Interview with Cengiz Ay, Deputy General Manager of GREEN Chemicals

In the interview we conducted, Cengiz Ay, Deputy General Manager of GREEN Chemicals A.Ş., answered our questions. Cengiz Ay provided detailed information about the company's extensive product portfolio.

Could you briefly tell our readers about yourself, your education and professional background?

In 1983, I entered Istanbul Technical University, Department of Materials and Metallurgical Engineering, completed my undergraduate degree in 1987, and my master's degree in 1991. Particularly because I specialized in corrosion for my master's thesis, my first work experience after military service was in the chemicals sector. In 1992, I began my career at Türk Henkel in the research and development of surface preparation chemicals. After working for seven years as research and development plus technical service manager, I was appointed as manager of the automotive and automotive suppliers division at the same company. My scope covered both Turkey and neighboring countries including Iran and the Turkic republics. I continued in this role until 2006. Subsequently, I left Henkel and in my new phase worked on innovative products. For a period, I provided both consulting and representation for an American firm's nano-ceramic materials. During this time, I worked for a certain period with products designed as nano-ceramic coatings that could serve as alternatives to insulation made with polyurethane or glass wool. Later in 2010, I joined GREEN Chemicals and returned to classical chemistry manufacturing. I have approximately 25 years of professional experience.

Could you provide information about GREEN Chemicals' founding process and the stages it has gone through to the present day?

GREEN Chemicals was founded in 1995. Despite the name GREEN Chemicals being in English, it is 100% a Turkish company. It began operating under main group headings of water conditioning chemicals and metal surface treatment. Until approximately 2007, GREEN Chemicals primarily represented an international firm in water conditioning chemicals. Following the termination of this representation, the company represented another international firm for several years. In 2007, GREEN Chemicals decided to proceed entirely under its own brand rather than as a representative. For the past 10 years since 2007, it has continued as 100% a domestic company under its own brand. As GREEN Chemicals, we have surpassed 22 years since our founding. Our brands include WET-Treat®, MET-Treat®, OIL-Treat®, GEO-Treat®, MINE-Treat®, WASTE-Treat®, TreatON®, and GREEN ADH-Tech® for different product groups. Our turnover in approximately 2017 was around USD 16 million, and our target for the coming year is USD 21 million. From the previous year, we had some projects we missed or could not acquire as planned, but those will come in 2018; we are better prepared this year. In the last quarter of 2017, we acquired many new projects that had not yet been reflected in the full year figures, and with their inclusion, we foresee significant revenue growth in 2018.

Approximately 60-65% of our overall turnover comes from classical water chemicals, 20% from metal chemicals, and the remaining approximately 10-15% from adhesives and petroleum-refinery sectors.

Looking at surface preparation, the portion concerning paint chemicals comprises approximately 20% of our revenue. Our facility is built on approximately 12 hectares with 6,500 square meters of enclosed space. This area is designed as 3 separate units for production, raw materials, and finished products. Approximately you have 3,500 pallet storage space for both raw materials and finished products. In total, we have 7,000 pallet storage space. In terms of production capacity, we have 50,000 tons capacity with three shifts. We can say we newly constructed this factory; after the transitional period in 2013, we have actively continued our operations here with all our units since 2014. Previously, we had both our production and sales in separate locations. Here we wanted to consolidate our departments under one roof, and we also made an upfront investment in capacity that would meet our needs for at least the next 10 years. We had a piece of land here, which we utilized in this manner. We have already reached approximately 40% of our capacity. Following our acceleration in both domestic and international activities, we will exceed this capacity every year. We made the entire investment upfront, and of course this demonstrates our confidence in ourselves; we have complete faith in this. We believe we will fill this space during the planned period ahead. The data we have from the last 2-3 years supports this.

What sectors does GREEN Chemicals primarily serve and what types of products does it supply? Could you provide information about GREEN Chemicals' products, brands and services? What kind of work are you conducting at GREEN Chemicals as a company in the areas of innovation and research and development?

