Matters THE Akzo Nobel MAGAZINE | JUNE 2007 Beijing Olympics Decorative Coatings Working in China Cool Chemistry Food industry China roars ahead Colophon Akzo Nobel Matters June 2007 Publisher Akzo Nobel NV, The Netherlands Editorial address Corporate Communications (ACC) P.O. Box 9300, 6800 SB Arnhem, The Netherlands Telephone + 31 26 366 4501 Fax + 31 26 366 5850 E-mail akzonobel.matters@ akzonobel.com Managing Editor Berry Oonk Chief Editor David Lichtneker Editorial Board Peter de Haan, David Lichtneker, John McLaren, Berry Oonk Contributors Arne Braaksma, Patricia Gosling, Rebecca Parsley, Sara Sharpe, Florence Tonk Photography/ Illustrations Alamy (Jon Arnold images/David Lyons/ Francisco Martinez/ Redchopsticks.com, LLC), BOCOG, Corbis (Image Source), Getty Images (Emile Luider/ Keren Su), iStockphoto. com (Geopaul), SXC (Elisabetta Grondona/ Mike Johnson/Justus Kindermann/Andy Steele) Traffic Manager Erica Lier Production Hemels Publishers, Hilversum, The Netherlands Printing Roto Smeets Utrecht, The Netherlands Contents Opinions in this magazine do not necessarily represent those of Akzo Nobel, and Akzo Nobel accepts no responsibility for these opinions. While the information in this publication is intended to be accurate, no representation of accuracy or completeness is made. Reproduction of the contents in other publications is prohibited unless prior written approval is given by Akzo Nobel. You can subscribe to Matters magazine online by visiting www.akzonobel. com/com/News/ Company+Magazine. htm Akzo Nobel is a Fortune Global 500 company and is listed on both the Euronext Amsterdam and NASDAQ stock exchanges. It is also included on the Dow Jones Sustainability Indexes and FTSE4Good Index. Based in the Netherlands, we are a multicultural organization serving customers throughout the world with coatings, chemicals and human and animal healthcare products. We employ around 62,000 people and conduct our activities in these four segments, with operating subsidiaries in more than 80 countries. Consolidated revenues for 2006 totaled EUR 13.7 billion. The financial results for the second quarter will be published on July 24, 2007. Visit Akzo Nobel’s corporate website: www.akzonobel.com 3 Welcome Akzo Nobel CEO Hans Wijers welcomes you to our latest issue. 4 Building the dream A look at how Akzo Nobel is contributing to the 2008 Olympic Games being held in Beijing. 6 The only way is up The General Manager of the company’s Decorative Coatings activities in the Asia Pacific region gives his impressions of the market in China. 10 When in China Three of the company’s China-based employees talk about what it takes to be successful in a country which poses so many unique business challenges. 13 In brief A summary of company developments from around the world. 20 Seal of approval How Akzo Nobel’s polysulfides business is helping China’s government and its construction industry in their efforts to become more sustainable and energy efficient. 23 In brief More company news summaries from across the globe. 24 A formula for success How Akzo Nobel’s recently acquired Sico brand successfully overcame a number of challenges to launch a zero VOC range of one of its established product lines. 26 We’ve got the power A close-up look at the company’s fuel cell pilot plant in Delfzijl, the Netherlands. 14 Cool chemistry We explain why one of the company’s coatings ranges is raising the roof in some of the world’s sizzling inner cities. 14 16 Food for thought Two managers from Akzo Nobel Chemicals outline the company’s contribution to the food industry and explode a few myths along the way. 10 26 28 Welcome CEO Hans Wijers 28 Search for a star A report on some of Akzo Nobel’s recruitment initiatives designed to attract the best young talent to the company. 30 Calling One of the company’s employees reports from their part of the world. 30 Gallery We highlight one of the works from Akzo Nobel’s acclaimed Art Foundation collection. Full of Eastern promise Welcome to another landmark edition of Matters magazine. I am pleased to announce that following on from the publication of our first language version (German) in March, this issue marks the launch of Matters in Chinese. To celebrate this latest addition to the family, it seemed only natural that our theme for this edition should be China, a country which holds tremendous strategic significance for our company. This month alone we are opening two new plants in China and recently announced a EUR 250 million investment in a new Chemicals multi-site being established in Ningbo. This is just the tip of the iceberg, however, because, as I have stated on numerous occasions, China has a key role to play in Akzo Nobel’s growth plans. Various features throughout this issue underline our commitment to expanding in this part of the world, as well as focusing on a number of success stories. 16 For example, there’s a detailed look at our decorative coatings activities in China, which highlights our determined efforts to become the country’s number one coatings company. We also offer a glimpse at Akzo Nobel’s major contribution to next year’s Beijing Olympics and find out why this month’s opening of a new polysulfides facility in Taixing is so significant for China’s sustainability efforts. With almost 5,000 employees in China, we also take the opportunity to talk to three of our managers to find out what it’s like to live and work in a country where the economy is continuing to boom and where doing business offers so many unique challenges. In addition, we also report on a zero VOC paint range launched by the company’s recently acquired Sico brand in Canada, investigate the vital role Akzo Nobel plays in the food industry and learn more about the efforts being made in the area of recruitment to attract talented students and show them the benefits of pursuing a career within our global organization. 04 Remember, you can subscribe to Matters free of charge (either the English, German or Chinese versions) by visiting Akzo Nobel’s corporate website (www.akzonobel.com). I look forward to welcoming you to our next issue in September. Hans Wijers Chairman of the Board of Management Building the dream With the countdown to the 2008 Beijing Olympics well underway we look at how Akzo Nobel is contributing to the sporting spectacular. W ith a little over 12 months to go to next year’s Olympic Games, Beijing is currently a hive of activity, with every effort being made to ensure that the Chinese city is ready to welcome the world in August 2008. Since winning the vote to host the event back in 2001, Beijing has been undergoing a spectacular transformation. Cutting-edge stadiums are rising over the skyline, while subways, roads, railways and a major airport extension are also helping to ensure that the city lives and breathes the Games—even though they are still more than a year away. Like any massive project, there have been one or two setbacks—the discovery of an ancient tomb halted work at a shooting range late last year— but the excited sense of expectation is growing by the week, aided by a special clock in Tiananmen Square which is already counting down the days to the opening ceremony. With a track record which includes the 2000 and 2004 Olympic Games in Australia and Greece, the 2006 Winter Olympics in Italy and the Commonwealth Games in the UK in 2000, it was almost inevitable that Akzo Nobel’s Coatings businesses would become involved in the major construction program, which has been ongoing for several years. The two most prestigious venues are the main Olympic Stadium—dubbed the Bird’s Nest—and the National Aquatics Center, christened the Water Cube. As one of only two official paint suppliers to the Games, Akzo Nobel has provided coatings for both eye-catching structures. Home to the swimming, diving, water polo and synchronized swimming events, the USD 100 million National Aquatics Center features products supplied by both the company’s Marine & Protective Coatings and Powder Coatings businesses. All the steelwork is being protected by International Protective Coatings products, including Interzinc®, Intergard® and Interfine®, while around 1,000 kilograms of Interpon® powder coatings has also been specified for the project, which is scheduled for completion by the end of the year. Built to accommodate 6,000 permanent and 11,000 temporary seats, the venue is based on a stunning water cube design which plays on the geometry of water bubbles to create a huge, crystalline greenhouse structure. It will be used after the Olympics as a multi-purpose leisure and swimming center. The main focus of the 17-day sporting spectacular will be the 91,000-seater Olympic Stadium itself, which should be finished next March. Being constructed at a cost of around USD 430 million, the so-called Bird’s Nest—which was designed in keeping with the principles of biomimicry—also features Interpon products supplied by Akzo Nobel’s powder coatings business. Other competition venues being coated by the company include the National Indoor Stadium, the Qingdao Sea Boat Center and the Beijing Olympic Convention Center. But it’s not just at the venues where Akzo Nobel’s coatings expertise has been required. The company has also supplied products for the USD 3 billion extension to Beijing International Airport. The project involves three major connected steel buildings—Terminal 3A, Terminal 3B and the Grand Transportation Center—and is expected to be completed by the end of the year. Such is the extent of the preparations that Akzo Nobel Chemicals has also become involved as the city gears up for the Games. Beijing is bracing itself for a massive increase in traffic flow and work being carried out on the transport network has seen the company’s Surfactants business supply a micro-surfacing emulsifier which has enabled roads to be repaved in double quick time during the night. So the stage is almost set for the Games of the XXIX Olympiad, when the eyes of the world will be focused on China and the 10,500 athletes who will be competing during the 16 days of competition. n Beijing by numbers • Beijing will play host to a total of 31 competition venues, 11 of which are being built from scratch • More than 60 new roads and four new bridges are being constructed around the Olympic venues • Around 240,000 Beijing residents applied to be Olympic volunteers—only 70,000 will be needed • Thirty million flower pots will brighten the streets, hotel reception areas, Olympic venues and scenic spots of Beijing in the lead-up to the Games • More than seven million tickets are available to the public, of which about 75 percent will go to Chinese residents • Around 20,000 accredited media representatives will be in attendance • Athletics will stage the most finals (47) followed by swimming (34) Beijing O l y m p i c s | A k z o N o b e l M A T T E RS | The only way is up “The market is growing by around eight to ten percent a year, so there is clearly substantial room for further growth” China’s booming economy is continuing to attract major foreign investment, with the coatings market being a particularly attractive proposition. A good time, therefore, for Akzo Nobel to be opening a new deco facility in the north of the country. In order to help meet this increased demand—which shows no signs of letting up—Akzo Nobel has just opened a new production site for decorative coatings in Langfang in the north of the country, just south of Beijing. “We’re selling more paint so we have to supply more paint to meet the demand,” continues Brouwer, a Dutch national who is now based in Shanghai. “The new plant will also help us to further improve the service to