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A triangle that works in yarns

Sinterama, an Italian company based in the Piedmont region acquires Germany’s Trevira with the financial support of a Thai colossus, Indorama. «The future of our sector will be played in Asia. And we’ll be there» says Paolo Piana, chairman of the Italian leading company.

A triangle that works in yarns

This is Italy Team

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«The hardest day? I wouldn't wish it on anyone to have to tell your employees you're laying them off». Paolo Piana, 63, a businessman from Biella, is a man of few words and a lot of facts. He is about to take over, as soon as he has the approval of the EU antitrust commission, as leader of the most important group of polyester yarn producers in Europe, maybe in the world (China permitting) with the acquisition by Sinterama, with headquarters in Sandigliano, of the German company Trevira, jointly with its Thai partner Indorama. It is not everyone who, in a moment of glory, would be willing to remember the costs, especially the human costs, of a march on the road of the global economy that has been entirely uphill and does not allow for any distractions.

Which is exactly what makes this Italian case history a story worth telling, when the courage of an entrepreneur and the intuition of a banker were responsible for the birth of a world leader with an Italian passport.

Let's start from the end. It was a decidedly odd couple that took over Trevira, the German company in receivership, with 1,350 employees and 240 million euro turnover: an Italian company half as large (Sinterama's turnover is about 120 million euros) and the Thai group Indorama ventures, in another class altogether, with a turnover of 2.3 billion euros. It is the world's leading company in the production of polyester, one of those chemical processes that, in the new organization of labor in the globalized economy, has set sail for the Far East. The three companies form a lopsided triangle, with Sinterama in the position of the leading company, though the Thai group has the majority shareholding (the transaction is worth 40 million). «We were the ones who instigated this» reveals Piana. «For years we had been doing business with Indorama, with reciprocal satisfaction. It was natural for us to turn to them for an operation that was too big for us». Even though, for once, the Italian banks immediately approved of the project: thanks to Giovanni Rocca, corporate manager of Unicredit in the northwest.

The prize was very appetizing indeed. Trevira, a spin-off of the chemical colossus Hoechst, means brands and technology of excellence, the product of long-standing experience. But it was in serious difficulty: the company had been sold by Hoechst to the Indian colossus Reliance, «a giant in polyester, used to working with big numbers, but that's not enough in our sector: you have to be able to guarantee customer service».

The secret is often in the colors. «Let's say that it's the key aspect of our business» continues Piana «the reason why nine customers out of ten buy from us. 50% of our turnover comes from the automotive industry and we have to be able to guarantee them the same shades, year after year». This may be the reason, or there may have been others, but the marriage of Trevira and Reliance only lasted a couple of seasons. Then, in spring 2009, Reliance stepped back and for Trevira the only possibility was receivership. This was the background of the operation: an efficient company from the standpoint of sales and production, but lacking leadership. No one wanted to make such a large commitment in a sector that, though «poor», requires considerable know-how.

In the spring of 2009, however, the last thing Sinterama probably should have been thinking about was making acquisitions. In the aftermath of the Lehman debacle, the company had been forced, just a few months earlier, to close yet another Italian plant, in Sant'Angelo Lodigiano, in its rapidly shrinking empire, and of the original seven plants was left with only two, one in the Biella area and the other in Treviglio. «But we really had no choice» recalls Piana. «Because we weren't just closing plants, you see, but at the same time we were actually promising to expand our activity, in Europe and later worldwide. We knew it was vital for us to stay in touch with our clients, because we work with just about all the big companies». So we gave free rein to investments in Great Britain, Brazil and Turkey. And, of course, China, with the result of creating a group that sold 30 tons of yarns last year. These things work according to a precise formula: even in the world of fibers, a by-product of chemistry, mass production is no longer the answer. The market belongs to those who can focus on special products, with a mentality more like that of a small business and not like a big chemical industry, which ruled the sector until the Nineties, when they started to die out.

And so Sinterama finds itself the leader in Italy, at the end of a long zigzag trail. While all this was happening, the disadventures of Montefibre and the Snia led to their withdrawal from a market that, in just ten years, has changed dramatically. Indeed, in 1999, when Fidia and Mediobanca invested in the company, with 24% each (now they own, respectively, 24% and 10%), there was talk of quoting Sinterama on the stock exchange, in the perspective of growth in the sector. Then China appeared on the scene and European fibers could no longer compete. Most of the players gave up, but some, like Piana, dug in, wagering on the international economy. That is what gave Piana his idea: a three-way deal, a federation. «It is essential to guarantee Trevira the necessary independence, just as the role of Indorama is essential: the future of our sector will play out in Asia». So we set up this trio that can count on complementary productions in the four Trevira plants (three in Germany and one in Poland) and Sinterama's six, with the firepower of a solid supplier in the Far East.

 

 

Ugo Bertone

 

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