Corbion is weathering the COVID-19 storm, says CEO
15 Apr 2020 --- Dealing with the COVID-19 pandemic has topped the recent corporate agenda for all sectors, including the food and beverage industry. Netherlands-headquartered Corbion, supplier of lactic acid and its derivatives, among other ingredients, has been heavily impacted from the outset. FoodIngredientsFirst speaks with Corbion CEO, Olivier Rigaud, who discusses the measures the company is taking to counter the spread of the virus. With operations on four continents, the company acted quickly to isolate employees, secure the supply chain and find solutions to shortages in necessary products.
In a statement in mid-March, Rigaud, who took the helm at Corbion last August, stressed: “We are weathering this storm, focused on one clear priority: protecting health and well-being.”
A few weeks on, we asked a series of questions to discover how the Dutch food and biochemicals giant is holding up.
One of the biggest challenges must be that if you are globally based, how do you adjust the timelines of how you adapt locally. How did you manage that?
The crisis team is global and consists of people from all over the world. Basically, it is always a matter of trying to anticipate. What we see in the way the crisis has developed is that we should overdo things and prepare for the worst. By doing so we could gain some anticipation on quite a lot of aspects. Beyond the supply chain, it was a matter of inventory build-up and ensuring that we had things in the right place to ensure business continuity. As a global corporation, we have the advantage of a spread footprint that spans four continents. We do source locally with big operations in Asia, South America, North America and Europe. A lot of what we produce serves the local markets. This puts us in a better position than if we were to have a single plant serving the global market.
Are your Asian operations working normally right now?
For our big facilities in Thailand, it was quite challenging as we are currently undergoing a major site expansion. As well as having 300 employees on site, we had a further 600 contractors there. So you can imagine that ensuring that everyone stayed healthy was even more challenging. Thailand was one of these countries that closed down travel from abroad very early on. This meant that we didn’t get any disruptions there so far. While we won’t be immune forever, so far it has been the case.
China was a bit different for us as we do not have large operations there. But our frontline employees were sent home early and we were able to manage the commercial operations. What we see now in China is that all our people are back to work and also the suppliers who were in a critical position a few weeks ago are all back into their respective positions. So basically, the supply stream from China to the other various locations across the globe is back up and running.
Are there any specific products that you have been impacted on when it comes to the supply chain?
If there is one product that is falling short and we see some disruption it is ethanol, simply because primarily in Europe, a lot of distilleries are being asked to produce gels and hand sanitizers. We use ethanol in some of our production processes to also make some lactic acid derivatives. But while we have been facing some shortages, we have been able to navigate through that.
The situation is very volatile right now. The US was very far behind in terms of the virus spread, but it is actually becoming a much bigger issue as we speak. So far, we have done exactly the same inventory build-up and securing two or three suppliers. But we cannot anticipate what might happen and do expect the situation to get very serious in the US.Having said that, these types of situations can always lead to some good creativity. When you think about gels and hand sanitizers, Corbion is also involved in some disinfectant industries, where we have been supplying the market for a long time.
One of the products that we have already been marketing for many years, makes it possible for our customers to produce hand sanitizers with a mixture of lactic acid and ethanol, which helps to reduce ethanol content into a disinfectant by 40 percent. With this in mind we first thought about how we could be able to help the community around us and the hospitals who are close to our Dutch facility. The current situation demonstrates that it is important to find alternative solutions to ethanol, for example by combining it with antimicrobials. If we can bring a solution where it can fulfil an immediate need, it makes sense to move forward with that full speed and that is what our team did.
Do you see any light at the end of the tunnel?
We see that the Chinese situation is better now. It is not an ideal situation, but things are getting better. When you consider all the measures we are currently taking in Europe, and hopefully in the US going forward, there is hope. However, things are still very volatile and we cannot speculate on the timing.
How are things evolving in terms of the coronavirus mitigation measures you have put in place?
There are a lot of initiatives happening behind the scenes to ensure that we protect the health of our people and ensure that we can keep supplying our customers.
We anticipated what was to come by following the unfolding events in China and South Korea. We sent people to work from home very early on. It was our priority for all people working close to Corbion: employees, stakeholders and contractors. At the same time, we needed to protect those on the front line, who were actually running the operations, to ensure that things kept moving, safely. As any company, we have had daily crisis meetings in place.
We organized pandemic kits that provide masks, gels and gloves. We closed down all the cafeterias that we had in our plants at a very early stage, while providing lunch boxes for employees. This helped ensure that they had as little contact as possible with each other. We had a big stream on securing the supply chain for our raw materials, to ensure that we had business continuity in place. That was important as it allows us to continue to serve our customers and not bring any disruption.
We are an essential part of the food supply chain, as well as offering pharma and biomedical products that have the potential to benefit life. With that background, we have been very disciplined in ensuring that we had plenty of options in place for raw materials. We increased the inventory levels as well. We also prepared contingency plans in case we would have sick people within our operations to see how we would continue to operation if the situation got worse. That was all implemented. It was not always easy, but we were able to go through the first period of the crisis in China, without any disruption. At the same time, we cannot afford, as a key piece of the food supply chain, to get our customers in trouble. A lot of our products are about keeping food safe, which is a key element in any processed foods.
What are your thoughts on how the food industry has largely continued to operate despite the unprecedented coronavirus challenges?
If you see what the industry has been able to achieve in making sure that shelves in the supermarkets are still full and can feed people, it is very impressive. Next to health, food is an absolute necessity. You have to ensure there is no disruption and that you continue to feed the world. In times such as these the food industry has a huge responsibility to ensure that it secures the supply chain and shares the efforts and costs.
More from Olivier Rigaud on Corbion’s 2025 business strategy can be found in print in the “View from the Top” interview in the April/May 2020 edition of The World of Food Ingredients.
Edited by Missy Green
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