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Company Perspectives:
Tessenderlo Group has chosen to focus on those manufacturing sectors in which it can be a world leader. 60% of Tessenderlo Groups prod ucts are specialty products that can be found in practically all aspe cts of daily life, from food to construction, from medications throug h to computer products. It is this diversity and interrelation betwee n product lines that limits the impact of fluctuating market conditio ns.
Tessenderlo Group is a Belgium-based, globally active specialty chemi cals company. One of Belgium's largest chemicals firms, Tessenderlo h as established a position for itself on an international level by foc us on a narrow range of core niche chemicals. The company is the worl d's top producer of hydrochloric acid, fertilizers based on liquid su lfur, sodium hydrosulfide, benzyl alcohol, acetate, and chloride, amo ng others. Tessenderlo holds number two positions in the production o f animal feed-grade phosphates and potassium sulphate and the number three position worldwide in the production of gelatin. While targetin g a global market, backed by a network of 66 factories and 40 sales o ffices, Tessenderlo is a highly European group. In Europe, the compan y is the largest producer of glycine, and number two in caustic potas h; the company also holds leading positions in the production of plas tic compounds and polyvinyl chloride (PVC). Europe accounts for 84 pe rcent of the company's total sales, including 39 percent from Belgium and 23 percent from France. The United States adds 10 percent of the group's sales, while the rest of the world, including operations in China, Chile, and Brazil, among others, adds 6 percent to sales. The company posted revenues of EUR 2.08 billion ($2.6 billion) in 200 4. Since 2005, Tessenderlo has been structured in three primary divis ions: Chemicals; Specialties, including fine chemicals, gelatin, and natural derivatives; and Plastics Converting, including the productio n of PVC-based profiles, pipes and fittings, and compounds. Tessender lo is listed on the Euronext Brussels Stock Exchange and is led by Ch airman and CEO Gérard Marchand.
19th-Century Origins
The first association of the town of Tessenderlo, in Belgium, with th e country's developing industry occurred in the late 19th century wit h the founding of Exploitation des Procédés Raynaud in 1892. That company began manufacturing chloric acid and sodium sulfat e, used in various industries and products such as detergents. Follow ing World War I, the site was acquired by L'Union Française de s Produits Chimiques & Matières Colorantes, which despite its name was owned by Belgian interests. The formation of this compan y marked the start of the later Tessenderlo Group. The site was redev eloped and in 1920 launched the production of the sulfate-based ferti lizer potash and hydrochloric acid, a byproduct of the sulfate produc tion process. In that year, the company was renamed Produits Chimique s de Tessenderlo.
In the 1920s, Tessenderlo's production featured a number of company m ainstays, including feed phosphates, fertilizers, and sulfates. These products remained central to the company's operations throughout the century and into the beginning of the 21st century. The decade also marked the beginning of Tessenderlo's relationship with France, which became the company's second largest market after Belgium. In 1923, T essenderlo formed a sales agreement with France's Sociét&eacut e; Commerciale des Potasses d'Alsace. That agreement led to the creat ion of a joint venture between the two companies, called Produits Chi miques de Limbourg, formed in 1929. The creation of the joint venture , which involved the merger of the Tessenderlo and Alsace companies' operations, also marked the entry of French investment into the Belgi an company. The Limbourg-based joint venture built a new plant in the town of Ham and began producing potassium sulphate and dicalcium pho sphate. Exports formed a major part of the joint venture's operations , and by 1930 exports accounted for some 80 percent of the company's total production.
Yet the deepening of the economic crisis in the 1930s forced Produits Chimiques de Tessenderlo to withdraw from the joint venture with Pot asses d'Alsace in 1936. Instead, Tessenderlo set up its own independe nt operation, focused on the main Tessenderlo site, for the productio n of new salt and potash derivatives, including sulfuric acid, dicalc ium phosphate, chlorine, and caustic soda. The company went public th e following year, listing on the Brussels Stock Exchange.
The years of World War II and the Nazi occupation of Belgium culminat ed in an explosion at the main site, which killed nearly 200 and left 800 wounded in 1942. Following the war, the company rebuilt its oper ations. In 1954, however, the Tessenderlo company's development once again coincided with that of Potasses d'Alsace, now known as Mines de Potasses d'Alsace. This time, the French company acquired its Belgia n counterpart outright. Under its new owners, later to be known as En treprise Minière & Chimique, the Tessenderlo site remained focused on its sulfate-based production, and its core Limbourg regio n, into the 1960s.
