fighting medical residue
Transcription
fighting medical residue
K E M I R A S T A K E H O L D E R M A G A Z I N E 3 / 2 0 1 0 making waves to save the Baltic Sea adding value & how to do it better than others drugs & water fighting medical residue REACH has a role for Kemira 3 | 2010 waterlink 21309133.indd 1 1 3.9.2010 15:02:10 COnTenTS 4 LINK IT 26 The latest news from Kemira. 11 ProfILe presenting Waterlink’s columnist, international author and thinker Dan Steinbock. 12 addINg vaLue: a movINg TargeT a company’s offering must not only meet customers’ needs, but do it better than competitors. 19 sTormy weaTher Clean drinking water, even in turbulent conditions. 20 KemIra’s messeNger We joined leena lie, Vice president of marketing and Communications, for a busy day at work. Kemira has an important role in the european reaCH process. 26 maKINg waves The Baltic Sea is in despair. action is needed - now. 31 CoLumN The changes in global economics signifies the start of a new era for the chemicals industry, too. 32 TargeTINg reaL Needs Kemira’s new strength additives are great news for packaging board production. 36 from wasTe To useabLe ProduCTs many previously disposable byproducts can now be made into valuable raw material. rami lappalainen 24 regIsTraTIoN rumbLe 20 12 It is critical that customers perceive added value. If they don’t buy the arguments, superiority doesn’t matter. 38 Numbers Kemira’s key figures and share price development. 42 amaZINg 2 21321640.indd 2 GeTTY imaGeS @ the millennium Science camp. a new product to dye for. Say cheese! waterlink 3 | 2010 7.9.2010 11:00:31 e D i TO r i a l aDDeD ValUe fOr CUSTOmerS anD OWnerS K SUSanna KeKKOnen emira takes pride in providing its customers with solutions for different water treatment and reuse needs. This ability is based on our technology expertise, product portfolio and experience gained through collaboration with customers. We work globally with nearly 10,000 customers, so we are able to draw from a vast pool of experiences when creating new solutions. In the spring, Kemira launched SWEET, the Center of Water Efficiency Excellence, which enables us to generate new expertise. Water treatment combines different methods, such as water chemistry, biotreatment and equipment technology. Customers need seamless, full-scale solutions that are cost-efficient and environmentally sustainable. Creating value through enhanced efficiency, for example, requires a comprehensive understanding of customers’ specific needs and the ability to combine different technologies. A company also needs to create value for its owners, so that the return on investments meets their expectations. Ownership affects management and building for the future. Essentially, further development requires that shareholders, the organization and customers look in the same direction. Kemira’s ownership structure supports determined and constistent long-term development for the good of our shareholders. Harri Kerminen President and CEO of Kemira Waterlink is a magazine for Kemira’s stakeholders, published in finnish and english four times a year. prODUCTiOn Sanoma magazines finland Custom publishing www.sanomamagazines.fi pUBliSHer Kemira Oyj www.kemira.com managing editor Johanna hytönen editor in Chief marie Lundgren tel. +46 42 17 11 19 paper This magazine is printed on Galerie art Silk 115 and 200 g/m2. COVer pHOTOS rami lappalainen producers Kati heikinheimo anu Piippo layout Tomi metsä-heikkilä GeTTY imaGeS prinTeD BY forssan Kirjapaino Oy iSSn 1797-7738 Please send your feedback to marie.lundgren@kemira.com subscriptions and changes of address can be made at: www.kemira.com/media 3 | 2010 waterlink 21321640.indd 3 3 7.9.2010 11:00:35 LINK IT MedIcaL resIdue burdeNs waTer sysTeMs TeXT Risto Pennanen | PHOTO getty images T ens of research groups around the world are investigating the types of problems medical residue causes for water systems and people. This research, however, focuses on industrialized countries. “Research has not paid equal attention to medicines used in developing countries. We need more information about malaria, tuberculosis, AIDS and parasite medications, to name just a few examples,” says Professor Tuula Tuhkanen from the department of chemistry and bioengineering of Tampere University of Technology. These medications are used in countries with no wastewater or household water treatment. Urine in wastewater carries medical residue to the environment and back to household water. Although the situation is significantly better in industrialized countries, medical and hygiene product residue must be taken seriously. In particular, medical residue should be monitored closely in water systems that receive wastewater and run through several cities before reaching the sea. “The United States, for example, has approximately 3,000 registered medical substances. Only some 20 substances, those with the highest production volumes, are monitored in terms of residue in water systems. This work is very demanding, because residue is measured in nanograms per liter,” says Kaj Jansson, Vice President, R&D and Technology. In water systems, residue can cause many types of environmental problems, some of which are still unknown. These problems may be related to species’ reproduction. “Medications are only one of the substance groups with possible residue in household water. The combined effects of different substances can cause additional problems, because this may result in tens of compounds,” Tuhkanen points out. Reducing medicine use would be one step toward decreasing medical residue. In practice, however, the situation is developing in the opposite direction. For this reason, the problem must also be tackled with effective treatment methods in developing countries. The techniques are numerous, including biodegradable chemicals and advanced oxidation methods. According to Jansson, the treatment plants presently in use have not been designed for decomposing medical substances. They are mainly intended for removing solids, phosphor and nitrogen, as well as easily biodegradable matter. In other words, more research and practical testing are still needed. n 4 21321642.indd 4 medical substances damage water systems and, possibly, human health in countries with dense populations. waterlink 3 | 2010 3.9.2010 15:03:10 Many medicines are water-soluble and partly require other treatment methods than those used for drinking water. 3 | 2010 waterlink 21321642.indd 5 5 3.9.2010 15:03:12 LINK IT SUSaNNa KEKKONEN KIcK-Off 3+1 QUESTIONS TO jOhaN gröN, KEmIra’S ExEcUTIvE vIcE PrESIdENT, r&d aNd TEchNOLOgy Kemira participates in the ACQUEAU cluster, which facilitates water technology and related innovations. Established in May, the ACQUEAU cluster is part of the Europewide Eureka cooperation network, and aims to generate water-related research and development projects enhancing the development of competitive products, processes and services for the global market. The purpose is to award a total of EUR 500 million in funding for joint research projects over the next ten years. 1. How does tHe ACQUeAU ClUster differ from otHer eUropeAn reseArCH CollAborAtions? The ACQUEAU cluster is a business-driven network, which doesn’t fund basic research at universities. Instead, it focuses on applied research carried out by businesses closer to the customer interface. 2. wHAt Are its foCUs AreAs? ACQUEAU has five focus areas: low environmental impacts for disinfection and oxidation, low energy waste- 6 21321645.indd 6 A fAsCinAting debAte on water management issues took place at the Singapore International Water Week in July. This global platform brought policymakers, industry leaders, experts and practitioners together to address challenges, showcase technologies, discover opportunities and celebrate achievements in the water world. The seminar was also the opportunity to launch Kemira’s research and development cooperation with Singapore Membrane Technology Centre at the Nanyang Technological University (NTU). The two-year project aims to enhance used water treatment and purification. water treatment, membrane technologies, real-time system management and materials for pipes and coating. 3. wHo Are tHe members? More than ten leading European companies in the water sector have founded the cluster. In addition to large companies, small- and mediumsized enterprises are especially welcome to join. The authorities from different countries, such as Tekes, the Finnish Funding Agency for Technology and Innovation, also have a forum in ACQUEAU. +1 How does KemirA benefit from ACQUeAU? Through the network, we can make an impact on the future direction of water-related research in Europe. ACQUEAU also offers another road to research funding. The focus areas of the cluster are essential also in the strategic development at Kemira. n Kemira Ceo Harri Kerminen and professor ng wun Jern of nanyang technological University celebrating the new r&d alliance formed in singapore. waterlink 3 | 2010 7.9.2010 11:33:19 fOr cOLLabOraTION IN SINgaPOrE The goal is to design a more efficient water production process with a higher recovery rate, lower energy consumption and less waste volume. Singapore has strengthened its position as a “global hydrobub”. In 2006, the Singapore government identified the environment and water industry as a strategic key growth area and committed over EUR 250 million for developing this sector. Over 70 water companies now have regional headquarters, manufacturing and R&D activities in the country. n NEw acQUISITION IN ThE UK KemirA Closed A deAl with Albemarle to acquire the legal entity located in Teesport, Middlesbrough, United Kingdom. The negotiations were completed on July 30, 2010. The main range of Teesport’s products consists of corrosion inhibitors and drilling emulsifiers enhancing the Kemira product offering to the oil and gas industry in the region. The acquisition aims to strengthen Kemira’s position in the region and to accelerate the introduction of Kemira’s waterfocused strategy. The location of the