2012 – Renewed Growth

The new year has started off with some definite volatility.  Market conditions continue to be unstable in our key markets for a few reasons, some of which are expected, and others unexpected. 

Our business has a definite seasonal nature, due to the slow down in the paint & coatings segment, which represents a large portion of our sales.  Across the U.S. not as many painting projects are done in the Winter months, as Spring and Summer.  This slowdown is expected and plays out year after year.   Conversely, the plastics industry tends to bounce back a little in January due to end of year de-stocking.  We have seen this again this year.

The unexpected causes of the new year’s volatility relate to the European economic malaise as well as a slowdown in Asia-Pacific.   The European market is a key export market for U.S. manufacturers, particularly when the dollar is weak.  If their demand slows, we will definitely feel the impact with our customers locally.  It should be noted, that if Europe falls into a major recession, China will feel the impact as well as China is a major exporter to Europe. 

Furthermore, there is a well documented slow down in Asia-Pacific.  China growth has slowed to less than 9%, which is still very significant, but the slowest that they’ve seen in several years.  When the Chinese closed factories for the Lunar New Year holiday, their inventory levels are believed to be at very low levels.  If they come back strong in the next few weeks, many companies in the specialty chemical industry will see this recovery in demand as a welcome sign.

Despite these macroeconomic factors, Maroon Inc. continues to see growth opportunities in 2012.  Our focus on Exceptional Customer Service, Technical Sales, Global Sourcing, and Product Bundling, are all advantageous to our customers.  If customers are looking to improve their inventory turns, we can help with our JIT inventory programs.   

Specialty chemicals and packaging by Maroon Inc.

2011 – An “Unbelievable” Year!

This past year will certainly be remembered as “unbelievable”.  2011 presented a wide array of challenges in the specialty chemical industry, with more excitement to follow in 2012.   We can look back on many significant events that impacted our key markets and customers.  Supply shortages, price increases, the Japanese earthquake and tsunami, unrest in the Middle East, European economic woes, the residential and commercial real estate depression, floods in Thailand, on and on, and on… 

With the backdrop of these significant events, the fundamentals of our business and the value that we provide to our customers is unwavering.  Customers still need, and deserve, exceptional service.  We think about this every day, with the drive to improve our on-time shipment performance.   Today, we ship nearly 50% of our orders same day.  The primary reason that we don’t ship more, is that our customers don’t want their delivery immediately.  This can drastically improve the working capital for our customers and allow them to more efficiently plan their production schedules.  There is no need for you to wait 4-6 weeks for deliveries on material when you can get it in a day or two. 

We also maintain a central focus on fostering customer relationships.  Outfitted with the latest mobile technology, including iPads, our technical sales team is available when you need them, with instant access to the information that you need.   There is no need to wait for 2-3 days after a meeting to get a presentation or TD Sheet, when we can submit you the information instantaneously.   ”Creating Customer Success” is so important to us that we trademarked the phrase.

Our recently redesigned website allows you to research and access our complete portfolio of products, order samples online, follow our social media links, and learn more about our company.  Bi-monthly email campaigns allow us to stay in touch and introduce our newest products. 

Rest assured, despite the success that we’ve achieved in 2011, we will continue to focus on improving our service, product offerings and company. 

Specialty chemicals and packaging by Maroon Incorporated.

 

Sales Tools – iPad Launch

We recently outfitted our sales team with iPads that can be used during their face to face interaction with customers.  We’ve found that this tool is an excellent way for us to present a wide range of technical information to our customers in a very timely fashion.  The time to launch a presentation, open a technical bulletin, or review a product guide on an iPad is significantly faster than booting up a laptop computer.  Furthermore, the mobility of iPads is excellent.

Customers have accepted this technology with open arms.  Often times, during presentations, our customers will interrupt and ask if they can bring in their Sales Manager or Senior Management to see how effective iPads are. 

We continually strive to find ways to bring value to our customers.  iPads are a great way to make information instantly accessible and reduce the time required for sales calls, sample requests, etc.

Specialty chemicals and packaging by Maroon Inc.

