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Interview

with Peder Bohlin, Managing Director, Jotun Malaysia

25.03.2010 / Energyboardroom

Jotun is a well established niche player that has been in Malaysia for about 25 years today ; could you highlight to our readers the reason for the establishment of your premises in this country and give them some historical background of your activities?

Jotun Group has been established in Norway in 1926, providing corrosion protection to ships that were then made of steel. At that time 90% of the Norwegian shipping fleet was built in Norway, then in the fifties and sixties, ships started to be produced in Japan and Jotun had to follow the shipowners, which represents the start of Jotun’s internationalization process. As of today, Jotun remains the second largest player in terms of marine coatings. In the end of the sixties, Oil was found in the North Sea which led the way for Jotun to launch operations in the offshore industry. It was a natural move for Jotun to operate as it is based on the same variable as marine coatings (salted water, steel, corrosion protection) and its core technology became the company’s success factor in offshore as it was in marine. At the time, Jotun had a substantial network internationally, made of owned factories and agents, and converted to its marine coating activities to protective coating, including the offshore business. In 1976 we established factories in Singapore and starting exporting to the offshore industry in Malaysia as well as Sarawak and Eastern Peninsular Malaysia. We also appointed an agent 35 years ago in Brunei, and he is still working there for us. But eventually in the early eighties we felt the need to establish local manufacturing plant in Malaysia in order to get a sizable market share, since there would always be a preference from client for local manufacturers. Since we wanted to get bigger contract with PETRONAS or Shell Sarawak, it was the right moment to establish our operations here.

What is today the importance of Jotun Malaysia to the group in general?

Jotun’s turnover in Malaysia is about $80 million, when the one of the group is approximately $1.7, so approximately representing 5% of our global activities. But it has more of a strategic importance, based on the development of the local market (Indonesia and Vietnam and Thailand). Our facilities in Malaysia have become a regional center which gives us opportunities to grow efficiently in these other markets, and today the turnover in South East Asia is approximately $300 million.

How are the activities spread in between each of your activities (offshore, marine, architectural decorative)?

The original Jotun is marine coating and hydro-technical coating, i.e. offshore. Both are based on the issue of steel corrosion. Later came decorative paint for wood and plaster. Globally the steel, marine and hydro-technical represent fifty per cent of Jotun’s business, when decorative represents the other half. Today in Malaysia marine and hydro-technical represent about 40% of our turnover.

And where do you see the most opportunities for growth?

The market is nearly ten times bigger for decorative painting than the marine and offshore, given the amount of houses, hotels, hospitals etc. therefore Jotun’s market share is much smaller. We have around forty per cent of market share in offshore, but around seventeen per cent in decorative area. As a result we see much more potential to grow from seventeen per cent to a bigger market share, than in a market where we already are among the leaders.

How do you contribute to the development of the Oil & Gas industry in Malaysia?

In South East Asia, Jotun represent about 2000 employees, among which five are expatriates; in Malaysia we are 280 with only two expatriates. This means that along our thirty five years of operations we have developed our local skills. Local people are driving this organization today, and they are the ones sitting at the management table, having been in the company for ten to twenty years. That is Jotun’s way to support Malaysia in its development and offer international careers to Malaysians. We give back what we were given: we got the opportunity to develop a business here in Malaysia, and in return we help Malaysia grow and become more successful.

Would you say that you are a Malaysian company with Norwegian root or a Norwegian company that has operations in Malaysia?

We have our roots in Norway, are a Malaysian company that builds its operations on Malaysian culture, and at the same time are also an international company that gives the opportunity to individuals to realize their dream careers. We celebrated our thirty five years of operation in Malaysia last December, and our employees expressed this same idea. To quote our Senior Sales Executive, who could summarize the way we think: “The head office may be thousands of miles away in Norway, but Jotun Malaysia thrives on the same unique culture that put the brand on the world map. The company places great emphasis on staff – taking good care of their needs. Even work comes with an opportunity to travel to different countries and meet different people.” In a word, we do not forget our roots but are an international company giving value to the individuals. We also are a family owned company, which means that today Jotun’s values are Norwegian values mixed with family ones. Since 1926 we have based our business on the same key words that are Loyalty, Care, Respect and Boldness. We are loyal to our family, take care of each other, respect anyone, any culture or religion and respect each other. After these soft adjectives, we are willing to take risks and give every member of our family to show boldness and try new things. When other companies say something is not possible, we say that is why it is a great opportunity. As we say in Malaysia “Jotun Boleh”. So yes we have Norwegian roots, but you could use the same values for any family company in other countries around the world.

Boldness also means that Jotun brings new products to the market. How do Malaysians react to new ideas?