facility gives Kemira advantages in geography, manufacturing flexibility and a dedicated operation. The site employs approximately 30 persons. n Read more on Kemira’s operations in the United Kingdom on page 10. DiD You Know… that if you compare the volume of water in the Baltic Sea and in the Mediterranean to the amount of people living around the sea (and hence burdening the water with human action), there should be twice the population of the Earth living around the Mediterranean for it to be under the same stress as the Baltic Sea! 3 | 2010 waterlink 21321645.indd 7 » 7 7.9.2010 11:33:20 LINK IT OIL SEmINar STrENgThENEd cOLLabOraTION cUSTOmEr SErvIcE ShaKE-UP reClAiming wAste oils generated at oilfields was one of the challenges discussed at the Oilfield Separations Seminar, held on June 2, 2010. Kemira’s Espoo Research Center hosted the seminar in conjunction with the Joint Industrial Program of the Norwegian University of Science and Technology. The three-day event attracted about 60 participants from oilfield service and oil producing companies as well as universities. “For us in the research field, it was very useful to hear what challenges companies face at oilfields. This information is crucial for us when developing new products. The seminar also offered an excellent opportunity to find new possibilities for collaboration among the participants,” recounts Senior Research Scientist Susanna Toivonen from Kemira’s research and development. n dUring tHe pAst few yeArs, Kemira has taken important steps towards centralizing and, thus, upgrading its customer services. Four new customer service centers in Helsinki, Finland; Helsingborg, Sweden; Barcelona, Spain; and Botlek, the Netherlands now cater to Kemira’s customers across Europe, Russia, and the Baltic countries. These new centers are dedicated to their cause and take care of everything from customer contact to transportation. Instead of calling various local offices, customers in the Netherlands and Germany, for example, can now call the center in Botlek and receive swift and efficient service in up to eight different languages. According to Jari Grönlund, Vice President of logistics and customer services, the aim of harmonizing processes in this way is not only to improve the quality of customer services but also to be better able to measure it. In fact, surveys so far have indeed revealed significant improvements. “And it’s only going to get better,” says Grönlund. n 8 21321645.indd 8 mEET US ON ThE rOad sept 19 iwA world water Congress, montreal, Canada sept 28 world dairy expo 2010, madison, wisconsin, UsA sept 29 food ingredients Asia 2010, Jakarta, indonesia oct 02 wefteC, new orleans, UsA oct 04 AoCs 7th world Conference on detergents, montreux, switzerland oct 05 Cphi 2010, paris, france oct 13 57th sepAwA Congress, fulda, germany oct 15-16 Cleantech finland smart days at shanghai world expo oct 26 spe russian oil & gas, moscow, russia oct 27-29 delhi international renewable energy Conference direC (Cleantech finland exhibition stand) nov 03 6th international exhibition on water treatment Chemicals, technologies and Applications, shanghai, China nov 08 pap for russia, st. petersburg, russia nov 09 AneAs, XXiV Annual Convention, mexico City nov 16 ppi Awards 2010, brussels, belgium waterlink 3 | 2010 7.9.2010 11:33:22 IN SHORT flUoresCent wHitening Agents sold to CAteC gmbH Kemira oyj and german Catec gmbH, financially supported by fengler beteiligungs gmbH, have signed a contract, according to which Kemira sells its global fluorescent whitening Agents (fwAs) business to Catec. fwAs improve the whiteness and brightness of paper. the deal covers a production plant in leverkusen, germany, the global fwA sales network and the associated support functions. the fwA business and its staff of about 100 persons will be transferred to the new owner once the companies have closed the transaction in August 2010. the transaction does not have any significant impact on Kemira’s financial figures. ThE maN bEhINd “gräTzEL cELLS” wINS mILLENNIUm TEchNOLOgy PrIzE tHe foUrtH millenniUm Technology Prize was awarded to Professor of chemical engineering Michael Grätzel from Switzerland. He has invented and developed dye-sensitized solar cells, known as Grätzel cells, that reduce the cost of harnessing solar energy. Artificial photosynthesis, the method created by Grätzel, is a promising alternative to the prevailing silicon-based solar cell technology. The first consum- er products based on Grätzel cells are already available on the market. In the future, products based on this innovative technology may include energy-collecting windows and low-cost solar panels, to name just a few examples. The Millennium Technology Prize is EUR 800,000. Kemira is a cooperation partner of the Millennium Prize Foundation. n KemirA’s serViCe CompAny sold to Coor serViCe mAnAgement Ab Kemira oyj and the swedish company Coor service management Ab agreed on may 21st, 2010 that Kemira sells its ipos service company to Coor. ipos (industry park of sweden Ab) provides its customers maintenance, technical and other services in the industry park in Helsingborg. the ipos legal entity and a staff of about 130 persons were transferred to Coor on July 1, 2010. in Helsingborg, Kemira produces water treatment chemicals as well as pulp and bleaching chemicals. Kemira will keep ownership of some of the services and assets like energy production, harbour and eHsQ services and procurement of the key raw materials. Coor service management is a leading nordic service company. n 3 | 2010 waterlink 21321645.indd 9 » 9 7.9.2010 11:33:24 LINK IT maSTErINg ThE maTrIx on JUly 1, Randy Owens was appointed as Head of Kemira’s operations in North America. He now holds this position alongside his role as President for Kemira’s Oil & Mining segment. “North America represents 23 percent of Kemira’s total revenue in 2009. While the region is considered a mature market for some industries, our new water strategy presents ample opportunities for profitable growth,” Owens says. Kemira has more than 30 sites in the area, including manufacturing, sales, and logistics terminals. Nearly the full range of the company’s water chemistry platform is manufactured in plants throughout the United States, Mexico and Canada. The region is also supported by a research and development center in Atlanta, Georgia. The product portfolio represents sales in all three segments; Paper, Oil & Mining, and Municipal & Industrial. Following the restructuring of the business in 2008 to the current business segments, regional restructuring has followed this year in North America. Kemira continues the transition to a fully global company, and the goal is to align the region according to the segment strategies and the functional goals of Kemira.” “I see my role as a conduit to ensure strong cooperation and harmonization between the region, functions and segments. My aim is to assure that regional needs are addressed and that North America is an integral part of Kemira.” Owens says Kemira wants to continue being a great place to work, both professionally and personally. The biggest challenge is simply letting the matrix structure work to build cohesive global teams. n PrOdUcTION hUb IN ThE UK KemirA wAs estAblisHed in the United Kingdom in 1982. 3 FacTS ON THe UK: • population: 61.7 million • total area: 244 820 km² • year of eU entry: 1973 source: eU 10 21321645.indd 10 After several divestments and acquisitions – the latest acquisition taking place in July 2010 – the total UK workforce now stands at approximately 170 people. Kemira operates from four main sites, the principle one being the dry polyacrylamide plant in Bradford. The ferric sulphate coagulant plant is located in Goole and the polyaluminium chloride coagulant plant in Ellesmere Port. The latest addition is the Teesport facility in the North-East of England. The main products manufactured there are corrosion inhibitors and drilling emulsifiers, enhancing Kemira’s offering to the oil and gas industry in the region. Sales from the coagulant plants predominantly come from the UK municipal and industrial markets. However, 90 percent of the polymers produced at the Bradford site are exported globally with 45 percent going to EMEA. In addition, Kemira is the largest supplier of runway de-icing products in the UK. n waterlink 3 | 2010 7.9.2010 11:33:29 PrOfILE ThE ShIfT cONTINUES In the aftermath of the global recession, more and more people are asking: What’s next? WaterLink’s columnist Dan Steinbock believes we have massive global changes ahead of us. TExT sAmi Anteroinen | PhOTO leHtiKUVA I ”The replacement of g-7 with g-20 is the best indicator of the changing times.” nternationally recognized business expert Dr. Dan Steinbock is known as somewhat of an enfant terrible, with fresh viewpoints on social and economical development. He argues that the global economy is still amid a massive transition. “In the end, its sources of growth will be more diversified, and more prosperous.” Steinbock is an expert on the relationships between advanced economies and large emerging economies. Currently, he serves as Research Director of International Business at the United States-based India, China and America Institute, and as Senior Fellow at the China-based Shanghai Institutes for International Studies. “New sectors of growth, especially in energy and sustainability, will take time to materialize. The growth drivers will be primarily in the large emerging economies – in China, India, Brazil – and in the East.” Steinbock notes that the shift of the growth drivers from the advanced world to the emerging world precipitated the global crisis – and the fallout from the crisis will only accelerate this shift. “The large emerging economies have been driving global growth since 2007, for the first time in centuries,” Steinbock points out, citing the replacement of G-7 with G-20 as the best indicator of the changing times. n Read more: Dan Steinbock’s column on page 31. 