Strategic Sourcing

We recently wrote an article for Paint & Coatings Industry Magazine about Strategic Sourcing.  The full article can be found at  http://www.pcimag.com/Articles/Feature_Article/BNP_GUID_9-5-2006_A_10000000000001109216

Below are excerpts from the article:

1.  Establishing a strategic sourcing process is a critical step in improving the cost, efficiency and effectiveness of your procurement functions.

2.  Steps in the strategic sourcing process include the following:

     A.  Assessment of Current Competencies

     B.  Market Analysis

     C.  Vendor Analysis

     D.  Cost Analysis

     E.  Logistics Networks and Internal Operations

     F.  Develop a Strategy

     G.  Negotiation

     H.  Execution

     I.  Monitor Results

Specialty chemical suppliers can play an integral role in a successful strategic sourcing program, due to quicker order processing, flexible payment terms, global sourcing, product bundling and close relationships. 

Specialty chemicals and packaging by Maroon Inc.

Consumer Confidence

There are certainly a lot of “mixed messages” that we are receiving from the U.S. marketplace.  Interest rates remain at extremely low levels, corporate earnings are coming in very strong, exports are strong due to a weak dollar, and industrial output is buoyant.  On the flip side, residential and commercial construction are very weak, unemployment remains very high, and the stock market has fluctuated significantly in the last several weeks.  This creates concern for many customers as they are uncertain about what the rest of 2011 and 2012 will bring. 

The key markets that we supply are doing very well in general.  Plastics is strong due to recovered automotive builds, exports and consumer goods.  Although price increases are still common, supply has improved for most specialty chemicals.  Paint & Coatings in the U.S. is not very strong due to poor residential and commercial sales and contruction.  However, global paint & coatings producers are doing well with the OEM heavy equipment and truck segment, as well as exports. 

We are optimistic about further growth for our key markets in 2011 and 2012, albeit at a slower pace that has been seen thus far this year.  We continue to focus on the fundamentals of providing our clients with exception service, quality products and responsible pricing.

Specialty chemicals and packaging by Maroon Inc.  www.marooninc.com

Secondary Supply Impacts

Even today, we are feeling the secondary impacts of the Japanese earthquake and tsunami.  Key intermediates that go into specialty chemical products are sourced in Japan and have led to a significant tightening in the paint & coatings, plastics, and sealants & adhesives markets.  One main class of products, UV Absorbers, has particularly felt the impact.  Prices are rising and supply remains short on many products. 

As we see further consolidation on the supply side, we are more susceptible to supply shortages.  This further supports the rationale of our customers having multiple approved sources on key products. 

Specialty chemicals and packaging by Maroon Inc.  www.marooninc.com

Alternate Supply

As a result of global shortages on several key raw materials over the past few months we have received a large number of calls from new customers looking for product.   In some cases, we are able to help by providing the material that they need immeditaly.  Due to our global supply relationships, we have been very fortunate to be able to get additional product from our suppliers to meet this increased demand.  In other cases, if we don’t have product available, we can recommend an alternate supplier that may in fact have product available. 

In instances where we ourselves are on allocation with our suppliers, we may not have any additional volume to sell.   Our #1 priority has been to take a long-term focus and help loyal customers, even if a new customer is willing to pay a signficant premium.  If a customer has already bought a product from us or our supplier in the past, it is infinitely easier to get them material.  Our suppliers tend to be more amenable to customers that are already “in the system”, as opposed to spot buyers that will never order from us again. 

With this in mind, this climate is an excellent time to approve our products as alternates to your incumbent suppliers.  By giving us a minority supply position, your chances of getting product in the future are greatly improved.  Customers that have multiple approved sources seem to be fairing much better than those that pitted one supplier against another.

Global Supply Chains

With the recent earthquake and subsequent tsunami in Japan, several customers have asked about interruptions that we our experiencing or anticipate experiencing in our supply chain.  Fortunately, thus far we have not had any substantial impacts.  However, we fully expect that there will be secondary effects that we feel in due time. 

