28/11/2014

CUSTOMER SATISFACTION

Optimists hope this year’sphysical sales will be kept at the same level as 2013, as a consequence of the situation of the plastic resins market in Brazil in 2014. The business environment deteriorated by the occurrence of the World Cup in the country, which increased the number of holidays. The electoral environment also reduced the productive activity, which reflected in the weak disposition of the transformation industry to invest in additional production capacity.
Despite the difficult year, plastic resins distributors have shown lean and efficient structures in order to keep small and medium processors supplied, and plan to expand their business, especially by aggregating services.

Integrated operation - A different business view is offered by Cromex: in the last quarter of 2012,the company merged its masterbatch production with the resins distributor Resinet, initiating joint operations in 2013 under the name of Cromex. The existence of common shareholders in both companies made easier the integration.
Even with most of the market share coming from the sale of masterbatches, the distribution of polymers has gained strength, taking advantage of the structure built nationwide. "There is a great synergy among the areas, those who purchase resins usually order colour masters or additives," said Cromex's commercial director.

He points out a benefit for the acquisition of raw materials, particularly engineering plastics, since the master is made with the same resin supplied to customers. The same applies to polystyrene, provided by Unigel for distribution. "The PE and PP we use to make the master is locally manufactured, while we distribute the products we import from some well-known international suppliers," he said.

As he pointed out, due to a larger and more diverse market, getting polyethylene countertypes is easier than in the case of polypropylene, which is more specific. In addition, polyethylene underwent complementary tax protection, via import duties from 14% to 20% by August 2013. PP kept a14% rate, but imports were (and still are) harmed by anti-dumping compensation of different values, according with the country of origin, against the United States, South Korea, South Africa and India.
Another synergy gained by Cromex is related to the use of the same commercial structure for both areas. After all, those who process PE and PP will use some kind of masterbatch. "We sell masters to large customers who buy resins directly from the manufacturers, but small processors buy master and resin from us," he said. He stressed that the company's idea is to offer a complete solution to customer needs. For this purpose, the portfolio introduces products that can complement buyers' supply: special compounds for wire and cable from Borealis (in addition to standard compounds from Cromex), Multibase silicones, and purge components for plastics production lines from Mould Plus.

Also the areas of credit analysis, registration and billing are consolidated, streamlining operations. "I believe distributors need to be as complete as possible, offering resins, masters, compounds, services, etc., the way it is done in the United States and Europe. We have found good response from the customers,” he added.
"It's a way for the distribution."

The need to adapt to market changes has been emphasized by Cromex's commercial director: "Plastic transformation has increased slightly in the last five years, although the Brazilian industrial market has decreased, but there has been important changes," he said. He pointed out the use of increasingly thin films and the gradual reduction in weight of consumer products packaging, without prejudice to its resistance, due to the development of new polymer grades. "That means using less resin to make the same amount of products," he explained.

Cromex expects to achieve a sales growth this year, although below the past years. This is a good result, considering the influence of the World Cup, the uncertainty of the election period and the weakness of the national productive activity, which did not spare the auto industry, a large plastics consumer. "We are investing in innovation, such as micronized compounds for rotational moulding of large parts, e.g., water tanks and itens for agricultural-use," he said. The company does not yet have the capacity to produce polyamide compounds, but it distributes the ones manufactured by partners such as BASF.

Performance in plastics specialties requires technical support. For this reason, Cromex has its own laboratory in Bairro do Limão, São Paulo, also used for the masterbatches area. In addition to supporting customer developments, the lab structure also provides services for distributors. "We perform analyses and reports for Samsung, which provides us with polycarbonate, ABS and its blends," he said.

In addition, the company keeps its own technical assistance experts to help customers for both masters and distribution, and a national network of sales representatives linked to regional centres. "We have many clients in other areas out of the South-Southeast regions of Brazil and, as shipment costs are high, having regional teams is advantageous," he said.

Production is also divided between the headquarters, in Bairro do Limão (São Paulo) and the manufacturing unity in Bahia , with distribution centres in Pirituba (São Paulo-SP), Santa Catarina, and Paraná.

Pinhel admits that commodity customer loyalty is low, unlike specialties. "We encourage our customer to look at the cost and not the price of resin; that is, consider care and services added to the product and how it affects their operation," he said.

The commercial director also commented on the great interest of global manufacturers of plastic resins in entering the Brazilian market. "The country is seen abroad as a good strategic option, both for the local market size and the potential of growth," he said. He pointed out that the United States is in short supply of plastic resins, but the plans and development of petrochemicals there will be followed by an increase in manufacturing, in a scale capable of placing the country as an exporter without leaving an exportable surplus of resins, a great fear for local manufacturers of these items. "China has a large market, but it is focusing on domestic demand," he said.

Close to its fortieth anniversary in 2015, Cromex is preparing novelties, still kept confidential. Both business areas will benefit, according with Pinhel.

Tax issue - The lack of rule standardization for the ICMS, an VAT tax charged in several Brazilian states, has motivated evaders to use various devices to circumvent the tax authorities. Some states charge a 4% rate on the value of plastic resins marketed in their territories. São Paulo State, the biggest consumer of these items, charges 18%. The difference between the percentages is tempting.

"Those who evade tax will appropriate a 14% tax difference, which is much more than the distribution margin. This is a worse factor than the exchange rate itself." said Pinhel. "The commercial activity should be based on logistics and commercial efficiency, but it has become a tax issue nowadays".
See the complete article: Plástico Moderno
*Distribuidores Cromex*
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