Memo from Mark Newman to anyone running a new industrial spinoff: Hit the ground running and deal with legacy issues with dispatch.
Newman has been CEO of Chemours since July, but he was CFO and COO before that since the Wilmington, Delaware-based company completed its spinoff from DuPont in 2015. Chemours employs about 6,500 people making chemicals and materials for markets including coatings, plastics, refrigeration, transportation and semiconductors, and owns some of the best-known industrial brands in the world, such as Teflon.
“It’s critical as a new company to be very focused on the formation of what is a new culture going to be, and what are the cultural norms, so that folks have a way of anchoring their actions early on,” Newman told Chief Executive. And while he decidedly wasn’t commenting specifically on the new breakup of another U.S. manufacturing icon, General Electric, it might have been beneficial for Peter Arduini, Scott Strazik and Larry Culp—the top GE executives who will head newly independent companies—to hear what Newman had to say.
“Chemours has had to deal with difficult legacy issues,” Newman said, such as the company’s negotiations with the other two surviving parts of the old parent company, DuPont and Corteva, that ended in January in an agreement over how to share liabilities from a plant on the Ohio River that released toxic perfluorooctanoic acid for years. “Problems don’t solve themselves with time—they need to be addressed head-on. So one of our learnings from our spinoff is to deal with difficult issues as well as possible and as early as possible.”
Chemours’ products are essential to the functioning of today’s economy and also will play key roles as companies address societal goals including decarbonizing operations and products, rolling out 5G and renewing America’s infrastructure.
“We’re having a great year, with a focus on running our plants safely and reliably, and staying close to customers,” Newman said. “That has served us really well. We’re building momentum as we go throughout the year, and we’ve increased guidance for our earnings. As we look to 2022, I love the momentum we have [and] how we’re doing everything possible to engage all our employees in how we service those needs and grow our business sustainably.”
Chemours has been able to shine during today’s broad supply-chain crisis in part because “developing deep partnerships with customers has served us well,” Newman said. “Today, there is a huge premium on having well-managed, reliable suppliers like Chemours,” with a “value proposition” that is attractive because Chemours is safe and sustainable compared with lower-cost suppliers in China, he said.
A major reason for Chemours’ reliability, he said, is that “a significant part of our supply chain is in the United States, including a large majority of our operations. Whether you’re talking about energy costs or energy supplies or other inputs like chlorine or core organics,” Newman said, “that helps to alleviate some of the logistical issues. That’s been a strength of the company.”
Strong relationships across Chemours’ supply chain including long-term contracts also have helped stem the inflationary pressures that have been building across the U.S. industrial landscape. Some allow for price increases based on changes in input costs, Newman said, “but by and large we have quite a bit of protection from spot [prices] versus long-term contractual prices.”
What’s more, he said, “With demand still vigorous around the world and supply so constrained, in the great majority of cases we’ve been able to pass on any cost increases that we’ve been seeing and have been able to preserve and even expand our margins.”
Newman predicted that market demand and supply in general will “start to equalize into 2023” and inflation pressure will ease in Chemours’ markets.