Listen to This Episode with Patty and Victoria Here:
Sharing insights on the complexities of managing global chemical businesses, Patty Summers, Global Business Director at Zeochem, joins host Victoria Meyer on this episode of The Chemical Show. Patty, drawing from her extensive experience in the molecular sieve industry, discusses how Zeochem navigates diverse regional markets through strategic partnerships with distributors and agents. She shares valuable insights about doing business in India’s ethanol market, where government initiatives and unique funding structures significantly impact project timelines, and explains the critical importance of having local presence and understanding cultural nuances in different regions.
Victoria and Patty discuss how mid-sized chemical companies can effectively balance global strategy with local execution, particularly in today’s challenging market conditions. Summers discusses the role of sustainability in different regions, noting how natural gas continues to serve as a bridge fuel in the energy transition. Victoria and Patty also make note of the potential impact of changing trade policies and tariffs, particularly regarding U.S.-China trade relations, and how companies like Zeochem are adapting their sourcing and market strategies in response. Patty emphasizes the importance of maintaining consistent long-term strategies while remaining adaptable to regional market dynamics and regulatory changes.
Join us to learn more about the following topics this week:
- Global Business Partnerships: The importance of distributors and agents in different regions
- Cultural considerations in international markets, focusing on India and the Middle East
- India’s ethanol market and project-based business management
- Sustainability and Clean Energy Transition: Natural gas as a bridge fuel
- Trade Policy Impact: Discussion of tariffs and their effects on global business
- Regional market strategy and managing business across diverse global markets
Killer Quote: “When it comes down to the selling process, it’s more than just the words. There’s a deeper level of connection that you’re trying to reach… it’s easier to get to that win-win in the local language with that level of trust.” –Patty Summers
Other links:
Watch Victoria and Patty’s Discussion Here:
Think Global Act Local with Patty Summers of Zeochem
Hi, this is Victoria Meyer. Welcome back to The Chemical Show, Where Chemicals Means Business. Today, I am speaking with Patty Summers, who is the Global Business Director at Zeochem. Patty’s been on the show before. We will link to her prior episode. Today our theme is around managing globally and how chemical companies, many of whom have very diverse operations, have to manage globally.
Patty Welcome back to The Chemical Show.
Thank you, Victoria. It’s a pleasure to be back.
Well, thanks for being here. So let’s just start with a brief introduction to you and to Zeochem. Tell us who you are and tell us about Zeochem.
Yes. So Zeochem is a very old Swiss based company, and one of our product lines is molecular sieves, which we manufacture across the globe, in Europe, China, and here in the US. So we are a company that sells into a lot of diverse markets. My role is chemicals and energy. So I spent a lot of time in the natural gas treating markets, and little bit of petrochemicals refining. It’s those kinds of applications that are project-based that use molecular sieves to do purification steps for the materials that go downstream. So I’ve been at Zeochem about seven years now. But I’ve been in the molecular sieve industry for decades, going back to initially starting at Union Carbide, that became part of UOP and now it’s wholly owned by Honeywell. So, I spent over 20 years with them.
I took a short break from molecular sieves and joined Endress Hauser, where I did a little bit of analyzers, managing that group and finding applications there around the globe for their products, which typically were downstream of molecular sieves. So there was a great fit there in terms of the marketplace. However, it got back to my roots in molecular sieves by joining Zeochem about seven years ago.
I love it. Well we started talking about this and I thought it was just such a great and timely conversation for us to have. So the reality is when we look across the chemical industry we operate in global chemical and energy markets, right? Cause your company branches into some broader territory and yet within the global market, there are also significant regional differences. Many companies, smaller companies such as Zeochem and really 80% of the chemical industry, I categorize in the small to midsize. There’s a lot of partnership and diversity that takes place when they look at managing global businesses and global supply chains.
What we’re seeing today, of course, as people know, in the broadest sense we’re seeing significant oversupply across many products and markets. With some moderation of demand, yet continued new build and developing regions in China. For the most part, the view is that US markets are fairly strong, although we’ve seen some weakness, maybe in the second half of 2024, but generally seen as a robust and resilient market. On the other hand, Europe sees continued challenges on a cost basis and energy basis perspective and then some weakening of demand. Then the Middle East influenced by Europe and also by Asia, and then Asia is dominated by China.
Heavy future growth coming from India, which is where you’ve recently been. So seeing significant effects of tariffs, particularly in China, and that effect of supply chain issues and more so bottom line is, the role of a global chemical executive is always interesting and ever challenging. So I know that you just recently returned from a trip to India and Dubai. So I thought it was really timely to get some of those recent perspectives, particularly about doing business and how they are seeing the global marketplace, but also how you as a US based global executive work with partners in India, in the Middle East and elsewhere.
