News.
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03. 01. 2012
Shanghai Wellgo Ltd., China
The company Shanghai Wellgo Ltd. has been acquired by the Chinese Shanghai Yusheng Sealing Material Co., Ltd. and is therefore no longer part of the FLM Group in Switzerland.The company Shanghai Wellgo Ltd., China, a subsidiary of Chemical Engineering Hago GmbH & Co KG, Munich, has been acquired by Shanghai Yusheng Sealing Material Co., Ltd., China, and is therefore no longer part of the FLM Group in Switzerland.
The company Yusheng Ltd. with its Sunrise brand has been for several years one of the biggest customers of Wellgo Ltd. In order to achieve better integration and development in and for the Chinese market, the acquisition of Shanghai Wellgo Ltd was a logical step for further strong growth in China.
Both parties are pleased to have reached a good and promising result. With regard to the arrangements for the transaction. both parties have agreed to confidentiality.
We wish the company and its Wellgo employees as well as Mr. Tang and his company Yusheng Ltd. a common, successful and prosperous future.
FLM Holding AG
G.J. Peichl
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02. 01. 2012
Gloomy prospects? -A clear no!
Debt crisis, danger of recession, inflation fears, and sustainable economic downturns - the news these days provides sufficient cause for gloom when looking at the near future.For the business with polyurethane foam, however, we feel the prognosis for the coming year is significantly more optimistic than what the current media reports on the general economic development lead us to believe.
As is probably the case with all companies, whose financial year ends with the calendar year, we have also prepared our forecasts for the coming year during the last few weeks. Even though the famous crystal ball must be consulted here for planning cycles that are becoming increasingly shorter-term, there are a few fundamental things, as well as the experience gained from the direct consequence of the 2008 financial crisis, whose analysis and evaluation gives us cause to be quite optimistic as far as the PUR foam business is concerned.
On the one hand, one must always bear in mind that the forecasts and data about the construction sector only apply to a minor portion of the PUR foam sales: the most reliable data only reflects the number of submitted (new) applications for building permits; as far as renovation work is concerned, there are no sustainable numbers at the European level concerning renovation work. Secondly, the use of PUR foams as a straightforward repair material should not be underestimated: even if the uses from country to country are quite different, this type of use from a European perspective still makes up the major share.
The experience gained after the 2008 crisis has confirmed this. Although the sales partners who exclusively supplied the processing trades close to the construction sites were significantly affected by the decline in new orders, all other sales organizations that served a wider range of user groups, recorded almost no losses. On the contrary: in Germany, for example, the almost nation-wide introduction of shorter working hours in the key industries resulted in the fact that the persons concerned apparently used their additional free time to do repairs to their homes and properties; the distinct increases in sale of PUR foams in the Do-It-Yourself sector gives rise to this conclusion.
But also the other states, and even in those whose economic end is being evoked on a daily basis by the media, the findings as far as the PUR foam business is concerned were completely different: In Spain, Italy or England, the annual growth of the past can certainly no longer be achieved after 2008, but any talk of a decline into a bottomless abyss is absurd. The PUR foam business, even in those states, has stabilised and has been relatively stable since then.
Extraordinary exclusions, whether upwards or downwards, which we see time and again within individual markets, can usually be attributed to very specific events with the market participants which have very little or nothing to do with the general economic situation.
So, if the PUR foam business presents itself as being relatively independent of the economic situation and one engages in updated budgets - does 'business as usual" simply continue? Not at all!
The challenges of the coming years become larger than ever before.
From our point of view, there are no general drops in demand for PUR foam. Rather, great efforts are required at the manufacturer level in the development and production, with the sales partners in marketing and on both side of the complete supply chain, to successfully service a basically positive demand for PUR foam.
New products must comply with the existing and more restrictive chemical laws of the future. The existing, non-classified PUR foams of today must be improved and developed further.
In consumer marketing, the outstanding properties and especially the beneficial values of PUR foam must be highlighted: unbeatable as far as construction physics is concerned, easy to process and saves energy and costs throughout its service life - and above all: retains value!
Retaining existing values or better still, improving them will probably be the central theme in the coming years in order to survive the upcoming economic turmoil relatively unscathed. PUR foams with their diverse application possibilities and their outstanding properties can make an important contribution towards retaining and increasing value. This has to be communicated in an understandable manner. With all of our sales partners, one recognises time and again that additional marketing activities immediately reflect in a positive development of sales - and vice versa.
