How Pilot Chemical Continues To Innovate And Sustain With Glynn Goertzen

 

Pilot Chemical Company has been a successful, family-owned enterprise for 70 years and they continue to grow and innovate. How do they do it? What differentiates Pilot from other chemical companies? Learn all the answers in today’s episode. Join Victoria Meyer as she talks to the Vice President of Technology & Innovation/Corporate Development at Pilot Chemical Company, Glynn Goertzen. Learn why Pilot values their customer experience so they can create trust with their customer. Find out how they continue to innovate with their core technologies like sulfonation and sulfation. Discover how they’ve grown and are continuing to be a sustainable chemical company.

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How Pilot Chemical Continues To Innovate And Sustain With Glynn Goertzen

In this episode, I am speaking with Glynn Goertzen of Pilot Chemical. He is the Vice President of Technology & Innovation and Corporate Development for Pilot. He served as President of LMG, which is a subsidiary of Pilot. Prior to that, he served as Pilot’s VP of Commercials. He has been at Pilot for 21 years, so he knows a lot of the ins and outs of the company. He has also been in the chemical industry for almost 40 years, having previously worked at both Univar and Kerr-McGee. We are going to be having a great conversation about Pilot, chemicals, innovation and more.

Glynn, welcome to the show.

Thank you. I’m glad to be here.

What’s your origin story? How did you get started in chemicals and what got you to Pilot Chemical?

That’s one of those that will definitely give my age away. I answered a newspaper advertisement for Van Waters & Rogers. Van Waters & Roger is a precursor company to Univar. They had a management training program that they were advertising for. I was interviewed by them. I liked the idea of going into a company and doing almost every job to see what a company did and what was appealing.

I started with them on the day that they purchased McKesson Chemicals. I was excited. I got on board, and then immediately got pushed into a corner as we worked on integration, ideas and all the excitement around. It’s a great experience that I got started there. I eventually moved to Kerr-McGee North American Chemical. I was with them for seven years and then joined Pilot back in ’98. It has been a great ride and a great experience being at Pilot.

Can you tell us a little bit about Pilot Chemical? Some people may not know who they are.

It’s a privately held company. We celebrated our 70th anniversary in 2022, which was exciting.

Congratulations.

Thank you. Pilot is largely anionic surfactants, specializing in a couple of spaces, HI&I, oil and gas, and metalworking, and is strong in the EPP latex markets.

You mentioned that Pilot celebrated its 70th anniversary, which is an accomplishment for any company and maybe even especially a private company. It’s hard to see it through many generations of leadership and the changes that evolve in an industry. What lessons can other companies take from that? What do you attribute to Pilot’s success and longevity in the industry?

I would say a lot of credit to our founder and his successors. Their focus on continuous improvement came up with a novel way to sulfonate, which we still practice today. How do we make the highest quality products? When everyone says that, I think sometimes, we focused on that. It wasn’t really necessary. The bar was below where we were at. It was important to our chairman. He wanted to always be able to claim that.

 

The other thing with a family-owned business, the family had always played the long game. They understood how cyclical the chemical industry was, and they didn’t panic during the ups and downs. We know how this works in the chemical space when you’re around for a while. We’re going to see the roller coaster and there’s going to be good years and bad years. They persevered through all of it. We had an attitude even towards our customers and with our employees, “Don’t panic. We’ve seen this before. These things show and pass as well.”

I’ve talked to some other privately held or family-owned companies who had similar points of view. They’re not chasing stock market returns. It’s about business, long-term business value, and what it means for the company, employees, customers, etc.

We’ve had projects that took fifteen-plus years working with a customer to try to get a project to the finish line. Trials are in there and you’re working along the way, but there are tangible results. You got to have some faith there. It’s a nice privately held company. Our stakeholders can make that call.

Pilot Chemical has been led by non-family members, at least for the last decade. The president and CEO have come from elsewhere in the industry.

In 2010, we made the decision to bring in outside management. Pam Butcher came to us from Dow and Mike Clark from Sasol. Both of them bring in a world of different ideas, and ways to do things, helping Pilot continue to adapt. We still have a very involved family, the third generation in the business and are active. We’ve had professional management since 2010.

If we think about the pandemic, supply chain disruptions, the Russia and Ukraine war, and the effect it’s having on energy, supply chains and everything, it certainly has been an inflection point for many businesses in terms of change in the way that they do business, sharpening what it thinks its core capabilities and focus areas are, and reshaping effects with customers and employees. How has it been for Pilot? What changes have you seen over the past few years that maybe made a difference for Pilot Chemical?