Let me just start by saying, having partnerships is absolutely key and that goes for everywhere around the globe, but you’re right at who we choose and how we choose to interact will change by the region. Our products are used with other technologies that we don’t necessarily have in our portfolio. So first and foremost, it’s important to partner with people who have complimentary products so that their sales activities and their interactions with the customers are not solely dependent on when these customers may need molecular sieves or not because our sieves have a long life. So they’re loaded into these large vessels, they’re used and they’re regenerated and their life can be anywhere from four years to over 10 years, depending on how it’s used, what applications and how frequently it’s regenerated.
So we need customers and we actually need distributors that will be interacting with our customers in between all that. So they know when the customers need help, when they need molecular sieves. So that helps us a lot increasing our spread.
That’s true. I think for you guys across the globe, leaning into distributor relationships as a way of expanding your reach and expanding your touch points is important.
Yes. Now you talk about the different regions. In some places we want agents.They’ll help line up the sale and we give them a percentage commission based. But in other areas like the Middle East, country value is becoming more and more prevalent as a key part of the decision process of those purchasing agents. And what that means is that they’re giving preferential treatment to those companies that have invested in that country in Saudi Arabia or in Qatar so that they have stock, they have employees, they might even have blending facilities, repackaging or testing or even some other light manufacturing. So that has become a key element. And that has a lot to do with who you choose to partner with, what kind of strength they have in that value as the scoring during those purchasing processes. And we’ve seen that increase over time.
Yeah, it makes sense. So let me just do a little decoder ring action here. So how do you differentiate between an agent and a distributor for those that maybe aren’t as familiar.
Yeah, a distributor will actually purchase the material and take possession.
Okay. Whereas the agent acts as a sales agent on your behalf.
Yeah. So if we have an agent, our order is with the end user and they are paying us and we pay for the service, the sales help and the assistance that we had from our agent. So you’re paying them for a service rather than a distributor will be buying the material.
So you maybe touched on this then, when you think about this, how do cultural and business practices, particularly in India, and as we look at the Middle East impact your approach, how does it change your approach to customer engagement and to partnerships?
So it varies quite a bit. I know in India, for the most part we are focused on the ethanol market. So this is the dehydration step that allows the ethanol to be blended with the gasoline pool for transportation. So it’s an important sustainability step for the Indian folks. And the government, Modi has taken the lead and said he has this goal of having a 20% blend right into their gasoline pool.
That’s big.
I think it’s 20% by 2025 even. So by the end of next year. But they’re only currently at 11% or 12%. So they still have some growth to go in terms of building new plants and getting the production settled in the marketplace to supply all this increasing demand. The structure is that we’ll determine how many plants are to be built. The government will then tell the banks that they need to fund a certain number of plants. And then the engineering firms will be getting distributions from those banks according to a schedule. So when it comes to doing those initial fills of our molecular silks into those plants, it’s highly dependent on the cash flow that comes from the government.
So we have open orders they slip in terms of when they’re going to ship because in India, getting payment is more challenging than other parts of the world. So not a lot of credit that’s offered in those markets. We rely on prepayment. And again, the flow goes back to the government and the banks, and it’s all about the money flow. So that’s a different element that we don’t really take into account fully in other regions necessarily. Not that we don’t have prepay accounts around the globe, everybody does. Everyone’s in different financial situations, but for the ethanol market in India where we participate, there it dictates a lot of the timing.
It’s so project dependent and tied to the government objectives and government fundings and priorities.
Yeah. At the end of the day, the plants are owned and operated by farmers, by cooperatives. It’s still very much, back to the early days when we had a lot of plants here in the US it started with the farmers having the feedstock, we’ve grown up and become a little more corporate here in the US but in India, it’s still very much the local cooperatives.
So that makes me think that it’s really important to have local presence and people that really locally know the businesses. So if I think about the oil and gas market, for instance, in North America, which is the areas that I’m familiar with. When people go out to West Texas and they’re selling oil field chemicals, a lot of times it’s people that grew up in those communities. They have very tight relationships. They live in those communities. Do you see the same thing happening? As you do business in India.
Yeah, very much so. And even more so because India is a collection of a lot of states and each state will have their own local language as well. So even communicating across the country presents a bit of a challenge.
Yeah.
Only people in the big cities can fluently speak English. You can find English in some of the other larger cities, but really getting down to the purchasing decision, you do need to rely on locals to navigate that.
That’s interesting. Number one, so there’s so many Indian companies that we work closely with across the US and across the globe. And on a regular basis encounter Indian people that are very fluent in English. Yet it’s interesting, the whole variety of languages and the skills that are needed to really do business effectively in the country.
