Chemical Shortages (Getting Shorter and Shorter!) 7

I started in the chemical industry in 1988.  Anyone long enough in the tooth to remember that time (pre-email, about 50% of companies had fax machines) will recall the product shortage that ruled the day was Titanium DiOxide (Tio2).  List price at that time for the standard Dupont R-900 grade was about $1.00/lb, and the first deal I ever put together was with a great guy, still in the business – Warren P.  We bought a truckload (40,000 lbs) at $1.50/lb FOB and sold it at $1.60/lb FOB to a company called GoldBond Products in Sumter, SC.  There were two very nice ladies in the purchasing department that must have felt sorry for me or something –  I really didn’t know what I was doing at the time, but they placed a purchase order nonetheless.  At that stage of my professional life (fresh out of the Army, 27 years old and about 4 months in the business), I didn’t have $60,000 to fund the deal; Warren funded it, and we split the $0.10/lb profit.  About 30 days later when GoldBond paid Warren, he sent me a check for $2,000.  This was the greatest day of my life to that point.  I was hooked.

It seemed like that shortage lasted many months.  If you are under 35 years old, it must be impossible to imagine not having email to transfer offers and specs/analysis by attachment. In the late ‘80’s the fax machine was just reaching the ‘tipping point’ of adoption. The physical act of communicating information to suppliers and potential buyers was comparatively done at a snail’s pace and the entire process of conducting commerce exponentially less efficient than it is today.  To a chemical trader, ‘those were the days’.  No really, they were. I talk to some old timers in the business about the Oil Shortages of 1973 (arguably the year that the chemical trading business started), and they talk of those shortages as the true ‘gold rush’ of our industry.

Ascorbic Acid:

Since that time I’ve seen numerous shortages with various lifespans and degrees.  The Chinese ‘cartel’ of Ascorbic Acid (aka Vitamin C) manufacturers appear to create a shortage every 3-5 years, moving prices from $3/kg to over $20/kg in one case.  That’s fun on the way up, and can be very dangerous on the way back down to $3.  The phrase ‘don’t try and catch a falling knife’ is in play on shortages such as these.  It took weeks (months?) for the price to rise 6-fold, and literally one week for the price to drop a similar amount.  Multiplying the dollar amount times 20,000 kgs per container – a lot of money can be made or lost.  I know of one company that actually made over $100,000 on each of two containers (as the price rose), and having not followed the age old principal of ‘take your first loss, it’s the best loss’ held on too long the final container and literally gave back all the profit made on the first two.  A loss of $200,000+ on one container!  It’s only money, right?


Other shortages have included products like Methyl Ethyl Ketone (MEK);this product used as a cleaning solvent in high end electronics became very short after the horrible aftermath of the Japanese Tsunami several years ago. An MEK plant in Japan (designed specifically to service the high tech industry in Japan) was knocked out and the likes of Sony, Sharp, etc… were forced to buy MEK on the open global spot market.  That shortage lasted about 3-4 weeks.

Purified IsoPhthalic Acid:

Fast forward to just a few weeks ago when the major USA manufacturer of Purified IsoPhthalic Acid (PIA) announced o/a March 1 that their plant would be out of commission until mid-late April at the earliest. Common sense thinking would assume this shortage would last several weeks.   ‘Back in the day’ we would be chomping at the bit, salivating over the import opportunities that could come from Taiwan, Korea, etc… for PIA.  Reality is that this ‘shortage’ literally lasted 2-3 days for the spot market to be open and shut.  Emails flew around the world, international text messaging ramped up, and new communication Apps like ‘WhatsApp’ allowed instantaneous communication from mobile device to mobile device transcending former barriers such as time zones.  Users of PIA placed orders in 2-3 days to cover the next 6-8 weeks of shipments (including one container I know of that was air freighted from Korea!), and the ‘shortage’ was over.

As anyone who participates in these shortages knows, it can be alot of ‘fun’, and very rewarding to assist company’s & customers who need to find product to keep their plants up and running. Those same people will recognize the many sleepless nights of owning product at well over market prices, and the fear of selling in a market that is ‘the falling knife’.

Technology continues to change and evolve our industry.  It’s exciting; fast and furious,  and creates the need for the occasional ‘all-nighter’.  And until the next ‘shortage’, its back to the daily grind…chemical distribution the old fashioned way.  Bags, drums, pallets and truckloads at a time.

Share your ‘shortage’ stories!

Chemicals: Why must we defend our chosen profession? 11

Have you ever been in a social setting and someone asks what you do for a living? You pop up your chest, stand a little straighter and reply ‘I’m in the Chemical Business’. Or, do you actually stand up straighter?  Rather you might temper your answer depending on the audience.

