Donald T. Pine

Chemtan President

President's Message

May 2022

We are patiently waiting for supply lines world- wide to improve given we are well into the second quarter of 2022. A great deal has been learned how to manage Covid 19 in most parts of the world without sacrificing the livelihood of so many people. There continues to be increased raw material cost from both foreign and domestic material suppliers. Limited supplies of raw materials persist in the USA due to continued Force de Majeure positions of major international chemical companies. In addition, we have seen significant increases in transportation costs particularly imported raw materials. To increase difficulties further, delays at both East and West coast ports including trucking shortages has added considerable stress to the situation.

On a macro level the world economy is slowly fracturing towards regional supply chains of goods and services linked to consumer markets because the cost of transportation is eclipsing the past economic benefits from worldwide trade. I hope this trend changes because there will be far too many smaller countries who will have even greater difficulties adjusting.

Employee shortages for the past few years have hampered our ability to increase production irrespective of the shortages in raw materials supply. Cash flow is too often seriously undermined from sporadic flow of raw materials negatively impacting schedules to produce finished goods. This dynamic forces us into working 7 days a week, 12-hour plus days which is not sustainable. Customer demand continues to be strong while our growth opportunities remain unrealized due to supply line shortages. Our foremost priority is to maintain a continuity of supply for our customers. Adding new customers for our key products is not possible in this environment.

It seems appropriate to state what we stand for as a company being a part of the leather industry. Yes, we were designated an essential manufacturer because we are in the supply line for US military leather. Yes, we are exporting more product in the world than what we supply domestically so we are not immune to world-wide competition. Our interests are in industry advancements to use the best available technologies and responsible practices. Also, it is important to be more critical regarding who the customers are in the supply chains. Selling product to leather producers who are using the best available technologies and practices will advance industry wide improvements faster than most other initiatives.

The emphasis on cattle supply lines entering the market when clearly linked to deforestation driven by agricultural expansion is not a viable trade-off. The means of earning a living in these areas of the world must also be developed to effectively stop these activities. Where hides come from is important to Chemtan even though we are a downstream supplier to leather producers.

Chemistries which are at not at odds with restricted substances and are identified through ZDHC guidelines for chemicals screened, tested and ranked are eligible then to appear on LWG ZDHC portal is a tremendous advancement forward, and we are proud to be part of this initiative.

REACH as an organization, is a uniquely European bureaucracy and acts as a trade barrier. Unless a chemical supplier can show a bonafide pathway available through a legal EU entity who has or can register chemistries under REACH can sell product into the EU.

The compensation required by REACH should not rule the day. Only the science which qualifies substances of very high concern (SVHC) should be the determining factor for any compound or chemistry useful in producing leather. The EU REACH organization otherwise too often significantly increases cost and reduces competitiveness worldwide.

There is no counterpart to REACH in the USA.

Respectfully,
Donald Pine