I don’t want to minimize how terrible COVID was. I look at it and just see so many positives that have come from it. We’ve come away from this whole experience wild at what our employees could accomplish. Our manufacturing employees who were tried and true came in every day and did all the right things. Our employees worked hybrid. We were wowed by the productivity that we saw in our teams.

People worked so hard. We had to move people around and shift resources. People took on different roles. The energy was required in those spaces. We had to change processes, put new processes in place, and work in different ways. Like a lot of companies, we come out of COVID and say, “Many positives came out of that from work practices.”

The COVID pandemic was the catalyst for so many positive work practices and changes. Click To Tweet

Sometimes you need a catalyst in the chemical world. We use a lot of different catalysts. If you think about business practice, ways of working, focus area, maybe the events of the last couple of years were a catalyst to make some changes.

I don’t want to say companies took for granted our customer interactions, innovation happens when we’re interacting with our customers, not being able to interact with customers, day on day, not being able to get in front of them with new products or the things we were trying to accomplish. It was tough. You can do a lot of that via teams, but our customers drive this business and not being able to interact with them, it was easy to get stale. Every call or every discussion was about how we get you material, rather than how we solve your next problem. How do we help you grow? How do we do new in that? Getting back out and talking to customers again is invigorating.

People are happy to be doing that. Let’s talk about the customer experience. That’s something I like to talk with folks about. Why do customers do business with Pilot Chemical? What’s the unique value that you’re bringing to the table? The product is easily replicated. What’s unique about your Pilot’s customer experience as it goes out into the markets?

You’re talking about 70-year history. People know us. We’ve got a track record. We come in and out of markets. We’ve been pretty tried and true. I know this is cliche, but I think we see it and it got reinforced with some of the eCommerce things that we tried to do. How do we make it easy on the customer? The market’s going this way. We heard loud and clear from people, “I don’t want to give up the interaction I have with my salesperson, with my customer service rep.” A lot of times, people stay with us because of our people.

 

We’re not dealing with a corporation. We’re dealing with a person and they develop relationships. Those are what drive our success. It has been this balance. How do we let people check their orders or look up what they need, but still have rights if they want to interact with the person they’re used to? It has been a good balance, but that’s where we see our strength. Can we be fast? Can we arm our customers with what they need and use our people in the best way?

What are you guys doing in the land of digital? What’s Pilot’s approach to digital commerce and eCommerce?

We’re starting slow. We had grandiose plans and lots of ideas. We saw what people were doing effectively. We saw a lot of that driven at the distribution level. There are some cool things that our distributors were doing. We fill a different role. Let’s be smart about what we do. This went from something that we dipped our toe into, “We should be exploring different ways to do this,” and aligning our data. How do we use all of this information with not enough resources available to do all the things we want to do?

We went from maybe healthy skeptics to giant advocates saying, “This is helping us and giving us better insight.” You referenced it before. COVID made it so much more important that our data were aligned and that we were all working off the same sheet of music. Digitalization helped us a lot. You’re using so many different systems, freight systems, third-party logistics providers, and your various plants and suppliers. How do we make sure all of these things are aligned? That’s one of the benefits we’ve seen in that space.

Have you guys tied it all into one system? Is that what you’re doing on the back end or is it more complex than that?

I think it’s more complex than that. As a smaller company, we always had that concern, “We’ll outgrow our system. Someday we’ll have to go via SAP or something similar.” What we learned is we’re using many different platforms that are probably not required. What is required is that we have the skeleton to make sure all those systems talk. We brought in people that could help us in that space. We have been wowed by what they were capable of bringing to the table. It has been pretty productive.

Stop using so many different platforms. Instead, require that you have the skeleton to make sure all those systems talk. Click To Tweet

What’s the customer response to that? It sounds like some of this is an internal alignment and better use of data. How does that look to your customers and suppliers?

Their needs are escalating so fast. I wouldn’t say we’re blazing new trails. I think this is the customer expectation because what they see on the consumer product side is, “Why can’t I do this in the chemical industry?” It’s like, “This is a cost of doing business.” Customers are waiting for: when is the industry going to catch up?

I see that as well. We’re all used to being able to access anything and everything at our fingertips and have data that gets pushed to us, and not just me going out and seeking it. If you think about where orders and deliveries are. Amazon likes to update me every minute, “It’s on its way.” When you have that in your personal experience, you want the same thing or similar in your business experience.

