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News archive 2001

New chemical plant outsources its production analysis services


Press Bulletin

Forchem and Western Labs in partnership

The chemical industry is looking for cost effectiveness as in the electronics industry, by outsourcing support services that are not part of its core business. Forchem will not invest in its own analytical laboratory for the tall oil fractionation plant it is building in Rauma, instead it will buy services from private companies. Process and quality control analyses will be carried out by the Rauma-based, Western Laboratories Inc., a firm selling laboratory, research, development and consultancy services to the forestry products cluster.

Forchem Oy is planning to break into the European tall oil processing market next year by building a new tall oil fractionation plant in Rauma. The plant will be the biggest of its type in Europe. The total cost of the project is about 400 million Finnish marks (over 67 million euros). The plant is scheduled for start-up at the end of next year. Forchem is targeting a market share of over 30 per cent in the tall oil market, dominated to almost monopoly levels by the US company Arizona Chemical.

"We are starting our business activities from scratch, so we are free to organize our operations as we see fit. In order to get a flat and effective organization and to concentrate on what we do best, we decided right from the beginning to outsource as many services as possible. There were very clear economic reasons for this," says Martti Fredrikson, CEO of Forchem Oy.

"The fact that the Rauma plant will outsource its laboratory operations, which could be imagined as a sacrosanct core activity for a chemical plant, has a very well-founded reason. We dared to take this step because there was an independent forestry industry analysis laboratory in the area, which has been operating for over ten years and is renowned both nationally and internationally. We believe we can work safely with Western Laboratories both in assuring quality control and process control and development."

According to Martti Fredrikson, the primary objective of the agreement is to safeguard basic process lab analyses, of which there will be quite a large number. How Forchem will organize their later product development needs is still open. In addition to Western Labs there are plenty of resources in this field available in Finland.

Western Laboratories Inc. (Lännen Laboratoriot Oy) is a subsidiary of Western Research Inc. The major owner of the parent company, Dr. Panu Tikka, considers this contract to be an excellent example of present-day business practice, where resources are focused on core products and other necessary expertise is purchased from the market.

Forchem Oy processes tall oil resin and tall oil fatty acids from the crude tall oil generated as a by-product in the production of pulp. Tall oil pitch is also generated in the process. Tall oil resin is a basic raw material for industry and its greatest application area is as a glue and binding agent. Tall oil fatty acids are used as many kinds of binding and lubrication components in various branches of industry. Tall oil pitch is burnt as a biofuel that is exceptionally low in sulfur. Pitch also contains a considerable number of sterols needed in the food and pharmaceutical industries.

"Present-day highly effective pulp production is based on the fact that the fibrous material handled in the process is just lignin and pulp and everything else moving in the process is in some way a hindrance, which must be brought under control and separated out of the process, for example, to become a raw material for Forchem," states Panu Tikka.

"For over five years, Western Labs has been doing meticulous research work for pulp mills related to soap, tall oil and various extractive components. We worked out the extractive component balances of the modern pulp mill and developed the research and measurement methods needed. It is really excellent that a new entrepreneur who can take this business forward in a new way, is coming into an area of industry formerly concentrated in one pair of hands."

Western Labs currently employ a staff of 33. This contract means the number of personnel can be increased. Only some limited investments need to be made to complete Western Labs' range of equipment. Western Laboratories Inc. has previous wide-ranging service agreements due to outsourcing e.g. with Metso Paper Oy and Oy Metsä-Botnia Ab.

For more information please contact

Forchem Oy CEO Martti Fredrikson GSM + 358 (0) 400 635 387

Oy Lännen Laboratoriot - Western Laboratories Inc.
Markku Ahponen
Tel + 358 (0) 2 549 2146

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