Pairing Experience with New Ideas
OQ Chemicals Focuses Growth Strategy on Oxo Chemicals with New Structure
With its own patented production technologies, OQ Chemicals is one of the world’s leading manufacturers of oxo chemicals. Known as Oxea until 2020, the chemical subsidiary of Oman’s state-owned OQ employs around 1,400 people and operates production facilities at six sites in Europe, the USA, and Asia. In September 2021, there was brief speculation that OQ was considering selling its German subsidiary based in Monheim am Rhein. However, in November 2021, OQ Chemicals has gained more independence and, with a new management team, is also changing its organizational structure and strategic direction. Michael Reubold asked OQ Chemicals Managing Director and CEO Oliver Borgmeier about the changes and future goals.
CHEManager: Mr. Borgmeier, it has been relatively quiet around your company since its integration into the OQ Group. What does the future hold for OQ Chemicals?
Oliver Borgmeier: OQ Chemicals has excellent potential. It is true that since we integrated into the OQ Group in 2019, much of the communication has gone through the parent company. We, as OQ Chemicals, regained more independence in November 2021 and were able to reorganize ourselves accordingly. That’s why you’ll be hearing more about OQ Chemicals in particular again in the future.
There were some changes at the end of 2021, both in terms of personnel and organization.
O. Borgmeier: Yes, in the new management team of OQ Chemicals you will find some familiar faces and new ones. They all have many years of experience in the chemical industry, the majority specifically in the oxo sector. This makes us strong, as experience can be paired with new ideas. For example, with David Faust and Kyle Hendrix, two new Executive Vice Presidents have taken over responsibility for the two segments Oxo Intermediates and Oxo Performance Chemicals, into which our product portfolio is divided.
In setting up the new organization, we have drawn on the experience of our times at Oxea and the OQ Group. As a result, we believe we are well equipped to continue doing what we do best in the future: Producing oxo chemicals and selling them worldwide.
The strategic cornerstones on which we will build are strengthening Oxo Intermediates, growing Oxo Performance Chemicals, and driving functional excellence. Our independent investments and projects will focus on these to be successful in the long term. A healthy cash flow is just as important as the willingness to invest selectively. I have complete confidence in OQ Chemicals, our employees, and the future of our business: We are well prepared.
What does the division of your product portfolio into Oxo Intermediates and Oxo Performance Chemicals mean for your customers?
O. Borgmeier: We can understand our customers’ needs more precisely and can respond to them even better. In some cases, these can be very different. While the Oxo Intermediates are mostly basic chemicals, Oxo Performance Chemicals, our former Oxo Derivatives, are more about specialty chemicals with different application profiles and different markets. Our customers of Oxo Intermediates and Oxo Performance Chemicals have different needs, allowing us to focus on them more effectively.
That is why we have decided to rename the Oxo Derivatives business to Oxo Performance Chemicals. Here, our focus will be strongly on growth to meet our customers’ demand in the long term. In the Oxo Intermediates segment, on the other hand, our focus will be on stability and the good availability of large-volume products.
Which products and markets in these two segments have performed particularly well?
O. Borgmeier: We closed fiscal year 2021 very successfully – despite difficult conditions such as the corona pandemic and regional challenges in logistics and availability. This demonstrated OQ Chemicals’ ability to achieve excellent business results even in difficult times.
In the Oxo Intermediates business, success was partly driven by strong demand for n-butanol in the USA. In Europe, we built on the excellent networking and integration of our value chain to meet the overall high demand for oxo intermediates.
In Oxo Performance Chemicals, the demand for acids was consistently high in 2021. We recently completed a capacity expansion for TCD Alcohol DM, so we can now get back to full speed.
How do you assess the future development of demand in your sales markets?
O. Borgmeier: We are preparing for rising demand, particularly for Oxo Performance Chemicals, and are investing more heavily in capacity expansions here. In the case of carboxylic acids, we see high global demand for base oils in the lubricants sector, but other markets are also developing well. The first stage of our carboxylic acid capacity expansion will be completed by the end of 2023, and we plan to expand in subsequent years. We see excellent developments in TCD Alcohol DM, driven by applications in new technologies in the electronics sector, such as touch panels.
The focus of your future growth will be on Oxo Performance Chemicals. How do you intend to support the growth potential?
O. Borgmeier: Important here are carboxylic acids, for which we are a leading global supplier. Our investments in acid capacities reflect this. Our primary focus is on investing in products and technologies where we are already a leader. However, we will also be looking at other technologies we can use to expand our product portfolio.
