New SI Group CEO seeks growth opportunities
NISKAYUNA Frank Bozich didn’t get much of a chance to settle in to his new digs at SI Group.
The president and chief executive officer hired in May barely got a chance to check out the Niskayuna headquarters before he was back in transit, touring the company’s holdings. And with 20 facilities spread out across 14 countries on five continents, Bozich ended up spending a good number of his first days with his new company in the air.
“For me, the first 10 months have been a bit of a whirlwind,” he confessed during a recent interview. “I basically spent the first four months in an airplane.”
The experience wasn’t easy, but it gave Bozich a feel for how the family-owned chemical manufacturer operates and a firsthand look at the markets that gross it roughly $1.8 billion in annual sales. By the end, he surmised the groundwork laid by his predecessor, Stephen Large, had left him standing on solid footing at the company.
“It’s a great company,” he said. “We’re extremely well-positioned in our markets.”
Hired from an executive position at chemical giant BASF, Bozich remains impressed by the results-oriented operation of SI Group and how the company’s board of directors remains focused on expanding its horizons. Now his mission with the company is to help identify emerging markets for SI Group products and help grow ones that already exist; in essence, to continue the work Large started.
A chemist with a master’s degree from the University of Illinois and an entrepreneur who founded his own successful adhesive company, Bozich’s background isn’t dissimilar from SI Group founder W. Howard Wright, an entrepreneur who grew the business from an offshoot of General Electric Co. more than a century ago. His unique blend of industry knowledge and executive experience made him the perfect candidate to replace Large after his retirement last year.
“Frank is a seasoned executive with deep industry knowledge, strong leadership skills and an entrepreneurial spirit,” said Wallace Graham, chairman of SI Group’s board of directors, following Bozich’s hiring last year. “His background, experience and style make him uniquely qualified to lead us in achieving our growth objectives.”
Bozich said part of his attraction to the SI Group was rooted in its rich history and the Wright family legacy. He said learning how the company moved from its origins as a small varnish manufacturer to the market innovator it is today left him captivated.
“It’s really a great American success story,” he said. “It’s great to be part of that legacy.”
Much of Bozich’s first year heading SI Group was spent getting up to speed on the company’s structure and market segments. That assessment has instilled in him a faith that SI Group is on a path for continued success and growth.
“In the technologies and products we supply, we’re a global leader,” he said. “While the range of our offering is much smaller [than businesses like BASF], we have a great position in our markets and potential to grow.”
Bozich did make some slight tweaks to the leadership structure of the company, which employs 2,200 workers around the world and 350 in Schenectady County. Those changes, however, seem more geared at surrounding himself with the same company veterans who helped drum up $800 million in additional gross sales between 2007 and 2012.
William Scheffer, who joined SI Group in 1981 and had led the company’s North American division, was given the newly created executive role of vice president of operational excellence. In his new position, Scheffer focuses on a variety of corporate governance issues, ranging from global operational steering to manufacturing footprint optimization.
Paul Tilley, another veteran SI Group executive, assumed Scheffer’s prior role as vice president of the North American division. In addition, Tilley, who has worked with SI Group since 1993, is tasked with maintaining relationships with the company’s global key customers.
Bozich promoted Stephen Haller, who previously ran the company’s Europe and Middle East division, to senior vice president of strategy and new business development. With more than a decade of experience at SI Group, Haller is still the relative newcomer of the bunch and will be responsible for the company’s strategic development activities, research and development, and new business development.
Bozich said the moves amount to the company aligning itself to support its strategic roadmap. In short, he said the company is streamlining its operations and positioning itself for growth.
“We’re very focused on results and we’re going to continue to be,” he said. “There’s a commitment to a strategy and a growth agenda.”
Strength in diversity
Part of SI Group’s growth in the chemical industry stems from its ability to diversify its offerings. Compounds produced by the company are separated into seven different market segments and appear in household items ranging from the grip handles on kitchen utensils to the soles of sneakers.
The company is also intricately linked to the automotive industry, providing many critical components used in vehicles. Heat-resistant resins are integral in the production of brake pads and clutch facings, while adhesive resins are used to bond rubber to metal in automotive parts.
SI Group’s alkylated phenols are used as lubricant additives in engine oil, gasoline and diesel fuel. And its engineering plastics are often used as lighter, cheaper substitutes for metal in cars.
The company’s connection with the auto industry contributed to its ability to not only weather the global recession, but emerge even more successful.
The company was able to position itself well to supply Chinese automobile manufacturers just before domestic car sales in that country exploded.
In 2010, SI Group announced it would invest $35 million into bolstering production capacity in China, including an existing plant in the town of Songjiang, outside Shanghai, and by building a new manufacturing facility in Nanjing, which was completed last year.
The expansion couldn’t have come at a more critical time. After a couple years of cooling, the hot Chinese automobile industry took off again in 2013, with vehicle sales increasing by 13.9 percent. Prior to opening the Nanjing plant, SI Group needed to pull resources from surrounding regions just to meet demand.
“Our Songjiang plant is running at full capacity,” remarked Emmanuel Hess, vice president of the company’s Asia Pacific division, during a tour of the facility last year. “We also import from our global manufacturing plants outside Asia, demonstrating our ability to serve customers from multiple production locations by utilizing SI Group’s global footprint.”
The aggressive growth in Asia hasn’t come without headaches. Specifically, SI Group has long struggled with its Chinese competitors, which it has accused of stealing trade secrets and then using them to produce identical products that are used to undercut the company’s prices.
SI Group maintains that Sino Legend — also known as Zhangjiagang — hired away a manager from its Shanghai manufacturing plant and then used him to illegally steal trade secrets for the same tackifier resins that allowed the company to corner the market for tires in North America.
One of Sino Legend’s founding shareholders came from the management of Red Avenue Chemical Co., which previously distributed SI Group resin products, and the two companies are affiliated through ownership. SI Group filed a civil lawsuit against Sino Legend in China in 2010, and another pair of legal actions in the United States in 2011 on behalf of both its Chinese and U.S. holdings. Though the Chinese lawsuits came down in favor of Sino Legend, the action taken up with the U.S. International Trade Commission resulted in a ruling that imposed a decade-long ban on certain resins produced by Sino Legend.
Bozich described the ruling as one that will have a significant impact for SI Group, which will no longer have to compete against its own products being imported in the United States by Sino Legend. Also, he said the ruling showed that intellectual property and the rule of law will be adhered to in the domestic market.
“It reaffirms the rule of law and intellectual property law are going to be protected,” he said. “It will definitely have an impact.”
Bozich said SI Group’s outlook isn’t solely focused on the Asian market. Rather, the company is seeking ways to help develop mature markets in Europe and North America.
Part of that goal is to boost the quality of SI Group products and how that relates to improved performance. Bozich said these products can sometimes help solve significant issues facing industries.
For instance, the company’s products help create low rolling-resistance tires, which in turn cut down on fuel consumption. Its fuel additives and lubricants can help an engine run smoother and improve efficiency.
“We don’t just provide basic materials into these important products,” Bozich said. “We’re also helping solve some real significant problems that will provide growth in even mature markets.”