Article and interview by Bert Lauwers for Trends.be
Away from the limelight, West Fleming Yves Bonte skimmed high peaks at global players such as LyondellBasell and Yara before becoming CEO of the equally discrete family company DOMO Chemicals. The Ghent-based company was founded by Jan De Clerck, a descendent of the De Clerck textile family of West-Flanders. DOMO focuses on the business of the versatile plastic polyamide, which is crucial in the automotive sector, among others. DOMO used to be known primarily as a carpet and artificial grass group, but those activities were sold in 2010. Bonte was immediately allowed to get his teeth into the integration of the European polyamide business that had just before been acquired from Solvay, nearly doubling the company’s size. DOMO thus also laid hands on the Technyl brand name, which resonates with international customers. Now that the integration of the Solvay business has been completed since this spring, the 61-year-old Bonte, who is also chairman of DOMO Chemicals, talks for the first time about the future of the company with over 2,100 employees.
What is DOMO Chemicals?
YVES BONTE. “A producer of plastics for key sectors. The automotive sector represents about half of our turnover. A lot of parts under the bonnet contain polyamide. E-mobility is also hugely important, as there are a lot of polyamides around the battery components. Polyamide thus fits very well into that huge transition from internal combustion engine to electric vehicles but also hydrogen technology, because of its sturdiness, heat resistance and fire-resistant properties. We are also a major player in electronics and electricity — a growth segment — especially in construction. Your switchboard with fuses? Almost all polyamide. But our products are just as good in laptops or smartphones. The chip industry also requires polyamide. As does railway infrastructure, to absorb vibrations, and consumer goods such as drilling or grinding machines or kitchen appliances.”
Is DOMO a pure polyamide player?
BONTE. “Almost exclusively. There are two major families, polyamide 6 and 66, with 66 being slightly higher-quality. DOMO had mainly 6 in its portfolio, while Solvay was mainly 66. That was a main reason for that acquisition. For 6, we are now number two in Europe, for 66 the number one.”
Who are the customers?
BONTE. “We supply polyamide in granules -pellets- to companies that make finished parts from it. For example, they make a complete dashboard, which includes our polyamide components. They then supply that to car manufacturers.”
How does that translate into results?
BONTE. “Before corona, sales were 1.6 billion euros. Last year, they rose to 1.9 billion, and I expect us to cross the 2 billion mark this year. Profitability remained largely stable. All I can say is that our EBITDA margins are practically always slightly double digit. In the beginning of Covid in 2020, it was difficult, but we got back to level in the second half of the year, so even that year was reasonably good.”
DOMO mainly produces in Europe?
BONTE. “We operate a.o. in China, India, the United States..., but the backbone of DOMO is indeed European, mainly in Germany, France, Spain, Poland and Italy. There was already a momentum to grow in other parts of the world, and I reinforced that. Two years ago, Europe accounted for almost 92 per cent of sales. Now it is less than 90 per cent, and because of our factory in China, it will systematically fall further.”
The integration is complete, so is the time ripe for another acquisition?
BONTE. “First we need to make sure that we get through the energy crisis properly. Polyamide production is very energy-intensive, even compared to other plastics. However, we do not sit dejectedly watching what happens to our energy. We are working hard to adapt our supply chain, and at some point we have also adapted production to real market demand. That has not quite been resumed yet. Automotive, in particular, runs a lot lower. Around 21 million cars were produced annually in Europe before the Covid crisis, now 15-16 million. Already there is a shift in market demand. More larger, more expensive cars are being produced, and more polyamide is used in them.”
DOMO does not produce in Belgium, just like, say, Solvay. Are we losing our industry?
