CJP Chemicals

COMPANY PROFILE

2014

CJP Chemicals

Quality products + competitive pricing + world class service x global expansion = CJP Chemicals

company profile

Quality products + competitive pricing + world class service x global expansion = CJP Chemicals Editorial: Christian Jordan Production: James Clark

CJP Chemicals is seeking expansion. This innovative company, that has probably had an impact on your life through the products you use, has opened a new office in China and is now looking to India, South America and the rest of Africa to further develop its already sterling reputation.

Leading importer, stockist and distributor of chemical raw materials and ingredients, CJP Chemicals has set its eyes firmly on growth over the coming years after taking a bold move for the industry and opening an office in China. The company, which services just about every major industry in South Africa, is also looking to Africa for growth in what is set to be a busy 2014.

Alan Timms, manager of CJP Chemicals Paints and Coatings division, tells IndustrySA that the opening of the Chinese office has had a dramatic impact on business.

“More and more of the commodity raw materials have their origination in China and having someone who can speak Mandarin or Chinese to a Chinese customer is far more significant than having someone typing out an email in English.

“The Chinese office has also allowed us to move from dealing with trading houses to deal directly with manufacturing houses. Also, if we require pre-shipment testing, auditing of plant, assistance with arranging shipment or anything similar, we have people on the ground who understand how the system works in China and we can make the most efficient decision possible. We’ve seen significant benefit from this,” explains Timms.

“Most Chinese manufacturers, unless they’re dealing with a Chinese person, prefer to deal with trading houses. This is

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because sometimes they don’t understand how another country operates and generally they prefer not to operate on trading terms. Our Chinese office has allowed us to liaise directly with manufacturing houses and negotiate trading terms which is hugely beneficial,” he says.

Clearly, there are major benefits to be had from operating in China, not least the cost efficiencies that we hear about so often.

But other emerging markets, namely India and South America, are also beginning to look like attractive propositions for CJP Chemicals.

“If you want to be a serious player in the South African industrial raw material market going forward, you would need to have a set-up in China and soon in India, and that is our next port of call,” explains Timms.

“That’s probably one or two years off just now and we are also in early talks with potential partners in South America as that is a rapidly growing potential source of raw materials.”

BONDED TO THE INDUSTRY CJP Chemicals history dates back over 25 years. “There has been a lot of change but it all goes back to a family owned business. It was established in ’86 as a family distribution business primarily for the food manufacturing industry,” says Timms.

“In 2006, there was a management buyout where senior

CJP Chemicals

managers took up share options with an investment bank. In 2013, there was a second management buyout because the investment bank changed,” he adds.

Timms explains that since the business started there have been two main changes. Firstly, the company’s emphasis has changed from commodities to specialised products. Secondly, the number of industries in which the company operates has increased dramatically. “We’ve gone from a food and personal care company to one which covers almost the entire spectrum industries, from lubricants and oils to paint coatings, adhesives, general industry, household care and many more.

“In the last four years we’ve taken on new customers because we’ve made that move from a commodity/raw materials base to offer more specialised products,” says Timms.

The company’s growth over the years has forced the development of a solid national footprint with offices in Durban, Cape Town and Port Elizabeth and the head office located in Johannesburg. Business is split regionally although some customers deal on a national basis with national pricing structures because of the size of their operations.

Because of the growth in the amount of industries serviced, the company now has specific divisions looking after certain sectors. This has presented opportunities but Timms says that core markets remain vitally important.

“It’s only in the last five to ten years that we have looked to

expand our services out of food and personal care as a result of our strengths in that market.

“We now have specialist teams focussing on specific sectors of the market. My division is only two years old so there is a fair amount of growth opportunity in South Africa but we have to ensure that in our pursuit of new business we don’t lose our foothold in our dominant markets,” he says.

TOXIC ECONOMY One of the main challenges that CJP has faced over the past few years has been the challenging economic conditions.

Considering the ‘import export’ nature of the company, the economic climate and the unsteady currency have had noteworthy effects on business.

“We’ve significantly changed our business model to accommodate the changes in the business environment. Some of the people we used to deal with are no longer in business, generally trading terms have become more difficult to leverage and the extension of credit has also become an issue,” explains Timms.

“Our domestic stock holding policy has had to change significantly. Our customer base was previously prepared to hold two or three months stock but now a lot of those customers will operate on a just-in-time basis. Because of this we’ve had to do one of two things; either sit on a higher stock

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company profile

holding or be prepared to ship more regularly.”

Further disruption has come with companies who need to liquidate their stock holding more quickly, causing an overall decline in pricing as Timms explains: “Smaller companies have needed to convert inventory to capital and have therefore been prepared to reduce their prices and that has been disruptive in the market place.

“However, the situation has presented opportunities. With the instability in the Rand, if you can offer people longer-term stable pricing, customers remain interested.”

INTEGRATING GROWTH Even with the difficulties in the economy, there are mumblings of a global recovery and CJP Chemicals will embrace this with plans for growth in the next two to three years. As mentioned, China, India and South America all represent solid opportunities but Timms is also excited by prospects on the African continent and what the company can offer, especially in regard to a turn-key solution for raw material supply.

“A major growth strategy for us is outside SA,” he says. “More and more of our customers are now looking outside of SA. We are doing JV deals with customers as they move into Africa. We then offer logistical and supply chain solutions. As the economy has tightened, people are focussing more on their core business and that is usually not managing a supply chain of raw materials so we can offer assistance there.”

As this growth strategy is realised, physical growth will follow and this in itself represents another challenge for the company

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– skilled people.

“The skills shortage in technical fields is arguably still South Africa’s biggest challenge,” says Timms.

Ideally, a company like CJP Chemicals will need people with a strong education, technical background, industry experience and perhaps an eye for sales but today, it is common practice for skilled people to leave the industry for a competing sector or international market. However, Timms says that an internal training programme can help to up-skill recruits; then the challenge is to retain them.

“Your skillset comes more from experience rather than from what you learn at university and a lot of the courses in SA are more theory based rather than industry based. Because of this, we will tend to look for people with a qualification, preferably a chemistry qualification, and we then have an internal training programme specific to a certain area of the business and we use our partners to help train that individual in a certain area.

“We have a good relationship with the technical colleges and universities so we take people from there but unfortunately there is a lot of poaching that goes on.”

Nevertheless, the company remains on a steady growth path and with its ventures in China and, potentially, India and South America providing healthy prospects for the future, it seems as though this is not a company that will be overcome by challenges, quite the contrary; in fact CJP Chemicals is perfectly positioned to develop whilst maintaining its focus on providing quality products, competitive pricing and world class service.

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Hatch Goba

Port of Ngqura

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011 494 6700 www.cjpchemicals.co.za

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