That’s doing business effectively, I think is the key because a lot of these people will speak English and we can communicate. But as you know, when it comes down to the selling process, it’s more than just the words. There’s a deeper level of connection that you’re trying to reach that level of understanding the pain points.
You’ve talked about it before, getting to know your customers and bridging. It has to be a win-win, and it’s easier to get to that win-win in the local language with that level of trust. So yes, a local presence is absolutely key. You see that in the Middle East as well for slightly different reasons. Because the Middle East, as you know, has very distinct protocol and procedures that you need to go through for these massive RFQs. Understanding how to navigate the particulars of those individual RFQs issued by large corporations where they have a lot of people checking all the boxes. You can be kicked out if you don’t tick all the right boxes. So it’s important to have somebody who understands the culture, understands each customer, knows how to ask the questions for clarification ahead of time before you might be on the outside looking in.
So you talked a little bit about the fact that this is really much of your business, India in particular is project based, time-tables slip. You don’t always have control of that. How do you manage that? That is definitely a variability in supply chain and in your sales and your delivery process that, the reality is from an operations perspective, steady state is always the best predictability is preferred.
Yet it sounds like you don’t necessarily have a lot of predictability at times. How do you guys manage that?
That’s right. I can’t forecast. What I try to do on a global basis is streamline the product line. So we have a handful of major movers in terms of the product, the product size, and how it’s packaged so that we can deal with those flexibilities.
We still have product moving. It may not be to customer A, but we’ve got it in stock. It’s going to go to customer B because they paid first. So it’s very fluid. But by streamlining and having only a few products for the major markets. We do have the specialties, but it’s a smaller part of my business. By having the large volume movers, I can oversee across multiple customers and balance it out. So it all comes together, not perfectly mind you, but it’s not as much chaos as it must seem.
Yeah, that makes sense. I think there’s this whole element of standardization that’s needed to be effective. It’s kind of the whole 80-20 rule I would imagine. The Pareto principle applies for so many factors for a reason, because if you can get yourself to 80%, whatever your target number is of standardization, it gives you that ability to navigate.
It does. And it helps us manage our inventory and it helps me have more inventory available on demand, which in the US market, I think has really given us a distinct advantage that we maintain good levels of stock and can respond rapidly to our customer’s needs. Cause there are those unplanned upsets and we are the “go to” I’d like to think because we can supply on short notice for those customers that have an upset.
That’s great. Let’s talk a little bit about sustainability. So we know that sustainability is becoming increasingly critical across all businesses, all geographies. Well, I say all geographies. Is that true? As you venture into India and the Middle East, where does sustainability, carbon reduction and other things factor into their priorities?
India is a tough one because I’m not involved down at the individual plant level. But we can say that their use of ethanol and wanting to blend that into the gas pool is having a positive impact on the environment. So that’s India.
If you look at the other markets that I sell into, let’s just say at a high level, natural gas is the clean fuel. It is the bridging strategy. Everyone can say it’s going to be wonderful. And in 5-10 years, we’re going to move massively away from hydrocarbons. But the reality is some of those technologies may not be ready and natural gas is a cleaner fuel, a cleaner option than coal. So we are seeing strong markets for natural gas processing and even the LNG plants, especially here in the US, that we’ve seen grow, they’ve been strong in other parts of the world for quite some time, but anyway, there’s investment in natural gas and LNG for those reasons.
Now, when it comes to using our products in the processing of natural gas, it’s mature technology. But what we’re seeing is that our customers are very receptive to our services of helping them optimize. So use less energy in the processing of natural gas, getting more life out of the molecular sieve loads that we do put in so that they have less environmental impact on disposal. Even just the whole reload process of the trucking of the vans to get it there, trucking the spent material to be disposed off. So it’s got its own little circle of life and trying to get longer life, minimize those disruptions and disposal costs. Use less energy as you’re operating those plants day to day. We formed some tight partnerships that have really helped us differentiate ourselves from our competitors to be able to impact that.
That’s great. And I think your point about natural gas being the clean fuel of choice or at least a bridging strategy. I think that is one of these reflections that, depending on who you’re talking to, but I think more people are coming to that realization of the future world where we’re looking into green energy sources, whether it be solar, wind and other things it’s a ways away, right?
We’re not ready yet to have it fully impacted. So when you think about moving from coal to natural gas. Natural gas is a cleaner alternative. Heavy hydrocarbons to the light hydrocarbons. It’s a cleaner alternative. So it’s all kind of this stepwise sustainability progress that we’re seeing take place.
And it’s nice because it’s established technologies. We know how to do it. We know how to do it responsibly. I think it’ll be around for longer than people want. I hope we get there sooner with some of these greener technologies, But the reality is there’s going to be another decade or two.
