The
Editor's Page:
By Max W. Sung
DyStar maintains its independence and standards: The past two
decades had seen a shift of the textile dyestuff pro
duction
from Western Europe and the United States to Asia, a trend necessitated
by the shift of textile manufacturing to Asia in general. The giants
of textile dye innovation, Bayer and Hoechst in Germany, merged their
textile dye operations to form DyStar in 1995, to be joined by BASF's
in 2000. The mergers were born of necessity in the face of economic
realities, and were anticipated to reduce costs and employee numbers,
close down production 
sites
in Europe while expanding production sites in Asia close to the textile
manufacturing hubs. The Yorkshire Group, a major textile dye producer,
went into receivership of its UK plant in 2004, and sold its US operations
to DyStar. The Huntsman Corporation moved its headquarters from Switzerland
to Singapore last year as part of its restructuring to serve selected
global market segments with growth potential. It was therefore not surprising
that DyStar filed for insolvency for its German operations last year.
In December 2009, at the eleventh hour, an agreement was reached for
Kiri Dyes & Chemicals Ltd (KDCL, Ahmedabad, India) to take over the
operations of the DyStar Group and its German sites in Frankfurt/Main,
Leverkusen, Ludwigshafen and Brunsbuettel, together with 36 international
subsidiaries. The acquisition was executed through KDCL's SPV, the Kiri
Holding Singapore Pvt Ltd. The Zhejiang Longsheng Group, with textile
dyestuff production facilities headquarters in Shangyu, China, and with
whom KDCL had a joint venture in two production facilities near Ahmedabad
in India, was anticipated to own 18.75% of DyStar post-acquisition,
adding to its 7.46% share of KDCL and 60% of the Kiri-Longsheng joint
venture.
The question is, will the DyStar Group post-acquisition be subsumed
under KDCL, or will it be maintained as an independently operating company?
A press release from DyStar (February 4, 2010) had quoted KDCL's managing
director Manish Kiri as saying that "DyStar will continue to operate
as an independent company in the market." Two weeks later, Manish Kiri
announced his senior management team for the DyStar Group. He himself
will take on the position of chairman.
Steve Barron, previously vice president responsible for strategic marketing
at DyStar, will become CEO; Bart VanKuijk, previously sales area manager
for South Asia, was appointed chief marketing officer; Viktor Leendertz
will continue his responsibilities as CFO in the new DyStar Group, while
Harry Dobrowolski will take on the newly formed position of chief operations
officer. Steve Barron, the new CEO, is a veteran of the dyestuff business
having entered it in 1982 when he joined ICI Dyes Division. He has since
joined BASF in 1996 and went on to DyStar in 2000 with the BASF merger.
He was previously head of DyStar's "synthetics & wool" business, then
vice president for marketing until appointed CEO. I had the opportunity
to talk with Mr Barron about the changes at DyStar. The interview was
conducted on April 28, 2010.
Max W. Sung: Mr Barron, congratulations on your appointment
as CEO of DyStar. Can you tell us how the insolvency filing by DyStar
of the German operations was resolved?
Steve Barron: Well, we were very pleased that a strategic investor
has acquired the company after long negotiations and that now the new
company is getting back on track. I am afraid I can't release any details
of the purchase arrangements, I'm sure you would understand.
Sung: You have now a new executive management team at DyStar.
Could you comment on the members of this team and their responsibilities?
Barron: The executive team of the wider senior management group
encompasses not only the C level, but also the heads of technology and
production and also what we call sales areas managers. These are people
who are responsible for groups of countries around the world. So it
is a very international group of people covering the whole world.
Sung: We have received your letter from March 8, and you mentioned
that DyStar will be transitioning the production of many products to
Asia. Can you comment on how this is different from the previous production
patterns at DyStar and how it would change in the next one to two years?
Barron: I think it is well known that we will be stopping manufacture
in two of our sites in Germany. And we will be transitioning more production
into Asia, looking to work closer to our main customer base and also
for more cost effective production options.
Sung: Which two production facilities are you closing?
Barron: This is the Leverkusen site and the site in Brunsbuettel
as well. The indigo manufacturing site in Ludwigshafen will remain unaffected.
Sung: So, in terms of transitioning your products to Asia, in
which country do you think most of your products will be manufactured?