Although we are primarily a water conditioning company, over time we have developed subsidiary branches adapted to our system. Among these, the most important for our company is our Metal Chemicals division, which is managed as a separate strategic business unit. We also conduct adhesive manufacturing to a certain extent. We have entered the field of chemicals used during petroleum extraction, transportation and processing in refineries. Although our main water business branches within itself and has continued with 20-22 years of experience, we maintain long-standing operations. However, within typical water conditioning, we have implemented diversifications. Until 4-5 years ago, we were not very active in wastewater; we focused entirely on process waters, heating or cooling waters. Recently, we developed our product range and sector regarding wastewater. More recently, new industrial areas we have entered are geothermal energy and chemicals used in mining. We have had considerable activity in these areas, and the contributions to revenue from here have reached significant figures. Looking at it as a sector, we are present virtually everywhere water is used. Our products are used throughout Turkey's top 500 companies. In every industrial facility, in subsidiary units serving main production, since water is used, water conditioning with chemicals is necessary. The greatest encounter between water and metal occurs either as corrosion or as pipe clogging resulting from water hardness. This problem we occasionally experience in our homes, of course, occurs on a much larger scale in industry. Our purpose here is to extend the life of these installations or investments made and ensure processes run smoothly.

If we elaborate somewhat on our chemicals in the metal surface treatment field, as you know there are two main types of surface preparation chemicals.

First are the conventional ones, and second are more technological products developed especially in the last 5-10 years. Before painting, we use typical zinc phosphate as we know it, and as paint we use cataphoresis or direct wet or powder coating combinations. Looking at the industry, because cataphoresis and paint combination is used in automobile production, the zinc phosphating process continues as the main process. We can produce all these types of products in our factory. However, alongside this, recently we have begun to focus on newer technologies; nano-polymers with polymer-inorganic and organic combinations. As our 411th Research and Development Center, because we are a registered R&D center, we have created many projects related to nano-polymers. As is known, in conventional methods you need to use considerable energy, this can be pumping, heating. However, with the work we conduct with nano coatings, we observe that energy consumption in application can be reduced. These new technologies have shown that significant savings can be made from heating and waste containing heavy metals. Additionally, compared to zinc phosphate, the amount of waste produced decreased significantly; this type of zinc-phosphate waste must be transported to certified waste treatment facilities for disposal. Nano-technology has brought important flexibility to this matter. Recently we have high concentration on this, and our R&D team also has the knowledge, accumulation and capability to conduct this work. We are working on processes that produce less energy and less waste. We are probably among the first 25 R&D centers in the chemicals sector. We received the Marmara Region's successful chemistry company award twice in a row from the Kocaeli Chamber of Industry. Generally as a company, our objective is to source certain chemicals locally that we have imported from abroad, keeping the foreign currency here.

We try to accomplish this wherever possible and wherever we find opportunities for all products.

We have conducted many studies to date, carried out joint projects, and work with universities. We primarily work with Istanbul Technical University; we are closer with them. Our company's board chairman is a member of Istanbul Technical University, Department of Chemistry's sector cooperation commission. We also have professors from whom we seek consulting on certain projects. Additionally, we have conducted work with Aegean University and professors emerging from there or operating there. To continue on our path, to remain competitive, we must demonstrate these developments. Abroad, we work with 10-12 consultants who have sectoral experience in various fields and R&D experience with global reach. From time to time we meet with them on a project basis. With their guidance or participation, if there is a product group we are targeting, we realize it with our own R&D together with them. Of course, if we need to receive support from TUBITAK or another institution or university in any way, we are open to these matters.

Could you tell us about your domestic and international sales activities?

