Welcome to The Chemical Show, the podcast where Chemical means business.
I'm your host, Victoria Meyer, bringing you stories and insights
from leaders driving innovation and growth across the chemical industry.
Each week we explore key trends, real world challenges, and the
strategies that make an impact.
Let's get started.
victoria_1_03-27-2025_105142: Welcome back to the Chemical Show.
This month I am continuing on our theme around sustainability and innovation
and with a number of great guests, including today's guest, who you're
gonna hear a little bit more about.
Very soon.
If you are new to the Chemical Show, make sure that you hit the subscribe
and follow button on whatever podcast player that you're, using and
head over to the Chemical show.com
where you can get a lot more information, including a whole writeup on our blog,
more information about what we've done.
It's a great place to search for past episodes 'cause again, we have
over 200 episodes published in.
Lots of great interviews with lots of great executives.
Today I have the opportunity to speak with my friend Kendall Justin
Yano, who is the founder and managing director of Growth Arc Advisors.
Growth Arc and Kendall helped chemical clients and material clients find
untapped growth opportunities through expertise in sales and marketing, value
and growth and strategic transformation.
Kendall.
Comes to this with an a career of over 30 years at leading companies, including
kendall-justiniano_1_03-27-2025_155142: Hmm.
victoria_1_03-27-2025_105142: and most recently WR Grace.
So we're gonna be talking about sustainability and innovation, some
of the challenges, opportunities, and the new directions that we're going.
So Kendall, welcome to the Chemical Show.
kendall-justiniano_1_03-27-2025_155142: Victoria, thanks so much.
It's great to be here with you today.
victoria_1_03-27-2025_105142: I am so glad to have you here.
Let's talk about your origin story.
'cause you know, I love to start there.
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: what
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: in chemicals and how did you
get to where you are today?
kendall-justiniano_1_03-27-2025_155142: I, I think for me, I don't think there
was any other place that I was gonna end up, but chemicals, and that might
sound strange, but I've got chemical engineers and chemists in my family.
Chemistry was a love since high school.
It was always gonna be a chemical play for, for me in my life, but
I've spent 25 years on the commercial side of the chemical business.
Uh, and I think, I think the one thing that's unique about my
career is I'm a generalist, right?
So I've done sales and marketing, product management.
I've seen a lot of different industry sectors and segments.
And I've operated in a bunch of different scenarios, specialty,
commodity, high growth, and even around investments, right?
The one thing that I, I honed over that time, and I think that
I've come to be known for, is.
First off, when I, when I get into a, a, an, an industry a a particular problem,
it's really fundamentals analysis, going back to the fundamentals of what's
going on in that particular context, and an ability to take that and read
the tea leaves and do something with it.
For instance, when I was at Poly One Aviant, uh, I was one of the
early champions of composites of us getting into composites.
That business is now.
25%, almost a third of Ian's revenue.
victoria_1_03-27-2025_105142: Wow.
kendall-justiniano_1_03-27-2025_155142: And so that's the kind of, that's the
kind of thing I've, I've been known for.
They haven't always been successes.
Sometimes they've, they've been like, no, we gotta shut it down guys.
Uh, but that's the thing I've done.
I think part of that was because of this generalist thing, right?
I've seen a lot of different places and I'm not tied, I didn't develop my
intuition around, a single context.
But it's also, 'cause I didn't start in commercial my first six
or seven years in the industry.
I was in operations.
I was doing capital deployment and I did, one assignment as, as a finance analyst.
victoria_1_03-27-2025_105142: Hmm.
kendall-justiniano_1_03-27-2025_155142: So I have, I have a close
tie to the technology.
Again, chemistry's in my blood.
I'm not gonna ever get rid of a close tie to the technology and,
and, and a real understanding of what it takes operationally
and from a financing standpoint.
Um, And you put it all together and sort of our superpower, where we come from is.
The fundamentals of business growth, right?
How do you do business growth?
And that's one of the reasons I decided to form, uh, form growth advisors.
I, I took around when I was looking for my next, my next opportunity,
and I looked at the crystal ball and, you know, you were there.
Um, and I said, look, growth is gonna be tough to come by in the future.
That's, that's my, my bet and leaders are gonna need help.
And so we decided to go off on our own and, and specifically specialize in
helping chemical leaders, with growth.
victoria_1_03-27-2025_105142: I love that.
Um, and I think, I think you're right, and I think Kendall, you and I have.
Some parallel experiences in our career, starting in manufacturing
and projects and, and moving through a, a wide variety of just different
commercial roles and manufacturing roles and, and project roles.
And it gives you that
kendall-justiniano_1_03-27-2025_155142: Yeah.
lens for how businesses really done.
Right.
Because
Yeah.
victoria_1_03-27-2025_105142: of times it's easy to have you.
If, if you stick in one space, you kind of have blinders, right?
You, you only know what you
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: The good news, bad news thing of being
a generalist is, you know, a little bit about everything, which, uh,
it's a great opportunity and it can also be a pain in the butt.
kendall-justiniano_1_03-27-2025_155142: yeah.
I mean, that's the, that's the potential downside.