Diversifying from the 1960s
Tessenderlo launched its first effort at diversification, accompanied by its first expansion beyond the Limbourg region, in 1964 when it a cquired a company in Vilvoorde-based Pont Brûlé. That co mpany, which like Tessenderlo produced sodium sulphate and dicalcium phosphate, added the production of gelatin to Tessenderlo's sphere of operations as well. Gelatin, derived from slaughterhouse byproducts, was produced by hydrolyzing the bones and skins of pigs and cattle, a process that made use of hydrochloric acid. As Tessenderlo had alre ady emerged as a major producer of hydrochloric acid, the extension p roved a natural fit. Gelatin and, later, other specialty products suc h as natural derivatives were used in flavorings.
Tessenderlo's production of chlorine provided the launch pad for its next extension at the end of the 1960s. In 1969, the company teamed u p with DSM to begin production of vinyl chloride monomer and, later, polyvinyl chloride (PVC). For this effort, the companies created a jo int venture, Limburgse Vinyl Maatschappij, and built a new production facility, which came onstream in 1972. The company also changed its name that year, becoming Tessenderlo Chemie.
Tessenderlo's growing gelatin operation formed the basis for the crea tion of another subsidiary, PB Gelatins. Formed in 1972, PB Gelatins began to expand through acquisitions, starting with the purchase of C olles et Gelatines, based in Zaventem, in 1973. In 1975, the gelatin production subsidiary added a site in Germany, acquiring Nienburger G elatine.
Tessenderlo extended its operations again with the launch of a fine c hemicals division, which began producing benzyl chloride, another chl orine derivative, as part of a joint venture, in 1976. That business was expanded in 1980 with the purchase of 100 percent control of Benz yl Chemie. The company also boosted its vinyl chloride operations as well, buying up France's Société Artésienne de V inyl in 1976. Meanwhile, the company had added another company, Limbu rgse Rubber Producten, in 1975, and then launched construction of a n ew electrolysis facility.
By the early 1980s, Tessenderlo had completed, in large part, its div ersification efforts. In 1983, the company restructured its operation s, bringing all of its subsidiaries under a single holding company, n amed Tessenderlo Chemie N.V. The newly reorganized company now boaste d four main areas of operations: Inorganic and Chlor-alkali Chemicals ; Fine Chemicals; Gelatin; and Natural Derivatives. By focusing on ni che products, the company successfully avoided direct competition wit h the world's chemical industry giants. Over the next 20 years, Tesse nderlo established itself as a European and/or global leader in many of its product groups.
Tessenderlo's vinyl chloride monomer and PVC production led it to an interest in developing downstream activities as well. In 1984, the co mpany launched a strategy to add a new business division, that of Pla stic Conversion. As part of this effort, the group launched a new ser ies of acquisitions, starting with French plastic pipe manufacturer S otra in 1984. The following year, the company began producing window profiles through the purchase of Plastival, located in Clerval, Franc e. By the end of the decade, the company had added Dyka, a pipes and fittings maker active in The Netherlands and Belgium, acquired in 198 7. Into the 1990s, the group boosted its plastic products operations with the purchase of Deltaplast, in The Netherlands, in 1993, and Sep eref, a pipes producer in Quincieux, France, in 1996.
Niche Leader in the New Century
Tessenderlo continued building up its other core business areas throu gh the 1990s as well. The group's Gelatin operation grew with the acq uisition of a production facility in Treforest, marking the company's entrance into the United Kingdom, in 1985. In a related move, the co mpany acquired Caillaud, based in France, which specialized in collec ting and processing slaughterhouse byproducts, and provided a stable supply of raw materials for the group's gelatin production. A decade later, the company's gelatin subsidiary made a major step toward beco ming the world's leading gelatin producer through its acquisition of Baert-Verlee, based in Belgium, which also produced animal meal and f ats.