With the supply chain things that we had with raw materials and shipments, we needed to arm our customers as well because they had stakeholders that were saying, “Where is my product? When are we going to get production?” They could say, “The feedstock is currently sitting off the port of San Diego. You’re four weeks out. We’ll keep you informed, but you can look here to see where things are.” I think it just put them in a position where it wasn’t just many words. It was, “Here’s data to back up our claims.”

We’ve always known that the value chain is interconnected, but it has become even more apparent. The expectation of information being able to flow all the way across that chain is critical.

We have different levels of adaption in the chemical industry when we’re seeing it in multiple places. It only takes one space where you have a gap that then you need to figure out, “How do we fill that gap for customers? How do we answer those questions?”

A big part of your role is innovation. What does that look like for you and for Pilot Chemical? What is the innovation focus that you guys have?

What a cool time to be tackling innovation. You saw this probably when you were at Shell. Our customers in our universe had formulations that they probably used some iteration for 35 or 40 years, things that were developed ages ago and the changes, things that we see in our space, one for Dioxin and the push around sustainability, all of a sudden has customers opening up formulations or at least open to it for the first time in 30 or 40 years. In the surfactant space, we’ve started to look at tons of these bio-based products or things that can help our customers move the needle. It doesn’t have to be a perfect solution, but they’ve got goals and objectives as well. How do we help them?

The shortages aided there as well. When people couldn’t get things, all of a sudden they said, “Maybe we do need to look at these formulations.” We’re looking at a lot of different things. When you think about sustainability, for us, it’s not just new products. It’s a group practice. What about the ways we do it? What about the ways that we’re making these things? Not just the way we’re making them, but where we’re making them.

From a “Where you’re making” perspective, what does that look like when you think about that?

We saw a lot of people thinking about our legacy platform. We bought our plants in the ‘60s, ‘70s and ‘80s. We got to think about our network a little. Where has our customer base evolved to? Are we making all the products in the right spaces? Can we make some improvements by thinking about our overall platform?” Lots of people in our space are doing that. That’s something that we never gave any thought to before because logistics rail and truck were largely so affordable for so long.

It was easy for a very long time.

It’s so easy. All of a sudden, it has changed and it’s like, “Will that get better?” I’m sure it will improve, but it’s still something we have to think about in the long term.

The majority of your business is in North America.

We do about a quarter of our business outside the US that’s largely all into that latex industry. That goes to 60-plus countries. That’s a great product line for us. The bulk is in North America. We bought a company in Mexico in 2019 right before COVID shut us down, but largely all of our assets are in the US or Mexico.

Even inside the US logistics is challenging and optimization is key. Let’s talk a little bit more about sustainability. You have your first sustainability report. I know that Pilot has created some senior roles focused on sustainability. How does that play out? What’s your priority? Do you guys have a sustainability strategy? Are there certain things in specific that you’re focusing on?

For us, sustainability made a lot of sense. We knew we needed to do it. It was nice to see that was driven by one of the family members to whom it was important to. That certainly helped. As we started to dig into it, the things that we said to some degree had this overall slogan, “Unwavering integrity,” which was, “Let’s make sure we’re doing the right things. How do we do these things to leave the right kind of legacy?” That was greener products, greener practices, innovative products, and better lives for our employees and customers. That’s acting on new information when you get it. Our trade groups, ACI and ACC, have done a great job of educating the populace and educating us as to those things that we got to adapt on.

Pilot has unwavering integrity. They make sure that they are doing the right thing and leaving the right legacy. Click To Tweet

Are you getting a lot of requests from your customers? Are they asking for sustainability metrics or goals? One of your customers are big consumer products companies, as well as other companies whose shareholders are asking for more sustainable things.

We did like everybody is done. A recent entrant on this, I was listening to someone on your show talking about how they had been in it since 2008. We certainly didn’t start back then. We followed our trade groups and started getting a better look at them. We did our materiality assessment and figured out the things that were important to us. Our customers have said, “We applaud you for going down this road. Here are some of the questions we want to be answered. They’re not always the things that we initially sketched out.”

That will change over time. It has been interesting with some of the big consumer products companies. They have not just gotten into it, but they have been pretty good tutors for what they are looking for from their suppliers. I know one of the interactions into it thinking we were going to get harangued to do X or Y and came out of it with a lot of good ideas and suggestions that would hit the mark. The interactions have been largely positive.

In this whole area of ESG and sustainability, we need a lot of collaboration because, in many ways, it’s still early in thinking about what does it look like? How do you work together across the value chain to hit those goals, the big goals that are out there, as well as the little goals? That’s positive that you’re seeing that with your customers.