Barron: Well, there is a variety of countries that is involved
in that. We are looking into transitioning products into India, but
also to Indonesia, Japan and China. As you are probably aware, we have
manufacturing sites already in Indonesia, China, and Japan. We are also
looking to move some of our production into Kiri sites in Ahmedabad,
India.
Sung: You also have facilities in India which are part of the
international group of production plants from DyStar. Will these production
plants be competing with the facilities from Kiri or will production
be relocating to the Kiri facilities in Ahmedabad?
Barron: The site we have in Ankleshwar really is complementary
to what is going on at Kiri sites, so we do not plan to close our site
in Ankleshwar.
Sung: And, will the production plants in other countries like
China, Indonesia, South Africa, be producing at full capacity as in
the past, or will there be any change in production?
Barron: No, we are continuing with our manufacturing sites in
all those countries. You had mentioned specifically South Africa. The
South Africa site makes textile and leather chemicals, not dyestuffs,
so is only involved in non-colour chemicals.
Sung: There has been talk of dye production being more favorable
in India than in other countries because of their export taxes, or lack
thereof, compared with other countries. Do you agree with that?
Barron: I think India, regardless of the export tax VAT issue
as with China, would anyway be a favourable site to make dyestuffs.
Sung: One question that I would like to ask is the involvement
of the Longsheng Group. We understand that Kiri and Longsheng has a
joint venture of production in India, and Longsheng has their own facilities
in China. It seems that Longsheng had involvement in the transfer of
DyStsar shares to Kiri.
Barron: Longsheng is a minority shareholder in Kiri Singapore
Holding which is the acquisition company. And yes, Longsheng has a joint
venture with Kiri in India as well.
Sung: Will the Longsheng group be participating in the executive
team or in the management of DyStar?
Barron: DyStar is run as an independent company, independent
from our shareholders. So DyStar really runs independently.
Sung: So, DyStar will be maintaining its own management independent
from the shareholders?
Barron: That is absolutely correct, yes.
Sung: What management structure do you have that permits this
independence? Is this through the senior management or the executive
team?
Barron: We have obviously the four of us, that is me as the
chief executive officer, my chief financial officer, my chief operating
officer and also our chief marketing officer. And we work together very
closely. Just a practical point, the wider executive management team
operating worldwide can't meet frequently, but we have an effective
network and regular conference calls.
Sung: You also mentioned in your letter about backwards integration.
Would you like to comment on how you think this would affect the cost
of dyestuff production?
Barron: I think it is more a question of being able to minimise
some of the impact of speculative pricing in some of the reactive dye
intermediates in recent years.
Sung: DyStar has currently 21% of the market share of dyestuffs
production globally, and you had sales of 800 million euros in 2008.
Do you anticipate sales increasing past one billion in the next one
to two years?
Barron: Not in the next one to two years, but one billion euro
sales or revenue line is our target.
Sung: Can you comment further on DyStar plans and the current
situation at DyStar?
Barron: I just like to reemphasise that DyStar is running as
an independent company, DyStar is not Kiri, not Longsheng. One of the
things which is very important to us is maintaining the DyStar brand
in the market. That brand image encompasses a number of things including:
quality, both in terms in high quality and consistency; ecology; innovation;
application expertise and integrity in our people and products. We have
a very wide range of people throughout the world who really are experts
in the wet processing area and are all around the world to serve our
customers. That is one thing I would like to mention. The other thing
that I would mention, which we did not touch on at all, is how we see
ourselves not just as colour and effect chemicals suppliers but we also
see us as part of the retail world as well. We know we can help retailers
and mills take time out of the supply chain, by helping with colour
communication, thereby minimising the process of resubmitting lab dips
and getting colour approvals. Additionally through our econfidence program
we are working closely with retailers to understand and help retailers
meet their ecology needs.
Sung: It has been said that one of the ways of reducing the
cost or dyestuff production is in areas where there are no such strict
environmental laws. Do you think that production in places that do not
have strict regulations regarding wastewater effluent will have a cost
reduction advantage?
Barron: It is not something that DyStar would entertain, as
we have global standards for our production in all respects, regarding
waste water, etc.
Sung: Thank you. This has been most informative.
