Page 48 - HW October 2020 NEW

glues, sealants & adhesives
LIKE OTHER BUSINESSES, the big players in glues, sealants and adhesives have been busy navigating the almost all-pervasive uncertainty that has been and is still being driven by this global pandemic this year.
Still, they seem to have done remarkably well to date, judging by their generally upbeat tones.
“I didn’t expect our September business would end up being so good when we went into Alert Level Four,” reports Melanie Reid at Soudal (https://soudal.co.nz/), for example. “I don’t think anyone saw that it was going to play out like this.
“We’re taking opportunities as they arise and starting to trend towards having some real momentum in the market. We’re optimistic about the current quarter and finishing what is our financial year strongly.”
At Bostik (www.bostik.co.nz), Paul O’Reilly sums up the year- to-date performance as being “like everybody else, sort of living month to month and trying to do as much as we can and sell as much as we can, working with our customers as well as we can.”
With Bostik labelling itself as “predominantly trade”, Paul says that sales have been “consistently strong” across Bostik’s key sealants and adhesives categories.
Tony Smith at Sika (https://nzl.sika.com/) also describes his latest numbers as “looking really, really good despite hardly any sales in April, and our products losing a month of shelf life.
“We haven’t adjusted our pricing or tried to recover costs, even though freight costs are higher and we’re absorbing extra costs because it’s not running efficiently.”
Will these costs trickle down? “Price increases will happen,” he admits, at the same time qualifying with: “Our number one priority is making sure we’ve got the right product for our customers so our customers’ customers have what they want, and our merchants are well stocked.”
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Accurate forecasting and, frustrating for many, an ounce of luck, have been equally important these past few months.
“We import some finished products, because Sika is in 100 countries around the world,” explains Tony Smith.
“But we also manufacture a lot of products here and have to forecast well in advance, generally about five months in fact, based on data from the previous two years, taking into account projects that might happen one year and not the next, and projects that are coming forward.
“You’ve got all that in place in March, you know exactly what’s coming in the next five months, and then it all gets thrown out the window when you go into lockdown.
“It was particularly hard because there was lots of conflicting information about the future. Infometrics was saying the market could drop as much as 20%, while some big customers were suggesting 25% drops for the next 12 months.”
Melanie Reid is just as conscious of the long lead time to get products to New Zealand. She says Soudal has fared well thanks to having robust forecasting processes in place.
Having said this, she adds: “Some people have been caught out by not anticipating the demand that we have experienced of late. Given the other complexities around shipping and raw material supply, there’s real potential to be caught out.”
Tony Smith reckons things are going to get a little worse from a supply perspective before they get better.
“What we find in a small market like New Zealand, where you’ve got similar suppliers, is as soon as one of those suppliers runs out of a particular product, pressure on all those other suppliers suddenly goes up, and you can’t fix the problem quickly.
“We had one product where we sold three months of forecasted stock in July-August alone coming out of lockdown, so all of a sudden you’re a month short.”
Paul O’Reilly puts in his 10 cents’ worth: “Whether it was good planning or good luck, Bostik was pretty well stocked with raw materials going into the first shutdown so we were able to come out of that okay, and packaging was also unaffected.
“Fortunately, we haven’t had to use air freight at all, which is a blessing!”
Soudal is also well positioned in this respect: “We’re not impacted by issues around freight,” Melanie Reid confirms.
“We pride ourselves on our delivery into our merchants and customers.
“We have good stock holdings here and carry good buffer stock. Our sales and operations process is very robust and we’re very comfortable with where we’re at, given challenges around the global supply chain.”
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46 NZHJ | OCTOBER 2020
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