At least. I’ve seen somebody say another 70 years. We’ll see. I don’t know, but I think it all depends on what you’re looking at and what you’re measuring. So we’ll see. Time will tell.
Let’s turn and talk a little bit about leadership and strategy. So as a leader in a midsize international company, how do you balance local autonomy and global strategy. You have employees, but you also have tight business partner relationships who are obviously external to you, but who also need to align to your business objectives, to your business strategy as you serve markets.
Right. It takes a lot of coordination. I will say that. And thank goodness we all got used to Zoom and Teams and these other remote ways of communicating, because it’s not as good as being there, but it’s better than a phone call. So we can stay connected in ways that we couldn’t before. But in addition to that, having the right channel chosen for that country for whatever they bring to the party, depending on what part of the world we’re in. As I manage, I’m in touch with my team so that they know throughout the month how we’re progressing and what I’m looking for. And it is a coordination because, as we try to branch out into new regions, references are really important. So we just got a great reference in the Middle East that’s going to help us in China, for example. Just to show that yes, we have good products. Others have have trusted our materials for decades and now you can too. It’s okay.
So trying to coordinate and make all that come together is fine. Now, me personally, I do a little bit of block flow. I will focus in on certain regions for a couple of weeks, like four weeks and make sure everything’s aligned. Move on to the next. I do tend to focus and dive in deep in one region and then move to the next and move to the next, that just kind of works for me.
The whole study of you can’t multitask very effectively. None of us really can. And so I think this idea of block focus in different markets in different regions makes sense.
I try not to focus too much on currency exchange. That’s just that’s just me. We report our earnings in Swiss francs. So that doesn’t always work in my favor, depending where in the world I’m focusing on. But I found that if I focus on the customers focus on the value. Even a couple of pennies count, just being very mindful of those margins points me in the right direction.
Yeah, I think it’s a good point. I mean, control the things you can control and currency is not one of them.
No. In my business, and I think in any business, you can’t keep changing your strategy. You have to have a strategy and it’s multi-year strategy and you might tweak and change a little bit along the way, but you can’t be managing and reacting to swings in currency.
Yeah, awesome. So we’re approaching the end of 2024. We’ve recently gone through a presidential election in the US, we’re at the cusp of a new administration. Lots of conversations around what that potentially means for global trade, particularly when we think about trade tariffs. Did that come up at all? How are you or your business partners thinking about that as you look forward over the next 12 to 24 months? Is it too soon to tell?
Well, it’s a little soon. But if you take some of the pre-election information and talk and chatter into account, we will see increased tariffs on imports coming into the US. While that gives me a little bit less flexibility in terms of sourcing from the multiple plants, cause there’s times where I do want to source from China and bring to the US depending on the product, depending on the strength of the individual markets and the demand on our plant.
What I’m really looking at now is how is that going to change the competitive landscape? And I think it will. I think that’s what Trump’s all about, is that there in his mind, there maybe is too much presence from the low cost Chinese material with the increased tariffs it’s going to be impactful for some of our competitors. Currently the molecular sieves coming in from China are tariffed at 25%. So if it goes to 60%, that’s a big step. I think it’s also a game changer for some of my competitors. Now with my big plant in Louisville, Kentucky, I think it may open up some of the market to us that wasn’t available before.
So, it’s a little bit of having more market available to me. But how do I do the sourcing? How do I change my sourcing a little in that direction of sourcing the rest of the world from the China plant best I can? We’re sourcing Brazil, India, Middle East, and China. So we’ve already started down that path. But I will tell you that in the past, the 25% tariff wasn’t really enough to change the market dynamic. I mean there’s market prices and we weren’t able to just pass on that because all of a sudden there’s 25%. But I think 60% is a different, it’s a higher level.
It is a game changer.
We’re doing our math and trying to see what is it really going to mean for us. It will mean more to our competitors, and I’m glad we have a plant in the US.
Yeah, absolutely. We gear up for a new administration, potentially new trade policies. It’s a great time to reflect on strategy, and what it means for global balances, business strategies, market strategies, sourcing strategies. There is, I think, a lot of work going on behind the scenes, not just at Zeochem, but everywhere.
Oh, yes, including raw materials and parts and pieces, I was reading something on the news just yesterday about can we even get the parts we need for raw materials? We’ve gotten used to a world of available things that we can use and have access to and now that might not be available.
Right. Well, Patty, thank you for joining us today on The Chemical Show. Really appreciate having you here.
Well, it’s my pleasure.
Thank you and thanks everyone for listening. Keep listening, keep following, keep sharing, and we will talk with you again soon.
About Patty Summers:
Patty Summers is Global Business Director of Chemicals and Energy at Zeochem. Patty has 30 years in the chemical industry at companies including SpectraSensors, UOP Honeywell and ExxonMobil.