1. Managing Operations in China
Resina:
Managing Operations in China
Team 6
Rebecca Gonser
Ian Campbell
Yvonne Hernandez
Joe Nations
Andy Olpin
Donna Stratford
Paper impregnation line

2. 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

3. What Do They Make Two divisions Three main categories
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

4. Customers Customers Customers Small and large panel board producers
Furniture makers, building material suppliers
Customers
Small and large panel board producers
Furniture makers, building material suppliers

5. 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%)

6. 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

7. Resina sales by region

8. Profitability Low margins Loss making
Mainly commodity product – 51% panel board

9. 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

10. Resina in China

11. 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

12. Growth in China adhesive market
China has went from net importer to large exporter of plywood and board products

13. 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

14. 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

15. Strategic Reason for Site
High
Lead
Source
Contributor
Server
Offshore
Outpost
Low
Access to low-cost production
Access to skills and knowledge
Proximity to market

16. 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)

17. 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

18. Questions