The thing that I learned is as long as you stay to the fundamentals,
you're always gonna figure it out,
victoria_1_03-27-2025_105142: yeah,
kendall-justiniano_1_03-27-2025_155142: You're always gonna figure out what,
how it works in this particular context.
So.
victoria_1_03-27-2025_105142: Love that.
So, you know, we're sitting here in the first part of 2025.
our focus here today is really around sustainability and innovation
kendall-justiniano_1_03-27-2025_155142: Mm-hmm.
victoria_1_03-27-2025_105142: The views and discussions on sustainability
have dramatically changed.
Right?
If we go back to the
kendall-justiniano_1_03-27-2025_155142: Oh yeah.
victoria_1_03-27-2025_105142: it was rah rah.
Yeah.
We're, you know, we're shooting for the moon.
There was big promises, big goals, net zero, by my gosh,
kendall-justiniano_1_03-27-2025_155142: Yep.
victoria_1_03-27-2025_105142: Um, or 2030 or 2040, depending on where you sat.
Um, and along the way we figured out it's really stinking hard.
not,
kendall-justiniano_1_03-27-2025_155142: did.
victoria_1_03-27-2025_105142: sure how we make it profitable.
How do our
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: and it's easy to say, oh, I
want a sustainable product.
Oh, well, your sustainable product's gonna cost 10 times more.
Well.
Maybe not.
Um, so,
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: a, a big shift and yet there is still a
sustainability imperative, right?
So I think there's no doubt about the fact that people wanna continue to improve
the world, leave it a better place, be
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: of carbon and greenhouse gas
emissions and all the other things.
You're talking to a lot of industry executives, what are they
kendall-justiniano_1_03-27-2025_155142: Mm-hmm.
victoria_1_03-27-2025_105142: What do you see happening and why?
kendall-justiniano_1_03-27-2025_155142: Well, I, I, you know, I echo
your sentiment and this are, these are some really wild times.
I'm not sure I've seen times like this in my career.
Right.
And it's, it's been a pretty long career.
Um, you know, if you look around you, it sure looks like a lot of people
are pulling back from sustainability.
You see majors like bp, right?
They just announced a whole pha reemphasizing and, and
sort of pulling away from their renewable energy initiatives.
Companies like BlackRock in the financial sector, they were one of the guys who
originally started kicked off this whole ESG sustainability investing trend.
And they're struggling.
You know, there's a lot of talk about maybe sustainability and financial
returns don't actually go hand in hand.
And that was the original premise of why financiers started, uh, investing.
And we were just talking a little bit ago in the green room.
I, you know, I'm in Europe now and, and what you hear here and a lot of industry
leaders have already spoken up is.
Look, you can get decarbonization, but you're probably gonna get
de-industrialization at the same time.
Are you sure you really want that?
Right?
Because now you're talking about impacting the standard of living of people in
order to get to these lofty goals.
and you know, even if you look at trends with our customers, like, um, I follow
the auto industry for a long time.
Let's set Tesla and some of the political stuff aside.
The rest of the auto industry is still trying to figure out
how to make money from EVs,
victoria_1_03-27-2025_105142: Yeah.
kendall-justiniano_1_03-27-2025_155142: and this is after spending
billions of dollars of investment.
So it can certainly look, look pretty scary in terms of, Hey, what's
really happening with sustainability.
I think before you get into the, the dynamics around sustainability, you
have to look at kind of the economic context in materials today, right?
Where do we sit?
Where do we stand?
I.
And, and what is the outlook just as you're talking about chemicals?
And from our perspective, I think we are, I mean, you start to hear
this as I talk to executives, right?
We're a third of the way in to one of the longest down cycles you've ever
seen in the chemical industry, right?
It may be precedent setting.
Even in my, in my career, you know, we, we've been around the chemical industry
long enough, Victoria, we thought of it as a, as a cyclical industry.
Every five years, you'd get a little overbuilt, eh, a little
aggressive, and then you'd have to cut back, wait it out, right?
And then, then the industry would come back.
The reality is we haven't really seen a down cycle in 20 years, and a lot of
that was fueled from Asian growth, right?
So China's growing double digits.
They need materials.
There's, uh, crazy amounts of construction.
You see these things like, you know, uh, skyscrapers built and you've
got 25 year, uh, backlog of empty buildings waiting to be filled.
And miraculously, five years later they were filled.
victoria_1_03-27-2025_105142: right.
kendall-justiniano_1_03-27-2025_155142: And so from our perspective, a
lot of what's happened is that China growth story is over.
Their, their real estate sector has imploded.
They, we now know they've overbuilt their materials sector, right?
And, and we've got a significant amount of excess capacity
and sort of core chemicals.
And a lot of that was happening pre covid, right?
I think the industry got caught a little bit flatfooted.
Uh, first there was covid.
That was, that was what was happening.
And so everybody pointed to Covid and there was the, all of the logistical
issues that came along with Covid and sort of sorting that out.
And I think it's become pretty clear at this point.
That, that Asian growth story is over.
They've had flat growth in China for, for several years now.
