in the U.S. and Mexico. It was really a no-brainer in making that transition."

All of the inbound procurement side is handled by Jarrett, namely the raw materials that HCA requires for its formulas.

But on the outbound side, freight is handled by a combination of Jarrett and, for larger customers, their own carriers.

"And that's ok," Moore said. "Our customers have a choice to select our third party supplier or nominate and select their chosen service provider. Ideally, we would manage inbound and outbound services, but we understand that some customers have preferred partners that manage their services.

"Smaller firms have found benefits in using our services. We typically go from cradle to gate, or more specifically, cradle to a specific location.

"And in the future, HCA envisions that all customer COA's will include a CO2 calculation stated for each compound with a number representing (a verified) cradle-to-gate calculation."

Of its many services, Jarrett assists HCA with consolidation, in bringing in raw materials from all parts of the world.

"They handle a lot of smaller packages, international transfers, products sent to China and mainland Europe," Moore said. "They help ensure that we are maximizing our loads and using truly efficient means to not only reduce costs but also impacts on the environment.

"On the raw materials market, the flexibility of having a partner that can react quickly offers a value proposition that some companies don't offer."

Jarrett monitors average cost per pound; total shipments; average weight; missed opportunities; proactive savings; and emissions reporting.

"The beauty of their services is that it's like another hub," Moore said. "Fourteen plants input information and Jarrett consolidates that, maximizing space on freight.

"Maybe we even ask for a slightly delayed shipment date to maximize the freight, if that is ok with our customer from a timeframe and logistics perspective. Having trucks on the road is not cost-effective."

Jarrett even suggests more efficient in-house routing for HCA.

"They may say, 'You're producing this compound in Burton, Ohio, and shipping it to California. Have you ever considered switching this formula production to California?' They offer logistical solutions like that."

And HCA is taking on Scope 3 emissions independent of customer urging, at least in North America.

"In Europe, the Trelleborgs, the Freudenbergs ... they are actively seeking this traceability information," Moore said. "But domestically, it's usually, 'Yeah, we've heard about it, but we're not there yet.' "

Energy markets already are shifting back to drilling under the Trump administration, "moving away from recurring natural resources," Moore said.

"The rig count is down, but we expect that to go back up," he said. "To be fair, over the last four years, we have seen off-shoring. The reality is that if you are wanting to work in a sustainable manner, then near-shoring needs to outweigh off-shoring.

"Importing from Turkey makes no sense if you have a rubber plant in Mexico."

Overall, the automotive market has been down for the past couple years for HCA, the compounder's largest market, followed by wire and cable.

In total, HCA turns out about 1.3 billion pounds of polymer compounds per year.

Moore said many large customers in automotive continue to mix in-house, using captive reversion.

"We continue to see a trend of insourcing," Moore said. "Some larger opportunities exist with companies evaluating if they can continue to invest in mixing, or switch to captive conversion. There are several active projects in this category for 2025."

While the move toward EVs remains uncertain domestically, the transition continues in Europe.

For HCA, the needle does not move much in response to EV market fluctuation, Moore said.

"To be honest, the transition from ICE to BE or hybrid has little influence on the compounds HCA provides its customers," Moore said. "Each vehicle requires sealing, antivibration and some kind of fluid management. We need to be assigned to the right platforms and customers that continue to outpace the general market.

"Our ability to provide high performance and Hexpol proprietary solutions with technical support is our value-proposition."

There may be other opportunities for HCA in light of EVs' heavier weight.

"You have to compound around extra dynamic forces," Moore said. "The compound criteria and the performance needs to increase on the NVH side. In addition, because of the lack of engine noise, the (need for) sealing your compartment or doorsill also increases.

"We are seeing much more demanding requirements for wind noise."

On the fluid side, EVs do not have a core radiator hose, though other heat-related hose applications have increased.

"A battery is not efficient in a cold state or a hot state," he said. "It requires constant changing of temperature and fluid management to optimize its performance. At the start you need to heat it up and in operation you need to cool it down.

"For North America, hybrid technology is the likely path forward. For us, it is about making sure we have infiltration into the right platforms and the right products that have a future life.

"And fluid management is key for those vehicles."

The irony of sustainability continues as well: the creation or introduction of an undesirable material into the process of producing another sustainable product.

In the Nordic region, where EVs have been adopted wholesale, CO2 levels have decreased dramatically and rubber fume—from tire wear—has become a new issue.

"The thing is, you're still using materials you would not classify as sustainable, like polyurethanes, which are not synonymous with sustainability," Moore said.

"Those are challenging chemicals going into EV tires to make them quieter, materials that are challenging to work with and challenging to handle. It's almost counterintuitive. We need to provide solutions, but it sometimes means using materials that are not sustainable to reach those solutions. But it's the reality."

Five years ago, Moore said he would not have predicted that wire and cable would be the second most lucrative space for HCA.

"I am happy to report that wire and cable has become the second-largest sub-segment for Hexpol," Moore said. "Five years ago, wire and cable would not have made the top five.

"In terms of electrification and insulation, we have really seen growth in those market segments."

Moore added that HCA needs to continue to meet performance parameters in this space, which are expanding as AI infrastructure grows.

"These data centers that we are looking at for AI ... the power required to operate those machines is greater than what is required for a metal foundry. Consider a metal foundry and the immense heat, then think of that little bit of data coming into a data room—you'd think they were poles apart," Moore said. "But the reality is these centers require cooling polymers—nitrile, EPDM, CR—to cool data rooms down."

The HCA president added that he sees more opportunities with standardized insular applications for branded products.

"Our Hexsil AG for architectural glazing and Hexsil HV for high-voltage applications are two examples," he said.

There could be a transition away from masterbatch compounds with future developments taking place in air and fluid management, as well, Moore said.

And off-shore and near-shore wind farms use hundreds of miles of cables to transfer power.

"And this is very, very significant," Moore said. "That's a lot of rubber to insulate those cables. The market is growing at a kind of GDP rate you'd expect just because of that infrastructure.

"But that infrastructure also needs to improve drastically. On the electrical side, the robustness of grids needs to improve.

"When we are still conserving heat and energy, this just shows how fragile the industry is."