our customers in the north of the country, where there are some major population centers.” The addition of the Langfang facility means that the company now operates three deco production sites in China, the other two being located in Suzhou in the east (opened in 2005) and Guangzhou in the south (which was integrated after Akzo Nobel’s acquisition of Toide Paint later that same year). Investment That China is continuing to attract substantial foreign investment is no great surprise. The country has experienced tremendous economic growth since the late 1970s (GDP quadrupled between 1978 and 1998) and the challenge it now faces is to balance its highly centralized political system with an increasingly decentralized economic system. In many ways, Akzo Nobel’s presence in China has mirrored the country’s growth curve. From modest beginnings in the mid-1990s, the company has accelerated its expansion in China at a rate of knots—nearly 5,000 people are now employed there—with total sales from all operations topping USD 887 million in 2006 (up from USD 750 million the previous year). Overall, Akzo Nobel’s coatings activities account for 75 percent of the company’s sales in China and, given the buoyant market, Brouwer maintains that the only way is up. “There are signs that the government is taking more effective measures to cool down the economy, but in 2006 economic growth in China was bigger than ever before. From a coatings perspective, China is a vital market, simply t A kzo Nobel has made no secret of the fact that China is one of its key strategic markets. Not content with setting a sales target of USD 1 billion by 2010—a milestone which could well be reached ahead of schedule—CEO Hans Wijers has also set his sights on becoming the number one coatings company in China. As strategic priorities go, it makes perfect sense. Akzo Nobel is well established as the world’s biggest coatings company, but is yet to command the coveted top spot in China—the second largest coatings market in the world outside the United States. China, however, represents something of a unique challenge. While the coatings market there was worth USD 7.3 billion in 2005 (30 percent of the Asia Pacific region), and continues to offer enormous potential, it’s also home to more than 7,000 manufacturers of decorative coatings—one of the few segments where, perhaps unsurprisingly given the sheer numbers involved, Akzo Nobel does not hold a leadership position in China. “In terms of size, we are a relatively small player in what is a fragmented Chinese deco market,” explains Wilfried Brouwer, General Manager of the company’s Decorative Coatings activities in the Asia Pacific region. “However, the market is growing by around eight to ten percent a year, so there is clearly substantial room for further growth.” Indeed, closer examination of the Chinese coatings market reveals that 40 percent is accounted for by decorative coatings, with growth in this sector being boosted by extensive property development and a sudden boom in home ownership. “Private ownership of apartments has only been allowed for about the last eight years,” continues Brouwer. “Before that, everyone had to rent a state-owned apartment, which people were not inclined to paint. We’ve seen the benefits of this because it has triggered an upsurge in painting and decorating and the market has inevitably seen an upturn.” D e c o China | A k z o N o b e l M A T T E RS | The Chinese way Dutchman Wilfried Brouwer’s career path has taken him to China via the Netherlands, the United States and Singapore. In fact, he hasn’t lived in the country of his birth for 14 years. Now based in Shanghai, his position as General Manager of Akzo Nobel’s Decorative Coatings activities in the Asia Pacific region has enabled him to immerse himself even more in the culture and tradition of his surroundings. “I actually came to Shanghai in 2002 when I was appointed Asia Pacific manager for the company’s Polymer Chemicals business,” he explains. “Prior to that I was based in Tianjin for more than four years after being stationed in Singapore for a year, making numerous trips into China.” All of which stood him in good stead when he took on his current role in 2005. “It was very tiring early on in 1998, mainly due to the cultural differences and language difficulties. But I quickly got used to operating in China, even though there is a big difference in the way people manage and express their feelings.” One decision he made relatively quickly was to try to learn the language. Although he claims he isn’t “super fluent” he can certainly get by. “I still need to use a translator for important business discussions, but normal conversations can be held in Chinese. I think it’s necessary because it’s very important to be able to speak directly to people, otherwise there’s a filter between you and the person you’re trying to communicate with. Living in China for such a long time, it can also only be more pleasurable if you are able to independently move around and travel.” Adapting to and learning how to fit into the unique business culture was another important talent to master. “You find that business can be conducted differently even within different parts of China itself,” he reveals. “So doing business in the north can vary from how it’s conducted in the middle of the country, which in turn can be quite different from the south, in terms of habits, how long it takes to get to business and how to obtain customer loyalty.” But despite these differences, Brouwer admits that he’s relishing every minute he spends in China, even if he is missing the cheese from back home. “It’s incredible to have the opportunity to be in, and participate in, a miraculous boom of an economy and the development of a country in so many ways, not just the economic aspects. The country is clearly moving forward in a healthy way and it’s great to be part of that. “The tremendous energy that is found in the economy is also present in the Chinese people, and certainly in our employees, who have incredible drive to achieve and to deliver. It’s much nicer to work in an environment where there is an economic boom, rather than being in one where growth is stagnant and some people are trying to hold on to the past and are not facing the future.” because of the country’s size in terms of population, which also relates to volume. On top of that, consumption per capita is still rather low if you compare it with developed countries in Europe, or North America, where consumption per capita is significantly higher—about eight times higher in fact. So from both a population and a consumption per person standpoint, there is tremendous potential for further growth.” Competition The company’s predominant decorative brands in China are Levis® and Poli®, which have to compete against thousands of rivals in a country where large-scale outlets such as huge DIY chains are still very much in the minority. Because when it comes to buying paint, small, local stores are the main point of sale—and competition can be fierce. “In many places you find that a garage operation or a small business in a certain city has a better position,” Brouwer notes. “So in lower tier brand areas you have to compete with the local low tier brands, and in the higher tier segment and in bigger cities you have to compete with more international and local brands. That’s just the way it is in China. The number of large-scale outlets is still rather limited, although fast growing, and their percentage is still a small proportion of the total distribution, except in the very large cities. Most of the paint is distributed in relatively small-scale shops that are either operated by the owner or privately owned by a dealer who has multiple shops. So it’s not completely comparable with some big Western countries where large retail chains are the main suppliers.” He adds that one crucial factor influencing customer choice—which weighs heavily in Akzo Nobel’s favor—is brand power. “Corporate brand names are important in China. People believe that size is power. Pictured left to right are two projects in China that used the company’s Decorative Coatings products, West Project in Lan Zhou (Gan Su province) and Hun Bei Garden in Shen Yang (Liao Ning province), and a paint shop selling Akzo Nobel’s coatings located in Liu Zhou (Guangxi province). I think the Akzo Nobel corporate name, coupled with the brand advertising, is something that helps people to be convinced of the quality of our products. It’s also apparent that if you are part of a big company, it’s easier to hire the right people and attract young talent, and that is very important.” As far as paint trends are concerned, Chinese people tend to lean towards lighter shades, possibly because the majority live in apartments, which have fewer windows than houses. Consumers are also becoming more sensitive to the environment, although in China, Brouwer points out that there’s a subtle difference in the approach to eco-friendliness. “Consumers are certainly becoming more and more sensitive to paint which they would say is better for personal wellbeing. If you look at the Chinese translation, the phrase they use is good for health, which is slightly different to saying good for the environment. So water-based products are becoming more popular, but this isn’t a trend which will result in solvent-based products being phased out over the next few years.” With estimates suggesting that value sales of coatings will increase by more than 50 percent between now and 2010, Brouwer has a clear picture of the challenges that lie ahead. “Our decorative activities have to grow substantially,” he says. “We have a clear ambition to become a very significant player in the Chinese decorative coatings market and establish the sort of leadership position that the company’s other coatings activities already command in this part of the world. I think we can realistically achieve that within the next five years.” Which is good news for the CEO, who might also be encouraged by his countryman’s final comment. “If we can achieve our goal, we should drive the company towards its target of becoming the biggest coatings company in China. In fact, to be honest, I think we may already have that position value-wise.” n Akzo Nobel Coatings in China A summary of some of the major developments involving the company’s Coatings activities in China since 2000: 2007 Akzo Nobel Decorative Coatings opens a new factory in Langfang 2006 Decorative Coatings finalizes the purchase of the coatings activities of Guangzhou Toide Manufacturing Co., the biggest Chinese manufacturer of emulsion paint 2005 A new Decorative Coatings facility opens in Suzhou; two new powder coatings factories also become operational, one in Langfang, the other in Guangdong Province 2004 Two new multi-purpose coatings sites are opened by the company’s Industrial Finishes business, one in Tianjin, the other in Jiashing 2003 The company’s new non-stick coatings factory opens in Dongguan City 2002 Akzo Nobel acquires Ferro Corporation’s powder coatings business in Asia Pacific, including its operations in Ningbo, China 2001 A new production site opens in Suzhou housing Car Refinishes, Powder Coatings and Transportation Coatings; a new wood coatings plant also opens in Dongguan City. D e c o China | A k z o N o b e l M A T T E RS | Be not afraid of growing slowly; be afraid only of standing still Ancient Chinese proverb When in China Three of the company’s China-based employees talk about what it takes to be successful in a country which poses so many unique business challenges. Unique Johnny Boey, General Manager of the company’s