We currently have two major suppliers that are headquartered in Japan.  The first, based in Southern Japan, was unaffected as far as personnel and plants.  They did a great job of communicating early and often to us, reviewing their U.S. inventory holdings, shipments in route, as well as reiterated their ability to transfer production to alternate facilities outside of Japan.  Within 36 hours of the earthquake, we had communicated this information to our Sales and Management team for dissemination to our customers.  Since the earthquake, we have continued to communicate with this supplier on a daily basis to obtain updates. 

Our second Japanese supplier, was directly impacted and has experienced signficant production interruptions primarily related to inadequate power supply.  They are putting on hold all material warehoused throughout the world, until they can better understand the length that their production stream will be interrupted.  Fortunately, they too had a large inventory built up in the U.S. and our customers should not experience any supply interruptions. 

Our sourcing model is one that takes us to all corners of the globe.  We continually discuss contingency plans and worst case scenarios, to best plan our business.  However, there are numerous things that occur that cannot be controlled.  By maintaining high levels of inventory, communicating frequently with our customers to make sure they are apprised of the situation, and taking quick action when things outside of our control do occur, we lessen the risk that our customers face.

You can obtain more information about our company at www.marooninc.com

What value can distributors provide?

This is a question that we often get asked, typically by a new or prospective customer.  In the past, many companies felt that they could get a better price by buying direct from a manufacturer.  However, this is often times not the case as the costs incurred by a distributor would be incurred by a manufacturer if they went direct to market. 

Distributors can create the following value for customers:

1. Reduced lead times.  In today’s Just-in-Time manufacturing environment, with significant pressures on cash flow, manufacturers do not want to carry large inventory levels.  Whereas multinational chemical manufacturers often times require 2-4 week lead times or more, distributors can typically deliver in a matter of days or hours.  On an average day, we ship out approximately 35% of the orders that we receive that day.   The only reason that we don’t ship out more is that our customers don’t need same day delivery.  Not having to sit on 4 weeks of inventory brings tangible value to our customers.

2.  Financial flexibility.  As smaller, more flexible entities, distributors often times can provide more flexibility with payment terms.  We can either extend payment terms to our customers, or put in place consignment programs that allow customers to be billed upon usage.  Not many manufacturers are willing to extend terms beyond the standard Net 30 days and if a past due reaches 35 or 40 days, you may risk being put on credit hold.  Coupled with carrying less inventory, these two affects can be significant. 

3.  Global sourcing.  Distributors can reduce the risk for our customers by handling the global sourcing and logistics of key raw materials.  Many of our customers do not have the scale, interest, or internal expertise to import products.  They want to take advantage of lower cost alternate suppliers, but if you only buy 1 pallet per month, it is not feasible to import direct containers.  Distributors can bring in full containers, which we can sell to multiple customers.  This assists small to mid-size producers to compete with competitors that are importing direclty.  

4.  Product Bundling.  Most distributors carry a wide range of complementary products.  Our customers can consolidate their number of suppliers by buying from distributors.  At a minimum, a reduction in freight expense can often times be realized. 

5. Customer Relationships.  Distributors are typically located in a customers geographic region, which allows us to visit with them on a more frequent basis than a global manufacturer.  This allows distributors to foster strong working relationships with the purchasing, operations and technical staffs of our customers.  Our customers often times call us first when formulating or attempting to source a new raw material.  These types of relationships become mutually beneficial. 

The real value of distributors varies for each customer.  By tailoring solutions to our customers specific needs, we can become a valued supply partner.   There is a saying “In the manufacturing business, its all about products.  In the service business, its all about people.”  Successful distributors focus on the customers needs and how they can best meet them.

Learn more information about Maroon Inc. at www.marooninc.com.

Our first post!

Maroon Inc. is pleased to announce that we will begin blogging about various topics related to the specialty chemical distribution business.  As a distributor for more than 30 years, supplying customers in the Paint & Coatings, Plastics, Graphic Arts, Adhesives and Composites Industries, we have a unique perspective on this business. 

Our goal is to provide information that you will find informative and useful in better understanding the dynamics of our markets.  Our business is global in nature and we are impacted by many factors, both micro and macro economic.  We will be addressing topics such as Pricing, Supply Constraints, New Product Developments, Industry Consolidation, etc.

Learn more information about Maroon Inc. at www.marooninc.com