And, and you've seen now what global, global commodity prices are looking like.
I came from polyolefins.
It's pretty ugly right now.
I think as a, as a context, the industry's dusting off, uh, what you and I probably
knew as the down cycle playbook.
What do we do in a down cycle?
victoria_1_03-27-2025_105142: Right.
kendall-justiniano_1_03-27-2025_155142: Right?
I.
We got used to, knowing how this worked, every five years or so,
we're gonna run a down cycle, right?
You start to see rationalizations happening, you see things
going on for sale, that's after companies are reporting losses.
Then you see focus on cash, you know, limited capital, probably
some headcount reductions to get your cost structure in place.
And you waited it out and it eventually came back.
victoria_1_03-27-2025_105142: Well,
kendall-justiniano_1_03-27-2025_155142: Right?
victoria_1_03-27-2025_105142: Kendall.
kendall-justiniano_1_03-27-2025_155142: to clients.
Uh, go ahead.
victoria_1_03-27-2025_105142: I'm gonna jump in and
kendall-justiniano_1_03-27-2025_155142: Yeah, go ahead.
victoria_1_03-27-2025_105142: of the things I've seen is that, if
you look at our current leaders, so, you know, you talk about it being
kendall-justiniano_1_03-27-2025_155142: Mm-hmm.
victoria_1_03-27-2025_105142: upcycle and it's been approximately
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: It's been a really long upcycle and now we're
gonna enter this really long down cycle.
But we have a lot
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: business leaders that have
never actually managed or led
kendall-justiniano_1_03-27-2025_155142: Been through one.
Yeah.
victoria_1_03-27-2025_105142: they
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: I mean, heck, maybe they weren't even there.
Work career yet they were in college or maybe they were in the early days
when, and I don't know about you, but I didn't actually understand what was going
on in the business when I was working in manufacturing as a young engineer.
I mean, I, I tried, but I, I full, I didn't, I mean, there
was a, well, we'll get into
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: story.
There was a few things I called, you know, BS on, related to sales guys when
they would tell me some stories, but, um, but you didn't really understand
it 'cause you weren't dealing with it.
You were just executing.
And not making the decisions.
So
kendall-justiniano_1_03-27-2025_155142: by.
victoria_1_03-27-2025_105142: whole set of decision makers that
haven't necessarily had to make decisions in these environments.
I think it's
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: that you talk about pulling out the playbook.
I was at Soma recently, um, in, uh, I guess it was in February.
And of course, Akima is focused in on the, it's mostly specialty
custom manufacturing toll
kendall-justiniano_1_03-27-2025_155142: Mm-hmm.
Fine And custom.
Yep.
victoria_1_03-27-2025_105142: they're actually feeling.
Pretty solid because they know that part of the playbook is
when the big companies have to
kendall-justiniano_1_03-27-2025_155142: Right.
victoria_1_03-27-2025_105142: to tighten their belt, have to
focus in the opportunity comes up for that part of the market.
Um, and so I think there's just some
kendall-justiniano_1_03-27-2025_155142: Yes.
it certainly is completely contextual, right?
If you know the fundamentals, you can figure out where, what,
where you are at, and how those fundamentals play out for you,
victoria_1_03-27-2025_105142: Yeah.
kendall-justiniano_1_03-27-2025_155142: right?
I, I, you know, I have, I, a funny story.
I've got the, I've got the same kind of thing.
I've got clients.
I was talking to a CEO the other day, and, you know, he is of the
same age that I am, and he know, he, he remembers the playbook.
He, he remembers that it was run.
I wasn't a leader at that time either.
But his entire operating staff has not been, you know, almost all of
his people have not been through.
And when you, and, and if you remember the mantra of the day was first into
the cycle is first out to the cycle, The guys who saw it first, who reacted first.
Didn't end up hemorrhaging as much cash as some of the other companies did,
and they were the ones who were setting themselves up to be the ones to come
out healthiest in the back of the cycle.
So if you know that, you say, okay, first in is smart.
If you've never experienced that before, you say first, oh my God, we're, you
know, what's happening to us and what's gonna happen on the other side of it?
And I think that's part of, part of what, what we're dealing with.
Part of why we got flat got caught a little flatfooted for, for those basics.
victoria_1_03-27-2025_105142: The other piece, the other mantra that comes
to mind with this is Cassius King.
Right.
And, and that was something
kendall-justiniano_1_03-27-2025_155142: Cassius King.
victoria_1_03-27-2025_105142: out early on was Cash's King.
And I didn't fully understand it, but you know, we executed the playbook
'cause I was running, helping to
kendall-justiniano_1_03-27-2025_155142: Mm-hmm.
victoria_1_03-27-2025_105142: But, I certainly see that now.
It's an interesting dynamic as an entrepreneur, like Cash is king because
I'm running my own books and I'm not relying on, uh, somebody else to cover
kendall-justiniano_1_03-27-2025_155142: yeah,
victoria_1_03-27-2025_105142: Take, so to speak.
You gotta do it yourself.
So I think this, this whole aspect is, is interesting.