3 | 2010 waterlink 21321645.indd 11 11 7.9.2010 11:33:32 30 seconds •Driversofvaluechangeover time,saysProfessorRamBaliga, expertintheareasofglobal managementandstrategic transformation.Ontheglobalized market,newcompetitorsare cominginfromalldirectionswith nolegacyandafresh,unbiased perspectiveoncustomervalue. •Companiesoncefocused exclusivelyonthetechnicaland economicaspectsofvalue.But socialandemotionalaspects oftenmakethedifference.A goodproductcanfailbasedon badexperiencesfromjustafew customers. •Baligapositsanewequation forunderstandingcustomer value:value+willingnesstopay +price+cost.Costandprice arecontrollablevariables.But willingnesstopayandvalue aretrickier.Thesamevalue propositiontovariouscustomer segmentscouldgeneratedifferent outcomesinwillingnesstopay. •Anothercentralconcept iscustomerexperience management.Everyencounter withacustomeratanytime inanywayisastartingpoint forsignalingvalue,saysDr.Kaj StorbackafromHankenSchoolof EconomicsinHelsinki. •Customervaluehastwoparts:the actualexchangevalue,orwhat thecustomeriswillingtopayand usevalue,orwhatthecustomer getsoutoftheofferingasthey useit,beitaservice,achemical, orapieceofequipment. •Companiesshouldstructurethe offeringsothatcustomerscan getashareofboththeexchange valueandtheusevalue. 12 21321654.indd 12 waterlink3|2010 3.9.2010 15:04:48 teXt Randel Wells|PHOtOSGeTTY IMaGesAndIsTOCKPHOTO Adding vAlue: AmOving TARgET It is no secret that in order to succeed, a company must offer products and services that bring value to customers. The offering must not only meet customers’ needs, but do it better than competitors. » 3|2010waterlink 21321654.indd 13 13 3.9.2010 15:04:51 ”R elying on past success as proof of future success is a big mistake,” states Ram Baliga, Professor of Management at Wake Forest University in North Carolina, expert in the areas of global management and strategic transformation. “Companies often fall prey to their own mantra. They develop a particular solution or application and begin believing their offering has some sort of intrinsic value.” Companies also still look at value from a very static perspective, he continues. “They don’t take into consideration that the drivers of value change over time.” The value life cycle is shrinking, just as product life cycles shrink. Even developments in cost reduction are changing so rapidly that a company’s ability to maintain low cost production is not guaranteed. 14 21321654.indd 14 The continued globalization of economies brings further challenges. New competitors are coming in from all directions with no legacy and a fresh, unbiased perspective on customer value: “They come to the market with a more current value proposition,” Baliga says. “To understand what is valuable to a customer, one needs to understand what the customer’s goals are,” adds Dr. Kaj Storbacka, who presently holds the chair of Marketing at Hanken School of Economics in Helsinki and serves as the chairman of Vectia Ltd., a consultancy specializing in customer oriented strategy development, and sales and account management. “Only if your offering helps the customer achieve his or her goals will your offering be of value.” PERCEPTiOnS “Companies used to focus exclusively on the technical and economic aspects of value. A lot of times where those companies get beat today are in the social and emotional aspects of value,” Baliga notes. Take, for example, the recent case of a new diaper by Procter & Gamble. The diaper was demonstrably more effective at keeping a baby dry compared to other diapers. However, a few early users experienced their babies getting rashes from the new diapers. These customers went on social networking sites to tell about their experiences. Soon, even though their product was technically superior, Procter & Gamble faced many challenges. On the basis of bad experiences from just a few customers, a good product can fail. Even in heavy industry, these soft aspects of value are becoming more important. Customers are not only interested in the technical value of a product, but also in whether the company is easy to do business with on a person-to-person level. “Customer value is always a perceived waterlink3|2010 3.9.2010 15:05:04 value,” Storbacka says. Customers can perceive things differently than the provider, so the provider needs to understand those differences to be able to make the right offering. It is critical for companies, even if their product is technically superior, to ensure customers perceive that value. If customers don’t buy the arguments, superiority doesn’t matter. BREAKingDOwnTHEvAluE EquATiOn The principle used to be that you charge more for more value. Globalization has completely undermined this. You can essentially get more for less these days. Baliga posits a new equation for gaining a better understanding of what customer value means in today’s economy. His equation comprises four variables: value + willingness to pay + price + cost. Cost is a controllable variable. Companies can directly impact their margins by changing their production costs. Price is also controllable, but it is different in that it is a strategic variable. A company could price their offering to get the most out of the exchange, or price the offering lower to keep competitors out of the market, for example. Willingness to pay and value are trickier. “You could say there is a one-to-one correspondence between the value you provide to a customer and his willingness to pay for that value,” says Baliga. The same value proposition to various customer segments could generate different outcomes in willingness to pay. The value of the offering doesn’t change in this case, but customers’ perception of that value does. In other cases, the value does change. To illustrate this, Baliga recalls the story of thalidomide. This drug was introduced in the 1950s as a means to reduce nausea during pregnancy. It was withdrawn from the market once it became clear that the drug caused birth defects. The new equation for customer value: value + willingness to pay + price + cost » 3|2010waterlink 21321654.indd 15 15 3.9.2010 15:05:07 In the ensuing decades, doctors tried thalidomide for other ailments and discovered that it worked very well. The perceived value of the drug changed, and people were willing to pay for it again. Eventually it was discovered that thalidomide worked well against myeloma, a type of cancer. Once again the perceived value changed, and this time, customers’ willingness to pay increased even more. In the business-to-business context, however, monetary aspects are still a higher priority according to Storbacka. “If you are going to sell something that really creates value for the customer, you should be able to prove that to the customer,” he says. To do this, he suggests using ‘customer quantification’ (see Factbox page 18). 16 21321654.indd 16 DiSCOvERingCuSTOmERvAluES Regardless of how a company quantifies value, the quantification is only as good as their underlying understanding of their customers. “The real key capability in all this is what I call customer value research,” Storbacka says. “In any context, you need to have this capability to understand what is valuable to customers.” More often than not customers cannot articulate the real drivers themselves. What customers say is valuable is not reflected in their actual behavior. “You have to dig behind the scenes to really understand what the critical value drivers are for the customer,” adds Baliga. He recommends looking at previous purchase decisions to see what attributes the customer seems to have valued. New methods based on anthropology and ethnography are being developed to help companies better explore and grasp customer value perceptions. The main trend is to participate and to observe over longer periods of time to really understand what is going on with the customer. “We need to have an ongoing relationship with the customer in order to understand and solve the critical needs of that customer at any particular point.” CuSTOmERExPERiEnCE mAnAgEmEnT Especially in the heavy industry context, this relationship with customers plays waterlink3|2010 3.9.2010 15:05:11 ”In any context, you need to have the ability to understand what is valuable to customers.” a major role in influencing buying decisions. “A company must have good relationships with all its influencers. That’s the key,” Baliga says. “The challenge is making the right value pitch to the particular individual, recognizing what is of value to him or her at that stage. A plant manager, for example, wants to minimize downtime. The CFO wants to see an increase in profitability, and the purchasing guy wants to reduce costs.” The complexities of customer relationship management, or rather customer experience management, can be overlooked. “Every encounter with a customer in any form at any time in any way through any channel is a starting point for signaling value. Whatever we do with the customer should be viewed from that perspective. Whatever it is – from sending an invoice to making a phone call – does it fulfill our brand promise, even from an emotional point of view?” Storbacka says. Staying on message is a difficult thing. It requires clear value propositions that are understood by everyone, and strong leadership within the company that supports those propositions. “Most companies still really struggle with this,” Storbacka notes. “Internal marketing of value propositions is as important as external marketing.” To keep everyone on message, Baliga believes the incentive systems really have to support that. 3|2010waterlink 21321654.indd 17 » 17 3.9.2010 15:05:15 “If you tell your people to sell value, but reward them based on volume, you won’t get value sales. There are too many examples of companies talking value and new ways of thinking, but not following up in terms of their incentives.” nEwOPPORTuniTiES Influencing buying decisions through customer experience management is one way to drive business growth. Another particularly interesting opportunity lies in what Storbacka calls use value. Customer value can be broken down into two clear parts. One