Interview with Peter O'Sullivan, DuPont Titantium Technologies

 |  Includes: CAF, DD, FXI
by: Shaun Rein

This piece originally appeared in the CMR Business Quarterly.

DuPont Titanium Technologies [DTT] is the world's largest manufacturer of Titanium Dioxide (TiO2), a key ingredient in products from plastics to paper to coatings and paints. DTT has been in business serving these core markets with their branded product, Ti-Pure*, for over 80 years.

Over a decade ago, DTT anticipated the shift in market focus from North America to emerging markets, specifically China, and was quick to invest accordingly. DTT has since established a world class presence in China, from its management teams to distribution networks, sales channels and facilities. Over the next five years, nearly half of total global growth in this market will come from China; DTT's early move has not only given it a significant competitive edge, but will further solidify its position as industry leader worldwide.

DuPont has charged Peter O'Sullivan, Global Marketing Leader, to lead a team that manages the strategic direction for DTT offerings worldwide, including product development and marketing programs to drive international growth. A 24-year veteran of DuPont, Mr. O'Sullivan and his team are focused on growing DTT's current position of strength both globally and within China.

CMR recently sat down with Mr. O'Sullivan to gain insight into how DTT has achieved its significant success in China, its plans going forward, and the specific challenges and opportunities it expects to meet along the way.

CMR: As China's economy continues to boom in spite of the global slowdown, what are the major opportunities DTT and DuPont face going forward in China?

POS: From automobiles to mobile phones to coatings for the home, the Chinese people are seeking better quality goods than ever before as their standard of living improves. For DTT, this is a great opportunity because entire value chains need better quality TiO2 in order to ensure the quality expectations of finished goods are met. As we consider opportunities to grow, a key metric we focus on is the per capita consumption of TiO2 in the context of expectations of growth in per capita wealth. Mature western economies like the U.S. and Germany typically have consumption > 4/kg per person per year. Today China is consuming about 1/8th that amount per capita. For obvious reasons China is an exciting long term growth market for us that requires investments in many forms, from physical assets like manufacturing facilities and customer support labs to investments in organizational size and capability. China is now DuPont's second largest country market after the United States and will become the largest in the next few years. We are now planning to build a world class TiO2 manufacturing plant in China to meet the need for consistent, high quality products DuPont has produced with its rutile chloride manufacturing process for decades.

CMR: What challenges do you face in China that are different from the US and other BRIC (Brazil, Russia, India and China) countries?

POS: We learned early on that we had to localize our management teams so that we are best able to manage within the unique culture and business norms here. What works in the U.S. or Russia does not necessarily work in China. While the same sort of exciting rapid growth opportunities exist in Russia specifically, and Eastern Europe, in general, as in China, it is clear that the unique cultural capabilities that only a localized leadership team can deliver is every bit as essential in Russia as in China.

Like other companies, human resources is one of our biggest challenges as there is more turnover in China than some of our other markets and a lack of deep DuPont local management experience at certain levels consistent with a region of the world where our business is relatively new and growing quite quickly. The solutions we have chosen include world class training programs, providing exciting career paths and filling senior management positions with local employees.

An outstanding example of this is Charlie Huang, our Sales Manager for greater China. Charlie has been given responsibility for driving DuPont TiO2 sales in the region. His entire staff is comprised of local, talented individuals with strong ties to the community.

CMR: In light of rising labor and real estate costs, inflation and the weakening of the US dollar, are you looking to produce in other countries such as Vietnam where costs are lower, or do the needs of your supply chains demand you be in China?

POS: We are clearly focused on acquiring all the necessary licenses to build our plant in Dong Ying. China is where our major growth in the pacific rim is happening. At the end of the day, locating our TiO2 business where we are experiencing the most growth is always going to be in DuPont's best interest.

CMR: Over the last decade, Chinese companies such as home appliance manufacturer Haier or computer company Lenovo have made great strides at becoming global players. How do you view the emergence of domestic Chinese TiO2 competitors in your sector?

POS: For us, generally Chinese producers have a reasonable offering for specific markets but most still lack the quality and reliability that DTT has. For the most part, Chinese producers manufacture TiO2 utilizing the sulfate process. Titanium dioxide produced using this process inherently lack some key quality characteristics that are important to customers. We see the local producers moving toward high quality products at some point, which is where DuPont is positioned right now. This will be necessary in order for customers to produce high quality consumer products.

CMR: The Government's push to transform China from manufacturing-based to service-oriented has resulted in rapidly changing policies and levels of policy enforcement. How have these changes, such as increased concern over pollution and water use, affected your strategy going forward?

POS: Our strategy is consistent with the environmental objectives you highlight. Our processing technology produces less pollution than our competitors. DuPont has publicly stated sustainability goals consistent with the policy direction you highlight, e.g. reducing targeted pollutants and reducing our water use. As a specific illustration, our Dong Ying site has been designed for lower water use than comparable facilities currently operating. We already operate our facilities to high environmental standards that in some cases go beyond the requirements of the law. But in order to ensure a level playing field for the benefit of consumers, we support the uniform and equitable enforcement of environmental regulations.

Peter O'Sullivan Biography

Education: Graduate of the University of Delaware with degrees in Accounting and Finance

DuPont: Joined DuPont in 1984. Entered DuPont Titanium Technologies in 1985 with an assignment at the New Johnsonville, Tennessee site, the world's largest TiO2 manufacturing plant. This was followed by assignments at DuPont's other U.S. TiO2 plants in Delisle, Mississippi, and Edge Moor, Delaware. In 1991 Mr. O'Sullivan changed career direction from manufacturing into commercial work with an assignment as a Product Manager position in DTT's Minerals Business. Over the next twelve years he held assignments including Customer Service Manager for DTT US, Business Manager for Mineral Products, and SAP Manager of Global Organizational Change

Served as North American Sales Manager - Coatings at DTT for four years before being promoted to Global Marketing Leader in 2007

As Global Marketing Leader, Mr. O'Sullivan and his team determine strategic direction for DuPont TiO2 used in coatings, paper, and plastics worldwide, including product development and marketing campaigns for international growth