I imagine the chemical industry is celebrated in places like Houston, Delhi, Antwerp, Singapore, and Shanghai – but in Seattle, there is an audience always ready to malign our chosen profession at any opportunity. Sometimes I am in position at the family dinner table to have to argue (i.e. defend) my positions on things like why the XL Pipeline should cut across Nebraska, and have documented my thoughts on fracking as a necessary technology risk while alternate energies become more viable.

At a convention of the National Association of Chemical Distributors (NACD) a few years ago, I got into a choice discussion with a female guest who spent much of the day roller blading while our group was in sessions.  When she took the time to ask about our business, she came over the top with the usual ‘chemicals are bad’ generalizations and I proceeded to explain to her how chemicals were rooted into her life (products in her hair, makeup, pigments in clothes, textile chemistry, etc..).  The best moment for me was when I focused on the wheels of her roller blades and was able to talk about the reaction of such substances as Isocyanate and Polymer being reacted to create PolyUrethane Resin, basically the entire wheel.  And every time she slid on those wheels, a little slice of this nastiness is released to the environment.  So much for her ‘green’ workout.

A label from a "Bio Organic Detox" Foundation Cosmetic.  Chemicals are everywhere.  It's reality.

A label from a “Bio Organic Detox” Foundation Cosmetic. Chemicals are everywhere. It’s reality.


GSP Reinstatement Revisited. It’s painful, and is costing jobs. Get it together Congress!! 2

On December 15, 2013 I posted an article, GSP Reinstatement. Help or Hurt the Chemical Industry?? which reiterated the need for businesses to press Congress to reinstate the General System of Preferences (GSP) and offered ways that companies could make their voices heard. In short, by allowing the GSP to expire, Congress is forcing all importers, small and large to have customs duty preferences revoked without notice or recourse – thus creating unanticipated increase in duties paid, a direct (and completely uncalled for) negative impact to their bottom line.  In a recent post by The Coalition for GSP titled GSP in 2013: Companies Should’ve Saved…Could’ve Hired?, Jeff Wright (Exec VP and CFO of TRInternational, Inc) points out the actual unanticipated loss for his company…the result of which causes our company not to be able to hire 1 or 2 people to spur its growth. Here is the excerpt:

TRInternational, Inc. (TRI), a global wholesaler of industrial chemicals, headquartered in Seattle, is just one of the companies forced to pay higher tariffs because of Congressional inaction. In the 20 years TRI has been in business, it has made the Puget Sound Business Journal’s “Top 100 Fastest Growing Private Businesses in Washington State” list on three separate occasions. Yet the absence of GSP has cost the company more than $50,000 in higher customs duties (as of this writing the amount now approaches $70,000)

As noted by Jeff Wright: “On an annual basis, that’s 1 and 2 new hires that TRI could be employing to help our growing company and the Puget Sound region.”

Surely this is Congressional inaction that must be rectified immediately.   Job Creation.  Stunted.  Seems like a no brainer to me.  Do you agree?   What is the counter argument?

If you feel as strong as I do, and we do at TRInternational, Inc (TRI) please act to support the immediate retroactive renewal of the U.S. General System of Preferences.

How do Chemical Buyer’s Buy? Will it ever really change? 24

I am not old enough to have experienced the ‘two martini lunch’ technique of ‘doing business’, nor am I young enough to fully grasp the trends on ‘how buyers will buy’ 10-15 years from now.  However, I do know that the chemical industry has actually regressed in the past 15 years with respect to our use of technology in the conduct of day to day business and transactions.

How are Buyer’s buying differently than in the past, and where could it lead in the future?

Last December, I visited a very progressive chemical marketing/sales company on the East Coast. I was impressed with the sheer volume of computer monitors and the atmosphere of a Wall Street trading floor. The founder graciously took me through their offices and explained how their website gets approximately 1,200 hits/day and 40 solid inquiries for their products.  They literally are ‘fielding calls’ and reacting all day long.  I am not ashamed to admit I was slightly envious, but I have to think this is a unique situation.

I look at my company’s website and while a little outdated in appearance, we provide solid information to customers/suppliers (and apparently headhunters as well) and try to offer a little personality with our company newsletters.  We get nowhere near 1,200 hits/day and are realistically lucky to get 5 solid inquiries per week, if that.

I consider us to be fairly progressive on the technology side; our CRM and ERP systems are reaching the tipping point with our entire staff learning the value of a central repository of information and how profit and value can be generated.   But I constantly wonder; “what are we missing, what is a better way?”


When I entered the chemical industry in 1988, only about 30% of companies had fax machines.  We literally had to ask contacts, ‘do you have a fax machine?’.  I contrast this to just this morning when a customer notified me of a purchase order via Facebook message.  Truth!   Back then, salesmen made phone calls and the occasional visit, and customers hopefully called back with purchase orders that were written into notebooks and somehow transcribed into systems that processed the orders and paperwork.

