Victoria: the reality is when we look across the chemical industry We
operate in global chemical markets, global chemical and energy markets,
Patty: when it comes down to the selling process, it's more than just the words.
There's a deeper level of connection that you're trying to reach that level
of understanding the pain points.
It has to be a win win, and it's easier to get to that win win in the local
language with that level of trust.
Natural gas is the clean fuel.
It is the bridging strategy.
Everyone can say it's going to be wonderful.
And in 5 10 years, we're going to move massively away from hydrocarbons.
But the reality is some of those technologies.
May not be ready and
natural gas is a cleaner fuel, a cleaner option than coal.
Victoria: Control the things you can control and currency is not one of them.
A key component of the modern world economy, the chemical
industry delivers products and innovations to enhance everyday life.
It is also an industry in transformation, where chemical executives and
workers are delivering growth and industry changing advancements while
responding to pressures from investors, regulators, and public opinion.
Discover how leading companies are approaching these challenges
here on The Chemical Show.
Here's your host, Victoria Meyer.
Victoria: Hi, this is Victoria Meyer.
Welcome back to The Chemical Show, Where Chemicals Means Business.
Today, I am speaking with Patty Summers, who is the Global
Business Director at Zeochem.
Patty's been on the show before.
We will link to her prior episode.
Today our theme is around managing globally and how chemical companies
and many of whom have very diverse operations Have to manage globally.
Patty Welcome back to The Chemical Show.
Patty: Thank you, Victoria.
It's a pleasure to be back.
Victoria: Well, thanks for being here.
So let's just start with a brief Introduction to you and to Zeochem.
Tell us who you are and tell us about Zeochem.
Patty: Yes.
So Zeochem is a very old Swiss based company, and one of our product
lines is molecular sieves, which we manufacture across the globe, um, in
Europe, uh, China, and here in the U.
S.
And so we are a company that sells into a lot of diverse markets.
My role is chemicals and energy.
So I spent a lot of time in the natural gas treating markets, uh,
little bit of petrochemicals refining.
It's those kinds of applications that are project based that use molecular
sieves to do purification steps for the materials that go downstream.
So I've been at Zeochem about seven years now.
But I've been in the molecular sieve industry for decades, going back
to initially starting, um, at Union Carbide, the, that became part of UOP
and now it's wholly owned by Honeywell.
So,
I had over 20 years with them.
I took a short break from molecular sieves and joined Endress Hauser, where I did
a little bit of, um, analyzers, managing that group and finding applications there.
around the globe for their products, which typically were
downstream of molecular sieves.
So there was a great fit there in terms of the marketplace.
However, it got back to my roots, um, in molecular sieves by joining,
um, Zeochem about seven years ago.
Victoria: awesome.
I love it Well, you know, so we started talking about this and I thought
it was just such a great and timely conversation for us to have Right.
So the reality is when we look across the chemical industry We operate
in global chemical markets, global chemical and energy markets, right?
Cause you, your company branches into some broader territory.
Um, and yet within the global market, there are also
significant regional differences.
Um, and many companies, smaller companies such as Zeochem and really
80 percent of the chemical industry, I categorize in the small to midsize.
There's a lot of partnership, um, and diversity that takes place
when they look at managing global businesses and global supply chains.
So, you know, what we're seeing today, of course, as people know, in the broadest
sense, we're seeing significant oversupply across many products and markets.
With some moderation of demand, yet continued new build and
developing regions in China, for the most part, the view is that U.
S.
markets are fairly strong, although we've seen some weakness, maybe in
the second half of 24, but generally seen as a robust and resilient market.
On the other hand, Europe sees continued challenges right on a cost basis and
energy basis perspective and then some, some weakening of demand and
then, you know, Middle East influenced by Europe and also by Asia and then
Asia, of course, is dominated by China.
Heavily heavy growth in the future growth.
I know coming from India, which is where you've recently been.
So seeing significant effects of tariffs, particularly in China, and that effect,
um, supply chain issues and more so bottom line is, you know, this and I know this,
the role of a global chemical executive is always interesting and Ever challenging.
So I know that you just recently returned from a trip, trip to India, Dubai.
And so thought it was really timely to get some of those recent perspectives,
particularly about doing business, um, and how they are seeing the
global marketplace, but also how you as a US based global executive
work with partners, um, in India, in the Middle East and elsewhere.
