Local production offers us completely new possibilities

The coatings and adhesives manufacturer Follmann is expanding its adhesives business in Europe with two acquisitions. With Great Britain and Russia, the company is investing in countries that each bring some special challenges. Managing Director Dr Thomas Damerau explains the strategy behind this.

Managing Director Dr Thomas Damerau is not concered about possible Brexit impacts on the aquisiton of Sealock. -

This year you bought the British adhesives manufacturer Sealock and recently you acquired a majority stake in the Russian adhesives manufacturer ZAO Intermelt in St. Petersburg. Why are these two acquisitions attractive to you?

Dr. Thomas Damerau: Follmann's adhesives division is comparatively young. Over the last 15 years, however, we have succeeded in continuously growing organically with our in-house know-how in dispersions and hotmelts based on EVA and PO – especially in applications in the wood sector – and in establishing ourselves successfully in the market as an adhesive manufacturer.

The two acquisitions are perfectly in line with our growth strategy. In doing so, we will not only be able to continue to drive forward our overall growth in the adhesives segment, but also have access to products and technologies that are new to us. Sealock, for example, is very strong in the development and production of adhesives for packaging applications and has a new technology for us in the production of PSA hot melt adhesives. Since the company has not been active on the German market to date, we can exploit considerable synergies with Sealock's know-how and our position in Germany. Our customers benefit from an even broader product portfolio.

With regard to the acquisition of Sealock, to what extent does the upcoming Brexit present you with a challenge?

Damerau: It is difficult to say what challenges can be expected until the concrete conditions and impact of Brexit on economic relations between Britain and the EU are clear. The Brexit did not play a serious role in the purchase negotiations. As long as there will be no explicit tariffs on the import of adhesives from the UK into the EU, we look forward to the changes with the necessary composure.

Follmann Headquarter

The Headquarter of Follmann in Minden, Germany (Source: Follmann)

You strengthen your business with hot melt adhesives. How do you assess the current market for hot melt adhesives?

Damerau: In recent years, we have seen a shift from the use of dispersions to hot-melt adhesives in applications relevant to us. However, this also means increased competition for hot melt adhesives, which can be seen, for example, in the trend towards commoditization of PO products. In principle, the question of chemically binding systems such as PUR hotmelts is also increasing.

Now you are one of the few medium-sized companies that produce hot-melt adhesives in Russia. Please describe the competitive situation in Russia.

Damerau: In addition to two competitors who have also been producing hotmelt adhesives in Russia for many years, Russia is a market that is heavily dependent on imports in this product group. Almost all well-known competitors known from Western Europe are represented here through dealers. In the context of political developments in recent years, Russia has seen a tendency to buy from local production if possible. We think that we can use this trend to position ourselves in the market as a Russian manufacturer and not as an importer.

Where do you see the greatest challenges in this respect?

Damerau: In order to achieve our goals in Russia, we see the greatest challenge in finding the right setup for our sales teams. Due to the size of the country, the classic Follmann approach, specific and with short delivery times to meet individual customer requirements represents a real challenge. Here, local production offers us completely new possibilities.

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