is exchange value, which is the value of the actual exchange, or in other words, what the customer is willing to pay. To exist, a company must at least convince the customer their offering has an exchange value. Increasingly, however, the bigger chunk of customer value is of the second part, use value. Use value is the value the customer gets out of the offering as they use it, be it a service, a chemical, a piece of equipment, whatever. “From a strategic viewpoint, this is a very interesting business opportunity,” notes Storbacka. “The question companies should be concentrating on is how to change the offering definition in such a way that customers can get a share of not only the exchange value, but also of the use value.” Pratt & Whitney, for example, used to just sell jet engines, but now they sell 18 21321654.indd 18 usage of them. The real customer value from the engines, generating power, is sold as a service. This has a positive impact on the customer’s balance sheet in terms of capital since the customer only pays for usage without investing in the hardware. At the same time, Pratt & Whitney have an extended source of income. This shift towards use value is a very promising new dimension for growth, but the jury is still out. Companies do seem to be moving in this direction, but as with any new paradigm, the shift is gradual. n n Customer quantification •Canyouprovetothecustomer thatyourofferinghelps increaserevenue(=sell more)? •Doestheofferinghelpthe customerreducethecostof runningoperations(=total costofownership)? •istheresomethinginthe offeringthatmakesa differenceinthecustomer’s balancesheet?Forexample, reducingworkingcapitalor fixedcapital,orfreeingup resourcesorgettingmoreout ofexistingcapital? •Doestheofferinghaveany impactonthecustomer’stotal risk,forinstance,byreducing riskexposure? waterlink3|2010 3.9.2010 15:05:47 teXt RAnDElwEllS|PHOtOSgETTyimAgES StORmy weAtHeR The city of Longueuil, located on the South Shore of Montreal QC, Canada, uses Kemira technology to ensure its water meets drinking guidelines even in the toughest conditions. J ust over ten years ago, the water treatment plant in Saint-Lambert (today Longueuil) faced a real challenge. The facility had just been upgraded with a ballasted sand system capable of treating water at very high speed. They continued to use aluminum sulfate as the main coagulant. However, this proved to be a serious problem because in that same year, Montreal got heavy runoff that severely affected the quality of intake water. The aluminum sulfate reacts very slowly in cold temperatures, and as a result, the plant was unable to meet drinking water guidelines. To help Longueuil obtain a faster and more effective reaction, Kemira introduced a new type of coagulant: Polyaluminum Silicate Sulfate (PASS). PASS is a pre-hydrolyzed, aluminum sulfate-based coagulant that works well in both warm and cold temperatures. As soon as PASS was added, the water quality improved significantly and allowed the city of Longueuil to fulfill the guidelines with ease. PASSBEnEFiTS “The key added value we have seen with Kemira technology is that it ensures we meet the drinking water guidelines,” remarks Alain Turcotte, Longueuil plant superintendant. Since PASS is very effective when the intake water is cold, it was the perfect solution for the plant in Saint-Lambert. The plant also discovered that by using PASS, they were able to get a higher pH level in the water. This had the added benefit of reducing the amount of lime needed, which lowered operational costs. “The beauty of this solution is that PASS and aluminum sulfate are fully compatible,” says Manuel Moreau, Director of Sales for Kemira, Municipal, Canada. As soon as the weather turns cold or there is a major storm, the plant can change to Kemira PASS. They switch back to aluminum sulfate during the summer, although other plants in the region stay on PASS year round. TRAnSPAREnTAnDTRuSTwORTHy area, making the company the largest manufacturer of coagulants in the region. Trust and transparency are the key values on which the business model has been developed. “Kemira has contacted us on a regular basis to evaluate their new technology to make sure we have the right chemistry in use,” says Alain Turcotte. Manuel Moreau was the Longueuil account manager at the time PASS was introduced. That role has now been taken over by Mélanie Lefebvre, Senior Sales Manager, who continues a very close relationship with the customer. “We believe that if something is not working, we can be open about it and learn from it,” say Lefebvre. Confidence in Kemira has increased dramatically at Longueuil. They have now called on Kemira to help them as they implement the Excellence Program for Drinking Water sto achieve significantly higher quality standards. n Kemira has built strong relationships with its customers in the Montreal 3|2010waterlink 21321654.indd 19 19 3.9.2010 15:05:51 Kemira’s messenger More and more people see Kemira as a leading water expert. Enhancing a brand, however, requires consistent work over the long term. We joined Leena Lie, Vice President of Marketing and Communications, for a busy day at work. TexT Matti ReMes | phoTos RaMi LappaLainen T he morning starts with a latte. Leena Lie has a few moments at the kitchen table to immerse herself in the news before a hectic day at work. Recently, the news has made her happy, increasingly so: the extensive strategic changes at Kemira have not gone unnoticed by the media. “Our decision to focus on water expertise has brought us plenty of positive publicity,” says Lie. Water is a hot topic around the world because of the alarming state of the Baltic Sea, urban water problems in developing countries and emerging economies, as well as many other issues. “This presents immense opportunities for water experts like Kemira. We must be able to rise to these challenges.” One step ahead Lie has a 20-minute drive from home in northern Espoo to the Kemira headquarters in Ruoholahti in Helsinki. Today’s schedule includes urgent communications issues and some planning for the future – in addition to the latest interim report, which was published a few days earlier. 20 21321655.indd 20 “The day never turns out to be what it looks like on the calendar in the morning,” Lie says with a smile. “Communications is at the core of everything and, preferably, always a little ahead of everyone else. We often need to respond to issues on very short notice.” Lie was appointed Vice President of Communications at Kemira in 2009. Since March 2010, after Päivi Jokinen, Executive Vice President of Marketing, took maternity leave, she has also handled marketing. At Kemira, external and internal communications and marketing are the responsibility of an 11-member team. In addition, the European, North American, South American and Asian markets have specific persons in charge of communications and marketing. The product organization also plays an important role in marketing through its close collaboration with customers. “The communications and marketing team serves as a coach and a consultant within the company, helping all employees get their messages across professionally. We offer, for example, Leena Lie with Marja Jokinen (left), head of internal communications, and CeO harri Kerminen. » waterlink 3 | 2010 7.9.2010 11:01:38 Liisa tikkanen (left), Jane toikka, Leena Lie, Johanna dumell, arja Vanhanen and sini Koskinen in a marketing and communications team meeting. . trainee Jane toikka preparing a media training course schedule. “Ourdecisionto focusonwater expertisehas broughtplentyof positivepublicity.” 3 | 2010 waterlink 21321655.indd 21 21 7.9.2010 11:01:43 Leena Lie • Vice president of Communications at Kemira since 2009. also responsible for marketing since March 2010. • Born in 1968 education • MBa Key woRK histoRy • KOne: Vice president, Brand and Reputation Management, 2008– 2009; Vice president, Internal Communications, 2006–2008 • nokia: head of Communications, Customer and Market Operations, 2005–2006; senior Manager, Internal Communications, 2002–2005; Manager, Communications, nokia Mobile phones, 1999–2002 • hartwall arena: Manager, Marketing, Communications and events, 1997–1999 media appearance training for management and other key employees,” Lie explains. MuLtIdIMensIOnaL Messages The first meeting of the day is with Harri Kerminen, CEO of the Kemira Group. Lie and Kerminen hold regular meetings to discuss topical issues in marketing and communications. Today, these include a future press release and a presentation Kerminen will give to guests from India. Communications and marketing have gained significance in Kemira, which pleases Lie. “These issues become increasingly important as we seek new growth and introduce new products in new markets.” Kemira’s carefully thought-out core message, which focuses on water expertise, makes Lie’s work a little easier. After the new strategy was introduced, this core message emphasized Kemira’s role in water-intensive industries. At 22 21321655.indd 22 Leena Lie and CeO harri Kerminen hold regular meetings to discuss topical issues in marketing and communications. the next stage, the focus was on water quality and quantity management. This year, the focus is even more on Kemira’s investments in specific customer industries and emerging markets, especially India and China. In addition, the emphasis is on Kemira’s water application expertise. “We have a clearly defined strategy, that will gradually become even more detailed and multidimensional.” OpeRatIOns In 40 COuntRIes Before noon, Lie and Kerminen hold a video conference for Kemira’s staff about the interim report, with direct connections to seven locations that range from Leverkusen to Shanghai. Kemira operates in 40 countries worldwide. Because of the time differences alone, this presents challenges – which Lie and Kerminen overcome by holding a similar conference in the afternoon for personnel in North and South America. The specific features of different markets present even greater challenges. Kemira’s product