global Cross-Linking Peroxides, Polymer Additives and Thermoset Chemicals business, who is based in Shanghai, says: “China is unique. It’s like no other country in the world.” As a native Singaporean who speaks fluent Mandarin and English, Boey has a distinct edge on the local business scene. In China, he points out, leadership is key. “To be successful in business here, it’s important to center our strategies around leadership. By that, I mean we need to identify the leaders and then adapt our strategy to them. Top-down directions must be clear. Aligning organizational structures and inter-department integration are absolutely critical as we adapt to local standards as far as possible. For example, when building a plant, it wouldn’t make sense to build to a standard which was developed elsewhere. We have to adapt smartly and work with our surroundings.” Adapting to local practices is an important feature of doing business with the Chinese. Another major challenge in China is how to manage intellectual property. In the West, where nearly every product or innovation is protected by a patent or copyright, intellectual property management is fairly straightforward. “In China, less than one percent of companies have patents on their know-how. It’s a different mind set,” continues Boey. “If they see a good idea, they’ll figure out a way to make it cheaper.” The fact that someone else might have done it first seems to factor little into the equation of intellectual property rights. With the challenges posed by the gap in business practices, how does a company stay out in front? According to Boey, integrating into the local economy is key. “When Akzo Nobel first came into the Chinese market, we were selling U.S. and European made products. Now we’re manufacturing on a local level. Our first Chinese plant was built ten years ago. Low cost operations are essential if you want to stay ahead. Demand consumption is huge, but we’re competing with cheaper local companies, so we need to know how to position ourselves in the market. An important question to ask ourselves is what can we offer that other companies can’t; what can we leverage from our global strengths? ” For any global company, positioning is very important. If a company starts off on the wrong foot in terms of its marketing strategy, problems will arise. “We’ve found it’s best to start at the upper end of the market, because the lower end is saturated. We also target foreign companies and export-oriented companies in China as customers for our products because these segments are growing. They are also the industry leaders and innovators. We’ve also found that it’s important to be geographically close to our customers.” Flexibility, therefore, is key. Geographic proximity allows for solution-oriented problem-solving and better customer relations. Mao Zedong’s ideas on discipline, first published in the late 1960s, may provide some insight into the organizational structure that persists in many Chinese businesses today. In Mao’s way of thinking, the individual is subordinate to the organization, the minority is subordinate to the majority, and the lower level is subordinate to the higher level. This philosophy may explain why Chinese people—to the Western mind at least—seem more group-oriented than individualistic (a highly prized character trait in W o r k ing in China t A s the saying goes, “When in Rome, do as the Romans do.” But does this old adage hold true for China, a vast and complex country with a long history, ancient traditions, and one of the world’s fastest growing economies? Akzo Nobel’s presence there is increasing all the time, with nearly 5,000 people currently employed by the company across its various business activities. So it seemed only natural that three China-based Akzo Nobel managers should be approached to give their take on the challenges of doing business in China, and the inside knowledge foreign companies need to obtain if they are to succeed in what has become a pivotal global market. | A k z o N o b e l M A T T E RS | 11 “Taking the time to have tea and chat is very important” the West), and prefer not to take individual responsibility for certain tasks or decisions. In the West, business professionals typically build transactions and, if they are successful, a good relationship will follow. In China, the opposite holds true. In doing business with the Chinese, relationships are important and generally must be built first before any contractual negotiations can be carried out. The Chinese even have a word for it: guanxi. Loosely translated as the concept of doing business through value-laden relationships, guanxi can be a difficult concept for foreigners to grasp. “It is often thought that the relationship is at the center of all interactions in China,” explains Boey. “And indeed, guanxi is important. We need to invest a lot of time and patience in cultivating good relationships, unfortunately there is no other way. Relationships help open the door, reduce bureaucracy, and can facilitate more open discussions. However, good relationships won’t necessarily solve all your business problems. We must always remember to first keep our house in good order. Besides, one has to be careful not to over rely too much on relationships and take short cuts, abusing the use of a good relationship is a very risky move.” The relationship between the manager and the employee, however, is extremely important, according to Boey. On the one hand, bosses may be worried that a smart employee will take over his position. On the other, the Chinese employee will suffer in silence rather than speak up. They’d rather “accept it” than “seek change.” “We’re trying to bridge this gap and we’re encouraging our managers to do the same: seek advice and listen to your staff. Employee surveys are important and every year we give out Best Employee awards. People need to be inspired and feel recognized and appreciated. Customer Keith Estes, General Manager of Akzo Nobel’s Wood Coatings business in Asia, who is based in Donggaun City, says: “In China, it takes a lot more time to develop a relationship with the customer. This is absolutely necessary to help increase market share.” As an American with 14 years of experience working for Akzo Nobel in Asia (ten of those in China), he knows the importance of relationship building. “Taking the time to have tea and chat is very important. In the West, it’s just the opposite—they want you to be as quick as possible in your transactions so they can go on to something else. We spend a lot of time building this cultural friendship in China. And in terms of the manager/employee relationship, the boss is truly the boss here in China. Things are structured in such a way that he is always respected, without question. Something that is understood throughout the organization.” Relationships Helena Yang, Akzo Nobel’s Human Resources Manager in Shanghai, knows all too well the importance of good relationships and guanxi. As someone who is involved in recruiting and retaining talent, she says that poor guanxi with the manager is often stated as the reason why an employee leaves a company. “Talented staff are hot property, especially in Shanghai, so we have to work hard to cultivate good relationships and retain our staff.” With all the foreign companies in China, Yang says that the Chinese manager needs to understand Western culture and vice-versa. It’s a two-way street. While Yang agrees that the culture gap is very real, she claims that the Chinese way of doing business is not all that different from that in Europe. “We’re still learning how to meet these cultural challenges and working to understand each other better.” Working within local cultural practices and expectations, Yang and her colleagues train managers to retain staff by helping them to establish a development dialog. As part of the company’s Performance and Development Dialog initiative, dialog between the manager and the employee is important for keeping the channels of communication open. “As the country’s economy grows and more opportunities arise, Chinese workers are becoming more interested in their own professional development,” says Yang. “If we don’t work to meet their needs they will move on elsewhere, so we train managers to help their staff meet their professional ambitions.” In that regard, Akzo Nobel will have an important role to play in the emerging markets in China. Expansion plans are already in place and the business climate is very positive. According to Yang, the company’s involvement and commitment in the areas of community and social responsibility positions Akzo Nobel as a good role model within the Chinese economy. “So far,” notes Yang, “Akzo Nobel has made good inroads in the market and has done many things right in terms of creating long-lasting relationships. I think there’s a very good future for the company in China.” n In brief Queen’s Award for Intersleek® 700 The Intersleek® 700 foul release coating developed by Akzo Nobel’s Marine and Protective Coatings business has received the Queen’s Award for Enterprise—the UK’s most prestigious honor for business performance. Recognized in the Innovation category, the silicone-based product—marketed under the renowned International® brand name— contains no biocides and prevents fouling organisms such as barnacles from settling onto a vessel’s underwater hull. It’s the fourth time the business has won the award, following previous successes in 1967 and 1977 for Export Achievement, and in 1981 for Technology. “We’re delighted to have won this year’s Queen’s Award,” said Marine and Protective Coatings Market Director Grant Russell. “We’re particularly pleased to have won this time because a critical element of our strategy is to continually strive for technological advances. To do this we must continuously improve, stay ahead of legislation and develop a constant stream of innovative and environmentally responsible products that meet customer and market needs. This award clearly demonstrates that we are making substantial progress towards that goal.” Intersleek 700 is designed for use on scheduled ships with in-service speeds of between 15 and 30 knots. It provides a slippery, low friction surface onto which fouling organisms have difficulty settling. Performance and environmental benefits include reduced fuel consumption, reduced carbon dioxide emissions, no leaching of biocides into the sea and reduced wash water treatment costs at dry dock. Intersleek 700 was recently complemented by the introduction of the next generation of foul release technology—International’s Intersleek® 900 (see page 23)—which sets even higher performance standards. Grant Russell (right) is pictured at the award ceremony with the Secretary of the Queen’s Award Office. Major Chemicals investment in China Akzo Nobel is to spend EUR 250 million on building two chemicals plants in China—the first confirmed investments in a new multi-site being established by the company in Ningbo. A 50-hectare plot has been reserved within the Ningbo Chemical Industry Zone (NCIZ) and the two new facilities—for the manufacture of ethylene amines and chelating agents—will be the first to be constructed on what will be one of the biggest sites for the company’s activities in the world. “Accelerating growth—particularly in the emerging markets—is one of the company’s main strategic priorities,” said Leif Darner, the Akzo Nobel Board member responsible for Chemicals. “The scale of this substantial investment not only underlines the fact that our growth strategy is gaining momentum, but also reinforces our commitment to consolidating our leadership positions