Chemtura Faces Imminent Large-scale Expansion, US$200 MLN Investment May Put in China
-- Interview with Craig A. Rogerson, President and CEO of Chemtura

By Katherine Mane & Amy Lee
Local time November 19th, 2010, Craig A. Rogerson, President and CEO of Chemtura Corporation rang the opening bell at the New York Stock Exchange, marking the returning of Chemtura, who just emerged from bankruptcy protection a week ago, to the New York Stock Exchange with a new symbol CHMT.
   On January 11th, 2011, Mr. Rogerson accepted the interview invitation of China Chemical Reporter, despite his tight schedule of discussing with his Chinese team about Chemtura's future strategy in China. It was only two months after the stock re-list of Chemtura, while its stock price has soared 20%.

Business Portfolio Reviewed in 2011

During the period of bankruptcy protection, Chemtura only sold its PVC additives sector to ArtekAterian, an Indian company, but retained other seven business segments – AgroSolutions TM (crop protection chemicals), Antioxidants / UV Stabilizers, Consumer Products, Great Lakes SolutionsTM, Petroleum Additives, Urethanes, and Organometalics.
   These seven business sectors, which vary widely in the application markets and technology, have been formed under many years' sedimentation of history. Mr. Craig A. Rogerson, who is known as an expert in mergers and acquisitions in the chemical industry, was once speculated that he will divest some non-core businesses and reconstruct the product lines of Chemtura.
   But he did not, at least not immediately. He once claimed to the public to make it clear that no plans will be conducted in 2010 and 2011 for the divestiture of any business. For business combination with a huge difference in product varieties and operation, he proposed a strategy - "flexible development on a unified platform" - to encourage all business segments to develop their most appropriate growth strategy, and Chemtura will provide all facilities to support their goals.
    Obviously, 2011 will be the investigation year for Mr. Rogerson to make adjustment strategy to the seven business sectors. "In 2010 and 2011, we did and will do our best to increase value of the current business sectors through investment, innovation and other means, and to explore the potential value of the existing business: if a business has reached its peak value, then we will consider to divest it and invest in businesses with more growth potential," he emphasized that, "we spin-off a business not because there's an attractive offer from a buyer.  It is because that business did not meet our expectations."

China is A Key Market for Investment

Mr. Rogerson said this after careful consideration. For Chemtura, the current, most important thing is finding a way to achieve rapid growth.  Asia-Pacific market, especially the Chinese market, will be a good answer: it is the growth engine of the global chemicals market - that is why Mr. Rogerson has been frequently visiting China and the Asia Pacific region in the last two years.
    In the challenging "Five-year (2010-2014) Plan" for the development of Chemtura, the contribution rate of sales from Asia-Pacific region among the global sales will grow from 15% in 2010 to 1/3 in 2014- this means that Chemtura's business scale in the Asia Pacific region needs to be expanded to 4 times the current. In order to achieve this goal, Chemtura will use various means - mergers and acquisitions, joint ventures and investment, but sustainable organic growth will still play a very important role.
    Chemtura will carry out a series of investment plans worldwide in the next few years, and Asia, especially China, will become a key driver. Mr. Rogerson disclosed to CCR that Chemtura will invest US$ 500 million globally in the next 5 years, one third of which (nearly US$200 million) will be in China, covering almost all of its businesses. This is in keeping with his style of doing business- when Mr. Rogerson served as chairman, president and CEO of Hercules Inc., the investment proportion of Hercules in China reached 60% of its global investment.
    When talking about the possibility for Chemtura to put investment in western China, he said, although western China is far from the consumer markets, which are concentrated in coastal area, it may be feasible for investment in western China because of the abundant resources of raw materials, also the support of preferential policies by the Chinese government.

Make Specialty Chemicals Special

Mr. Rogerson has nearly 30 years of experiences in the field of specialty chemicals. When he was asked what Chemtura will do to survive and achieve development as a medium-sized specialty chemicals company within the contest of more and more traditional global giants engaging in commodity chemicals shift their business to specialty chemicals, Mr. Rogerson showed his confidence: "Chemtura as a company with annual sales at US$3 billion to US$4 billion can only compete with those large companies through differentiating ourselves, that means you need customer intimacy and listen to their needs, increase investment in R&D to develop new products-that's what differentiate a specialty chemicals company from a commodity chemicals company."
    Moreover, he said that the traditional commodity chemicals companies are actually not that familiar with the business model of specialty chemicals companies, which needs to better understand customers, and jointly research and develop with customers and make tailored products for customers. While these cases of mergers and acquisitions such as Dow buys Rohm & Haas, BASF buys Ciba, shows that the buyers want the fastest access to this property through acquisition. Chemtura has been very familiar with the specialty chemical industry's operating model. We just need to maintain our strengths, and emphasize our product/service differentiation and customer focus.
    In order to reduce expenditure for getting high profit margin, Chemtura once reduced investment in R & D and product innovation, which finally get opposite results with the expectation. Therefore, Mr. Rogerson has put into great efforts to strengthen investment in R & D since he took office. The Asia Pacific Application Development Center (ADC), - launched in May, 2010 by Chemtura at Nanjing of Jiangsu province with an investment of US$3 million, is a good example. The Application Development Center consists of fifteen state-of-the-art laboratories, covering business of crop protection chemicals, antioxidants/UV stabilizers, consumer products, flame retardants, petroleum additives and polyurethane materials.
    Mr. Rogerson believes that the establishment of the Asia-Pacific Application Development Center is the first step for Chemtura to explore the Chinese market, which will ensure a rapid response to customer demands in China. In the next few years, Chemtura will gradually shift their manufacturing footprints from Europe to China.

Inevitable "Mergers"

The overall level of M & A transactions for the global chemical and related industries in 2010 showed steady growth. It is forecasted that, driven by the recovery of confidence in corporate leadership and the urgent need for industry integration, M & A activities in the global chemical industry will increase in 2011 and in the following interim period. Many Chinese companies so far can find good development fully rely on a strong domestic expansion and self growth, but the situation will be changed along with the growing alliance between domestic companies with advantages in market access and western compani