Patty: Yes.
Well, that's a mouthful.
Victoria: It is a mouthful.
It is a
Patty: Let me just start by saying, you know, having partnerships is
absolutely key and it goes everywhere around the globe, but you're right
at who we choose and how we choose to interact will change by the region.
Um, and our products are used.
With other technologies that we don't necessarily have in our portfolio.
So first and foremost, it's important to partner with people who have complimentary
products so that their sales activities and their interactions with the customers.
are not solely dependent on when these customers may need molecular sieves or
not because our sieves have a long life.
So they're, they're loaded into these large vessels, they're used
and they're regenerated and their life can be anywhere from four years
to over 10 years, depending on how it's used, what applications and
how frequently it's regenerated.
So we need customers and we actually need distributors.
that will be interacting with our customers in between all that.
So
they know when the customers need help, when they need molecular sieves.
Uh, so that helps us a lot
Victoria: Yeah.
And
Patty: increasing heart spread.
Victoria: yeah.
And that's true.
I think for you guys across the globe, leaning into distributor relationships
as a way of expanding your reach and expanding your touch points.
Patty: Yes.
Yes.
Now you talk about the different regions.
In some places we act as, we want agents.
And they'll help line up the sale and we give them a percentage,
you know, commission based.
Um, but in other areas like the Middle East in country value is
becoming more and more prevalent as a key part of the decision process of
those purchasing agents.
And what that means is that they're giving preferential.
Uh, treatment to those companies that have invested in that country
in Saudi Arabia or in Qatar so that they have stock, they have employees,
they might even have blending facilities, repackaging or testing or
even some other light manufacturing.
So that has become a key element.
And that has a lot to do with who you choose to partner with, with
what kind of strength they have in that value as the scoring during
those purchasing um, processes.
And we've seen that increase over time.
Victoria: Yeah.
I, it makes sense.
Okay.
So let me just, just do a little decoder ring action here.
So how do you differentiate between an agent and a distributor for
those that maybe aren't as familiar
Patty: Yeah,
a distributor will actually purchase the material and take possession.
Victoria: Okay.
Whereas the agent acts as a selling, a sales agent on your behalf.
Patty: So in, if we have an agent, we are directly, our, our order is with the end
user and they are paying us and we pay for the service, the sales help and the
assistance that we had from our agent.
So you're, you're paying them for a service rather than a distributor
will be buying the material.
Victoria: So, yeah, I mean, so you maybe touched on this then, you know,
so when you think about this, you know, how do these, how do cultural
and business practices, particularly in India, and as we look at the Middle
East impact your approach, how does it change your approach to customer
engagement and to partnerships?
Patty: so it varies quite a bit.
Um, I know in India, we, for the most part are focused in on the ethanol market.
So this is the dehydration step that allows the ethanol to be blended with
the gasoline pool for transportation.
So it's an important sustainability step for the Indian folks.
And the government, Modi has taken the lead and said he has,
This goal of having a 20% blend right into their gasoline pool.
Um, they're, yes.
So it's quite
Victoria: That's big.
Patty: think it's
20%
by 2025 even.
So by the end of next year.
But they're only currently at 11 or 12%.
So they still
have some growth to go in terms of building new plants and getting the
production settled in the marketplace to supply all this increasing demand.
Um, and as such, the structure is that the government.
We'll determine how many plants are to be built.
They will then tell the banks that they need to fund a certain number of plants.
And then the engineering firms will be getting distributions from those
banks according to a schedule.
So when it comes to doing those initial fills of our molecular silks into those
plants, it's highly dependent on the cash flow that comes from the government.
So we, we have open orders, they slip in terms of, um, when
they're going to ship Because
in India, you know, getting payment is more challenging
than other parts of the world.
So not a lot of credit that's offered in those markets.
And, um, we rely on prepayment.
And again, the flow goes back to the government and the banks, and
it's all about the money flow.
So that's a different element that we don't really take into account.
account fully in other regions necessarily.
Not that we don't have prepay accounts around the globe.
I mean, everybody does.
Everyone's in different financial situations, but for the ethanol
market in India where we participate there, it dictates a lot of the timing
Victoria: it's so project dependent and tied to the government objectives
and government fundings and priorities.