across all businesses.” Both plants will utilize state-of-the-art technology and will meet high, self-imposed standards for eco-efficiency. The chelating agents plant is expected to start up in 2009, followed by the ethylene amines factory in early 2010. “We are planning to build two world scale production facilities similar in size and scope to our existing plants in Europe and the United States,” added Jo Lennartz, General Manager of Akzo Nobel’s Functional Chemicals business. “We will also install the capacity to manufacture our own key raw materials. We have chosen Ningbo for these investments because its location just south of Shanghai and its excellent transport links will enable us to supply the growing needs of our customers in China and the entire Asia Pacific region.” Running for the planet News round-up One of Akzo Nobel’s employees in the United States is among the 20 runners who are currently running around the world as part of a high profile event designed to raise awareness for the fact that 1.2 billion people across the globe do not have access to safe drinking water. Rudy van Prooyen—a Dutchman who is now based in Chicago and works for the company’s Car Refinishes business—is one of the 20 international relay team members who will run around-the-clock to cover 15,200 miles over 95 days. Known as the Blue Planet Run and organized by the Blue Planet Run Foundation, the event began in downtown New York City in the United States on May 25 and will end there on September 4. The route will take in 16 countries on three continents, with each runner covering ten miles a day. The event is being staged to draw attention to the fact that every day, more than a billion people use unsanitary water or travel long distances on foot to search for safe drinking water for themselves and their families. “I am honored and excited to actually be able to leave a footprint and close the gap on this global humanitarian crisis at this time in my life,” said Rudy, who decided to apply when he saw the Blue Planet Run booth at last year’s Thanksgiving Day marathon in Atlanta. “It will be a lifechanging experience but it’s not about me. It is first and foremost about social responsibility and helping those in need of basic life essentials.” For more information about the run visit www.blueplanetrun.org in b r ief | n One of Akzo Nobel’s coatings sites in Brazil recently completed six years without a lost time incident (LTI), which translates into more than 2.5 million man-hours. The company’s Industrial Finishes business in Guarulhos, São Paulo—which produces industrial coatings for wood, metal and plastic products— employees 153 people and last recorded an LTI in December 2000. n Akzo Nobel has agreed to sell its European-based Methylamines and Choline Chloride (MACC) businesses to Balchem Corporation in the United States, a deal which completes the company’s Chemicals divestment program. Balchem Corporation’s European subsidiary, Balchem, B.V., has entered into an agreement under which it will acquire the businesses—located in Marano Ticino, Italy— from Akzo Nobel Chemicals S.p.A. n The company’s Felling site in the UK has been honored for its Corporate Social Responsibility initiatives at a major awards dinner. The annual North East Business Awards recognize local firms that have excelled in fields ranging from export performance to the environment. Recognized in the CSR category, Akzo Nobel was one of 11 winners on the night. A k z o N o b e l M A T T E RS | 13 COOL CHEMISTRY Things are hotting up in the battle to combat fierce inner city temperatures thanks to a new Akzo Nobel coatings range which is raising the roof due to its solar reflective properties. A kzo Nobel has developed a range of solar reflective roof coatings that can help to reduce the energy needed to cool buildings by as much as 40 percent, as well as providing a significant contribution towards making buildings greener by design. We can all make an important contribution toward protecting the environment—and saving money—by reducing the amount of energy we use in our homes and offices. Our greatest energy costs are associated with keeping buildings warm in cold weather, and cool in hot weather. In areas with hot climates, such as the state of California in the United States, air conditioning can account for up to a third of all electrical consumption. Cities in these areas can get particularly hot, with temperatures inside urban regions often up to 7°Celsius warmer than surrounding, less developed areas. The surface temperatures of city roads, sidewalks and building roofs can soar to about 40°C higher than the ambient air temperature. These higher temperatures make city dwellers more reliant on air conditioning, which is powered by electricity. In addition, the excess heat and increased energy production can lead to elevated levels of ozone and air pollution. “Many scientific studies have been carried out in recent years to investigate how the particularly high energy inputs required to run cooling systems for these ‘urban heat islands’ can be reduced,” explains Ed Karper, Akzo Nobel’s West Coast Marketing Manager for Coil Coatings. “It is the infrared light in sunlight which causes heat to build up. So products containing infrared-absorbing pigments heat up faster and to a greater degree than products colored with infraredreflecting pigments.” Akzo Nobel has been integrally involved in some of these scientific studies and has worked extensively with the U.S. government and other bodies to combine knowledge and find solutions. Research centers such as the Oak Ridge National Laboratory—the U.S. Department of Energy’s largest science and energy laboratory—and the Lawrence Berkley National Laboratory are still working with Akzo Nobel on developing greener ways forward. Innovative As a result of this research, Akzo Nobel Coil and Extrusion Coatings— part of the company’s Industrial Finishes business—has developed the Cool Chemistry® series, an innovative range of coatings which contributes significantly to saving energy. “Put simply, our Cool Chemistry coatings reflect infrared light and thus keep roofs cooler,” adds Karper. Studies have shown that roofs made of metal and painted with an infrared coating stay coolest and further reduce energy demands. “Simple measurements of the surface temperature on a Cool Chemistry coated metal roof versus the same color in a non-Cool Chemistry coating can show temperatures as much as 17°C to 28°C cooler for the Cool Chemistry coated roof,” notes Karper. The effectiveness of the coatings in reflecting infrared light comes from the inclusion of special Solar Reflective Pigments (SRPs). These ingredients have been altered physically and chemically to reflect infrared radiation while still absorbing the same amount of visible light—thus appearing the same color as lesser reflecting coatings, but staying much cooler. “Cool Chemistry products are available in a full color spectrum, even in the black and brown color groups, which have traditionally proved more difficult to manufacture with good solar reflectance properties,” says Karper. The Cool Chemistry series also offers outstanding performance in terms of durability—another key attribute of any effective coating for roofs. Long-term durability needs to go hand-in-hand with solar reflectance. Through involvement with U.S.-based trade organizations, such as the Cool Metal Roofing Coalition, The Metal Construction Association and the National Coil Coaters Association, Akzo Nobel has ensured that its products have been developed in harmony with larger “green building” movements. With local and national authorities in the United States and other countries beginning to set legal standards for energy savings in our cities, counties and states, the movement is gaining even more momentum among constructors, architects, and urban planners, as well as end-users. “There has been a gradual, but continuous increase in the demand for Cool Chemistry products since their introduction,” Karper continues. “In the last year, the demand has increased substantially. Cool Chemistry coated products are now being used in new construction, as well as retrofit or re-roofing of existing buildings. Maximizing “The consumers in the roofing market understand that maximizing the infrared reflection keeps a roof cooler, and that this reduces energy demand. In 2005, a nationwide survey of architects in the United States indicated that 26.5 percent said that cool roofing qualities influenced their use of metal in 2004. Metal roofs coated with infrared reflective coatings are a growing part of the efforts to ‘go green.’ He goes on: “The increasing percentage of our overall sales that are Cool Chemistry products is a good indication to us about how important environmental concerns are to our customers. Future growth of roofing products coated with our Cool Chemistry coatings looks very promising. To date, the bulk of the interest has come from our North American market of Canada, the United States, and Mexico, but the prospects are bright for reaching out globally with this innovative chemistry.” n C o o l Chemi s t r y | A k z o N o b e l M A T T E RS | 15 es m of o c t t e i i d n a d Whe e f t’s e’re a h w , w d o out b a t o fo s ct a f ’t. n g s n i i t t ic ha w d confl n ua om o r f y s r r o f nage a good m o rt w o t s d o st ske l a a c i e W hem C l e f. b f o a N h c e h t Akzo m fro t a e h the w Food t for thought... S t tudy after study has commented on the benefits or dangers of certain foods. The media has only added to what has become a smorgasbord of opinion, reporting one day that eggs are bad for you, while the next day they’re not so bad after all. When reviewing some of these recent debates—many of which are still simmering—it becomes clear that Akzo Nobel has an important role to play in various aspects of the food industry. Over the years, some of your health conscious friends or relatives may have volunteered the following piece of advice—stay away from canned and frozen vegetables because they have a lot less nutrients than fresh produce. While this might sound like prudent reasoning, it’s not entirely accurate. Many processed foods are equally, or even more, nutritious than their fresh counterparts. Frozen vegetables are usually processed within hours of harvest, but few vitamins or minerals are lost in the freezing process, so they retain a high nutrient content. What’s more, tomatoes in a can—paste or sauce—could even be healthier than fresh ones. After processing, tomatoes have a much higher concentration of lycopene, an antioxidant which, according to Harvard University research, can reduce the risk of prostrate cancer by up to 40 percent. F o o d indu s t r y | A k z o N o b e l M A T T E RS | 17 Reducing iron deficiency One Akzo Nobel product which is making a big impact on the food industry is Ferrazone®, an iron compound which is used to fortify foods and beverages in an effort to reduce iron deficiency—a condition which affects billions of people in the developing world and even some in the developed world. Developed by Akzo Nobel’s Functional Chemicals business, the company believes that the product has the potential to eliminate iron deficiency anemia by as much as 80 percent in populations where the problem is widespread and appropriate food vehicles (such as fish or soy sauce, wheat or corn flour) are widely consumed. Already marketed as a GRAS (Generally Recognized as Safe) product in the United States—official recognition was granted by the U.S. Food and Drug Administration last year—Ferrazone has been effectively used in health programs in various countries. In fact, the