and service application offerings vary by country and by customer segment. waterlink 3 | 2010 7.9.2010 11:01:47 Corridor meetings have their time and place. Leena Lie in a brief exchange of ideas with arja Vanhanen from product marketing and Marketing Coordinator sini Koskinen. “Ourreputation asareliable, high-standard partnerisanasset amongtough competition.” “Our customer base in the paper industry is relatively narrow, but other industries have a diversity of customer groups, ranging from sugar factories to the beverage industry,” Lie says. In municipal water treatment, Kemira participates in competitive bidding, where price matters the most. “Our strong and solid brand helps us in the municipal sector as well. The competition is tough, and our reputation as a reliable, high-standard partner is an important asset.” BetteR taRgeted MaRKetIng After the first video conference, Lie tackles a press release that will be published in the afternoon. Kemira has acquired a production plant in Great Britain, aiming to increase its product offerings for the oil and gas industries in the North Sea. The final tweaks she leaves for later because she needs to run to the next meeting, which deals with digital media channels. In addition to Kemira’s personnel, the participants include representatives of a consultancy firm. The purpose is to create an operating model for making more effective use of digital channels in marketing and communications. “In addition to the company website, discussion and expert forums can make for efficient channels. It is important to consider, however, which are the best ways to get our message across with the resources we have.” Lie has one more meeting in the afternoon, this time with her team. According to Lie, communications and marketing in a company like Kemira naturally intertwine into a seamless whole. “The upper-level messages are approximately the same, even though the target groups are different. Marketing is targeted at customers, while communications has other audiences.” Over the next few months, the goal is to make marketing even more closely targeted. “We are gradually building a global model that, in addition to Kemira’s general messages, includes marketing targeted deeper into the customer interface. This may be related to launching new products, for example.” WateR expeRtIse Is a pRIORIty Toward the end of the day, Lie reads e-mails from her crowded inbox and catches up on other tasks. Despite the hectic day, she also has some time for planning future communications and marketing operations. “Building a brand requires consistent work over the long term. The same themes and messages need to be repeated, over and over, year after year, before they take root.” Kemira is well known in its native Finland, but Lie still occasionally encounters ideas and images that no longer hold true. Elsewhere in the world, the situation is entirely different: Kemira needs more visibility, especially in new markets. Communications and marketing need to consider the company’s resources and identify the best methods for each market and customer segment. “We don’t have the resources for grand-scale brand building. We must choose the methods that best reach the targeted customer groups.” This year, major projects include the Expo 2010 in Shanghai, China, where Kemira contributed to Finland’s pavilion. For China, this world exhibition is an event of primary importance. All business in China is based on official relations, and the Expo offers excellent opportunities for new business. n 3 | 2010 waterlink 21321655.indd 23 23 7.9.2010 11:01:49 r egistration umble As the largest European manufacturer of aluminum and iron coagulants, Kemira takes a leading role in meeting the new requirements of REACH. text by Randel Wells | photos Rami lappalainen 24 21321656.indd 24 waterlink 3 | 2010 3.9.2010 15:23:54 t he Registration, Evaluation, Authorization and Restriction of Chemical substances legislation (REACH) is a new set of requirements for the EU chemicals industry. REACH started with a pre-registration that ended in 2008. The first full registration phase, targeting highest volume, highest risk substances ends in 2010. The next two phases are in 2013 and 2018, after which all registrations need to be maintained. “The regulations in the EU chemical sector are of fundamental importance to us,” says Helena Huttunen, principal REACH specialist at Kemira. Kemira has 500 substances to be registered, of which 100 need to be registered now in 2010. The REACH process is managed by the European Chemicals Agency (ECHA), based in Helsinki, Finland, where Kemira’s headquarters are also located. A gAme chAnger “REACH will totally redefine the playing rules of the chemical business within the EU and beyond,” says Huttunen. “The regulations are becoming fundamentally stricter. The companies who are able to cope with these demanding ways of working will succeed and get new opportunities. Those who are not able to adapt and react so quickly will lose their game.” The new REACH requirements are much stricter than those of the preceding chemical legislation, especially regarding the so-called ‘phase-in’ substances, chemicals that have been on the EU market for a long time. “Over 100,000 substances fall into this category, and many have been used for decades. It’s going to be interesting to see how many of these can be registered properly,” notes Liisa Rapeli-Likitalo, Kemira product safety senior manager. consortiA And sieFs Two types of new bodies were formed to help companies comply with REACH: consortia and Substance Information Exchange Forums (SIEFs). The consortia are completely voluntary, with each consortium covering certain substances. Consortium members are mostly manufacturers or importers of those substances and often know each other well. The SIEFs, on the other hand, have been defined by the REACH legislation. A SIEF is a group of legal entities who are registering the same substance. All the tens, hundreds, even thousands of companies who have pre-registered the same substance must be members of the SIEF to ensure common development of the registration dossier for that one substance. The lead registrant for the SIEF prepares the joint registration submission that contains all the scientific details of the substance as required by REACH: physical, chemical, toxicological and ecotoxicological. The companies also prepare the chemical safety assessment, either jointly or individually, which covers uses of the substance and their risk assessments. “The consortia manage the contracting for collecting content, but SIEFs are the legal actors that must be managed by the lead registrant and who submit the registration dossiers,” says Huttunen. Kemira leads the Aluminum and Iron Salt REACH Consortium (AlFe). Altogether, Kemira has 24 substances where Kemira is the lead registrant. AlFe covers 15 of these substances. As the lead registrant, Kemira is responsible for the SIEF management and steers the consortium work. The lead registrant has to be transparent to the members of each of the relevant SIEFs in the registration communication with ECHA. For the consortium led by Kemira, that means 15 AlFe SIEFs. Coordinating communication and exchange of information among literally thousands of SIEF members is no small task. “REACHwilltotally redefinetheplaying rulesofthechemical business.” supply chAin communicAtion “REACH requires enormous amounts of details concerning the safe use of substances, as well as administrative data to be communicated up and down in the supply chains and between the REACH stakeholders,” remarks RapeliLikitalo. “Besides REACH registrations we also have to deal with substances to be authorized, have systems in place to implement the Classification, Labelling and Packaging (CLP) Regulation and take care of the new requirements for extended Safety Data Sheets,” continues Rapeli-Likitalo. “At the moment we are very busy with the 2010 registration duties, but we must not forget that the supply chain still needs a lot of training to understand and ensure correct implementation of REACH.” According to Huttunen, it is too early to say yet how REACH will affect business. “REACH will change so many things: new registration requirements, classifications and markings, constantly updatable safety data sheets, as well as all additional use and exposure information to be communicated within the supply chain.” n 3 | 2010 waterlink 21321656.indd 25 25 3.9.2010 15:23:54 TexT by Sami anteroinen | phoTo Getty imaGeS Making Waves Come together, right now. The Baltic Sea Action Group steps up. T he Baltic Sea is in dire straits. It is the most polluted sea in the world and under a massive strain from year to year. As the Baltic Sea is a relatively shallow and largely enclosed sea, it is an especially vulnerable ecosystem. The sea has suffered for decades of unchecked pollution from oil spills, nutrients and toxic dumping – not to mention wartime mines and munitions. Trying to resurrect the Baltic Sea has seemed to be a particularly tall order, since nobody really owns the problem. Sure, there are a great number of countries around the Baltic shores, but no nation has really stepped forward and grabbed the banner. 26 21321658.indd 26 Nevertheless, citizens around the region have been watching the situation deteriorate for years – and are finally starting to take action. One example of this activity is the Baltic Sea Action Group that was launched a little more than two years ago. Three people – Ilkka Herlin, Anna Kotsalo-Mustonen and Saara Kankaanrinta – shared a passion for the Baltic Sea and already had a history of activities related to protecting it. Still, as the three of them got together, they started wondering if there wasn’t something more that they could do. The Baltic Sea Action Group (BSAG) started small, but has big aims. Operating as waterlink 3 | 2010 3.9.2010 15:15:03 This inhabitant of the Baltic Sea is the grey seal. High levels of PCB have caused problems for the seal’s reproduction. 