Patty: Yeah.
And because the, at the end of the day, the plants are owned and
operated by farmers, by cooperatives.
It's still very much, you know, back to the early days when we had a lot
of plants here in the U S it started with the farmers having the feedstock,
Victoria: So,
Patty: we've grown up and become a little more corporate here in
the U S but in India, it's still very much the local cooperatives
Victoria: So that makes me think that it's really important to have
local presence and people that, um, really locally know the businesses.
So if I think about, um, the oil and gas market, for instance, in North America,
which is the areas that I'm familiar with, you know, when people go out to
West Texas and they're selling oil field chemicals, a lot of times it's people
that grew up in those communities.
They have very tight relationships.
They live in those communities.
Do you see the same thing happening?
As you do business in India.
Patty: Yeah, very much so.
And even more so because India is a collection of a
lot of states and each state.
We'll have their own local language as well.
So even communicating across the country, um, presents a bit of a challenge.
Victoria: Yeah.
Patty: only people in the big cities can, can fluently speak English.
You can find English in some of the other larger cities, but really getting down
to, um, to the purchasing decision, you do need to rely on locals to navigate that.
Victoria: Yeah.
That's interesting.
I think we sometimes, uh, Number one, so there's so many, um, Indian companies
that we work close, closely with across, you know, the U S across the globe.
Um, and, you know, on a regular basis encounter Indian people
that are very fluent in English.
And yet it's interesting, the whole, uh, the variety of languages and the
skills that are needed to really do business effectively in, in the country.
Patty: And I think not to cut you off, but that's business doing business
effectively, I think is the key because a lot of these people will
speak English and we can communicate.
But as you know, when it comes down to the selling process,
it's more than just the words.
There's a deeper level of connection that you're trying to reach that level
of understanding the pain points.
And,
you know, you've talked about it before about getting to know
your customers and and bridging.
It has to be a win win, and it's easier to get to that win win in the local
language with that level of trust.
So, um, yes, a local presence is absolutely key.
You see that in the Middle East as
well for slightly different reasons.
Um, because the Middle East is, as you know, has very distinct protocol
and procedures that you need to go through for these massive RFQs.
And, um, understanding how to navigate the particulars of those
individual RFQs issued by large corporations where they have a lot
of people checking all the boxes.
Um, and you can be kicked out if you don't check out.
You know, tick all the right boxes.
So it's important to have somebody who understands the culture, understands
each customer knows how to ask the questions for clarification ahead of
time before you might be on the outside
looking in.
Victoria: Yeah.
Interesting.
So you talked a little bit about, um, the fact that this is really much of your
business there is in India in particular is project based, time-tables slip.
, you know, you don't always have control of that.
How do you manage that?
That is a, that is definitely a variability in supply chain and
in your, um, your sales and your delivery process that, you know,
the reality is from an operations perspective, steady state is always
the best predictability is preferred.
And yet it sounds like you don't necessarily have a lot
of predictability at times.
How do you guys manage that?
Yeah.
Patty: That's right.
I can't forecast.
What I try to do on a global basis is streamline the product line.
So we have a handful of major movers in terms of the product, the product
size and how it's packaged so that we can deal with those flexibilities.
We still have product moving.
It may not be to customer A, but we've got it in stock.
It's going to go to customer B because they paid first.
So it's very fluid.
But by streamlining and having, um, Um, only a few products for the major markets.
We do have the specialties, but it's a smaller part of my business.
Um, but by having the large volume movers, I can oversee, you know, across
multiple customers and balance it out.
So it all comes together.
Not perfectly mind you, but it's not as much chaos as it must, it might seem
Victoria: Yeah, that makes sense.
I mean, I think there's this whole element of standardization
that's needed to be effective.
Um, and it's kind of the whole 80, 20 rule.
I would imagine, you know, the Pareto principle applies for so many factors
for a reason, because, you know, if you can get yourself to 80%, whatever your
target number is of standardization, it gives you that ability to navigate.
Patty: It does.
And it helps us manage our inventory and it helps me have more inventory
available on demand, which in the U S market, I think has really given
us a distinct advantage that we, we maintain good levels of stock and can
respond rapidly to our customer's needs.