Tessenderlo expanded its basic production operations with the acquisi tion of a chlorine, alkali, and mineral chloride production facility from Produits Chimiques de Loos in 1988. The following year, the comp any acquired full control of the Limburgse Vinyl Maatschappij joint v enture. Tessenderlo also extended its downstream operations, buying u p Tiffauges, France-based Thermoplastiques Cousin Tessier in 1991. Th e purchased marked Tessenderlo's entry into the production of PVC com pounds and thermoplastic elastomers. In 1995, the company bought the Wymar group of companies, active in France and Belgium, but also in C anada, marking the group's expansion into the North American market. Wymar was a major producer of PVC-based window profiles.
Until then, Tessenderlo's operations had focused on its European base . In the late 1990s, however, the group began its expansion into the Americas. A major part of this effort was accomplished with the purch ase of Hickson Kerley, the U.S. arm of Hickson International. Complet ed in 1996, the acquisition gave Tessenderlo control of a major produ cer of specialty chemicals, including sulfur-based agricultural and i ndustrial products in the U.S. market. The Kerley acquisition also ga ve the company its first foothold in the Latin American markets.
The move into the United States came as part of Tessenderlo's effort to develop itself as an internationally operating company. Tessenderl o continued to add operations in the United States, such as Chelsea B uilding Products in Pennsylvania, acquired in 1996. In Italy, the com pany purchased a chemicals plant in Pieve Vergonte in 1997. The compa ny entered Eastern Europe in 1999, buying a PVC compound production f acility in Warzaw, Poland. The group also had entered China, creating the joint venture Lianyungang Chemical Factory in 1995, in order to produce benzyl chloride and other chemicals.
Tessenderlo's expansion continued into the 2000s, notably with the pu rchase of Accordis Fine Chemicals, based in Leeds, England, and a chl oroluene operation from Atofina in Widnes, also in the United Kingdom , both in 2001. In 2003, the company expanded its gelatin business, a dding a site in Davenport, Iowa, and in Santa Fe, Argentina, marking the first international expansion of that division. Both operations w ere purchased from Australia's Goodman-Fielder. In 2004, the company added to its extensive French presence, where 25 of the group's 65 pr oduction facilities were located, with the purchase of Acome, a PVC p rofiles producer.
The growth of all of its core operational divisions led Tessenderlo t o undertake a new restructuring in 2005. As part of that process, the company created three core business groups: Chemicals, including ino rganics, chlor-alkalis, and PVC; Specialties, including gelatin, natu ral derivatives, and fine chemicals; and Plastics Converting, includi ng profiles, pipes and fittings, and compounds. Already a world leade r in most of its product categories, Tessenderlo was prepared to cont inue its expansion on a global scale into the late 2000s.
Principal Subsidiaries: Aliphos S.A.S. (France); Baert-Verlee & Zoon BVBA; Ets. Caillaud S.A.S. (France); Calaire Chimie S.A.S. (France); Ets. Charvet Père et Fils S.A.S. (France); Chelsea Building Products Inc. (United States); Chemilyl S.A.S. (France); Cof ipar S.A. (Netherlands); Dyka B.V. (Netherlands); Dyka GmbH (Germany) ; Dyka Plastics S.A. (Belgium); Fairbrook PLC (United Kingdom); Farch emia S.R.L. (Italy); John Davidson Holding Ltd. (United Kingdom); Ker ley Trading Inc. (United States); Lianyungang Taile Chemical Industry , Co. Ltd. (China); Limburgse Vinyl Maatschappij S.A. (Belgium); PB G elatins France S.A.S.; Produits Chimiques de Loos S.A.S. (France); Te ssenderlo Chemie S.A. (Belgium); Tessenderlo Chemie Hungaria Kft; Tes senderlo Chemie International S.A.; Tessenderlo Fine Chemicals Ltd. ( United Kingdom); Tessenderlo Italia S.R.L.; Tessenderlo Kerley Inc. ( United States); Tessenderlo Kerley Latino Americana S.A. (Chile); Tes senderlo Kerley Mexico S.A. de C.V. (Mexico); Tessenderlo Polska Sp. z.o.o.; Tessenderlo Schweiz AG; Tessenderlo U.S.A. Inc.; Tessenderlo UK Ltd.
Principal Competitors: Repsol YPF S.A.; BASF AG; Sungai Budi G roup; Dow Chemical Company; OMK United Metallurgical Company; Lanzhou Chemical Industry Company; Zigong Honghe Chemical Company Ltd.; Voto rantim Participacoes S.A.; E.I. du Pont de Nemours and Co.
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