So
kendall-justiniano_1_03-27-2025_155142: yeah, for sure.
victoria_1_03-27-2025_105142: sustainability though, do you see
that companies are still interested?
Right.
So I mean there was this jubilance, now we're in an economic downturn
and there's a pullback is, and you're sitting in Europe, the.
You know, I almost would say the initiator of a lot of what we're
targeting in terms of the net
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: net zero by 2025 or 2030, or,
you know, pick your poison.
kendall-justiniano_1_03-27-2025_155142: Mm-hmm.
victoria_1_03-27-2025_105142: still interested in sustainability?
What are, what are they saying?
kendall-justiniano_1_03-27-2025_155142: I, I think the short answer is yes.
I mean, you know, thinking back five years, those were
heady times in a sense, right?
And, and everybody was getting pretty excited about the potential here, right?
Sustainability became the key innovation investment, if you will.
Everything had a, a sustainability angle.
What you're seeing right now.
Is a waiting of weighing of the trade-offs.
So in Europe, right, we're, we're starting to sort out what does this really mean?
And do do, does Europe continue on its path or does it have
to modify that in some way?
And that discussion, I think, in a lot of ways is just beginning.
But what you see other places is, is that first effect of rationalization, right?
Rationalization is not, oh, we're stopping.
Rationalization is not everything is affordable as
it was a couple of years ago.
We've gotta pick our investments carefully.
We've gotta, it, it's a pruning, if you will, right?
Plants get healthier when you prune them back.
Essentially.
I have an optimism for, for the industry.
But what you're gonna see right now is that type of pruning.
Um, and I think a lot of it,
victoria_1_03-27-2025_105142: heavily pruned, you know, you use that term
rationalization and, and there's rational, as in let's be logical and rational.
And then of course, we often use rationalization to say, and we're
shutting down a whole bunch of assets and
Is the mood gloom and doom where you sit?
kendall-justiniano_1_03-27-2025_155142: I mean, I think, I think this the,
the key leaders, some of the key leaders, so Jim Radcliffe is one I
look to Elem cadre at Science Code.
Just, just was on the European man.
She's, she's now leading the European Manufacturers Association.
They've gotta be sounding the alarm bells, right?
Because once you get to a point of rationalization, you're done.
Right?
You, there's not much you can do after something has been shut down.
victoria_1_03-27-2025_105142: It
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: in
kendall-justiniano_1_03-27-2025_155142: Yeah.
And so, yeah.
And so they're setting off those alarm bells, right?
And I think that's gonna be good, and that starts a healthy dialogue.
The other aspect is, is when we talk about sustainability.
We don't think of it as a, as as a single, you know, uniform type of thing.
Sustainability has a lot of different types of, of plays associated with it.
There's lots of different directions for sustainability and the fundamentals
are different for each one.
So each one has its own dynamics and each one's gonna react a little bit
differently to what's happening right now.
Right.
So, so for me, for the question are, are companies still interested?
I would say yes.
But in a qualified manner.
Right.
Does it make business sense?
And the devil right now for sustainability is in those
details, For some it'll be yes.
And for some it'll be no.
victoria_1_03-27-2025_105142: Yeah.
And I think some of it is, I think this, if I go back to, you know, the heady
days of sustainability in the early 2020s, it was around new products, new
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: new what have you.
And yeah, and we talked about this a little bit before we got
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: is I view the chemical industry and many
industries has been inherently circular.
Kind of forever.
Why?
Because it's efficient.
Maybe 'cause it's cheap.
Well, instead of sending this stream to waste or to the flare or to
whatever, can I make another product
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: it?
So if you, if you look at how much of the industry, in fact even
chemicals themselves often made from.
of the byproduct, bottom streams coming out of oil refineries, right?
So there's a lot
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: Circularity and sustainability
kendall-justiniano_1_03-27-2025_155142: Yep.
victoria_1_03-27-2025_105142: place in that.
but it gets
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: Kendall, I think just these different risk profiles.
And I think companies right now are facing a lot of risk, both from
kendall-justiniano_1_03-27-2025_155142: Mm-hmm.
victoria_1_03-27-2025_105142: perspective, from from meeting their targets.
From thinking about should they even have innovation platforms.
Right.
So, and I
kendall-justiniano_1_03-27-2025_155142: Wow.
Yeah.
victoria_1_03-27-2025_105142: in, um, in
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: and risk and understanding,
helping companies understand that.
do you, how do you
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: How do, how should companies be looking at
risk and de-risking their business and their portfolios and innovations today?
kendall-justiniano_1_03-27-2025_155142: From a basic standpoint, the
first is getting clear on what, what the context is.
That's why we talked a little bit about sort of where are we
at within the chemical industry?
Because if you say, Nope, look, uh, we still got growth in China,
dah, dah, dah, da da, right?
You're gonna think about this whole space differently.
So, so getting that context is the first piece of it.
The second, and, and this is what we advocate, is, look, you've
gotta reassess your portfolios.
You've gotta go through the portfolio, given a new context and take a
look at the fundamentals, right?
What are the fundamentals that are driving each of your investments initiatives?