The main challenge that our experience has shown will be the optimisation of the supply chain. The demands for shorter and more flexible delivery times with lower stock levels and lower costs for everything at the same time are diametrically opposed to each other. The use of consignment warehouses, "vendor managed inventory", "stock on truck", "supply chain management" or other approaches: measures, which we already initiated several years ago with major distributors, are also increasingly of importance to small and medium-sized companies. Here, it is necessary to find customer-specific solutions – easily multipliable modules are hard to find for smaller organisations.
But, and this is the good news, all the necessary measures are not dependent on or even controlled by the now seemingly ubiquitous "foreign markets". Recognising the right measures, seizing them and successfully implementing them are in the hands of those who operate this business: it is in our hands and in yours.
We all have good prerequisites for making the coming year a successful one: the right products, a sustainable and stable demand and an economic and political environment that will also promote longer-term value preserving and energy-efficient construction measures.
In this sense, we wish you a healthy and prosperous New Year and want to cordially thank all our customers and suppliers for their good cooperation last year.
Polypag AG
The ManagementDr. Klaus D. Büchner Achim Niemeyer
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There has been a prohibition on self service of classic PU foams throughout France and Germany since the end of December. Time now to look at the initial, very positive results in the market for the innovative, non-classified product systems which have since been on offer.
Just about twelve months ago, our distribution partners – particularly in France and Germany - were suddenly confronted with new product ranges. Products which, thanks to their innovative technology, no longer had to be labelled with special health and environmental warning symbols.
A new range of materials, differing markedly from the more familiar PU foam spectrum but at the same time costing decidedly more than the well-known products, gave rise to numerous sceptical queries. Certainly, none of our sales partners was willing to even hazard a guess as to the sales potential of these alternative products – much less start to project likely sales turnover figures.
Meanwhile, there was always the possibility (at least in theory) that the legislature would find a way to circumvent the planned self-service prohibition. All this meant that marketing people tended to hold back on product launch budgets.
Meanwhile four months have passed since the launch of these non-classified PU products, and what we can now say loud and clear is that
nobody at all anticipated the success we have experienced!
Of course, with the new legislation there was always going to be a high demand for initial stocking. But the key question was whether sales would follow suit?
The answer is yes. Users have embraced the new PU foams. The consistently high level of demand has continued into May, so that but for increased production capacity, we would actually be looking at supply bottlenecks. Particularly in France, where the legislation has effectively banned conventional PU foams from sale in DIY outlets, sales volumes have been replicated virtually one-to-one by non-classified product; with marked increases in turnover.
Those customers who took up the new, innovative PU products early on have managed to increase their market share. Increases of 50% have been common. Putting false modesty aside, we are quietly proud to have demonstrated the validity of our core concept: PUR Partnership – Your Benefit.
In Germany meanwhile, sales of classic PU foams have been managed a little differently to those in France, and a direct comparison is more difficult. The majority of German DIY outlets have chosen to continue with the sale of classic PU foams – now, however, kept under lock and key - alongside the new non-classified alternatives. Although these are being offered at quite markedly higher prices to the conventional foams, turnover figures have remained stable, with up to 30% of the classic foam business replaced; depending on the specific market in question.
Sadly this development is lost on those who choose to continue to push solely or mainly conventional foams. They may not have witnessed as feared the dramatic sales collapse forecast in some quarters, but they could be earning considerably more money on the same sales volumes.
These first results demonstrate that the slower market acceptance in Germany in comparison to France is not a result of consumer diffidence. Rather, the take-up serves to demonstrate that our long years of very positive results in Scandinavia can be readily transferred to Western Europe.
Something else which has become quite obvious is that the successful market launch of these products requires clearly defined positioning and comprehensive marketing support. Wherever classification-free products are sold indiscriminately alongside conventional PU foams without any discernible differentiation for the consumer, take-up is poor. In contrast, distribution partners who have focused on the new non-classified products and marketed them accordingly have achieved steady growth without the need for intensive advertising activity.
This is so important when new, improved formulations are soon to be available. In the Summer of this year, for instance, a low flammability, so-called “B1”foam will join the range of classification-free products.
Against this increasing diversification of the product range, a clearly delineated and communicated positioning strategy is the most important factor in successfully participating in the dynamic growth of a new generation of PU foams.
Achim Niemeyer
Member of the Board
Marketing / Strategic Purchasing