results of a field trial launched in Kenya in 2004 are being published in The Lancet, one of the world’s most prestigious and influential medical journals, which reveal that the project was a major success. The trial—conducted together with Wageningen University in the Netherlands and Unilever—involved more than 500 children between the ages of three and eight, all of whom were given porridge made from Ferrazone-fortified maize. Iron deficiency was reduced by 50 to 90 percent, depending on the amount consumed, which is a very successful result. UNICEF estimates that iron deficiency undermines the health of 500 million women of reproductive age and leads to the deaths of more than one million children and 60,000 women in pregnancy and childbirth each year. It also irreversibly impairs the cognitive development of young children. One of the most controversial food ingredients of the last few decades has been fat. With obesity becoming an ever-increasing problem in many parts of the world, some people have started to believe all fat is bad. The truth, however, is that just like all other nutrients, fat plays an important role in the human diet. It helps to build healthy cell membranes, for example, and is vital for brain development. But some fats are healthier than others. Saturated fats found in many animal products, and trans fatty acids found in a lot of commercially baked goods and margarine, can increase bad cholesterol and increase the risk of coronary disease. As for monosaturated fat found in seeds, olives and nuts, it can actually improve cholesterol levels. Omega-3 fats from fish also benefit heart health and even decrease the risk of cancer and strokes. What’s more, the so-called fat-free products that have flooded the market in recent years often contain large doses of refined sugar and refined carbohydrates to keep them tasty, while these also contain many calories and are a big contributor to weight problems. Food fads One man who knows more than most about the food industry is Theo van’t Zelfde, Marketing Manager for Akzo Nobel’s Cellulosic Specialties business, which produces cellulose gum for the food industry. He’s seen food fads come and go, but demand for the company’s products remains as high as ever. Cellulose gum, otherwise known as carboxy methyl cellulose (CMC), is produced mainly out of wood fiber and is used in a variety of processed food products, from bread and ice cream to soup and sausage. It provides a multitude of benefits, such as improving texture and feel, prolonging shelf life and stabilizing water and proteins. Cellulose gum also has zero calories and is a fiber, making it a popular ingredient for health-oriented dairy products and diet food. “A few years ago, everyone wanted to put ‘organic’ on the label, then it was ‘natural’ and now it’s ‘dietary fiber,’” notes Van’t Zelfde. “It’s advantageous for us, since our product contains a small amount of dietary fiber.” Cellulose gum—which used to be called CMC— cannot be labeled “natural” because it’s chemically altered. In the past, European food producers generally preferred to put E-466 on their labels, based on the code that the European food law assigned the product. Nowadays, most food manufacturers prefer to use the name cellulose gum on their product labels, because it simply sounds less chemical. “We have noticed an increase in the use of additives,” adds Van’t Zelfde. “On the one hand, food producers and consumers are more preoccupied with fat and sugar content in products. But people still want to eat tasty food that’s easy to prepare. In these cases, cellulose gum can play an important role.” The cellulose business is a competitive one, which is why Akzo Nobel’s Cellulosic Specialties business focuses on patenting specialty applications in new product segments such as processed meats, and fruit products such as jams and fruit fillings, and bakery products. Even though consumers tend to be wary of additives, controversies about E-466 or cellulose gum are non-existent. “CMC has no risks for causing allergies,” explains Van’t Zelfde. “It can even be used in gluten-free diets. This ingredient has been used for more than 30 years in the food industry. Both the European Food Law Association and the American Food and Drug Administration have approved it and put no limit on its use.” Health benefits Coffee is another one of those heavily debated staples which many nutritionists love to warn consumers about. Often denounced for causing all manner of problems—such as high blood pressure, heart palpitations, headaches and irritable bowel syndrome—the fact remains that when consumed in moderation, coffee might even have some health benefits. Because like chocolate, coffee contains antioxidants. While it increases alertness and concentration, it may also have a beneficial effect on bile production, meaning that you’re less likely to form gallstones. The link to Akzo Nobel might not be obvious, but the company’s Pulp & Paper Chemicals business, Eka Chemicals, actually supplies instant coffee makers with a product which helps coffee to taster better. Eka’s Industrial Specialties unit produces Eka Pellets, which are used to regulate pH value, to the benefit of the coffee drinker’s digestion. With most foodstuffs, we can all pick and choose what we want to consume. But one thing which is essential for human health is salt, the world’s favorite seasoning. It helps to regulate body water content and electrolyte balance, and is involved in energy utilization and nerve function. But lately, salt has been getting a bad press because some medical experts on cardiovascular diseases (CVD) claim that we consume too much in our diets, linking it with hypertension and consequent heart problems. Evidence In 2006, the American Medical Association issued a report advising a lower sodium intake to reduce the risk of hypertension or high blood pressure. That same year, the British Nutrition Foundation stated that the British consume too much salt and recommended that people should have no more than six grams of salt per day. Other CVD experts and food writers, however, claim that salt has been demonized without conclusive evidence. They state that people in good health should not have to follow a general recommendation about reducing their salt intake, as there are no proven health benefits. Koen van Eig is General Manager of Akzo Nobel’s Salt Specialties business, Europe’s leading producer of mineral salt, or sodium chloride. He’s been following the recent salt debates very closely. “At Akzo Nobel we support an open debate on salt consumption, as long as it is based on facts and sound scientific evidence,” he says. “To give out a blanket advice claiming everyone should consume no more than six grams of salt per day—as advised by the UK Food Standards Agency—is too simplistic and could even be dangerous.” Van Eig substantiates this with examples of people who could run health risks by following low sodium diets, such as those who frequently engage in sports, the elderly, or pregnant women. The elderly are particularly at risk from a low sodium diet, which could cause hyponatreamia, a low sodium level in the blood which leads to tiredness, difficulties concentrating, and loss of balance, and can develop into confusion or even a coma if left untreated. Continues Van Eig: “Of course, we don’t tell people to consume more salt. We just prefer to discuss salt consumption based on facts. That’s why we endorse a prudent use of salt, recognizing at the same time that generalizations of salt intake shouldn’t be made when hypertension is a highly individual problem.” At the same time, Salt Specialties does acknowledge a trend of reduced salt use by both consumers and industry. In response to concerns among the buying public, Akzo Nobel has already introduced low sodium salt to the retail market. Akzo Nobel also supplies iodized salt, which helps to combat iodine deficiency—one of the world’s most common health and brain development problems linked to thyroid disease. “We follow and pre-empt developments in the market,” Van Eig notes, adding that one of the current trends is salt texture, which can add a different flavor to food. The company’s Salt Specialties business has therefore created a special product line of salt flakes, which includes mill salt for grinding and grey salt stemming from the Atlantic Ocean. “One of the popular myths about salt is that sea salt would be healthier than mined salt. When people think of sea salt they imagine the Mediterranean, birds and artisans standing in the surf, raking salt out of the water. But how clean is the Mediterranean? When you mine salt like we do, you end up with salt from prehistoric oceans from 200 million years ago. That’s really clean. But even I have to admit, in terms of marketing, sea salt is a big hit.” n F o o d indu s t r y | A k z o N o b e l M A T T E RS | 19 Seal of apprOval A look at how Akzo Nobel’s polysulfides business is helping China’s government and its construction industry in their efforts to become more sustainable and energy efficient. The rubber gives mechanical stability to the double glass window and keeps the air gap between the glass panes free of moisture. It also keeps the inert gas within the gap between the windows. As a consequence, there is a very low thermal conductivity creating excellent insulation of the double glazed window. “Using double glazed windows helps to insulate houses and buildings in a better way,” notes Tatas. “Polysulfide-based sealants in insulating glass units can do a great job here.” He says that ultimately, this saves considerable energy, which is why the Chinese government has found their way to Akzo Nobel’s specially developed product for their construction industries. “The last session of the Chinese People’s Congress focused strongly on energy savings,” adds Tatas. “As a consequence, the Ministries of Construction and of Science and Technology are taking action. This includes the politically important International Conference on Intelligent Green and Energy Efficient Building & New Technologies and Product Expo, in which we also participate.” Awareness All in all, this demonstrates genuine interest from the Chinese government in taking steps to save energy, based on a growing awareness that the greatest results may be achieved in the construction industry, and specifically transparent building parts. The Chinese realize that they have to reduce their energy usage and utilize energy saving technology. And this directly leads to a demand for products that can accomplish this, meaning a leading role for polysulfides. t A s the world is turning more and more towards sustainable solutions, Akzo Nobel’s chemicals are in great demand. Take the company’s polysulfides business, for example. It has established a leading role in insulating glass, especially in China, where the product is helping to make the country green again. Such is the worldwide demand for a whole range of goods that Akzo Nobel is continuing to expand its activities in China, with a new polysulfides polymer plant due to open in Taixing this month. Although the company already commands a strong position in the global polysulfides market, the new Chinese plant will mean an additional annual production capacity of 10,000 tons. It will serve as a manufacturing base in the fastest-growing polysulfides market in the world. But why polysulfides? “Polysulfides are precursors to synthetic rubbers,” explains Ralf Tatas, Sales and Marketing Manager for Akzo Nobel’s polysulfides operation. “They can be seen as small liquid rubber molecules. These molecules are then put into two component (2K) sealant