An excellent article written in 2001 by Rajat Agrawal discussed opportunities for chemical companies and specifically customer-related opportunities and supplier opportunities as well utilizing e-commerce.  Based on my recollection, his vision at that time was spot on.  Suppliers on a mass scale would literally link into customers using EDI or an extranet to monitor inventory, and share real time information.  Smaller companies who could not afford such luxury were doomed!  Buyers could use e-commerce for cost containment.  Employees were leaving brick and mortar chemical companies to work for any entity that contained “dot com” in the title.  The labor market to hire recent college graduates was completely turned upside down by the dot-coms as these kids all wanted minimum 6 figures to start as a junior salesperson.

The Dot Com’s and Exchanges…

At the millenium, there were in fact three dozen or so chemical exchanges that were destined to cause the end of the traditional model of chemical selling.  They are ALL now gone… Powerful names like ChemConnect, e-Chemical, and Elemica were going to change the world, and here we are today… still on the phone (and with more – much more! email) making offers and still working for orders.

Perhaps these exchanges came too early, and this model will return again.  I am aware of several new chemical exchanges that are trying to resurrect this model today, but are buyers ready for this yet?  Will the chemical industry change it’s ways? Does it need to?  What value does the exchange provide other than sharing of someone’s inventory and electronically react to a buyer’s eBay style wishes? And how much is that worth to a buyer/seller?

The two martini lunch days are certainly over, and the 5 hour golf rounds are getting fewer and farther between (maybe people just don’t like playing with me and I haven’t caught on yet). Email is getting more ferocious to manage, and business moves at the speed of smartphones… but has anything essentially changed?  Are buyers buying any differently than 20-30 years ago, and more importantly will these habits change in the near future?

Personally, I don’t believe the chemical industry can be served by an Amazon.Com type model.  There are just too many ‘special requirements’ in this business.  Perhaps I am wrong, and I’d welcome any conversation about buying/selling habits.  Thanks for reading.

Frac’ing, Buying Time for the Future? (In 600 words) Reply

Although books are being written (and movies made) on the pro’s and con’s of Hydraulic Fracturing (correctly abbreviated as “frac’ing”) and the related revolutionary technology of Horizontal Drilling, I’ll give my opinion in the form of an ‘elevator speech’ (i.e. 600 words or less), understanding that I’m an American business person and recognize my views are USA biased. More…

GSP Reinstatement. Help or Hurt the Chemical Industry?? 1

Since its inception in 1976, the Generalized System of Preferences (GSP) has provided US importers with access to competitively-priced products, supported U.S. jobs, promoted economic growth in the developing world and supported favorable labor practices by offering a competitive advantage to companies from applicable countries.

As of 2012, the number of beneficiary countries and territories came to 126 (43 of which are “least developed countries”), the number of tariff lines eligible for GSP was 4,980 and the dollar value of imports cleared under GSP reached $19.9 B.  A total of $742 M were saved on products ranging from ferroalloys, fiber optic wires, jewelry and petroleum oil.

Regretfully, the U.S. government failed to reinstate GSP in August of this year and since that time, companies small and large are paying significantly more for their imports (lest anyone feel this program only benefits the “big guys”, see the Coalition for GSP’s website which advises 78% of their members are business with less than 100 employees and that the “typical” company has just 15 employees). More…

I’m a Chemical Trader – Now What? 12

I am a Chemical Trader (industrial, not recreational).

I’m also CEO of a $70,000,000+ multinational Chemical Company.  I have led a team that started as two people in a spare bedroom in my house and today has 33 people working in 5 nations around the world.  We have aspirations and a strategy to be a $200,000,000 company. Throughout 19 years, I’ve have worked extremely hard, been fortunate enough to surround myself with incredible talent, made some big mistakes, hit some huge home runs, and love being ‘in the game’.

The Problem
Lately, I’ve been doing a lot more CEO’ing than Trading – and I’m tired of it.  It’s not doing me any good, and certainly not the company.  I want the days back where I wish Saturdays were Mondays.

I’m returning from the Annual Meeting of the National Association of Chemical Distributors (, and spoke to a number of my peers about this dilemma.  I feel like I’m not contributing, nor participating in the daily battles we face in the market.  I am buried in email and meetings.  Does this sound familiar? The vast majority of tasks I take on could be, should be, or are handled by people much better suited than I to handle these tasks.  Approximately 75-85 out of every 100 emails come to me from within the company (n.b., I have not included the Nigerian Prince emails or the relentless onslaught of M&A emails that arbitrarily yet consistently pop up), I want that ratio reversed with the majority of my mail relating to buying and selling products.  And, if they are from inside the company – I want to be working with my team to put business together.  Commerce only!  No bankers, no lawyers, no insurance brokers, no interviews, no 1:1’s with staff, no annual reviews…Other people do that. I want to sell. That’s what I do best.

