“Our success is based on our continuous ability to create better applications to meet the needs of specific customer groups,” says Harri Kerminen, president and CEO of Kemira.

Kemira already ranks among the world’s three largest companies in its field, and its goal is to become the global leader in water chemistry. According to Harri Kerminen, Kemira is well positioned for further development and growth.

“Kemira’s foundation for profitable growth was laid during the past two years. Despite the recession, Kemira recorded a strong performance last year, which suggests that the adjusted company structure is in line with the strategy,” says Kerminen. Successful restructuring enables Kemira to follow its strategy of offering new and better means of water quality and quantity management for its customers.

“We aligned our organization and values, as well as governance and management systems, with our strategy. At the same time, we strengthened our balance sheet and cash flow considerably. Profitability improved as well. We also successfully listed Tikkurila, Kemira’s paints and coatings business, on the Nasdaq Omx Helsinki stock exchange and separated our titanium dioxide business from the parent company. Presently, water treatment represents 75 percent of Kemira’s revenue,” Kerminen says.

More profitable customer processes

According to Kerminen, water treatment market is the fastestgrowing market in the world, totaling a minimum of 500 billion dollars per year. The fragmented market offers Kemira a great number of growth opportunities, but the company has decided on a moderate acquisitions policy.

“Kemira is a company that invests strongly in research and development, and such companies need to secure a solid balance sheet and profitability. Healthy growth arises from in-house competence. We continually create new products and applications so that we can serve our customers better and offer them, as well as our shareholders, as much value as possible,” says Kerminen.

Industrial customers in need of customized solutions for process development present the greatest business potential for Kemira. “Some of our solutions – such as raw water, wastewater and sludge treatment – are suitable for all of our industrial customers. However, customized applications that help improve profitability offer our customers the highest added value.”

Kemira’s business model is largely based on applications designed for specific customer industries. These include the oil drilling, mining and paper industries.

“When we are familiar with our customers’ processes, we can enhance production quality and quantity, as well as water and energy efficiency—in other words, overall profitability. The pressure to create new solutions is particularly strong in Asia, where industrial production is increased despite the continuous water shortage.”

Companies like Kemira that specialize in water chemistry applications are few in the world, but the competition for growing markets is tough. “We are focusing on research and development, so that we can offer our customers new solutions that create added value. An excellent example of this is the Center of Water Efficiency Excellence, also known as SWEET, which develops technologies and solutions for water-intensive industries and, in a wider context, for the global water shortage.”

According to Kerminen, the broad range of problems to be solved enhances Kemira’s competitive edge. “We have 10,000 customers around the world. The situations we encounter every day contribute to our competence.”

Clean solutions for cities and municipalities

Kemira has long offered household water and wastewater treatment for cities and municipalities. “Our expertise covers a full range of products and applications related to municipal water and wastewater treatment. These will remain an important business for Kemira,” says Kerminen.

Solutions vary by country and continent. Kemira has a strong position in many different types of markets. “We offer basic water treatment solutions in countries where resources to invest in infrastructure are limited. Water business is developing slowly in these countries, and water is usually free for people and industries. In these regions, we also want to contribute to a better quality of life; after all, our business is not driven solely by financial values.” In a growing number of countries, consumers are paying for water companies’ operating costs, and the pressure for consumers to cover capital costs is increasing.

“Many old European cities require large investments in infrastructure. Because pipelines are in bad shape, the quality of drinking water decreases as it makes its way from the treatment plant to private homes. When water prices increase, consumers want lower costs. This accelerates technological development and boosts Kemira’s business in western countries,” says Kerminen.

Asia is a continent in which both rich and poor populations are represented on a large scale. The basic problem in Asia is a shortage of water. “China and India, for example, increasingly suffer from insufficient water resources. New technologies and water chemistry applications are needed because water is already rationed for people and industries in megacities. More clean water is also needed in agriculture, which provides food for these growing cities. One of the reasons is that people tend to adopt meatbased diets when the standard of living improves.”

Emerging economies in Asia and South America are open-minded about new technologies related to water treatment and reuse, because these technologies are critical for them.

“The process of testing and implementing new applications is uncomplicated in countries where water is scarce. In addition, legislation is more simple and straightforward in Asia and South America. Highly detailed laws and official proceedings in areas such as Europe often hinder the commercialization of water treatment methods. This is not to say, however, that European laws are inconsequential.” According to Kerminen, Kemira’s structure allows for a fast flow of information among the different segments of the company. The expertise Kemira has accumulated in chemistry over the decades is available to all of its customers.

“A shared product portfolio and technology platform enable and support global operations. We are able to create applications based on customerspecific needs around the world. This business model helps us stand out from the competition and establish a status as the world’s leading water chemistry company.”

Text: Jorma Leppänen
Photos: Susanna Kekkonen
The interview was published also in Kemira’s stakeholder magazine WaterLink, issue 4/2010.