formulations where they will be ‘cured’ or ‘cross-linked’ to the final big rubber molecule.” During this process, small molecules form bigger ones, resulting in a new set of properties. Used for insulating glass, they perform a small miracle. “They help to save energy,” continues Tatas. “The liquid 2K formula is applied around two pieces of glass, kept apart by a metal spacer bar. The gap is then sealed with the 2K formulation, resulting in a solid rubber around the edges of the two pieces of glass.” P o l y s u l fide s | A k z o N o b e l M A T T E RS | 21 Because of its know-how, Tatas points out that Akzo Nobel can make a strong impact. “I believe China’s current capacity for high performance insulating glass units needs to be many times higher within three to four years, to serve its internal and regional markets. Close cooperation between our company and EU delegations may help Chinese construction development to improve more rapidly, while supporting our market position in supplying the required polysulfide resins to the insulating glass producers.” Akzo Nobel also participates in coordinating European interests in introducing insulating glass standards, which will benefit European polysulfides manufacturers and exporters. “Our sealants are of outstanding quality as they are durable, gas-proof and relatively easy to use,” explains Akzo Nobel’s Asia Pacific Marketing Manager, responsible for polysulfides, Wout Neleman. “This makes them the material of choice in many types of construction.” The importance of this is also confirmed by external consultants and EU standardization officer Klaus Ziegler. He has charted the impact of intelligent transparent building parts for energy efficiency in construction and says that while the world economy is growing rapidly, so is the need for energy efficiency and savings. “Tremendous growth in markets such as China, Russia, India and the whole Far East is leading to an urgent need for improved practice in energy efficiency in buildings because the construction sector consumes about 35-50 percent of the total energy, especially due to poor insulating glass and facade quality.” Resources The use of living space, energy, and water consumption will increase as a result of growing wealth in these countries, and the requirements of resources are going to explode. European standards for sustainable building systems have set the example. They minimize CO 2 exposure, and save crucial natural resources, building material and energy. As a result, highly efficient insulating glass technologies are becoming central to China’s efforts for the Global Sustainable Building Policy (see side story). Energy consumption for heating buildings in China is still three to five times higher than in other developed parts of the world, such as America and Europe. Professor Lai Ming, Director of the Science & Technology Department at China’s Ministry of Construction, says: “In general, the pollution due to coal burning is immense and buildings account for more than 44 percent of CO2 emissions.” In total, China could save 21 percent of all energy consumed for buildings simply by using the best available insulating glass technology—Argon filled—together with highly efficient, low-emission coatings and sealant systems. Considering the expected lifetime of 25 years of high quality insulating glass with sealants and spacer systems, this would save a staggering Yuan 4.5 trillion (EUR 435 billion). When Professor Lai Ming compares building in China with that in Great Britain, the figures indicate an incredible decrease in energy consumption for air conditioning at peak hours—equal to that of fourand-a-half “Three Gorges” power stations. n Regulating China’s sustainability efforts The Chinese government is well on its way to addressing issues relating to sustainability and becoming a partner in the Global Sustainable Building Policy. In order to achieve this, it is focusing on workable regulations and standards, and more effective monitoring for the development of energy efficient, green buildings. International exchange and cooperation is encouraged, especially taking EU standards as a starting point. Gradually, best practices are emerging for a global approach to sustainable building. Cooperation between EU and Chinese organizations is, therefore, part of a necessary trend for common regulations, supervisory boards, and transfer of expertise— making China a “well-off society in an all-round way” and our planet a sustainable place to live. In China, the energy consumed per unit of construction area is three times more than in developed countries, making it imperative to develop energy efficient buildings, and to “reduce, reuse, recycle.” A National Green Building Innovation Award has been set up, annual conferences are being held, and pilot projects around the country stimulate the development of green buildings. Taking China’s green intentions seriously, Qiu Baoxing, China’s Vice Minister of construction, is adamant: “Green building in China has only just started.” In brief Intersleek® 900 now available Less than ten years after introducing its revolutionary Intersleek® 700 foul release technology for deep sea scheduled ships, Akzo Nobel’s International Paint business has launched its next generation Intersleek® 900 system. Setting even higher performance standards with improved fuel efficiency and reduced emissions, Intersleek 900 is a unique patented fluoropolymer foul release coating which represents the very latest advances in fouling control technology, significantly improving upon the performance of the best silicone-based system, industry benchmark Intersleek 700. Intersleek 900 is exceptionally smooth, with unprecedented low levels of average hull roughness, has excellent foul release capabilities and good resistance to mechanical damage. For the very first time, all vessels above 10 knots—including scheduled ships, tankers, bulkers, general cargo ships and feeder container—can now benefit from foul release technology. Compared with the Intersleek 700 silicone-based system, Intersleek 900 is 25 percent smoother and provides 38 percent better coefficient of friction; has up to 80 percent better static fouling resistance; 40 percent better foul release properties; 50 percent reduction in slime; 100 percent better hold up; 60 percent reduction in overspray and 60 percent better abrasion resistance. In terms of fuel efficiency and reduced emissions, Intersleek 900 offers predicted savings of two percent compared with Intersleek 700 and six percent in comparison with SPC (self-polishing copolymer) antifoulings. For a single very large crude carrier currently coated with an SPC antifouling, this could mean savings of more than 4,500 tons of fuel, a reduction in carbon dioxide emissions of more than 14,000 tons and USD 1.2 million over a five-year period. Protective Coatings portfolio boosted Akzo Nobel has strengthened its leading position in the global protective coatings market after signing an agreement to acquire the worldwide Ceilcote business from the German-based KCH Group for close to EUR 12 million. A major international brand used to coat concrete and steel structures—particularly in the petrochemical and power industries—Ceilcote specializes in high performance, polymer-based corrosion control solutions for both new construction and maintenance projects. “This deal underlines our strong commitment to delivering on Akzo Nobel’s ambitious growth strategy,” explained CEO Hans Wijers, who is also the Board member responsible for Coatings. “As the world’s leading coatings company, we are always looking to explore significant expansion opportunities in both mature and emerging markets and this is an important acquisition which will further enhance our portfolio and consolidate our global presence.” Added Bill McPherson, General Manager of Akzo Nobel’s Marine & Protective Coatings business: “Ceilcote has an enviable track record of providing coatings solutions to a range of markets, specifically the power generation industry, but also mining, wastewater and chemical processing, and we have long recognized the need to fully service these markets. The Ceilcote product line is a welcome addition which will both complement and extend our International Paint portfolio of products for the protection of assets in aggressive chemical environments.” Established in Cleveland, Ohio, in the United States in 1926, Ceilcote—which employees 36 people—is a global operation, with a regional sales office situated in Singapore. Research facility extension opened A new 2,800 square meter extension has been opened at Akzo Nobel Car Refinishes’ International Research Center in Bangalore, India. The EUR 2.6 million expansion more than doubles the size of the facility, which became operational in 2002. One of three main research and development centers operated by Akzo Nobel Car Refinishes, the Bangalore center—along with facilities in Troy, Michigan (United States) and Sassenheim (the Netherlands)— is involved in a range of activities related to Car Refinishes product development and maintenance for international markets, including management and innovation in color and colorimetry and color formula development. Through a geographical spread of its research facilities, Car Refinishes not only facilitates close contact with its customers around the globe, but also maintains ‘’windows’’ on the wealth of new ideas and technologies being developed throughout the world. The colorful opening ceremony in Bangalore was attended by Akzo Nobel Car Refinishes General Manager Jim Rees; International R&D Manager Klaas Kruithof; and Bangalore International Research Center Managing Director Sudhakar Dantiki. All employees gathered outside the building while a traditional “puja” (a Hindu religious ritual) was performed to inaugurate the facility. “We have a lot of positive momentum in our business,” said Jim Rees in his speech during the inauguration ceremony. “I think that comes as a result of the right people doing the right things at the right time, with the right customer focus. This is a global knowledge and color center and things that happen here today and in the future will have a profound impact on the success of Akzo Nobel Car Refinishes in the entire world.” in b r ief | News round-up n Akzo Nobel has agreed to be the sole Diamond Sponsor for the Women’s Industry Network (WIN) in the United States. The first association of its type for the collision industry, WIN will champion causes geared towards mentoring and networking women. n The company has divested its Akcros Chemicals PVC additives business to UK-based private investment firm GIL Investments. Financial details were not disclosed. Under the terms of the deal, Akzo Nobel’s sites in Eccles, UK, and New Brunswick in the United States—along with all of the approximately 160 employees at these locations—will be transferred to the new owner. n At April’s meeting of shareholders, Peggy Bruzelius—former CEO of ASEA Brown Boveri AB, and former Executive Vice-President of Skandinaviska Enskilda Banken— was appointed to Akzo Nobel’s Supervisory Board for a four-year term. Having reached the mandatory age limit, Abraham Cohen resigned. Alan Mérieux also resigned from the Supervisory Board, for personal reasons. Uwe-Ernst Bufe was reappointed for another term of four years. Cees van Lede was not available for reappointment. A k z o N o b e l M A T T E RS | 23 A formula for success The eventful story of how Akzo Nobel’s recently acquired Sico brand successfully overcame a number of challenges to launch a zero VOC range of one of its established product lines. T echnical innovations in paint