Resina:
Managing Operations in China
Team 6
Rebecca Gonser
Ian Campbell
Yvonne Hernandez
Paper impregnation line
Joe Nations
Andy Olpin
Donna Stratford
History of Resina
Resina Roots
Paulsen Norge formed in 1949 as formaldehyde maker
Auvo Chemicals founded in 1971
Auvo purchased by Sabel Investerings in 1999
Auvo and Paulsen merged in 2000
Organic growth and acquisitions and mergers
2005: $1Billion dollar
5% of the world market of global panel
board resins market
What Do They Make
Two divisions
35 Resin product lines
Brand name Kova
Three main categories
Industrial and surfacing Resins (48% revenue)
Insulation, construction, automobile brakes, foam, filters
Wood & Specialty adhesives (24% revenue)
Beams, floors, furniture
Paper overlays (28% of revenue)
Used in plywood, particle board, MDF production
High quality, resin impregnated paper branded Styrka by
Resina
Customers
Customers
Small and large panel board producers
Furniture makers, building material
suppliers
Manufacturing
Manufacturing in 25 countries
51 manufacturing plants
3.5 million tons of resin per year
500 million sq meters of paper per year
Plants are wholly owned, joint venture or
minority interest (20 to 50%)
Resina Strategy
Build production facilities close to
customers
Local products for local markets
Minimize supply chain
Growth by acquisition or organic growth
Aim for higher margin added value
products market
Resina sales by region
Sales by region
600
500
$ Million
400
europe
America
300
Asia
Oceana
200
100
0
2002
2003
Year
2004
Profitability
Sales and profitability
1200
1000
$ Million
800
600
400
200
0
2002
2003
2004
-200
Year
Low margins
Loss making
Mainly commodity product – 51% panel board
Financials and competition
Highly competitive market with low
barriers to entry
Competitors with similar strategies and
same low margins
Consolidation in the resin industry –
Resina is mid size player
Resina in China
Resina in China
Selling product since the 1950’s
First production in Singapore in 1970
Opened plant in Shanghai in 2002 – source
factory
Beijing and Guangdong followed
Shanghai only plant profitable
Beijing demand flat and has transportation
costs issue
Guangdong plant under capacity and has low
demand for it’s high quality output
Growth in China adhesive market
china sales of board adhesive
600
500
$ Million
400
300
200
100
0
1985
1990
2000
year
China has went from net importer to large exporter
of plywood and board products
2005
Beijing plant issues
City wants to move industrial area
Location means expensive shipping to
market which cuts margin
Options move plant close plant or invest
Move $20M
Close around $6
JV partner agreement
Guangdong Plant Issues
Wholly owned
Local partner pulled out before construction
Incomplete analysis of market and selected
location before construction
Local market
Sales half of what was expected
Options close plant or work to increase sales
Strategic Reason for Site
High
Lead
Source
Contributo
r
Server
Offshore
Outpost
Low
Access to
low-cost
production
Access to
skills and
knowledge
Proximity to
market
Recommendations
Make factories more autonomous and empower local
management to identify opportunities in Asian region
Invest in Shanghai to make it a Lead instead of
Contributor factory
Retain Guangdong plant and build customer base by
tailoring product line to local needs
Invest resources to make a Contributor factory
Bring in local management team based on Shanghai model
Relocate Beijing plant to industrial belt between
Shanghai and Beijing (possibly Qingdoa)
Recommendations
Beijing Facility
For new facility in (possibly) the Qingdoa area
use Weighted - Factor and Center of Gravity
models in the decision process
Factor identification and weighting will be
decided by a multi-disciplinary team
considering all facets of the business,
marketing, production, HR
Significant business clusters exist in the belt
from Shanghai to Bejing
Start small and expand as the market grows
Facility can still serve the Beijing market and
be more profitable by serving local customers
Questions