And do they still hold up in the new context, We don't
advocate for rules of thumb.
It's not, Hey, this worked last year.
It's, it's gonna work this year.
This is not the time to sort of use those types of rules of thumbs.
You want to go back to what are the fundamentals of each of these investments?
we think of sustainability in a couple of buckets and, and they
have distinct risk profiles.
Okay.
You mentioned earlier that you think, hey, the chemical industry.
Has kind of always been about sustainability, hasn't it?
Haven't we always tried to use less material to get costs down, right?
Isn't getting material out of the reaction stream and out of
the final product isn't that part of getting the cost down?
and that's really our first bucket.
So things that are tied to efficiency, to productivity, to energy efficiency
throughout the value chain, I think of as bread and butter sustainability.
When I was a young operations engineer at Dow, in the division we were
working at, the division manager wanted folks to focus on capital investments
that also had environmental benefits.
Right.
At that time, environmental was, was, was the, the watch word of the day.
And so they established a, a program for this, right.
So you could get monies from a special pool if you focused on.
environmental impact, impact at the Waste Treatment plant impact at the incinerator.
We had all those on site and it became one of the most popular
programs, it was called The Waste Reduction Always Pays program.
Right.
And what they found was you got a ton of payback.
When you paid attention to how much waste waters you sent into the waste
treatment plant, you counted for that.
You paid attention to how much waste you were sent and the cost of that.
And as those capital programs started going, number one, they
paid for themselves very quickly.
But number two, you know, the load on the on the waste treatment plant went down.
The load on the incinerated went.
All of a sudden, you see, you see waste reduction and efficiency and productivity.
You saw the connection to the financial benefit.
That's the first bucket for us to, to, to us.
That's, that's bread and butter.
It's not going away.
It may have been overlooked because of these larger sort
of sustainability initiatives.
Right.
But I think of things like lightweighting, you know, and now we're electrifying
and we're, and we're actually heavyweight cars, but we used to be
about lightweighting cars, right?
Waste reduction, getting ener energy efficiency down the value chain.
These are all, we think the lowest risk bucket.
our second bucket, let's call it medium risk, is what I would, I would put in
initiatives around the circular economy.
Right Now, you could say that's part of the efficiency bucket, but the
unique characteristic of circular economy is you're trying to build
a value chain that brings materials back into the chemical stream.
Right.
And yes, if you're doing that within a plant, that's part of the first bucket.
But if you're doing something like plastics recycling, or chemical
recycling of plastics, this type of thing, you are, you need to
build a new value chain, right?
That's part of the emphasis of a lot of these circular economy.
we think of that as a medium risk bucket because, uh, and the way we
think about sort of that is, is.
You want your circles in the circular economy to be as small as possible, you,
and, and this is just a cost look, right?
The idea being if you have to do a bunch of conversion steps from collection
all the way back, and you're going and you're taking the material all
the way back into the value chain, and then you're bringing it forward,
chances are you've got a lot of steps.
You've got a big ecosystem you're trying to build up, you're not
gonna have a big cost spread.
Right to be able to get that value for each of your ecosystem partners.
Whereas if you design ecosystems that are smaller, that have a limited
number of partners and that have a more efficient recycle, you got
a better chance of of surviving.
victoria_1_03-27-2025_105142: Hmm.
kendall-justiniano_1_03-27-2025_155142: Right.
I if you want some examples of this right?
For me, at the one end, the big circle is something like chemical
recycling through pyrolysis.
You're essentially collecting plastic.
You're aggregating it back in, you're turning it back into oil, and then
bringing it all the way back into the oil value chain at the refiner,
victoria_1_03-27-2025_105142: a lot of steps.
kendall-justiniano_1_03-27-2025_155142: right?
There's a lot of steps there, and you're talking about producing commodities.
Some of that's gonna end up in monomer.
Some of that's gonna end up in, in, uh, in fuel, one of the plays
I like from a smaller circle standpoint is Eastman's renew.
So they have a chemical, they have a chemical recycling.
It's based on polyester technology.
So here's an example where you can collect from the largest single recycle
plastic stream that exists, right?
PET, you've got very clean chemistry and you're, you're getting very
high yields back to monomer.
And then in the case of Eastman, you're putting it back into their
high value co polyester business.
So you've got a very small circle and you've got a very big spread
to be able to fit that circle into.
Right?
I think their biggest challenge right now still is capital.
Capital intensity.
And then you get to the smallest kinds of circles you can think of.
I've got a, I've got a company that I think is just a, a gem, a startup company
called UBQ, and their hypothesis is.
I don't need collection infrastructure.
I don't need, I'm gonna start at the landfill.
And they have technology that will take cellulose and plastic waste
directly from a landfill and convert it directly into a usable plastic
victoria_1_03-27-2025_105142: Hmm.
kendall-justiniano_1_03-27-2025_155142: about the smallest
circle you can think of.
I, I think that one's got really, really high potential.
Right?
And so you can see, in one case, you're like, Hmm.
Struggling.
And in another case you say, wow, these things could still move forward even
in the environment that we have today.
victoria_1_03-27-2025_105142: Yeah,
kendall-justiniano_1_03-27-2025_155142: So those are the buckets, right?