BONTE. “DOMO is a very strong Belgian company though. The headquarters is in Belgium, and the shareholder is Belgian. The discussion is not about being Flemish or Belgian, but about Europe, where the cost of energy is factor eight more expensive than in the US or other regions. That cannot be sustained. Europe has lost its competitiveness against other regions. A huge responsibility lies with the European Commission and member states to restore that competitiveness. Otherwise, structural damage will be done to industry, including in Flanders, and not just chemistry which has many ramifications to other sectors. There is no automotive, construction or packaging industry without chemistry.”
Is Europe in danger of becoming the world's industrial pariah?
BONTE. “For the first time in decades, Europe imports more chemicals than it exports. That is a warning signal. We are in the midst of a triple crisis. The energy crisis is stoking the economic crisis, and at the same time chemistry is in the midst of a massive transformation, from carbon-based to sustainable. We have something like two decades to completely convert this industry to circular. However, all this has to be financed and technologically delivered. I fully agree that the objectives of the Green Deal should be achieved. But how? How quickly? We need to engage in dialogue with the European Commission to clarify what is doable.”
You are forgetting another crisis: the image crisis of plastics and chemistry in general.
BONTE. “Just try to imagine the world without plastics. Your car wouldn't exist, your kitchen appliances... Plastics bring huge sustainable improvements to people's lives and make life safer.”
Sustainability, all well and good, but what about polyamide recycling?
BONTE. “You can recycle polyamide several times. For example, you can extract it from a car part, grind it up and remold it into another part. It does not lose its intrinsic properties after various steps in the production or recycling process. We are leaders in recycled polyamide. More than 10 per cent of our total production is based on recycled material, and we want to increase that to at least 20 per cent.”
You worked abroad for many years. What have you noticed since returning to Belgium?
BONTE. “Nothing earth-shattering, though I feel we live in a very individualistic society here. I lived in Asia for five years. The collective interest has a much higher value there. Here I feel much less attention for that, and I also feel much less pride for the country here, to achieve something together. This is unfortunate, as is the constant sinking further down the rankings, such as with education. That bothers me. You clearly feel that we have become somewhat complacent. We do read those statistics, but fail to say 'now enough is enough' and work towards a turnaround. Many of our structures and systems are complex, and discussions about them get bogged down in that complexity. As a result, there is no longer a focus on the country's real issues. And that while Flanders, and by extension Belgium, could have been the Singapore on the North Sea, with our potential with world ports and knowledge and entrepreneurs.”
DOMO is relatively unknown. That doesn't bother you?
BONTE. “I have absolutely no problem with that. We are not listed on the stock exchange. So we are also not in front of the financial analysts and media every quarter. But in the industry, we are very well known because we make a difference. Technyl, which is 70 years old, is an icon in the industry. Just talk to customers in other parts of the world: they don't buy polyamide, they buy Technyl number so and so. We can build and drive our business on that.”
How do you see the future?
BONTE. “We are leaders in sustainability and are able to follow our customers in other parts of the world. We notice clearly that we are winning projects before some of our big competitors. This is a company with many opportunities. And so we will grow mainly outside Europe; We are building a new plant in China, foresee expansion in the US and India. In Europe, we invest mainly in the sustainability of our production systems. We have partnered with EDF subsidiary Hynamics to build a green hydrogen production plant in France. We need a lot of hydrogen to produce polyamide 66.”
Do you want to keep DOMO independent in the long term?
BONTE. “DOMO is a family business, but that doesn't mean other options are ruled out. If an opportunity arises, it should be looked at. There are no dogmas about that here. The only question will be whether that opportunity really creates value for the company and the shareholder.”
Is there a knock at the door?
BONTE. “This sector is going through a huge transition. It would be surprising if nothing happened on the active landscape of plastics and chemicals. Anyway, for DOMO, there is nothing concrete at the moment. That we are in high demand? All the better.”
Did you fear that the De Clerck family would play the role of mother-in-law?
BONTE. “Not really, because we had talked through how I wanted to run the company. That felt very comfortable. And a family-run business also has advantages. The conversations and decisions are very short and clear. This allows me to move quickly.