production can be complex and demanding at the best of times. But the challenge starts to border on the Herculean when you also have to take other factors into account during the development process, such as environmental issues, climatic influences, launching a new image—and being acquired by the world’s largest coatings company. So when Canada’s Sico® brand successfully launched a zero VOC range of one of its existing product lines earlier this year, it marked a triumphant end to a hectic 18 months, during which Sico—Canada’s leading coatings company—officially became part of Akzo Nobel. First introduced around seven years ago, Sico Design is a popular, topof-the-range brand line for interiors available in three finishes known as Cashmere (washable flat finish), Chamois (soft gloss finish) and Shantung (silky gloss finish). Long renowned for its quality, sales have always remained healthy, but a strategic decision was taken to give the range a new lease of life—and a new look. “We wanted to give it a shot in the arm while it still had great momentum,” explains Claude Brosseau, Sico’s manager of sales and marketing. “So we reformulated the product to make it VOC-free. The demand for eco-friendly products really began to accelerate in Canada a couple of years ago and we decided to be among the first companies to go ahead with reformulating part of our product portfolio.” Adds Dominique Pepin, Sico’s senior brand manager: “While legislation that will require paint companies to lower VOC levels in their products by 2008 is expected to be introduced next year, Sico has taken the lead in completely eliminating VOCs in its Sico Design product line to reinforce our commitment to the environment and to Canadian customers, who are increasingly seeking out green alternatives.” Fantastic It proved to be no easy task, however. One of Sico’s competitors in Canada had already tried to introduce a zero VOC decorative coatings range, but the products weren’t of sufficient quality and they subsequently failed. “We wanted to develop a product which would keep all its fantastic properties,” continues Brosseau. “So the real challenge from a technical viewpoint was not to simply develop a zero VOC paint, but to create a great product which would involve no compromise on quality or ease of application.” The fact that the relaunched Sico Design range was endorsed by Green Seal—a leading U.S.-based environmental excellence organization which covers the whole of North America—is testament both to the quality of the product and the expertise of the Sico development team. Particularly when you bear in mind the fact that coatings developed for the Canadian market ignore one vital consideration at their peril—the climate. “All our products have to be able to withstand several cycles of freezethaw and still be in perfect condition” notes Brosseau. “Our coatings can be exposed to very harsh temperature ranges—either after application or during storage—from minus 25 degrees Celsius in the winter to plus 35 in the summer. So we had a lot of technical challenges to tackle over and above simply making a zero VOC paint.” Established in 1937 and with a workforce of around 1,000, Sico specializes in developing and marketing coatings for the architectural market and currently commands a nationwide market share in Canada of around 24 percent. Being such a vast country, however, means that as well as distributing the Sico brand nationwide, the business can also operate regional brands. In Quebec, for example—where Sico’s market share is closer to 60 percent—the company distributes and sells two other complete product ranges (Crown Diamond® and Bétonel®), while in British Colombia, the Mills® brand is exclusively available in special companyowned stores. Another brand, Para®—acquired by Sico in 2003 and sold through specialized paint stores—is also marketed nationwide. “We are very well established, but we are working on increasing our market share, especially in Ontario and western Canada,” says Brosseau, who points out that Sico products were used to coat the CN Tower in Toronto and the famous Chateau Frontenac in Quebec City. “Over the past few years we’ve enjoyed quantum leaps in these regions, but there’s still room to grow.” These growth ambitions will now be boosted by being part of the world’s biggest coatings company, following Akzo Nobel’s acquisition of Sico last year. Brosseau admits that during the first few months, harmonization of financial, purchasing and governance systems took precedence. But the advantages of the integration quickly became apparent. “There have been a lot of exchanges from a technical and marketing standpoint and everyone at Sico has been extremely positive because joining the biggest coatings company in the world has given us a lot more expertise and a new vision. We’re starting to learn from each other and people here are very appreciative because they have been treated with respect. “The future looks very promising. We’ve been getting very strong orders from dealers, who are really enthusiastic about the new Sico Design range, and we’re entering the time of year when Canadians start to redecorate their homes. So we’re hoping for another excellent year.” n Sico in brief • Sico is headquartered in Quebec City, Canada • The company achieved record sales in 2005 of CAD 312 million • The business’ architectural products are manufactured in three sites in Quebec (Longueuil, Quebec City and Terrebonne), as well as locations in Toronto and British Colombia • Sico’s coatings portfolio includes latex and alkyd paints, interior and exterior stains, varnishes and various specialty products • As well as coatings, Sico also manufactures Mulco® caulking compounds • In 2005, Sico was awarded the Contech award for Innovation and Sustainable Development for its Sico Ecosource product range Si c o D e s ign | A k z o N o b e l M A T T E RS | 25 We’ve got the power Hydrogen is one of the most environmentally-friendly fuels available. It just has to be harnessed and tested. Which is why Akzo Nobel has opened two fuel cell pilot plants. A kzo Nobel is setting new standards in energy efficiency for the chemical industry by applying so-called “green technology” and harnessing the potential of waste gases produced during the manufacturing process. Chlorine is an essential chemical building block for a large number of everyday products such as plastics, pharmaceuticals, detergents, glass and even paper. Around 50 million tons of chlorine is produced worldwide each year, each ton producing just over a ton of caustic soda. This important co-product has a wide range of applications. For example, it is an essential ingredient in everyday items such as soap and textiles, as well as being an important compound for water treatment, aluminum production and oil refining. Chlorine is made by passing an electric current through a solution of common salt dissolved in water, producing caustic soda and hydrogen as co-products. The process is relatively simple, but requires quite a lot of energy. “While caustic soda is recognized as a valuable product, the hydrogen is often simply vented into the air and wasted by some manufacturers, despite its potential to be extremely useful,” explains Ton Manders, Manager of Process Optimization and Engineering at Akzo Nobel’s Base Chemicals business. “Hydrogen is one of the most environmentally-friendly fuels available. So instead of letting it go to waste or selling it on to others, we have launched an innovative project to use it to meet the energy demands of chlor-alkali plants. The energy is fed directly back into the manufacturing process, and by converting all the hydrogen, it results in a saving of up to 20 percent of the total requirements.” The key to tapping into the potential that hydrogen offers is a device known as a fuel cell. Whilst a battery chemically stores and then releases energy, a fuel cell converts energy produced by a chemical reaction directly into usable power. The fuel cell resembles a conventional battery in that it has a positive and negative electrode and an electrolyte, but works quite differently, combining hydrogen and oxygen electrochemically to produce electricity. The only byproduct is pure water, so there is absolutely no environmental impact. Several different types of fuel cell exist, but all are based on the same principle. The hydrogen fuel is passed across the fuel (positive) electrode, where it dissociates into hydrogen ions and electrons. The ions enter the electrolyte and move to the oxygen (negative) electrode. The electrons move through an external circuit, producing a current. At the negative electrode, the ions, electrons and oxygen combine to form water. Lifespan The basic working principle of the fuel cell has been known for a long time. It was invented as early as the 1830s, but the high cost and short lifespan of traditional fuel cells prevented their large-scale introduction for a lengthy period of time. “Akzo Nobel began investigating a particular type of fuel cell which showed great potential for industrial use as long ago as the 1980s,” recalls Manders. “Those currently under trial for use in the – chlor-alkali industry are Proton Exchange Membrane (PEM) fuel cells. Compared with other types of fuel cells, PEM fuel cells have the shortest start-up time and the highest power density. This means they can adapt to a fluctuating hydrogen level and are well suited for portable, automotive and stationary applications.” He adds that PEM fuel cells are the preferred technology for the car industry, with futuristic, environmentally-friendly electric cars which can run on hydrogen having already been designed. In 1998, Akzo Nobel founded NedStack, a new company specializing in the development of PEM fuel cell technology. Together with NedStack, Akzo Nobel has been developing a live PEM fuel cell project for the chlor-alkali industry since 2004. A small pilot plant of 50 kilowatts is currently being tested at the company’s chlor-alkali plant in Delfzijl, the Netherlands, which will later be scaled up to the larger (megawatt) ranges required for industrial use. “As one of the first companies to implement this technology, we are looking forward to the results from the first trial,” says Manders. “Today, around 90 percent of the hydrogen produced is already utilised in other chemical processes, or as fuel. By using PEM fuel cells we could reach 100 percent, although there are some constraints.” The catalyst required for the electrode in PEM fuel cells is platinum, which is very expensive. To improve the economics of the development—as well as maximizing efficiency and minimizing environmental impact—Akzo Nobel Base Chemicals is also looking into other possibilities to optimize the use of fuel cells even further. For example, at its Bitterfeld chlor-alkali plant in Germany, the company is installing alkaline fuel cells in conjunction with AFC Energy, a UK firm specializing in the development of these cells. Space Shuttle The alkaline fuel cell (AFC) is one of the longest developed fuel cell technologies and is the cell which was used to fly man to the moon. NASA has used alkaline fuel cells since the mid-1960s, in Apollo series missions and on the Space Shuttle. AFCs are, however, the cheapest of fuel cells to manufacture. The catalyst required for the electrodes can be any number of different chemicals that are relatively inexpensive compared with those required for PEM fuel cells. Recent research and development has improved the performance of AFCs to make them interesting for industry. “The AFC pilot project will be operational by next year,” adds Manders. “It could provide