You’ve seen this in probably what you’ve looked at. For us, we’re still establishing baselines and trying to understand our current business, and those are no small undertakings. Significant resources make it even more important that we don’t want to be on some parallel track where we’re not answering the questions that are important to our customers. Let’s figure out what our baselines are when we go through our sustainability report. Establishing those baselines is a big part of the work we’re doing.

That’s the right place. You have to start there. I have some friends that work very closely in ESG and sustainability, and there’s a big push by some of the practitioners to have better standards. It becomes an easier understanding of how to meet the metrics or even how to measure some of these things. A challenge for a lot of companies is figuring out, “How do you measure that baseline?” Once you’ve got it measured, maybe being told, “The measurement is something different.” There’s a real drive as well to get some standardization to support that measurement and baseline creation.

That’s where we’ve tried looking out in the industry and seeing what people are doing. “Is GRI the right way to go? Is that the standard we want to set along? Will that be accepted by the bulk of our customers?” We saw this proliferation of certifications around green or natural. It’s like eight different definitions and they’re like, “Which one is going to satisfy customers?” We want to give them what they need, but it’s impossible to party to all of them.

Certainly, in the surfactant space, there have been a lot of different standards when you think about where some of the basic products come from, what’s natural or green and sustainable? Navigating that is challenging. Some of it is branding more than science. Figuring that out is critical. On the green space, you announced a deal with Integrity Biochem to work in some biosurfactants. Can you share anything about that and how that fits into your overall portfolio?

One of the things you’re learning in that biospace is you’ve got a lot of these very interesting technologies, people who have uncovered something interesting. What they don’t have is access to the marketplace. That’s a hard thing to grow up from ground zero. We came across Integrity. We’re impressed with what they did. What we had to offer were those 700-plus unique tier-2 and tier-3 customers who are out there looking for options. It’s made for a very natural marriage. We’re excited about what they can do.

They’ve got great leadership. We are wowed by their products. One of the things that were cool there and you see in this is getting these bio-based products that are scalable because we’ve seen lots of them that were lab. We couldn’t get to the level where if they were adopted, they could be competitive. They’ll pay more, but probably not forever.

 

If you think about where surfactants are going, some of these are large applications. When somebody reformulates, they want to know that they can fulfill those requirements. That has been historically a big hurdle for all of these new innovative products.

That’s struggle number 1. Struggle number 2 is one of the things where we think we could formulate our expertise is you can’t just drop these products in. They don’t perform the old proxies, the things that we’re used to, those ingredient numbers 1 and 2 on a lot of those surfactant-containing products. You’re going to have to look at, “How do I formulate with these? What other products do I need to put in there to get the viscosity I’m used to?” or things along those lines. It has been fun.

What’s next for you guys? We’re wrapping up 2022 and making plans to head into 2023. What should we be looking for with Pilot Chemical?

We’ll continue to look for good acquisitions that’ll help us be stronger. The bio-based space is interesting to us. We’ve got other markets that we’re very interested in. We’ll spend time there. We’ll continue to look for partnerships that make sense for us to help us get a bigger foothold. The conversations that we’re having with customers about sustainable products are pointing us in directions that matter to them and the problems they’re solving. Some of the things that customers are thinking about from sustainability with concentrates and the things that they’re trying to move to have us re-evaluating where we are spending our calories on the products that we’re trying to innovate in-house. There’s a great mix and an exciting time. We start to be able to engage with customers again. That’s where you get the ideas.

Thank you for joining us on the show. We appreciate your time and having you on the show sharing your insights.

Keep going. I loved the episodes that I’ve listened to so far.

Thank you, everyone, for joining us on the show. Keep following and sharing the show. Talk to you soon.

 

 Important Links

• Pilot Chemical

 

About Glynn E. Goertzen

Glynn E. Goertzen serves as vice president – Technology & Innovation and Corporate Development for Pilot Chemical Company. Prior to these roles, he served President, LMG, a Pilot subsidiary and Vice President of Commercial managing Pilot’s sales, marketing, customer service, integrated supply chain, research & development and corporate accounts functions. Glynn has worked at Pilot for 21 years. Prior to joining Pilot, Glynn worked for Kerr-McGee/North American Chemical and Univar for 12 years with various sales, marketing, and product management responsibilities. Glynn received his Bachelor of Science in Business Administration – Finance from the University of Akron and Master of Business Administration International Business from Rockhurst College in Kansas City, Missouri.

 

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