Africa
CW: The economies of East and Central
Africa have shown mixed growth signals
with those in Eastern Africa likely to experience substantial expansion with sectors such as construction and packaging
likely to record good progress. How does
H.B. Fuller intend to take advantage of
this growth to achieve its short- and long-term objectives in this market?
SK: H.B. Fuller is not currently involved
in the construction industry in this region; we do have a significant presence
in construction in North America. Our
focus in East and Central Africa will be
on what we have been doing for many
years with Continental Products, which
is leveraging and exploiting the value of
our technology in packaging, tobacco
and labeling. We will continue to sell
our adhesive solutions to multinationals and large African companies such
as tobacco manufacturers and beverage producers that need labelling solutions for their bottling operations, for
example. By partnering with already
well-branded companies that use our
technology, we have the advantage of
tighter control on quality.
CW: The East and Central Africa region
has at times been seen to have varied
regulations and compliance levels when
it comes to construction and industrial
material and products. How does H.B.
Fuller intend to ensure the needs of each
consumer is met without necessarily compromising on quality of products?
SK: Construction is not part of our core
business in East and Central Africa, and
because we are not working with traders,
the possibility of low quality products
or counterfeits of our brands will not be
an issue. I know that in industries such
as tobacco, there are counterfeit cigarette brands on the market. However, our
products are not affected because we sell
to established companies and do not deal
with middlemen.
CW: Apart from East and Central Africa,
where else in the continent is H.B. Fuller
active and what has been the market response to its products there?
SK: In Africa, we have a manufacturing
plant in Cairo that serves customers in
North Africa and also the Middle East.
We also sell our products to multinational companies in West and South
Africa. Our strategy for the African
continent is to steadily expand our
physical presence in a manner that
ensures we provide added value and
enhanced service to our customers. We
will have to overcome several challenges, such as limited logistics infrastructure in large parts of the continent as
well as sustainable access to raw materials, as we seek to respond to huge
market opportunities and partner with
customers and meet their manufacturing needs of the region.
CW: What are some of the applications
that H.B. Fuller will be targeting to grow
in the East and Central Africa market?
SK: We are not able to manufacture
a wide variety of water-based technologies locally in Kenya (some of the
Continental Products Ltd industrial adhesives include labelling adhesive, book
binding, packaging, lamination paper
conversion and tobacco industry). We
will be able to augment these offerings
with a much broader range of imported
products as well to ensure we can meet
all of our customers’ adhesives needs
and serviced by our outstanding team
of experts in Kenya.
CW: Mergers and acquisitions have at
times been a moment of uncertainty and
anxiety among employees. How is H. B.
Fuller addressing this issue with employ-
ees and clients of Continental Products?
SK: The staff at Continental Products is
extremely excited about this new devel-
opment. They number approximately
20 full time employees, who will now
be part of a global team of more than
3000. They are particularly excited to
have become part of a bigger family,
which provides them with access to a
comprehensive range of established,
world leading products used in various
industries ranging from book-binding
to footwear, hygiene to furniture and
many many more and thus they are now
able to explore many more opportuni-
ties in a much more diverse collection
of markets.
CW: H.B. Fuller projects a $70 million
capital expenditure in 2015. How much
of this will go to East and Central Africa
market and what specific investments will
the company be making in this region?
SK: Our capital budget was actually
prepared excluding prospective acquisitions and this was before the Continental
Products acquisition was completed.
CW: Local currencies in East and
Central Africa have recently lost ground
against hard currencies and the continued strengthening of especially the U.S.
dollar against these currencies is likely
to impact manufacturing operations in
the region. What measures does H.B.
Fuller hope to take to absorb the possible impact of this currency volatility
in coming months?
SK: As is the case with many speciality chemicals businesses in Africa we
are compelled to import a significant
proportion of our raw material needs
essentially because of the lack of well-established local sources of these materials in Africa. Most of these raw
materials come from long-established
sources in the Middle East, Asia and
Europe. Whenever local currencies lose
ground against hard currencies such
as the U.S. dollar or the Euro, imports
become more expensive when converted to local currency. However, in our
business what is more important is not
Steve Kenny, H.B. Fuller’s senior vice president for
Europe, India, Middle East, Africa (EIMEA) region.