Um,
victoria_1_03-27-2025_105142: the, uh, the landfill to whatever the
bottles, what, what popped into
kendall-justiniano_1_03-27-2025_155142: yeah.
Yeah.
victoria_1_03-27-2025_105142: Kendall, when I was a kid and,
and probably when you were a kid, we didn't drink a lot of soda.
Um, I
kendall-justiniano_1_03-27-2025_155142: Uhhuh.
victoria_1_03-27-2025_105142: it was the sugar, it was not as available.
It was expensive, but get eight packs, remember, in glass bottles.
And you'd
kendall-justiniano_1_03-27-2025_155142: Oh yeah.
victoria_1_03-27-2025_105142: bottle.
And the glass bottle got washed and refilled.
And um, and somehow along the way we've gotten away from that.
And, and frankly, some of it's lightweighting, it's the
beauty of plastics, it's the way the markets have changed
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: But, um, we've made those circles a
lot bigger than they used to be.
kendall-justiniano_1_03-27-2025_155142: I mean, I remember as a Boy
Scout doing paper drives, right?
That was when paper had value on the market.
And so you were incent you, I had a reason to go out and ask people
for their newspapers 'cause I could sell it and make money for it.
yeah.
So those are the buckets.
you know, in terms of, in terms of the, uh, reassessment, I talked a
little bit about the reassessment.
So, so we think of reassessing against four criteria.
and part of this is about getting really brutally honest
about your initiatives, right?
Take each one against four criteria.
One is what does your initiative look like in a cost constraint environment, right?
If you're selling biopolymer, competing with polyethylene, that may have all
been well and good when polyethylene was selling for 80 cents a pound.
And how is it now if polyethylene selling for 60 cents a pound, right?
Does it still, does your value proposition still hold water?
And the other piece is in a capital constrained environment, right?
If you've got somebody who has, who's going to have to make an investment in
order to grow the product you're trying to sell, how does, how are you holding up?
if, let's say that those capital investments are gonna
be very difficult to get right.
victoria_1_03-27-2025_105142: Kendall, I
kendall-justiniano_1_03-27-2025_155142: I think those two are super, super easy.
Yeah.
Go ahead.
Yeah, go ahead.
victoria_1_03-27-2025_105142: a bit of a philosophical.
Discussion that I did not tee
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: here we go.
because part of the challenge here, and, and I think it's a dilemma
that we're facing in a global world,
legacy companies, is are operating on.
With different measures.
So I look at, so for instance, you know, we talk about, uh, let's just
take polymers, polyethylene, pick almost
kendall-justiniano_1_03-27-2025_155142: Mm-hmm.
victoria_1_03-27-2025_105142: somewhat basic chemical.
China is overbuilt, China is overbuilt, and
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: gonna stop building and they're gonna keep building.
And we are awash with
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: polypropylene, other stuff.
they, I contend they are, those companies are not publicly held companies, or
maybe they are, they're quasi whatever.
Um,
kendall-justiniano_1_03-27-2025_155142: yep.
Yeah,
victoria_1_03-27-2025_105142: are operating with a dis different
strategic plan, a different set of
kendall-justiniano_1_03-27-2025_155142: yeah.
victoria_1_03-27-2025_105142: They are clearly operating on a country strategy
that is the, you know, the China first strategy around independence.
And then we've got companies in the US and Europe and particularly, you know,
I, let's just tackle Europe where we're shutting down, shutting down, shutting
down because it's not economical and they can't compete, it can't meet the
stringent environmental requirements.
so what it strikes me, and this is a bit of maybe my philosophical question is,
kendall-justiniano_1_03-27-2025_155142: Mm-hmm.
victoria_1_03-27-2025_105142: have an answer, but is
should companies be setting.
of their business should they be setting that?
You know what, this is just our long term investment.
We know there is no return for the next 10, 20, 30 years, but
this is what it takes for us to be
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: in 50 years.
'cause if I keep shutting down and rationalizing
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: not making investments.
It's efficient to do so, and I save money
kendall-justiniano_1_03-27-2025_155142: Mm-hmm.
victoria_1_03-27-2025_105142: and my stock market investors are happy.
I'm actually out of business
kendall-justiniano_1_03-27-2025_155142: Yeah.
That's a fantastic, so this could, this, this could be an interesting
conversation just in and of itself.
Um, so this is why sort of getting clear on what we think
the China dynamics really matters.
Okay.
and trying to see forward the fundamentals of can they continue this right.
In the last 20 years it's been now that'll never work.
Central planning doesn't work.
Right?
You and I both probably come, you're a Texan, you come from a free
market kind of kind of background.
I come from the same type of background.
Right.
And you got to the point with that Asian growth cycle where you said, uh, maybe,
maybe there's something to this may, maybe we should be doing what they're doing.
victoria_1_03-27-2025_105142: we, let's learn from
kendall-justiniano_1_03-27-2025_155142: Um,
victoria_1_03-27-2025_105142: I mean, if you look at
kendall-justiniano_1_03-27-2025_155142: yeah, yeah.