Innovation has been Jotun’s driving force from the very beginning. All around the world, people need paint, there is no place without paint, so you need to differentiate yourself, and the only way to do it is to bring new products into the market. For example we delivered splash zone coating to oil platform in Malaysia, since every company working offshore is facing corrosion in its splash zone. For example Shell Sarawak and EPMI are using it. We also launched BOLTAFLEX, a polyester based coating to cover the most difficult area. It was a very unique initiative in Malaysia that we also offered to EPMI and Shell Sarawak. Instead of lasting for around three to four years, our products last from ten to fifteen years which decreases the costs of maintenance.

How do you adapt specifications of your paints and coatings to Malaysia?

As a paint supplier, Jotun is dependent on three things: the paint, the applicator. What is applied and the way it is applied can be completely different in the North Sea. So when developing a system, it is impossible to say it is a global system, even for major companies such as Shell or EPMI. Everyone wants to say of its product that it works under local conditions. That is why we need to know and understand the local conditions to make sure we can help E&P companies.

To what extend does the Norwegian brand helps Jotun in Malaysia?

3% of the Norwegian knows that we are Norwegian. The rest thinks that we are Malaysians since in Jotun is the word “Tun” which is a title in the country. We are Norwegians but are not especially highlighting it. The important thing is that we are able to deliver, and no company, even the Norwegian ones, would buy from Jotun because of its origins.

Why did you choose Malaysia to establish your R&D and manufacturing facilities, when you could have done it in any other country in South East Asia?

Cost is a balance between return and actual costs, and in this regards Malaysia has a very unique position since we produce here paint cheaper than anywhere in the world in terms of cost per liter. Compared to China or India, costs of producing here are much cheaper given the structure and competencies available in the country. We experience the same idea in R&D with excellent chemist who are loyal to the company, and have the ability to communicate in English, which enables them to communicate with the technical headquarters in Norway. Our employees have to be trustable, as Norway will not delegate any responsibility for technology development if they are not able to entrust its researchers. A few of our employees have built up strong relations with our headquarters as they lived for a few years in Norway. There is not only a single reason why we chose Norway, but a combination of many reasons: high education, low level of costs, good English and language skills and good competencies in general.

What makes of Jotun the perfect example of Malaysian Norwegian business cooperation?

Jotun has been good in establishing themselves as a Malaysian company, using the best out of Norway while settling down successfully in the country. Others have come and go depending on the fluctuations of the market. We have invested in people, have established a strong market position and brand recognition, and we have supported innovation and brought new concepts in the market.

What product represents the best the capabilities of Jotun in Malaysia?

For the time being we focus on the heat reflector paint, which is not used offshore yet. It is based on technology developed for pigments in Norway and in cooperation with local labs, through which we can decrease the surface temperature of buildings. When the sun is shining, the paint reflects the heat back which has two positive impacts. First of all it contributes to decrease the heat island effect; when there is a concentration of buildings, temperature can increase by three to four degrees compared to the outskirts, because all the material used on the buildings (e.g. asphalt) absorb the heat. The second factor is that by reducing the temperature on the surface of the buildings, we are able to decrease the temperature inside the office by four to five degrees, hence becoming more energy efficient. In that way everyone can reduce costs in terms of energy, and fighting global warming. It is a small example of Jotun’s contribution towards creating a better world.

What could be Jotun’s contribution to make the Malaysian Oil & Gas industry?

We will launch this heat reflecting pigment in the offshore industry as well as oil tanks for example. However our main contribution is the water based paint. Solvent in the paint is the main component of the paint that has negative environmental impact, because it has to disappear in the atmosphere. Players in the Oil & Gas industry are very conservative, using only paint that contains solvent. However Jotun has worked with PETRONAS Carigali and Shell to use water based paint that has the same applications and benefits as he traditional one, without the negative impact on the environment. Demand for this kind of products is increasing, and Jotun is positioned as a frontrunner in this niche, having already an array of products tested and available, for example Shell Brunei has asked us for these products not later than last week. We develop products that are good enough so that they can be trusted and customers understand that we have the right technology for them.

How do you imagine Jotun Malaysia in 2015?

The key thing for Jotun is to be better and better in what we are doing, that is innovation, to take care of the customers, and to recruit people and retain them in the company. So far and for the past few years, we have been the fastest growing company in Malaysia, and we have to continue doing so not because we want to grow, but because we are good. We will continue to be an attractive place to work for employees and where they are happy to work with us. People are keys to our business. At the end of the day I have an easy job since I only work with highly skilled people who love their job.

In a few words, what would you tell the international community about doing business in Malaysia?

Invest in local people, and take good care of them to get loyal and competent staff. That is how you will be successful.

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