significant benefits in costs while leveraging basically the same green technology.” Subject to positive results from both projects, Akzo Nobel’s Base Chemicals business will look into introducing scaled up fuel cell developments as part of its global chlor-alkali activities. Concludes Manders: “As a company dedicated to using clean energy conversion wherever possible, we are determined to play a significant role in improving the energy efficiency of the chlor-alkali industry—leading the development and implementation of state-ofthe-art systems that provide optimal performance in terms of efficiency, environmental impact and cost.” n F ue l c e l l s | A k z o N o b e l M A T T E RS | 27 Search for a star Attracting the best young talent in countries around the world is a cornerstone of Akzo Nobel’s recruitment efforts. We take a look at some of the company’s ongoing initiatives in Europe. “From day one they are in a real job and are given real responsibilities–they hit the ground running” A s a global company, Akzo Nobel naturally strives to be the best in its chosen fields, which in turn makes us determined to attract the best talent. But with fewer students choosing to follow subjects such as chemical engineering and chemistry—resulting in a smaller pool of talent to draw from—it is more important than ever that Akzo Nobel is seen as a highly attractive employer. A number of initiatives are in place to encourage graduates to explore the potential of pursuing a career with the company and, so far, they seem to be paying off. But the groundwork begins even earlier than that, in the earliest stages of education. “If you look at the Netherlands, for example, we have programs ongoing with both primary and secondary schools to encourage children to choose a technical career,” explains Rob Sanders, Akzo Nobel’s Labor Market Communication and Sponsoring Manager. “We show them how everything in life relates to the chemicals industry—from toothpaste to hair gel—and aim to dispel the various myths that a career in this area is less well-paid or boring.” Recruiter Monique Vlooswijk adds: “We are seeing improvements, especially when it comes to encouraging more girls to enter the engineering industry. We held an event for high school girls last year, when they could visit sites and really see what the work involves, and that was a big success.” It’s among under-graduates, though, where the biggest effort is being made to persuade them that Akzo Nobel is the company to work for in the chemicals and coatings industry. A good example is the annual Masterclass—introduced this year— a two-day program during which undergraduates can get to know the company by attending lectures, listening to key speakers—such as renowned explorer Robert Swan, the first man to walk to both the North and South Poles—and demonstrating their own expertise, insight and communication skills in a series of business workshops. In turn, the Masterclass allows the company to assess the participants and invite a selected few to return for a third day, when they meet HR staff to discuss individual career prospects and opportunities. “The ones that really stand out leave us after that final day with a contract in their pockets for our talent program,” says Sanders. “It’s a real pledge of our commitment—even if they still have to finish their studies, or plan to go traveling for a year, that voucher is valid for 12 months and promises them a job within Akzo Nobel.” And it doesn’t end there, as Vlooswijk explains: “It’s not an apprenticeship, or a special arrangement that allows them to spend time in different parts of the company just to see what happens. From day one they are in a real job and are given real responsibilities—they hit the ground running. We have found this means people take their career more seriously, they feel more valued and that their skills are better appreciated.” Attractive Sweden is just one of the other countries where the company also operates a special course designed to encourage students to view Akzo Nobel as an attractive employer. Marketing in Brief—organized by Erika Stoltz, who is responsible for Akzo Nobel’s employer branding activities in Sweden—teaches the participants about competitive advantage, as well as outlining the benefits of working for Akzo Nobel. This year’s three-day program takes place in September at the company’s Stockvik site in Sundsvall. “This particular course is our main Swedish initiative, but we also run various other activities geared towards promoting Akzo Nobel as a great place to work,” explains Stoltz. “For example, every year we participate in a number of job fairs at universities around the country, when I always try to take along talented young people who are already employed by us, so that visitors can hear first-hand about career opportunities and what the company has to offer.” She adds that additional student activities such as lectures, workshops, and educational visits also take place throughout the year. The aim is to leave students with an overall impression of Akzo Nobel as being an ideal employer—offering the best career path and development opportunities, having strong ethical values and rewarding hard work and achievement. In return, their efforts will help to ensure that Akzo Nobel continues to establish itself as one of the world’s leading industrial companies—the perfect partnership for all concerned. For more information about career opportunities within Akzo Nobel visit www.akzonobel.com/com/Career/Career_Opportunities/ n r e c r uitment | A k z o N o b e l M A T T E RS | 29 Brazil calling Gallery A land of opportunities Child’s play Greetings from Brazil. This country is really my sweet home and I feel very proud to be Brazilian. Where is Brazil? Is it a country worth getting to know? If you don’t know the answers to these questions, don’t worry. I’ll try to explain why you should consider finding out more about this great country and perhaps one day come over and discover it for yourself. Brazil is the largest country in northern South America and is the only country on the continent where the official language is Portuguese. It is a very picturesque part of the world, but it’s my firm belief that travel is about more than just taking beautiful pictures—it offers an ideal opportunity for us to experience different cultures and meet different people. Brazil can offer all this because it is made up of a mix of cultures and is home to a multitude of ethnic groups. The country is divided into five regions, each one with its own particular enchantment. Music is an essential part of our culture and an excellent example of this is the range of rhythms we have, such as samba, forró, ache, bossa-nova and the famous Afro group Olodum. There are also the famous Brazilian attractions known all over the world—soccer, samba, carnival, Rio de Janeiro’s wonderful beaches and the Christ with opened arms. For me, a lover of nature, the most spectacular attraction has to be our natural environment. Brazil has the most diversified landscapes I have ever seen, from north to south and from east to west. Apart from the wonderful beaches, places such as the Amazon rainforest, the national parks (Tijuca, Itatiaia, Fernando de Noronha); the meeting of two rivers— Black and Solimões—in Manaus; Pantanal; Bonito town and Iguaçu Falls are just some of the other precious jewels that we treasure. Brazil’s other priceless asset is its people. Most visitors are enchanted by Brazilian hospitality, by the energy and passion for life that Brazilians have. Given its awesome size (the population is around 180 million), Brazil is a country full of opportunities. Economically, it is the continent’s leading industrial producer and the world’s leading coffee grower. Our climate is mostly tropical and we are rich in natural resources. São Paulo, where I live, is the major industrial city and most important financial center in South America, with 17 million people. Hundreds of people flock to the city daily in search of work, so the traffic here is intense on the main roads every day, especially during rush hour. Fortunately, I mostly drive against the traffic to get to Akzo Nobel. I feel great satisfaction to be part of the team working for Akzo Nobel Decorative Coatings and I am very positive about the potential of our business. I have been working for five years as secretary to the managing director who is in charge of all our corporate departments, and all business in South America. Being a secretary means that I can get to know people better both inside and outside the company. My position also demands a great deal of energy, discipline, initiative, intuition, concentration, organization, a good memory and patience. After I finish my working day, whenever possible, I allow myself time to relax by doing yoga, swimming or any other kind of activity which can renew my insight for the next day. Traveling is another passion. The next time you plan to visit somewhere new, why not visit our colorful country. You won’t regret it! Chinese artist Tang Zhigang (1959) painted four children at a table against the backdrop of a red curtain. With the light bulb over the table, it looks as if it is a play. Although there is a microphone and the two children in the center look very serious, this meeting cannot be real. A child’s seat, a toy car and a balloon on the ground make it a childish affair. Tang grew up in the army and later worked for the political department of the People’s Liberation Army. Apart from being responsible for writing, painting and photography, he was also the arts teacher for the army’s children. His life as a soldier began and ended with the war against Vietnam. He drew sketches of the soldiers’ daily life, with them reading the paper or relaxing. There is no trace of the violence of war or of Social Realism in any of his drawings and paintings, his work shows no heroes and does not set examples, but shows everyday life at a barracks. In Tang’s work, group photographs turn up that used to be made at the time of the Cultural Revolution when, each year, the children were photographed in a studio with their class. Because every picture featured a curtain to make the groups stand out against the background, in his work, the curtain has become a metaphor for registering an “artificial” moment and for creating spontaneity, which, in effect, creates a façade (pretence). The artist looks for likenesses between politicians and children. With children, immaturity stands for innocence, with adults it is calculated. Tang has clearly been able to study the parts the men played during these political propaganda meetings because the facial expressions in his paintings are painted with great skill; each figure has its own character or its own part in such meetings. In a previous series by the artist, Adults in Meeting, the men depicted not only wear various military uniforms, but sometimes also Mao suits, varying in color from light blue to grey. When he switched to painting children, he kept the fixed icons: the curtain, the table with the table cloth and the microphones, but he added destabilizing elements, such as toys, toy cars and small dogs. The artist here admits that he has added all these objects for their symbolic value. The toys suggest that, sometimes, grown-ups behave as if they are playing children’s games when dealing with very serious matters. Bersabé Nunes Executive Secretary Akzo Nobel Decorative Coatings Brazil The Art Foundation http://artfoundation.akzonobel.com Children in Meeting (2004) by Tang Zhigang 130 x 162 cm | A k z o N o b e l M A T T E RS | 31
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