Yeah.
victoria_1_03-27-2025_105142: long growth cycles and the long
commitments have worked, maybe not in
kendall-justiniano_1_03-27-2025_155142: Right.
victoria_1_03-27-2025_105142: on the long term they do work.
kendall-justiniano_1_03-27-2025_155142: so the one way to, so, so as you
look forward then, you know, you say, are these fundamentals set up to,
to operate like this going forward?
And I think there's two things that really suggests that the China
thing is over, is structurally over.
And in a way it's a vindication of the central planning.
The naysayers, if you will.
Number one, they've, they've imploded their real estate sector, and I don't
know how much people see that or feel that here because it's, it's localized.
Right.
But you now have, local governments that are highly in debt.
Most of the Chinese who could not get their money out of China, many did.
Right?
Vancouver's overbuilt.
There's lots of places that are overbuilt, but most of the, most of the
individuals who could not guess what real estate was a great investment.
And it's a way that you can inve, you know, families would
get together and that, and they would buy apartments, right?
On the, on the bet, it's a speculative bet.
Hey, this is all gonna work out.
It's worked out in the past.
It'll work out in the future.
Um, and so what you have there is a significant amount of capital destruction.
I.
Okay.
The other piece that I think people aren't quite aware of, and, and this
is really fundamental, so this says, okay, can you restart that engine?
Right?
Could, does that engine restart?
Does it continue to work?
So, so they imploded the real estate sector.
They've overbuilt their fundamental materials sector, right?
the other factor that you have is China is in the early stages
of a population collapse.
victoria_1_03-27-2025_105142: Yeah.
kendall-justiniano_1_03-27-2025_155142: So their population has
been flat for three years.
That's unheard of.
And if you look at estimates right now, you know, if you look at estimates
using official figures, it's something like, uh, they're gonna be back
to 700 million people, not the 1.4
billion people we thought they, they had.
When that starts to happen.
And, and if you look at, you know, a lot of the population figures are
a little bit overblown and is, and that's starting to come to light
now, and it makes that population collapse faster and deeper and worse.
As that starts to happen, you now don't have people to consume, right?
In the same sense.
And you don't have, you don't have workers to operate factories in the same sense.
So you got here by being the low cost manufacturer and now your supply of
manufacturing labor is drying up.
Coupled with the fact that you've got, you've got to restart that with capital.
And the one thing I know about free markets and a lot of, some
of the capital was, was coming from the free market, right?
Ev eventually foreign director investment came in.
You don't fool me once.
Shame on you, fool me twice.
Shame on me.
Right?
And so I think fundamentally you've got some structural issues
that say this is not coming back.
Now how do we deal with a fallout?
'cause they're already overbuilt.
So if you thought, go back to the, the way you used to think about chemicals.
When there was a cycle, we would get pretty pissed at the guys who were
the last ones to build a cracker and like didn't see the cycle coming.
These were bad actors, right?
Or the guys who decided to trash price because there's, they're gonna get into
a price war during the cycle, right?
These were the bad actors and these are stigmatized folks.
And the market has essentially works those out, right?
The good players within the market understand you've gotta build capability.
You can't overbuild, you've gotta be smart about the cycle.
And so what we have, you can think about this.
If you think about a global market, what we have is a bad actor, a bad actor
who is operating on their own policies.
And if you're doing that with your own money and your own people
and your own assets, that's fine.
If you're gonna blow up your own real estate sector, have at it.
But what you now are trying, now what you now see Chi China trying to
do, and they're doubling down on the consumption, the, the consumption
policy, which is we're going to sell our excess capacity on the open market.
Right.
victoria_1_03-27-2025_105142: Right.
kendall-justiniano_1_03-27-2025_155142: we're not going to, to, we
don't want to slow down.
We want to continue.
So, so you've got somebody who's now socializing their
bad acting into other markets.
If you remember, we originally let them into the WTO on the
basis of their liberalizing and moving toward free markets.
So now they're taking actions that show that they're not.
So you could say, let's do what they do, but we know where that's gonna go.
I think this is a time when you start to say, look, these are the basis on which
you were allowed into the global market.
you know, this is a place for policy.
This is a place for government action to say, look, if what you're
going to do, given that place in the global market is overbuild, and then
socialize your policies to the rest of the world, do we really want that to
continue and would we stand for that?
victoria_1_03-27-2025_105142: Great
kendall-justiniano_1_03-27-2025_155142: Right?
And I think that's some of what you see in the political backlash today, right?
That's some of what you see there.
victoria_1_03-27-2025_105142: because that's its
kendall-justiniano_1_03-27-2025_155142: No, no, no.
victoria_1_03-27-2025_105142: but what I am gonna say while, while we've got
this, we're on this topic, is, um.
John Richardson from ICIS has been on the show a number of times and we've
talked about some of the China dynamics.
So
kendall-justiniano_1_03-27-2025_155142: Love him.
