GLOBALIZATION OF CHEMICAL
BUSINESS: HOW TO BENEFIT
Introduction: Boy Litjens
EPCA president, Boy Litjens, welcomed attendees to the 41st Annual meeting in Berlin. After the success of last year’s meeting, which brought together chemical companies and logistics suppliers, Litjens, CEO of Sabic Europe, said the EPCA’s continuing joint approach reflected the fact that logistics and supply management is increasingly becoming an integral part of the petrochemicals business.
He reminded the audience that EPCA is much more than an annual meeting. “We initiate, facilitate and promote projects that are in the interest of the total chemical industry and its service providers.” He pointed delegates to documents produced by EPCA in collaboration with INSEAD and Harvard Business School, which contained the reports of studies into supply chain collaboration and exploiting cluster benefits to increase industry competitiveness.
With over 2,000 attendees, EPCA 2007 is breaking attendance records, said Litjens. He thanked the audience for its support, and also the companies who had sponsored meeting events: BASF for sporting events, ICIS for supporting transport, and Odfjell for the “happy hour”.
Opening the first business session, the EPCA president said: “The European petrochemical business is in a transition phase, facing challenges from other regions, from policymakers and on the environmental front. ‘Business as usual’ is not an option.” Therefore, the 2007 EPCA meeting theme - Globalization of chemical business: How to benefit from diversity - is intended to stimulate discussion and action to enhance competitiveness.
Finding Energy in Diversity:
Valuing, encouraging and leveraging human diversity, will strengthen business organizations and help them meet the future challenges of globalization, Royal Dutch Shell executive board member downstream (oil products & chemicals) Rob Routs told the EPCA audience. Since Shell was founded in 1907, diversity and inclusiveness have played important roles in his group’s success, and will continue to do so into the future, he said.
With a long history of working internationally, in challenging environments, Shell’s business structure worldwide was heavily decentralized, with operating companies in over 100 countries working with a high degree of independence. For much of this time, a cadre of international staff had moved from one expatriate EPCA President assignment to another, and became adept at operating across different cultures. But, Routs added, “Our focus is now on the development of local staff, with expatriates facilitating the transfer of skills.”
Today, Shell’s international mindset and an ability to do business across cultures, reflects its history, the group’s executive director for oil products and chemicals continued. “Our business structure and operating philosophy made us sensitive to national, cultural, ethnic and other differences. It has been critical to our successful negotiation with stakeholders such as governments and resource holders. I believe it also gave us an advantage in finding, developing, and using the human energy that is essential to any company’s success.”
In the 1990s, Shell looked for ways to take even greater advantage of its “human energy”, Routs said. Increasingly fierce global competition had made attracting, developing and retaining the brightest employees - and using the best ideas from around the world - more important than ever.
Meanwhile, Shell’s structure was changing from a focus on individual countries to a focus on its business as a whole. “Our goal was to achieve greater economy of scale and spread best practices to all of our operations. This led to greater work across national and cultural borders. Understanding and accepting our differences wasn’t enough anymore - we needed to leverage our differences to succeed as a business.”
Shell developed and shared a vision of the workplace it wanted to create. “We defined diversity as all the ways we differ, including age, gender, ethnicity and physical appearance, as well as underlying differences such as thought styles, religion, nationality, sexual orientation, and education. And, in our view, inclusiveness meant making the best use of all our employees, by eliminating barriers to full participation. We saw it as the critical next step needed to fully leverage our diversity,” Routs explained.
Shell’s global leadership has taken responsibility for making diversity a reality, reinforcing this commitment with standards and key performance indicators to measure progress. Today, Shell has three group-wide objectives: to raise the representation of women in senior leadership positions to 20% over time, to fill the majority of senior positions with local people from their own country and to increase continually the percentage of staff who feel that their workplace is inclusive.
Shell’s senior managers are focused on removing barriers to the retention and progression of women. It also has specific programmes around intercultural awareness, including supportand sponsorship of employee networks for women, ethnic groups, people with disabilities, gay, lesbian, bisexual, and trans-gendered individuals, and others. Routs said Shell’s leaders are highly visible insupporting these communities, and the group’s development programs recognize their unique needs.
To cut expatriate numbers in its businesses, and to ensure they are deployed for the right reasons, Shell is developing local staff, sometimes going beyond its own employees. Shell’s innovative approach is embodied in its Asian Talent Council, which is a cross business and crosscountry body composed of some of the group’s key business and functional leaders in Asia. It supports business growth by accelerating the quality and degree of representation of Asian talent in leadership positions.
Alongside a diversity of talent, Shell is also seeking a diversity of thinking, and a more inclusive culture. “We’re adding more external assessments of our performance, strengthening our relationships with universities around groundbreaking research, and engaging new employees - from interns to seasoned professionals - in a way that values their perspective,” Routs noted. “We believe a diverse workforce and inclusive work environment will help us attract and retain top talent, increase productivity, better understand our customer base, and build stronger relationships in the communities we operate in.”
An example of the value of diversity and inclusion in business is the $4.3 billion Nanhai petrochemical complex in China, a joint venture between Shell and China-based CNOOC, Routs continued. “Shell brought world-class technologies and project management experience to the effort. CNOOC brought invaluable knowledge of the local community and market needs. We both learned a great deal from each other. As a result, the complex meets the needs of the community, and our business,” the Shell director explained.
The partners also worked with local communities, governments, and other organizations to develop a comprehensive environmental and social impact assessment, making sustainable development central to the project. Another feature of Nanhai’s development involved tailoring products to the needs of Chinese businesses. CNOOC’s local knowledge played a key role in understanding the market and establishing a network of distributors and regional storage terminals, Routs continued. As a result, the plant has very quickly secured customers and a strong market presence.
Today, 95% of the 1500 employed at the plant and in marketing its products are Chinese, and many more jobs were created in local companies which provide services to Nanhai. The complex has helped transfer technology and skills to Chinese people, and supported diversification of local job opportunities.
Central to Shell Chemicals’ growth plans, Nanhai allowed the company to develop considerable knowledge of the Chinese market, which helped Shell China secure licence to import, trade and market petrochemicals in the local Chinese currency last year.
For petrochemical businesses with growth ambitions, these types of partnerships with major resource holders and national energy companies will be increasingly important. Those who do not have a culture that encourages diversity and inclusion will find themselves at a tremendous disadvantage on the global stage.