Preparing for the new normal

The world is turning the page on a most extraordinary year but I believe we’re far from done with this virus. We grieve together for the loss of life suffered in all countries of the world, and the impact on global economies and personal freedoms has been felt everywhere. From very early on, we treated the pandemic as a crisis with the senior leadership team acting as the Crisis Response Team and we were guided by three priorities which in order were:

(i) The health and safety of our colleagues, customers, suppliers and communities.

(ii) Keeping all of our labs and plants operational in order to meet the needs of our customers.

(iii) Our financial health.

We experienced a significant downturn in earnings in the second quarter of the year, but have since recovered well, thanks to an uptick in the market and the excellent work from Infineum colleagues around the world. As a result of this, we were able to accelerate activities in the second half of the year, and continue with our ambitious growth plans.

I think the biggest learning is that you have to act immediately to control what you can control. You also have to be clear on and publish your priorities in order to drive the day-to-day activities of the organisation. We didn’t get everything right of course and might do some things differently if we had our time again. To ensure supply security to our customers, we built inventories in the second quarter when raw material costs were high and then drew down stock later in the year when raw materials were cheaper, so we ensured supply to customers but it cost us on margin. With the knowledge we have now about demand profiles and the ability to keep our operations running flawlessly during lockdowns, we would certainly have taken different inventory and cash decisions. Then again, making decisions with incomplete data is far from easy.

Additionally, we learnt that a true crisis allows an organisation to achieve with great urgency things we might otherwise have considered impossible. Being clear on priorities gave the framework for the organisation to take the right decisions at the right level with a sense of empowerment that might not always be there. Overall, we finished the year in decent shape and we learnt lessons to help us meet the needs of our customers better in the future.

The thing I’m most proud of is very easy to answer: the Infineum colleagues. The response of our colleagues throughout 2020 has been as humbling as it has been remarkable. Some kept our labs and plants running with the most incredible attention to hygiene and safety. The majority were forced to work from home and they did so at great productivity levels despite difficult personal circumstances. They stayed safe, they delighted our customers, they kept product moving and they advanced key projects.

Even more impressively, they reached out to those in need in our local communities and provided their time, money and resources to health care workers, children in need, the vulnerable, the lonely and those with special needs. I’m honoured everyday to work with Infineum colleagues and I draw energy from them, and never was this more evident than in 2020.

Every industry is facing challenges and the additives industry is no different. We can probably divide the challenges for our industry into different timeframes. Immediately ahead of us, it’s going to take time for our marketplace to stabilise as variants of the virus, vaccination programmes and economic recovery all play out, and at different rates around the regions of the world. If our marketplace sees stability before the second half of 2021, I would be both surprised and delighted. 

Medium term, the dislocation of activity caused by COVID-19 has forced Governments to reconsider their green agendas. Some federal stimulus packages will accelerate the sustainability programmes, others will be put on hold as Governments tackle huge debt burdens. In response, OEMs will determine where to place their R&D bets in coming years. But, regardless of pace, the trends we’ve been facing as an industry will continue: electrification of passenger transportation, vehicle ownership patterns, autonomous driving, digitalisation, government intervention, internal combustion engine advances, and so on.

As these trends evolve, the longer term challenge then becomes how this industry supports future demand. With so much uncertainty around the trends and their timing, risk-sharing across the lubes and fuels value chains would seem to me an inevitable outcome.

First and foremost, the safety of our colleagues and those with whom we interact will continue to be at the top of the list. We have led our industry for years on personnel and process safety, and we will look to continue that into 2021. 

At a pragmatic level, we will also look to deal with the uncertainties of the COVID world and to supply our customers flawlessly against any scenario of future demand. In doing this, we will have to tackle the tightness of certain raw materials in the industry in the early part of the year. I’m really hoping we will see increasing stability and normalisation as the year progresses. 

Fundamentally though, Infineum has a strong growth agenda against which we will be making significant progress in 2021. We aim to grow our business by creating innovative, value-based solutions for our customers in both traditional and new markets. We will harness our learnings from the crisis to radically improve our customer experience and business operations, and accelerate key investments in Product Innovation, Data Analytics and Digitalisation. Our customers will be at the heart of everything we do as we work with them to enable them to progress their product, market and strategic goals.

A decade is a long way off and well ahead of that I would expect us to be living our corporate purpose of creating a sustainable future through innovative chemistry. We will also be making good progress on our journey to become a world class specialty chemical company. On this journey, we will continue to be safety leaders and will be taking a number of actions that mean we will:

(i)  Be customer centric.

(ii) Continue to invest hugely in technology to provide the precise value/feature combinations our customers desire.

(iii) Invest wisely in assets to meet future customer demand.

(iv) Transform how we work, and we will deliver growth both within our base business and in new markets.

(v) Lead the way on sustainability, innovation and digitalisation.

If we can achieve these things, I would expect our customers, business partners, shareholders, colleagues and surrounding communities to be delighted to be with us on the journey.