Many developments in the coming years will be shaped by new legislation, such as the EU taxonomy and political decisions, especially in Europe. We follow these developments very closely and will serve the market with suitable products. On the way to climate neutrality, we are already offering our customers ISCC Plus-certified products, for which we see increased demand.
Does your strategy include the production of bio-based chemicals?
O. Borgmeier: We can already offer our customers products based on alternative raw materials. However, the global market is very price-sensitive in this area and must continue to develop, also driven by end consumer demand. Our suppliers, customers, and we are still at the beginning of the journey.
We are strongly committed to the topic of sustainability and want to make our contribution to it actively. Our actions today will determine our chances of success as a company in the long term. For example, we recently had our German sites in Oberhausen and Marl, and our offices in Monheim certified according to ISCC Plus.
„Our actions today will determine our chances of success as a company in the long term.“
In general, sustainability is an essential part of our strategy. In environmental issues, reducing greenhouse gas emissions is an important issue that will accompany us in the coming years. Our goal is to become climate-neutral in the long term. To this end, in 2021, we initiated a group-wide program called “Reduce”; the first measures will already be implemented in 2022.
You mentioned functional excellence – what do you mean by that?
O. Borgmeier: When we say functional excellence, we don’t just describe our claim to high quality in production – we refer to all company areas at OQ Chemicals. It is about recognizing opportunities and taking appropriate action. In production, for example, it can be about digitizing processes, while in the “People” area, for example, there may be potential to improve our processes internationally. We have already developed the various objectives, performance indicators, and measures and will implement them successively.
How does the current market environment with high energy prices and supply bottlenecks for some raw materials affect your business?
O. Borgmeier: The current situation is a problem that affects the entire industry worldwide. We are trying to keep the impact on our customers as low as possible through contractual safeguards. Demand for our products remains high. We are working to find solutions along the value chain to continue to supply our customers in the best possible way in 2022.
The interview with Oliver Borgmeier, Managing Director and CEO of OQ Chemicals, was conducted by Michael Reubold, CHEManager International
Oliver Borgmeier is Managing Director and CEO of OQ Chemicals (formerly Oxea). He studied chemistry and received his doctorate from RWTH Aachen University in 1998. Borgmeier has extensive experience in production, management, and sales in the chemical industry from previous positions of responsibility at EC Erdoelchemie (now Ineos Cologne), GE Bayer Silicones (now Momentive), and Celanese, among others.
OQ Chemicals: Executive Vice Presidents Explain their Goals
Two new executive vice presidents, David Faust and Kyle Hendrix, joined OQ Chemicals’ leadership team in November 2021. Faust is responsible for the new Performance Chemicals segment as Executive Vice President, while Hendrix is responsible for the Oxo Intermediates segment in the same position. Both have extensive experience in product and supply chain management, business development, and marketing and sales. Faust holds a degree in international business administration from the University of Westminster, London, and spent nearly 14 years with Celanese and four and a half years with Covestro before joining OQ Chemicals in Monheim in mid-2020. Hendrix has an MBA from the University of Dallas, Texas, and joined Oxea, the predecessor company to OQ Chemicals, in late 2008 from chemical distributor Brenntag. He has his office in Houston, not far from the U.S. site in Bay City. The two executive vice presidents explain their goals.
Stability and Availability
Kyle Hendrix: In Oxo Intermediates, our focus will be on stability and good availability of large-volume products. A lot of this revolves around efficient processes and operations to make products available to our customers. Another important aspect is the market development of, for example, Propyls, which are more like a specialty business in their application character. We plan to expand our product portfolio to include so-called “low environmental footprint” products. This involves replacing petrochemical raw materials with biobased ones, for example. This can have a significant impact on a product’s carbon footprint.
Growth and Sustainability
At Oxo Performance Chemicals, our focus is on growth. Important building blocks are investments in our production capacities so that we can continue to meet the demand of international markets in the best possible way. This includes, for example, measures such as the ongoing expansion of capacities for carboxylic acids or the expansion for TCD Alcohol DM.
And in the future, we will also have more products in the Oxo Performance Chemicals portfolio that represent an alternative to conventional products based on fossil raw materials. With our ISCC Plus certification of the locations in Monheim, Marl and Oberhausen, we have already created the conditions for processing raw materials from renewable sources in our production.
Our strengths lie in the field of oxo technology. However, in all our activities, we will also always keep an eye on new technologies that suit us.