Cause there are those unplanned upsets and,
and we are the go to I I'd like to think we are the go to because
we can supply on short notice for those customers that have an upset.
Victoria: Yeah.
Makes sense.
That's great.
Let's talk a little bit about sustainability, right?
So we know that sustainability is becoming increasingly critical across
all businesses, all geographies.
Well, I say all geographies.
Is that true?
As you venture into India and the Middle East, where does sustainability,
carbon reduction and other things factor into their priorities?
Patty: hmm.
India is a tough one because I'm not involved down at the
individual plant level per se.
But we can say that their use of ethanol and wanting to
blend that into the gas pool.
is having a positive impact on the environment.
Um, so, so that's India.
If you look at the other markets that I sell into natural gas, let's just say at a
high level, natural gas is the clean fuel.
It is the bridging strategy.
Everyone can say it's going to be wonderful.
And in 5 10 years, we're going to move massively away from hydrocarbons.
But the reality is some of those technologies.
May not be ready and
natural gas is a cleaner fuel, a cleaner option than coal.
So, uh, we are seeing strong markets for, uh, natural gas processing and even the
LNG plants, especially here in the U S that we've seen grow, they've been strong
in, in other parts of the world for quite some time, but anyway, there's investment
in natural gas and LNG for those reasons.
Now, when it comes to using our products.
In the processing of natural gas, it's mature technology.
But what we're seeing is that our customers are very receptive to our
services of helping them optimize.
So use less energy in the processing of natural gas, getting more life
out of the molecular sieve loads that we do put in so that they have less
environmental impact on disposal.
And even just the whole reload process of the trucking of the
vans to get it there, trucking the spent material to be disposed off.
So it's, it's got its own little, circle their circle of life and
trying to get longer life, minimize those disruptions and disposal costs.
Use less energy as you're operating those plants day to day.
We've got, we formed some tight partnerships that have really helped
us differentiate ourselves from our competitors to be able to impact that.
Victoria: That's great.
And I think your point about, you know, uh, natural gas being the clean fuel of
choice or at least a bridging strategy.
I think that is one of these reflections that, um, depending on who you're
talking to, but I think more people are coming to that realization of
the, uh, the, um, future world where we're, we're looking into green energy
sources, whether it be solar, wind and other things it's a ways away, right?
We're not ready yet to have it fully impacted.
And so when you think about moving from.
Coal to natural gas.
Natural gas is a cleaner alternative.
Um, heavy hydrocarbons to the light hydrocarbons.
It's a cleaner alternative.
So it's all kind of this stepwise sustainability progress
that we're seeing take place.
Patty: And it's nice because it's established technologies.
We know how to do it.
We know how to do it responsibly.
And, um, yeah, I think it'll be around for longer than people want.
I mean, I hope we get there sooner with
some of these
greener technologies, but the reality is, I think there's going
to be another decade or two.
Victoria: At least.
I've seen somebody said, you know, another 70 years.
We'll see.
I
Patty: Oh
Victoria: I
don't know how to, you know, but I think it all depends on what you're
looking at and what you're measuring.
So we'll see.
Time will tell.
So, you know, let's turn and talk a little bit about leadership and strategy.
So as a leader in a midsize international company, how do you balance local
autonomy and global strategy.
Um, and I think about this, you have employees, but you also have
tight business partner relationships who are obviously external to you,
but who also need to align to your business objectives, to your business
strategy as you serve markets.
Patty: Right.
It takes a lot of coordination.
I will say that.
And thank goodness we all got used to Zoom and Teams and these other
remote ways of communicating.
Um, because it's not as good as being there, but it's better than a phone call.
And so we can stay connected in ways that we, we couldn't before.
But, but in addition to that, having the, the right, Channel in country
chosen for that country for whatever they bring to the party, depending
on what part of the world we're in.
as I manage, I'm in touch with my team so that they know throughout the month how
we're progressing, what I'm looking for.
And it is a coordination because, um, as we try to branch out into new
regions, references are really important.
And so we just got a great reference in, um, in the Middle East that's
going to help us in China, for example.
all.
Just to show that yes, we have good products.
Others have have trusted our materials for decades.
And now you can too.
It's okay.
So trying to coordinate and make all that come together is fine.
Now, me personally, I do a little bit of block flow.