3 | 2010 waterlink 21321658.indd 27 27 3.9.2010 15:15:06 a go-between, the non-governmental organization (NGO) is working hard to raise the level of awareness for the issues at hand. BSAG has held several seminars and founded projects for reducing the impact of agriculture, maritime activities and hazardous waste on the Baltic Sea. BalTiC SuPer SummiT To date, the finest hour of BSAG occurred in February 2010 in Helsinki as the organization hosted a one-day Action Summit in order to tackle the challenges head on. National leaders from all nine Baltic coastal states were in attendance. Even leaders from “catchment” countries such as Norway and Belarus took part. The summit had strong support from the EU as well. All in all, there were about 500 participants, representing regional organizations, large and small businesses, NGOs and local activist groups. There are nine nations surrounding the Baltic sea. Photo from Sweden’s capital, Stockholm. Almost all communities and cities within the Baltic Sea watershed clean their waste water using chemicals supplied by Kemira. While the political powers-that-be were well represented – from Finnish President Tarja Halonen to Russian Prime Minister Vladimir Putin – it soon became clear to everyone involved that this was truly a common call to arms, not just a show for politicians. The main focus of the summit was to harness the skills and energy of concerned individuals and businesses across the region. This was achieved by making the participants commit to the process of nurturing the Baltic Sea back to health. “We were looking to get 50 specific commitments in the summit,” explains BSAG Secretary General Saara Kankaanrinta, adding that the idea was to extract a pledge from each stakeholder country, and find a remedy of sorts for each of the problematic areas in question. At the end of the day, BSAG walked away with over 140 commitments. 28 21321658.indd 28 STand uP, STand OuT While there are commitments from countries, multinational companies and farmers’ associations around the region, just sifting through the bag of promises is a time-consuming task. Still, in Kankaanrinta’s mind there are a couple of pledges that do stand out: “Looking at the various countries, Russia made a very impressive commitment, pledging environmental clean-up programs around St. Petersburg, on the Gulf of Finland, and in the Kaliningrad enclave.” Furthermore, Russia has not wasted time acting on at least some of its promises. In May it was announced that Russia is ordering a new type of oil recovery ice breaking vessel from Finland. Taking stock of the corporate side, Kankaanrinta mentions that Kemira is in the winter time, the Baltic sea freezes over. Skating on the ice is popular among extreme sports lovers. waterlink 3 | 2010 3.9.2010 15:15:11 one of the companies that has wholeheartedly embraced the effort and is very actively involved in the process. “Kemira is one of the best example cases where the core business and ideology of the company are very well aligned with our targets.” In fact, Kemira’s business activities are playing a direct role in decreasing the wastewater load in the Baltic Sea. Almost all communities and cities within the Baltic Sea watershed clean their waste water using chemicals supplied by Kemira. FigHTing euTrOPHiCaTiOn In its pledge, Kemira commits to giving its expertise and research efforts to returning sludge-borne valuable nutrients, nitrogen and phosphorus, safely into the natural cycle without causing eutrophication. Aija Jantunen, General Manager of Kemira’s Municipal & Industrial segment, points out that all waste water treatment does, in fact, produce sludge. “The more efficient the waste water treatment, the greater the sludge disposal, and sludge disposal is a growing problem,” Jantunen says, adding that without a controlled return to nature, the nutrients in sludge can drift back and eutrophicate waterways, or accumulate in landfills. However, Kemira can make such sludge both hygienic and odorless, after which the sludge can be used to enhance crop production in a safe manner. In Finland, sludge treated using Kemira’s Kemicond method is accepted as a solid tool for soil improvement. “The heavy metal contents in sludge have been successfully reduced in Finland. This was done by requiring industrial players to apply an efficient pretreatment method when conducting their wastewaters into the sewer system. Kemira’s expertise is used in many of these applications,” Jantunen adds. Making sludge hygienic is only the first step: in the future, Kemira will focus more and more of its energy and resources on the safe recycling of the nutrients inherent in sludge. “Recycling nutrients is a part of our large-scale research venture at the Center of Water Efficiency Excellence (SWEET). The study yields information that can be used in the promotion of recycling.” According to Jantunen, there is now sufficient political will in Finland to abandon a way of life that is wasteful with raw materials. The Finnish government would like to see Finland develop into a model country for recycling. To 3 | 2010 waterlink 21321658.indd 29 » 29 3.9.2010 15:15:12 meet the targets set at the BSAG Summit, the government established a working group whose task is to give recommendations for reducing nutrient loading and for the proper recycling of nutrients. all HandS On deCk Both Kankaanrinta and Jantunen agree that the state of the Baltic Sea is so alarming that everybody needs to do their part. While big countries and corporations have the muscle to make things happen, there is also room for smaller players: “Everyone can contribute in accordance with their capabilities,” Kankaanrinta says. This pooling of resources from near and far, big and small, is a very Finnish phenomenon. Therefore it is somehow fitting that a Finnish NGO should offer the world a ray of hope in the aftermath of the Copenhagen debacle. Some media representatives went so far as to claim that what was created in Helsinki was something akin to a miracle: a post-Copenhagen paradigm for future collaborative, cross-border environmental action. Ilkka Herlin, co-founder and the Chairman of the BSAG foundation, is not so keen on superlatives. He points out that the work has only started: one has to monitor the stakeholders and make sure that they stay true to their word. “We will continue to keep a close eye on the situation, since saving the Baltic Sea is a continuous process.” YeS, We Can According to Kankaanrinta, each committed party advances according to its own set timetable, moving from one milestone to the next. Some have already fulfilled their commitment, while others strive to hit their target in, say, five years. Ilkka Herlin sees the role of BSAG as a moderator between the various stakeholders: “We can speed things along, bring different parties together and help facilitate change.” This includes getting politicians, companies and various organizations on the same page – and optimizing the support from citizens. “In today’s world, we feel that this is the best way to get things done.” n 30 21321658.indd 30 Eutrophication • One of the worst problems affecting the Baltic Sea. • a consequence of more than a century of nutrient loading caused by human activity. • The loading is caused, for example, by habitation, industry, agriculture and forestry in the Baltic coast states. • The heavy nutrient load causes an increase in the sea’s basic production. due to the large amounts of available nutrients, microscopic phytoplankton has increased significantly, algal blooms have become more prevalent, and the water has become turbid. • eutrophication is also seen on beaches, seashores and fishnets, which become slimy. • The vulnerable species of the Baltic Sea also suffer from eutrophication. Source: The Baltic Sea Portal waterlink 3 | 2010 3.9.2010 15:15:16 COLuMN THE GREAT CHEMICAL REACTION TExT Dan Steinbock | ILLusTRATION aRiJUkka tURtiainen A fter the 1973 energy crisis, the combined gross national product of Japan, the United States and the four key countries of the European Community (UK, West Germany, France, and Italy) accounted for 45 percent of the global GNP. By the mid-1980s, global competition was increasingly driven by the leading industrial economies. However, over the few coming decades, the growth generated by the large developing countries, especially the large emerging economies or the BRICs (Brazil, Russia, India and China), is expected to become a much larger force in the world economy. Only the United States and Japan will remain among the six largest economies in 2050. The established G7 economies and the large emerging BRICs play a vital role in the world economy and global growth. Together, they account for 69 percent of the world GDP and more than 50 percent of the world population. enoRmoUS GRowth in the Global chemicalS inDUStRy Since 2008, all industries have been coping with a rapidly changing business environment worldwide. The global chemicals industry is not an exception. Until the first half of 2009, the industry still suffered from steep declines in volume and price. On the other hand, industry practitioners have seen the steady, accelerating rise of the large emerging economies since the mid-1990s. Between 1995 and 2005, world chemical production increased by almost 40 percent, and more than 95 percent of that growth originated from developing countries. The momentum of growth will be in Asia. chanGinG inDUStRy clUSteRS In the most competitive nations, clusters are vital because they increase productivity, enable innovations and facilitate new business. In the global chemicals industry, mergers and acquisitions will contribute to changes in and among clusters. Last year, the Chinese chemical industry enjoyed 14.6 percent growth. Foreign multinational companies increased their investments in the mainland, and Chinese companies were increasing stakes in Western chemical companies. India is following in the footprints. For the global chemicals industry, it represents a great untapped market for petrochemicals and plastics. In the pre-crisis era, eight of the top ten companies in the industry were based in advanced economies in the West. By the mid2010s, the global chemicals industry will look very different. But the quest for innovation and productivity will continue to characterize the global industry leaders and flagship companies. n Dr. Dan Steinbock serves as a research director of international business in the India, China and America Institute. 