He's great.
victoria_1_03-27-2025_105142: link, um, some of those episodes here in
the show notes and to the blog so that we have, um, people have that
context if they wanna go do some
kendall-justiniano_1_03-27-2025_155142: Yep.
victoria_1_03-27-2025_105142: Alright, Kendall, so we're,
kendall-justiniano_1_03-27-2025_155142: sure.
victoria_1_03-27-2025_105142: we're gonna be running outta time here.
Um,
kendall-justiniano_1_03-27-2025_155142: Okay.
victoria_1_03-27-2025_105142: my one final question that I've got for you is.
You know, so as you sit here, we're the start of 2025.
We recognize
kendall-justiniano_1_03-27-2025_155142: Mm-hmm.
victoria_1_03-27-2025_105142: dramatic shifts, um, taking place
just economically, socially, et cetera, and companies are really
kendall-justiniano_1_03-27-2025_155142: Yeah.
victoria_1_03-27-2025_105142: and figuring out what their next steps are.
What's your top, uh, two or three things that advice that you give to
executives who wanna manage and grow?
kendall-justiniano_1_03-27-2025_155142: I think the first step
is reassessment, right?
We're in a period of pulling back in rationalization, so you've got to do
a reassessment, then you got to do it on fundamentals, step number one.
Step number two is.
The sort of easy options for growth.
The easy levers for growth aren't going to be there moving forward.
I, I give you an example.
I, I worked for two companies during, during this time, this
heady time of growth, if you will.
And, they grew by acquisition.
Both of them, you know, there was a big acquisition, scree, they grew
by acquisition and it was this, this sort of thing that, when, when an
acquisition was over and you were sort of got through all the synergies
and you were looking at counting on your organic growth to continue the
growth path, you weren't always there.
Right?
And as long as you're managing the core business really well, you could always go
get financing and do another acquisition.
so in the past, I would say, managing your core business and then being able to trade
on your core business was a fundamental.
If we're going into a cycle, everybody's gonna be struggling to manage their
core business and they're gonna be looking for growth wherever they can.
And I think, I think we've gotten soft on capabilities
around, around organic growth.
We've been doing that for so long in this era that we've
gotten soft on our capabilities.
And so the, the second thing that I would say is you've gotta invest in your
core capabilities to do organic growth.
victoria_1_03-27-2025_105142: Got
kendall-justiniano_1_03-27-2025_155142: Right.
And that means being able to do market driven innovation, right?
And being a be having the commercial capability for new business.
And when I say that, I'm not, I, I think we've gotten very used to managing
existing accounts, commercially marketing to existing accounts commercially.
And we've lost some of the muscle that we had to go out and get new
business to launch new products.
I'm gonna say something that's gonna be heresy, probably I'll get in trouble
for saying it, but I don't think.
I don't think the epicenter of B2B commercial excellence
isn't industrials anymore.
Right.
When you and I grew up,
victoria_1_03-27-2025_105142: Hmm.
kendall-justiniano_1_03-27-2025_155142: if you wanted to do B2B industrial
commercial work, you went to work for ge, you went to work for Dow
Chemical because those were the places that knew how to do this the best.
I think, I think, the epicenter of commercial excellence
today at B2B is in tech.
victoria_1_03-27-2025_105142: Yeah.
kendall-justiniano_1_03-27-2025_155142: Right.
And we've, in a sense, we've fallen behind.
Tech is not afraid of digital and tech has kept up with the selling science.
The selling science has advanced.
I used to be a huge value selling guy.
I'm not a val.
I, I am a value selling guy.
Value selling is table stakes.
Solution selling is table stakes.
And if you're not up on, on the latest science there,
you'll end up falling behind.
And if you're not using the latest tools, you'll end up falling behind.
And so that's the second piece of it, right?
Growth is gonna be hard to come by.
You've gotta start investing in real capability, real organizational
capability for, for organic growth.
And that's, and that's what Growth Arc is all about.
victoria_1_03-27-2025_105142: I love it.
And that's a great, uh, that's a great close.
So Kendall, this has been really fun.
If people want to
kendall-justiniano_1_03-27-2025_155142: Yeah,
victoria_1_03-27-2025_105142: um, how can they
kendall-justiniano_1_03-27-2025_155142: absolutely.
two ways.
Number one, I'm all over LinkedIn.
victoria_1_03-27-2025_105142: Yeah.
kendall-justiniano_1_03-27-2025_155142: if you're a LinkedIn user.
Feel free to connect with me on LinkedIn and you can, I've got a company page on
Linked As as well, growth Arc Advisors.
If you're not, and I know there's a lot of people who are not right,
I would say go to my website.
I'm at growth-arc.com,
www.growth-arcarc.com.
I run an executive round table.
I run a, a newsletter.
I would say subscribe to the newsletter and you'll hear and, and get some
of these perspectives and be able to stay in touch and, and, and,
uh, join into the dialogue as well.
victoria_1_03-27-2025_105142: love it,
kendall-justiniano_1_03-27-2025_155142: So
victoria_1_03-27-2025_105142: Kendall.
Thanks so much for this and thank you everyone for joining
us today on The Chemical Show.
Keep listening, keep following, keep sharing, and we will
talk with you again soon.