Many manufacturers saw significant rebounds in 2010, as demand for their products and services rose in North America.
St. Francis-based Fontarome Chemical Inc., a developer and manufacturer of fine chemicals, flavorings and fragrances, is one of those companies. During the last six months of 2010, Fontarome saw the greatest growth rate in sales and profit during the company’s history.
“Like everyone else, we were significantly affected by the recession,” said Mark Magnarini, chief operating officer. “We took a two-pronged approach. We implemented cost-cutting and containing and drove our lean initiatives. And instead of hunkering down, there was a commitment to invest to build up our sales and research and development personnel.”
Much of Fonatome’s success has been due to its implementation of lean manufacturing principles, which has helped maximize output while eliminating waste. By implementing lean, Fontarome was able to lower its prices while maximizing profits. The company is now able to deliver lower prices on several flavoring ingredients and active pharmaceutical ingredients (APIs) than Chinese competitors.
“Some of it stems from the research and development team development process,” said Chris Seekamp, director of R&D. “They have been developed fully in the lean process, so we’re getting the most bang for our buck from the ingredients and the process.”
Fontarome has also greatly increased its sales into the Chinese market. As the country’s middle class continues to emerge, demand for pharmaceutical products and packaged food and beverages has greatly risen, said Carl Sheeley, president and owner of Fontarome.
“We will sell more into China during the first six months of the year than we ever did before,” he said.
The company’s sales in emerging markets around the world are mirroring the Chinese market, Sheeley said.
“At the Moscow (Russia) food show, we had more than 100 sample requests,” he said. “Our French subsidiary increased sales and profits from the year before, and that’s not the usual situation there with the unemployment there.”
Fontarome has increased its sales into Brazil and India as well. Last year it added sales agents in London, New York and Ukraine. The company is in talks with sales agents from India as well, Magnarini said.
“They’ve already generated a significant amount of sales,” he said. “They’re coming here soon to talk about strategy and about selling into the Middle East.”
Fontarome’s focus on lean manufacturing has also allowed it to continue the refinement of its quality control and assurance processes. The company’s lean production and quality standards recently helped it win a significant contract with a large pharmaceutical company from a Chinese competitor, Sheeley said.
“We were in Switzerland a few weeks ago, presenting for a drug company,” he said. “We showed them the quality of the Chinese ingredient, which was 93 to 94 percent pure. Then we showed them the Fontarome product, which was 100 percent pure.”
“Our competitors are not lean,” Magnarini said. “That makes us more competitive.”
Fontarome is poised to continue its 2010 sales growth and success into this year. Many of the company’s sales for this year are already contracted. The company’s booked orders are now three times what they were at this point in 2010, Magnarini said.
“2011 should be significant, a double-digit increase over 2010,” Sheeley said. “Our sales pipeline for pharmaceutical ingredients is $7 million. It’s usually less than $2 million at this point.
“In 2010, our flavor and fragrance ingredients (sales) were about 75 percent up. We’re expecting a double-digit increase there as well.”
Fontarome’s lean manufacturing capabilities are giving it significant advantages over its competitors. It can produce higher volumes with great quality at less expensive rates than most other manufacturers of fine chemicals and flavors, Magnarini said. That capability makes the company very optimistic about its potential growth in future years.
“The two industries that we’re in are $15 billion global industries,” Sheeley said. “There are more than 1,000 companies doing what we do, but 99.9 percent of them don’t use lean. With the team we have, it should be easy pickings.”