3 | 2010 waterlink 21321659.indd 31 31 3.9.2010 15:16:15 32 21321661.indd 32 waterlink 3 | 2010 3.9.2010 15:19:07 TargeTing realneeds Whether it is recycled or virgin material, the new generation of Kemira’s dry strength additive resolves packaging and board production challenges unlike any other solution before. » TexT by Randel Wells | phoTos getty images and istock 3 | 2010 waterlink 21321661.indd 33 33 3.9.2010 15:19:10 4000 series is very resilient in such tough environments. “One of the fundamental differences between the European and North American markets is that in the former, there are a lot of recycled packaging manufacturers. In North America most of it is virgin linerboard,” notes Swales. Virgin board makers don’t have the same contamination issues as with recycled material, but their concerns are related to finding lighter base weight solutions to reduce the amount of fiber content while maintaining or increasing the strength of the finished board. Here, too, the Fennobond 4000 series is able to provide the extra strengthening needed. K Kemira’s new dry strength additive, the Fennobond 4000 series represents a completely new chemistry for synthetic strengtheners. “We have been systematically developing a technology that is based on standard chemistry synthesized in a novel, intelligent way, creating a newgeneration strengthener,” says Kimmo Strengell, global product line manager at Kemira. Strong heritage Synthetic strength additives have been around for decades in North America but they are not yet so widely used in Europe. With a strong heritage in leading-edge synthetic technologies for tissue and towel manufacturing, Kemira has applied this know-how to develop something new for packaging and board manufacturing. “We had a great deal of fundamental understanding about the chemistry from our Fennobond 3000 development. The 4000 series incorporates that understanding. As a global company, we can take advantage of technology transfer 34 21321661.indd 34 end-products for fennobond 4000 include packaging for household equipment, coffee mug insulators and fruit boxes. like this,” says Darren Swales, North America’s application group manager at Kemira. recycled or virgin There are good strength additives on the market, but increasingly they cannot meet the challenges package and board manufacturers face. “Our target is to provide an extension to currently available strength technologies,” remarks Strengell. Existing strength additives tend to be sensitive to water hardness and strongly closed processes. “Usually high calcium content in water has a negative effect on the most common dry strength agents. The efficiency of starch also decreases in high calcium hardness environments. The Fennobond 4000 series is absolutely insensitive to those conditions,” says Bernd Hauschel, team leader of wet-end chemistry at Kemira. Recycled materials and closed circuit production also introduce contaminants that reduce the effectiveness of conventional strength additives. High conductivity caused by a high concentration of inorganic salts also works against other strengthening additives. The Fennobond excellent propertieS The Fennobond 4000 series is demonstrating excellent performance in strength improvement and in the ability to resist system variation. Moreover, fiber, fines and filler retention is also enhanced. In addition to product performance, product characteristics such as shelf-life and dry solids content have been significantly improved over current technologies. The dry solids content of a chemical has a major impact on logistics. The lower it is, the more water content there is. This directly impacts the product weight and volume, and therefore freight costs. Existing synthetic strength additives usually do not exceed 10 percent dry solids content. The Fennobond 4000 series has already achieved a level of 21 percent at this stage. A second key characteristic is shelf-life. Before now, synthetic strength additives have been fairly unstable. Their shelf-life is no more than a few weeks at most. The Fennobond 4000 series, however, is remarkably stable. Its shelf-life is measured in months. poSitive full Scale teSting After considerable development and testing in controlled environments, the Fennobond 4000 series has moved into the pilot stage with customers. Two extended pilots are showing excellent results in very demanding environments. In France, a new grade development project is underway using 100 percent recycled material. The customer has an existing strengthening system in place waterlink 3 | 2010 3.9.2010 15:19:12 using starch-based additives. By introducing the Fennobond 4000 series, they have achieved considerably better strength. Their ring crush and burst strength tests, for example, have been improved by up to 15 percent. They have also introduced the Fennobond 4000 series to existing grades and see similar improvements. A second pilot is taking place in Turkey. Here the customer wants to use lower quality pulps in its manufacturing of testliner and fluting. This has a significant impact on the strength of their final product. With the Fennobond 4000 series, they have been able to maintain existing strength characteristics. This gives them the opportunity to lower their costs for raw material. good timing Instead of the usual few weeks, Fennobond 4000’s shelf-life in measured in months. “The packaging and board segment is very indicative of the market as a whole, and now we are seeing a good uptake in that segment,” says Swales. “The Fennobond 4000 series provides us with another strength technology in our portfolio just in time to meet these needs. Developed in Europe, it is now being prepared for the North American market. Kemira anticipates customer evaluations very soon.” The Fennobond 4000 series is well positioned to counter higher virgin pulp prices and increased use of recycled material. When manufacturers get better strength, they can offer new grades, speed up production, or reduce basis weight. In other words, the potential return on investment with the Fennobond 4000 series is significant. Kemira is actively looking for customers who have reached the limits with their starch-based or synthetic strength additives. “New grade developments or basis weight reduction cases are good, but we are also looking for cases where the customer really does not have any options left because their production conditions are so difficult,” says Hauschel. “There are also mills that are not equipped yet with a starch jet cooker,” continues Strengell. “Fennobond in that case is a good alternative to an otherwise significant capital expenditure. There can also be periods in production when for one reason or another strength characteristics fall below accepted levels. The answer to all these challenges is the Fennobond 4000 series.” n 3 | 2010 waterlink 21321661.indd 35 35 3.9.2010 15:19:15 text by Satu JuSSila | photo Getty imaGeS From waste 36 21321662.indd 36 waterlink 3 | 2010 3.9.2010 15:20:27 to useable product What if you could turn waste into a new source for raw material and save money in the process? Kemira technologies are making this possible. F or any industry, the prospect of converting by-products that are normally treated as waste into reusable products presents interesting possibilities. Take, for example, aluminum producers. For these customers, Kemira can develop and build a waste effluent treatment plant using its patented waste effluent technology. Previously residues produced by the plant were typically disposed at wastedisposal sites or sent to other industries for additional processing. With the new plant these residues are converted into saleable products, which are then used by Kemira in its own facilities or marketed. Products for differing needs “Our technologies are helping industries minimize the amount of waste they produce and are making contributions in conserving natural resources,” says Per Andersson, director of product management coagulants at Kemira’s Municipal & Industrial segment. Andersson is responsible for heading the product management team in the company’s coagulant product line. He explains that Kemira’s main raw materials for its coagulants are different qualities of acids, aluminum and iron metals, which Kemira can purchase as ‘virgin’ products. But for some industries, says Andersson, there are by-products that come from their core processes, which, he notes, “we can convert into good quality raw material.” reviewing individual Processes Consider the pickling process at a steel mill. Steel mills use acids for treating (pickling) the surface of the steel plate before further manufacturing. The acid is then contaminated with iron coming from the steel plate. Over time, the spent acid must be replaced. The spent acid can be neutralized and sent for landfill, or if the volume is big, it can be regenerated and sent back to the beginning of the process. “Depending on the situation, both options are likely very expensive for the steel mill,” says Andersson. As a third alternative, industries could make use of this spent acid that contains both iron and some free acid as raw material. The quality of different by-products varies a lot, notes Andersson, and is a challenge. “Some are quite pure and some are contaminated with impurities that we do not want in our coagulants. For this reason, we have developed different processes to deal with different situations. By working together with customers, we can maximize the raw materials available from any one source.” n 3 | 2010 waterlink 21321662.indd 37 37 3.9.2010 15:20:36 numBers June 03, 2010 – august 27, 2010 