I will focus in on certain regions for a couple of weeks, if not four weeks
and make sure everything's aligned.
Move on to the next.
Nothing.
I'm touching, not touching base.
In between, but I do tend to focus and dive in deep in one region and
then move to the next and move to the next just kind of works for me.
And
Victoria: know, the whole studies of, um, you can't multitask very effectively.
None of us really can.
And so I think this idea of block focus, uh, in different markets
in different regions makes sense.
It's in a, it's the, uh, focus in a bigger way.
Yeah.
Patty: I try not to focus too much on currency exchange.
That's just that's just me.
We report our earnings in Swiss francs.
So that doesn't always work in my favor, depending where in the world.
But if I found that if I focus on the customers focus on the value.
And even a couple of pennies count, you know, just being very mindful
of those margins, uh, points me in the right direction has been a good
Victoria: Yeah, I think it's a good point.
I mean, control the things you can control and currency is not one of them.
Patty: No.
And, and you know, you, in my business, and I think in any business, you
can't keep changing your strategy.
You have to have a strategy and it's multi year and you might tweak and
change a little bit along the way, but you can't be, you know, Managing
and reacting to swings in currency
Victoria: Yeah, awesome.
So, so we're here.
We're approaching the end of 24.
We're at, you know, we've recently gone through a presidential election in the U.
S.
We're at the cusp of a new administration.
Lots of conversations around what that potentially means for global trade,
particularly when we think about trade.
Tariffs.
Um, did that come up at all?
Is that how are you or your business partners thinking about that as you look
forward over the next 12 to 24 months?
Is it too soon to tell?
Or do they
Patty: Well, it's,
it's a little soon.
Um, but if you take some of the pre election information and talk and chatter,
uh, into account, we will see increased tariffs on imports coming into the U S.
Um, while that gives me a little bit less flexibility in terms of
sourcing from the multiple plants, cause there's times where I do want to
source, From China and bring to the U.
S.
Depending on the product, depending on the strength of the individual
markets and the demand on our plant.
Um, what I'm really looking at now is how is that going to
change the competitive landscape?
And I think it will.
And I think that's what Trump's all about, is that there in his
mind, there maybe is too much presence from the low cost Chinese
material with the increased tariffs.
I think Yeah.
it's going to be impactful for some of our competitors.
Currently the molecular sieves coming in from China are tariffed at 25%.
So if it goes to 60, that's, that's a big step.
Um, and I think it's a game changer for some of my competitors.
Now with my big plant in Louisville, Kentucky, I think it may open
up some of the market to us that wasn't available before.
So, you know, a little bit, it's, It's a little bit of having
more market available to me.
But how do I do the sourcing?
How do I change my sourcing a little
In that direction of sourcing the rest of the world from the China plant best I can.
We're sourcing Brazil, India, Middle East from China.
Um, and so we've already started down that path.
Um, but I will tell you that, um, in the past, the 25 percent tariff wasn't really
enough to change the market dynamic.
I mean, we were not able, there's market prices and we weren't able
to just pass on that 25 percent because all of a sudden there's 25%.
So, but I think 60 is a different, it's a higher level.
I think that's
Victoria: It is a game changer.
Patty: So it's only now that, and well, we did a little bit ahead of time, but
now we're doing our math and trying to see what is, what is it really?
Okay.
Me more to our competitors, and I'm glad we have a plant in the US.
Victoria: Yeah, absolutely.
And I think that's a great, a great point though, in terms of as.
We gear up for a new administration, potentially new trade policies.
It's a great time to reflect on strategy, um, and what it means for global balances,
business strategies, market strategies, sourcing strategies is, um, I think a
lot of work going on behind the scenes, uh, not just at Zeochem, but everywhere.
Patty: Oh, yes, including raw materials and parts and pieces, you know I was
reading something on the news just yesterday about can we even get the
parts we need for me raw materials?
you know, we've gotten used to a world of Available things that
we can use and have access to and now that might not be available.
Victoria: absolutely.
Good.
Well, Patty, thank you for joining us today on the chemical show.
Really appreciate having you here.
Patty: Well, it's my pleasure
Victoria: Thank you and thanks everyone for listening.
Keep listening, keep following, keep sharing, and we will
talk with you again soon.