Rohm And Haas Focuses Abroad

At the beginning of 2007, Rohm and Haas plans to reorganize its portfolio under three major business groups, down from five, and deploy 10 top managers to posts in Europe and Asia, up from the three currently in those regions. The effort is intended to foster growth businesses and allow the firm to increase sales in the emerging markets of Asia, Eastern Europe, and Latin America.

In addition, Rohm and Haas plans to upgrade its focus on innovation with product development efforts aimed at not only coatings and electronic materials technologies but also the emerging material needs in developing countries for energy, clean water, food, and health care.

Emerging markets account for 80% of the world's population, but contribute only 20% to Rohm and Haas's annual sales of $8 billion, CEO Raj Gupta tells C&EN. He wants to increase that contribution to 35% of sales by 2010, in part through increased capital expenditures abroad in facilities designed by local engineering firms using local construction materials.

Gupta says that "now is the right time to launch these initiatives." Although the firm has had strong revenue growth and has more than doubled its earnings to $637 million between 2003 and 2005, Gupta says, "This is not enough. We believe we can do better."

The firm's three core business groups will be electronic materials, specialty materials, and performance materials. Salt will continue to be managed as a stand-alone business. Gupta says the salt business, with $925 million in sales in 2005, is "a very profitable business and a huge cash machine." The powder coatings business, which has not been profitable for some time, will also be managed as a stand-alone business and will either be turned around or divested.

Underlying the larger reorganization is an effort to build stronger regional organizations. The company knows how to compete successfully with multinational firms, but "we need to fine-tune our business model to compete against local firms in emerging markets," he says.