Does anyone else face this problem? Do tell.

The Initial Solution
I’m getting back ‘in the game’, and I’m cutting the CEO stuff cold turkey.  I’m handing over the operation of the company to an extremely trusted Lieutenant.  I am lucky to have her… She’ll do a lot better than I at that segment of the business.  I’m not going away… I’m still going to work on CEO stuff like ‘managing the mood’ and ‘creating the future’, but I’m going to be active in the daily battle of commerce while we get there.

The Issue
The company was founded in my home in Leschi (Seattle) Washington USA in 1994, and as could be expected from a founder of a startup, I was the top revenue producer in the early years.  We grew. And we grew. And we grew some more.  Now 33 people in 6 countries and my personal production is negligible.  I want to get back in the fight. I want to be the top producer again.  My ego demands it. I am now surrounded by incredible talent, so my feelings won’t be hurt if I’m not on top… I just want that rush of getting that order.  Of working 24 hours calling different time zones moving east as the sun rises…moving, shaking…making it happen.

But, it’s a new world since I started with a few phone numbers, a calculator and $30,000 in the bank.  When I got into the industry in 1988 I recall only about 40% of companies had fax machines. Yes, everyone under 30 years old…google it.  Fax Machines.   By 1994, everyone had fax machines, but email was beginning to creep in.  My first email address (and there was no flexibility to change) was    Those were the days my friends.  About 30% of people in the industry and many a time you heard… “I don’t do that email stuff, why don’t you just pick up the damn phone… or, if you have to just fax me something”.  In 1995, we were one of the first companies in the industry with a website.  To ‘mass market’ prospects and potential customers/suppliers, I would print each and every fax and stand by the fax machine patiently as each page spit itself thru the rollers ever so slowly.

Fast forward to 2013.  Yes Mom, it’s a different world.  iPads, Airplay, SkyDrive, GoToMeeting, Smart Phones, Instant Messaging, Texting, What’s App, Skype Video Calls, Linked In, Twitter, etc…, and of course the relentless timesuck – Facebook.  Google/Bing… forget about it! Here is what ‘Search’ was… We used to rummage thru the Stanford Research Institute’s (SRI) “Green Book” and “Red Book” to find leads, determine producers.  At the price of about $10,000/set – owning these gained us quite a competitive advantage.

The latest in meeting technology...Conference Calls on MSFT Lync.  Seattle, New Jersey, Dubai, Delhi and Capetown represented here.

The latest in meeting technology…Conference Calls on MSFT Lync. Seattle, New Jersey, Dubai, Delhi and Capetown represented here.

I’ve got some thoughts, but how are any of us expected to gain a competitive advantage?  Everything happens so fast. I’d welcome any dialogue on these issues… I have my thoughts, please share yours.

So, as of next week I have a new job.  Senior Trader.  Any item, issue, or email that does not relate to buying and selling product and moving this company forward will be ‘declined’ (apologies to Michelle Connor, Marjalena Santos, and Megan Gluth). I’m going to take every business card I have been given for the past 10 years… (work with me folks… who has ever come back from a tradeshow and followed up on none of those cards?   Anyone? Anyone?). Then, I’m attacking LinkedIn and actually going to learn about my ‘connections’ and the companies they work for. Then, the fun starts….a blitzkrieg of phone calls, followed by email after I leave the inevitable voicemail.   If you are so lucky to be both reading this blog, and on the business card or LinkedIn list… you’ll be receiving these so get ready …. I want to figure out how we can do business. And I humbly look forward to it.

The Question
So here is my question, how are ‘chemical guys’ using the various social media outlets today?

Twitter?   It is a reasonable news source, but significant and real information does not seem hit this medium.

LinkedIn?  A glorified industry contact album canvassed solely by headhunters trying to steal my employees?

The Web?  Corporate Websites?  They appear to me to be digital brochures.  How are people using the web to trade, and commerce?

Exchanges?  Do any of these work.  I remember during the dot com bubble… ‘the industry as we know it will disappear…everything will be bought on the internet… auctions will rule the day, etc…. ‘.

So, where are we today?… Same place we were in 1988… purchaser picks up the phone (or the 2013 version of picking up the phone i.e., email) and places an order…. Can this ever change?  Will an Amazon style marketplace ever exist?

These are my questions… I’d love to hear input.  Meanwhile, I’ll be back in the trenches – loving every minute doing what got us here, but was forgotten so long ago.  I’ll report on my success (or other outcome) later.

I plan on coming out very soon with the first Chemical Trading and Distribution podcast.  These cast will feature prominent individuals from the chemical field speaking their mind on issues related to our industry. We’ll have a little fun too!

Please post your comments in the forums below, or contact me on Twitter (tonyridnell) or email (