Kemira’s marKet PerFormance & Press releases 10.50 € june 23, 2010 kemira sells fluorescent whitening agents to German Catec Gmbh 10,0 € 9,50 € june 03, 2010 members of the nomination Committee appointed Kemira share 9,0 € OMX Helsinki CAP june 29, 2010 kemira Oyj and nanyang Technological university start joint r&D cooperation around water treatment and purification technologies in singapore july 1, 2010 Changes in kemira´s management 8,5 € june 2010 j Kemira is right on schedule text jyrki mäki-kala | Photo juha salminen 38 21321651.indd 38 waterlink 3 | 2010 7.9.2010 11:02:37 july 21, 2010 january-june results on july 29, 2010 around 8.30 am Finnish time august 2, 2010 kemira acquires albemarle´s facility in Teesport, uk to enhance product offering to the oil & gas industry in the north sea region august 27, 2010 Financial reporting schedule for the year 2011 is published july 29, 2010 interim report january-june 2010: marked recovery in demand compared to last year, significant increase in operating profit july 20, 2010 no fine in european Commission investigation into divested animal feed phosphate business july 2010 i n 2008, Kemira’s Board of Directors set five financial goals for the company: Organic growth must be at least 5 percent annually. Cash flow after investments and dividends must be positive. The target level for gearing should be 40 to 80 percent. The return on capital employed (ROCE) must improve continually. And finally, Kemira’s operating profit (EBIT) must rise to at least 10 percent of the company’s turnover. After two years of determined work, we are seeing good results: we have already reached three of these goals. Our annual organic growth is not yet 5 percent, but our businesses are working together with R&D to achieve this goal. auGusT 2010 Raising our operating profit margin to 10 percent is a challenge, but we have taken steady steps in the right direction. The operating profit (EBIT) for our continuing business operations was 3.3 percent in 2008 and 6.3 percent in 2009. At the end of June 2010, we had already achieved the level of 7.5 percent. n Jyrki Mäki-Kala is Kemira’s Chief Financial Officer. CalenDar October 28 at 8.30 am interim report january–september 2010 For more information about Kemira’s stock and owners, please see Kemira’s website at www.kemira.com ➝ Investors ➝ Share information 3 | 2010 waterlink 21321651.indd 39 39 7.9.2010 11:02:38 numBers neW research emPhasis text ranDel wells | Photo kemira W ater is on everyone’s mind these days. While the situation varies from industry to industry, most will be facing major challenges and tighter regulations in the near future. Kemira’s Oil & Mining segment is taking an in-depth look now at the substantive problems in the oil and gas, as well as the metals and minerals sectors. “We are putting together research portfolios to better understand these problems and to develop technical solutions around water quality and quantity management,” says Louis Rosati, Vice President of Research and Development in Oil & Mining. There are currently several research initiatives being carried out through Kemira’s joint research institute, the Center of Wa- KEMIRA IN BRIEF Ownership (April 30, 2010) % kemira is a global, eur 2 billion chemicals company that is focused on serving customers in waterintensive industries. The company offers water quality and quantity management that improves customers’ energy, water, and raw material efficiency. kemira’s goal is to be a leading water chemistry company. ter Efficiency which will run through 2013. “Along the way we hope to commercialize short-term gains, but the emphasis is on finding solutions for the long-term.” Kemira’s aim is to focus on understanding our customers’ processes in order to develop total solutions that bring greater value, instead of maintaining a product-centric approach. Process modifications and optimization of variables, in addition to the chemicals added, are being investigated to find more efficient ways to use water. “We believe our solutions will bring significant value to our customers facing water management related problems, and of course bring good business to Kemira.” n (MEUR) Q2/2010 Q2/2009 revenue 545.2 488.5 1969.9 Operative eBiT 40.5 29.3 124.9 Operative eBiT, % 7.4 0.17 6.0 0.11 6.3 0.47 15.1 23.4 82.2 ePs (eur) Oras invest Oy solidium Oy 16,7 16,7 Varma 9,8 ilmarinen 5,2 Other Finnish institutions 20,6 non-Finnish owners, including nominee-registered institutions 11,4 households 17,3 kemira www.kemira.com 2,3 meur revenue 2009 Capex excl. acquisitions Cash flow after investments 1.9 83.9 ** 202.2 ** Gearing, %, end of period 48 ** 104 ** 53 ** equity ratio, %, end of period 50 ** 35 ** 45 ** 9139 ** 8493 ** Personnel, end of period 5177 ** includes Tikkurila until march 25, 2010 meur Operative eBiT eur ePs 3000 2400 200 0,8 1800 150 0,6 1200 100 0,4 600 2007 ** 2008 ** 2009 1-6 2010 50 2007 ** 2008 ** 2009 1-6 2010 0,2 1-6 2007 ** 2008 ** 2009 2010 ** includes Tikkurila 40 21321651.indd 40 waterlink 3 | 2010 7.9.2010 11:02:38 Focus on chile: high demand For Water exPertise text jyrki PalO ”K emira’s water treatment products offer new and interesting opportunities for our customers in the mining industry in Chile,” says Sergio Cabo, Vice President of Sales for Kemira’s Oil & Mining segment in South America. The mining industry represents seven percent of Chile’s gross national product. Chile produces more than one-third of the world’s copper. In addition, the country is rich in gold, silver, molybdenum, zinc, iron ore, nitrates and lithium, to name just a few minerals and metals. The mining industry is extremely waterintensive. In the most important mining areas in the northern wilderness and in the Cordillera region in the Andes, this water is taken mainly from the mountains. “Water is expensive to use and not readily available,” says Cabo. “The efficiency of water use and treatment is key to maintaining and expanding operations and to calculating the profitability of new mines. In addition, the mining industry is nowadays required to comply with the principles of sustainable development.” With the help of Kemira’s extensive water expertise, customers can increase water recycling, reduce costs and enhance the efficiency of mineral separation. The value of new projects to be launched by the Chile mining industry over the next few years is estimated to billions of dollars. In addition, major investments in desalination plants are in progress. Kemira’s key focus areas are desalination, water use and recycling, and mineral separation processes. Product development efforts are based on local expertise and local customers’ particular needs. Until 2007, Kemira sold only titanium dioxide products in Chile, but the company is now seeking to expand its presence in this mining-rich region as it makes the transition to a leading water chemistry company. n Thanks to its waterfocused strategy, Kemira is discovering new business opportunities in Chile. 3 | 2010 waterlink 21321651.indd 41 41 7.9.2010 11:02:40 AMAZING Istockphoto A New product to dye For The MeTaMorphosis from hide to quality leather products we value so highly is an extensive process. It is also costly and environmentally strenuous. Luckily, Kemira ChemSolutions has created a solution to alleviate some of those ill effects. The newly developed and rapidly biodegradable Tanfor A-15 is a formic acid based formula that can be used for pickling and dye fixing. Tanfor’s uniqueness is in its top quality performance at reduced dose levels, which essentially translates into greater cost efficiency. Furthermore, Tanfor is a superior acid dye fixing agent that leaves more color in the end product and less in the waste water. So, cost efficient, effective, and environmentally sound, Tanfor A-15 is bound to be of interest to tanneries around the world. n Fresh perspectIves oN scIeNce The firsT MillenniuM YouTh CaMp for young talent in science was organized in Helsinki in early June as part of the national Millennium Technology Week. The camp attracted nearly 1,000 applications from 62 countries. Based on highly selective criteria, 30 applicants were selected to participate. Half of the participants were girls. The purpose of the Millennium Youth Camp is to encourage and inspire young people to study natural sciences, mathematics and technology. The camp also promotes Finland as an education and career destination. In addition, it offers perspectives on the future beyond current innovations. Kemira is one of the sponsors of the camp. The camp participants also attended the Millennium Technology Prize award ceremony. They had the opportunity to meet the winner, Professor Michael Grätzel from Switzerland, and the two other 2010 Millennium Laureates. n Young talent in action. Jorge araya (Costa rica), santiago oviedo rouco (argentina) and Menna sirola (finland). Read more on the winner of 2010 Millennium Technology Prize on page 7. 42 21321652.indd 42 waterlink 3 | 2010 3.9.2010 15:22:08 sAy cheese! Istockphoto The qualiTY of Cheese depends on a remarkable variety of issues. One of the most important ingredients in the production of cheese is, naturally, milk. The quality of milk is affected by the feed served to cows. If the forage is preserved inadequately, this can lead to problems influencing the production of fresh dairy products and cheese. Kemira’s AIV product range ensures the high quality of silage and prevents harmful bacteria from growing and from transfering into the milk. Consequently, it is possible to avoid negative changes in taste and odor of milk and cheese. Additionally, the structure of cheese becomes as good as it should be. n 21321652.indd 43 3 | 2010 waterlink 43 3.9.2010 15:22:13 ALSO in thiS iSSue Profile: WaterLink’s columnist Dan Steinbock From waste to value – new opportunities for industry Say cheese! What’s happening in the uK? Brainstorming with the team. Kemira’s marketing and communications director Leena Lie believes efficient teamwork adds value. 44 21321648.indd 44 waterlink 3 | 2010 3.9.2010 15:23:07