Eccles Chemical Company Finds Formula for Success in Singapore
An Eccles company with a multi-million pound turnover is going from strength to strength after working with UK Trade & Investment (UKTI) to turn a major business challenge into a triumph. Akcros Chemicals is a world leader in the production of additives for processing and manufacturing a range of PVC products, polyurethanes, coatings, adhesives and sealants. They have a sister manufacturing plant in America, related production operations in Germany and Brazil and, with the help of UKTI, have recently established a joint venture operation in Singapore and a licensing deal in India.
Yet two years ago Akcros were about to be sold by their parent company - multinational giant Azko Nobel - with a real prospect of production being transferred overseas and possible closure of the Eccles plant. European Managing Director Richard Catchpole was keen to take control of the situation in order to avoid this.
The best option was to be bought by a venture capital company but for this to happen Akcros needed to show a convincing growth plan and find overseas partners to reduce product costs and access new markets.
Akcros consulted UKTI's Strategic Alliance Service (SAS) adviser Julian Birchett, who helped them plan ahead, and sourced a comprehensive report into the world market for their products with advice and financial assistance from the Export Market Research Scheme (EMRS).
The report helped target new markets for growth and expansion, and identified several potential partners, including Dalian Xinguan Fine Chemicals in China, a company already known to Akcros.
Julian Birchett helped the company develop a strategy to form a Joint Venture with Dalian based in Singapore - a preferable location to China due to its favourable business climate, greater tax-efficiency and financial transparency.
Jeff Simmonds (CEO) and Richard Catchpole (European MD) were in a strong position to make the deal with Dalian happen, having already developed contacts and business knowledge in the region through their Singapore based employee Albert Phua, but the Strategic Alliance Service provided comprehensive assistance with all aspects of the deal, from developing the structure of the commercial proposal, drafting a Letter of Intent prior to an exploratory visit to China and advising on the company's strategic position with regard to separating from Azko Nobel.
In March 2007 the terms of a deal to sell Akcros were finally agreed between Akzo Nobel and GIL Investments, and Akcros became masters of their own destiny!
The final joint venture deal between Akcros and Dalian was concluded in March 2008, and in May this year the new company DAK-STAR was established.
Richard Catchpole says,
"Being able to use UKTI, and having continual access to Julian's expertise really helped to make the venture possible. Julian brought clarity to an extremely complex situation. He went through the pros and cons of all the options with us, addressed gaps in our knowledge, and helped us through the complex negotiations required to take the JV to completion."
The new venture makes products in Asia, Europe and the US using the partners' existing plant and new investments, including a new plant in China, creating a powerful combination of low cost production and excellent technology.
The Strategic Alliance Service also helped Akcros to conclude a deal for the licensed manufacture and sale of its products in India through ALA Chemicals, Mumbai. The deal was concluded with the help of UKTI's India specialist, International Trade Adviser Barbara Singleton who was in Mumbai leading a market visit of companies from the North West and UKTI local staff.
Richard adds,
"India is a market where Akcros cannot compete effectively as an importer, and once again Julian's help was invaluable. He helped us utilise UKTI's contacts in the region to advise on contractual and cultural aspects, enabling us to put a deal in place in a matter of months.
"Both of these ventures are running smoothly today and have already produced significant benefits in their first year, with much more to come in the future. UKTI's role in enabling Akcros to develop and conclude these contracts should not be underestimated. The process was completed much more efficiently than would otherwise have been the case, and the successful outcomes owe much to the joint approach developed between Akcros and UKTI."
Julian Birchett, Strategic Alliance Service Adviser for UKTI Northwest says,
"Akcros Chemicals is an extremely successful company and a market leader in its field, but two years ago they faced an uncertain future. In order to help them move forward and retain their independence they needed the support of a private investment firm, and forming strategic alliances overseas was key to their success in developing a robust growth plan and making sure their business remained a major force in the industry.
"UK Trade & Investment recognise that strategic alliances such as this are fundamental to the competitiveness of UK companies, and can lead to major gains in profitability. The Strategic Alliance Service offers a tailored programme of support for businesses and I would strongly encourage other North West companies hoping to develop in this way to contact us for help and advice."
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