We are active not only in Turkey but in various countries. We operate in two regions of North Africa, with GREEN Portugal and GREEN France in certain areas of North Africa. We work with Iran, the Arabian Peninsula and the Turkic republics, where we also have small partners. In Europe, we work with a company based in the Netherlands. As a new development, we are establishing an organization in Romania; we will increase our activities in the Balkans in the near future. Another organization of ours is GREEN Brazil, with some activities in South America. We actually export to 35 countries. We have approximately 80 direct personnel. However, both domestically and internationally, we use many partner and dealer organizations. Sales and service has approximately 300 people serving in the field. From time to time on major projects, we place personnel as permanent staff at companies. These employees on GREEN Chemicals' payroll have the task of organizing and monitoring the use of only our chemicals at that company. We do not want to be known merely as a chemical seller. Our general objective is to provide 360-degree technical and engineering service when our product begins to be used at a customer or during project planning.

What kinds of difficulties can be experienced in the sector from a raw material perspective?

Particularly in 2017, we experienced a raw material cost volatility we had not seen for a long time. This was probably somewhat a problem arising from China's raw material supply. In recent years, global developments occurred regarding the reduction of carbon emissions. Due to pollution or air quality problems, the Chinese government was observed to shut down production factories of many raw materials. The supply decrease in raw material quantities coming from China automatically raised prices very significantly; price increases of 30% to 40% were observed in many raw materials. Balancing and managing these proved difficult. How the situation will develop in 2018, we are having difficulty predicting at the moment; China will again be determining here. From a raw material perspective, if it is a product already produced in Turkey at high volumes we use, sourcing from here is our first choice. However, we are forced to import certain products not produced here from abroad or purchase from another importer. This is one of the difficulties of the chemicals sector. Chemical raw materials represent a major foreign currency outflow; yes, we have many products we formulate locally here, but when we look into detail, a significant portion of the basic raw materials we use in formulations are imported. This is one of the problems we need to solve in Turkey in my opinion. Of course, there is no question of us producing everything, but we need to produce enough to meaningfully balance our import volumes. As a country we need to create this balance. Process investments need to be made; we should develop somewhat more visionary planning. However, we can still source raw material from one place or another; the essential part is when you keep the high value-added portion in your hands, where you have it made or where you source it from is not really that important. However, to advance to a higher level as a country, we need to develop technological production or innovative products. Knowledge and potential exist in Turkey; to evaluate this, we need to determine a fundamental strategy covering the long term, drawing a path compatible with the global development system.

Could you provide information about GREEN Chemicals' environmental policy, occupational health and safety approach?

The fact that we chose GREEN as our company name emphasizes that we attach maximum importance to these matters. Looking at the sector we work in, in wastewater chemicals, we are involved in processes that can treat water as much as possible and provide it to the environment cleanly. Regarding sustainability, all our quality systems are in place and on record. In terms of occupational health and safety, we apply all rules; companies that inspect us also conduct routine inspections. In the chemicals industry there can be many variables; accordingly, all necessary activities including health screening are conducted routinely. We are located within an important organized industrial zone and apply all rules completely.

What criteria are prioritized when GREEN Chemicals' investment plans are formulated?

When formulating investment plans, we take a long-term view. Since our founding motto is "nation first then world," we have tried to establish our company with world-standard, reliable infrastructure that anyone can visit and see with confidence, and we continue to develop this. We look at which direction to invest in two ways. First, how much need does our country have or how much can we contribute to the country; by doing this, how can we provide advantage both to ourselves and to our country. Reducing products causing foreign currency outflows from our country and producing them in Turkey is our primary objective. Second is to anticipate where the sector will evolve. Particularly our recent investment and concentration has been on the subject of geothermal energy. Because this is a renewable resource and Turkey has great potential related to it. Looking at it from the paint and surface preparation perspective; I can say we are seriously prepared regarding pre-coat nano applications and inorganic-organic polymers. What speed we will grow or what path we will take will be determined by the results of the products we obtain. In summary, our general principles in investments are; first, is it a project that will reduce dependence on foreign sources, and second, what kind of perspective exists in the sector where we will invest both in Turkey and globally in the time ahead. We try to use our resources efficiently. Here, we made a serious investment with this facility and want to obtain results befitting the investment we have made, harvesting its fruits over time. We are working hard and we have faith. Our company has always been successful so far and will continue to be successful going forward.