DCI-Harco: major share in decorative coatings
DCI-Harco (Dhahran Harco Chemicals Industries Ltd.) was formed in 1996 as a joint venture between DCIM (Dhahran Chemical Industries), a Saudi-GCC conglomerate of seven shareholders since 1991, and Harlow Chemicals, UK, the major producer of water-based polymers in the UK, established in 1963. This Joint Venture is 51 per cent DCIM and 49 per cent Harlow Chemicals UK.
The factory is located on an 81,000 square metre site in Dammam's second industrial city. Since its inception in 1996, the company's production and sales have increased threefold to become the number one supplier of water-based emulsion polymers in Saudi Arabia, serving the growing market for paints, adhesives and construction chemicals.
While DCIM brought to this partnership its infrastructure of factory site, production and warehousing facilities and network of sales coverage and logistics, Harlow Chemicals supplied extensive technical resources, modern production techniques, research and development facilities and marketing skills. In collaboration with Harlow Chemicals UK, DCI-Harco has operated with full ISO9002 Quality Certification since 1998.
The product range consists of a synergy of DCIM and Harco grades, developed over many years of combined experience, marketed throughout the GCC region under the Viking trade name.
The company concentrates on the manufacture and sales of water based dispersion (emulsion) polymers, grouped into five families depending on composition and usage:
The Viking range of dispersion polymers are sold into five main application areas:
Of these areas, decorative surface coatings is the most important sector for DCI-Harco, accounting for nearly 80 per cent of the total sales. This brings the company into direct contact with all of the major paint manufacturers in the Gulf region.
DCI-Harco has the majority share of the surface coatings market within Saudi Arabia, and also substantial stakes in the export of polymers to its neighbouring GCC countries, including the UK, Yemen and Eastern Africa. Currently around 25 per cent of all production goes for export.
Demand for water-based technology is rising rapidly, particularly within the surface coatings industry, as environmental awareness becomes more and more important, the market is moving away from traditional older solvent-based technology to more environmentally acceptable alternatives that DCI-Harco is established to provide. The market for water based dispersion polymers saw an increase of just over 12% over the last two years within Saudi Arabia.
Important environmental issues are not confined to the question of hazardous solvent emissions but also include the growing problem of waste disposal. To solve this, the company has established a dedicated drum recycling plant, providing customers with the opportunity to return used packaging to the company, where it is reprocessed and reconditioned for further use. This benefits the customer by both removing his problem of waste disposal and helping to maintain a competitive pricing level.
In addition to this, DCI-Harco has established a significant share of supplies in bulk road tankers as more and more of the major customers are seeing the advantages of bulk supply, in terms of more cost-effective handling, manpower requirements and storage efficiency.
DCI-Harco has established a strong logistics infrastructure to encourage moves to bulk wherever possible, and has been providing extensive technical and engineering support and advice to customers to facilitate the transition. Once established, the advantages are quickly realised by the customer. Packaging supply and disposal costs are negated and the saving is passed on directly to the customer. Over the last two years, bulk tanker deliveries have increased fivefold, and DCI-Harco now has a fleet of nine tanker vehicles servicing its customer base throughout the kingdom.
The last 18 months has been a very difficult time for the industry. Rising oil prices have meant that virtually all downstream petrochemical related products have been affected adversely, and in particular the major raw materials purchased for DCI-Harco's consumption: Vinyl Acetate monomer and Styrene monomer. Average raw material price increases over the last 18 months have exceeded 45 per cent. At the same time there have been a marked increase in the availability of foreign manufactured resins, priced very aggressively throughout the region. Imports from Indonesia, Taiwan, Turkey and Italy, in particular, are now readily available throughout most GCC countries.
In addition to this, local sources report that the average price of trade paint in the Kingdom has fallen steadily by almost 50 per cent over the last 4 years. As Saudi Arabia moves nearer towards WTO membership, these commercial pressures will become even greater, although DCI-Harco also sees itself set to benefit on the procurement of key raw materials, which should become more readily available within the Kingdom.
DCI-Harco has responded to this challenge by developing more cost-effective formulations, expanding the boundaries of polymer technology, and streamlining its production techniques. The results are very promising: enhanced technical performance at reduced cost. Regular bulk supplies of these new generation polymers are now in place and both DCI-Harco and its customers are reaping the benefits. A major future influence on the surface coatings industry throughout the region will be the implementation of more rigorous quality and performance standards by the SASO organisation. New standards from this government body will set the minimum technical requirements for the performance of coatings, and this will give a new base line for quality products. This move is seen as essential in the current climate, and receives DCI-Harco's full support, where all opportunities to forge strong technical and commercial partnerships for the long-term future growth of the industry are embraced. By working closely together with both customers and suppliers in areas such as this, DCI-Harco aims to maintain its edge as the premier supplier in its field.
DCI-Harco is committed to expanding its range of products to new and speciality niche sectors within the coatings, adhesives, building and textile sectors. The opportunity for growth within the GCC is very strong, and with the ongoing technical back up of Harlow Chemicals, one of the UK's best-established sector leaders, DCI-Harco is in an excellent position to realise this.
