First the ideas, then the market

Michela Conterno, President of the Board of Directors at Lati, talks about her experience in high performance compound field

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«We closed 2013 with some excellent results: we increased our turnover by about 12% with overall growth in sales and profits. This trend has continued into 2014, a fact that gives us reason to feel optimistic about the future». So said Michela Conterno, President of the Board of Directors at Lati, a company from Vedano Olona (Italy), as she talked to Plastix about the Varese-based company’s recent performance and its position as one of Italy’s most interesting manufacturers of engineering thermoplastics

Could you sum up your main target markets for us please?
More and more of our products are aimed at customers abroad, who account for about 70% of our turnover. Furthermore a good number of Italian firms we do business with are highly specialised processors and they, in their turn, are also working almost exclusively on international markets.

Which are your main outlet markets internationally speaking?
France and Germany have been central to our business for over twenty years and our relationship is successful and well-established. More recently we have been following the business potential that is emerging from the eastern European area where we are seeing, what are the highest growth rates of the moment. We have been working with countries such as Poland and Slovakia and we are also extending our sales network to take in Rumania, the Czech Republic and Hungary. We have been operating successfully in France and Germany, as well as in Spain, the UK and Scandinavia for many years and have well-established, structured and organized branches there along with a large sales network, warehouses and customer service teams.

LATI FACT SHEET
turnover in 2013: Eur 114 million (+12% on 2012)
production plants in the province of Varese: 2
employees: 240
staff in R&D: 20
compounds available: 7- 9,000
new compounds each year: 300
production output: 38,000 tons per year

Aside from Europe, what has your approach been to far-away markets?
For the moment our operations in Russia and South America are marginal, although in Brazil and Argentina where the boom years seem to be a thing of the past, we are investing in raising our profile; medium term growth is our objective. We have been active in Asia for some time now and there we have trusted suppliers who produce for us locally, although if sales should increase there we will consider the possibility of opening our own production facility.

Let’s talk about strategy. What does the management at Lati see as the recipe for success?
First and foremost we believe in keeping production in Italy and under our direct control. We have a research and development department that is the hub of our business. Our approach has always been oriented towards developing special, hi-tech products that will find space in the less crowded niche markets, particularly now when there is so much demand for specialization. We are continuing to see growth in the self-extinguishing application sector where we supply customers and end users, mainly in the electric industry. We have applied the same tactics for all the products we have developed in the past decade: from thermal conductive to electrically conductive materials we have always been committed to developing new applications. I can safely say our philosophy has never changed. We rely on special articles and how to develop them. This holds true “geographically” in terms of overseas sales potential as well as in terms of new sectors of application. This encourages a global policy of sales and purchasing which begins with the management of our raw materials.

“Our strength is that we can supply the best technical solution, which must, however be used correctly if it’s going to produce results. It isn’t easy, but it’s what has to be done”
Michela Conterno

What you have described is an approach that relies heavily on research. Can you tell us any more about that?
At Lati we think it is important to listen to what our customers want, which is what we do when there is a particular component or part that has to be designed and manufactured, but there is also the challenge of in-house development when there are no specific orders involved. This aspect is fundamental for us: indeed, when our researchers create new products it is not necessarily because of a specific order or request from a customer. Our job is to offer new solutions whenever there is a need for improved technology and better materials than the ones that are currently being used. Each year we develop up to 300 new projects aiming for those sectors we believe have potential for growth. Take graphene for example. Thanks to our approach we were the first to experiment and offer new solutions. Then there are bio-materials, which represent a new frontier with massive growth potential.

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The Lati head office in Vedano Olona

On the subject of research, do you think we can talk about “macro” trends?
Particularly when it comes to technological innovation, the sector is often conditioned by “trends” that come out of research projects, but it is also powered greatly by marketing: from nanotechnology to bio-materials and 3D printing solutions. However, it is not uncommon for an initial period of enthusiasm for a product to wither and fade of its own accord. I don’t think this is so surprising.
We are always ready to follow up on – and invest in – any research path we think has real potential. Sometimes we have been very successful in anticipating macro trends in the sector. We can say without fear of contradiction that we were among the first to put thermo-conductive compounds on the market; perhaps it was premature at that time, but today we are seeing demand from the market and, of course, competition from other companies, rise exponentially. But that’s no bad thing given that growing interest has created new commercial outlet markets for us too.

What’s your opinion about the bio-material sector that has been so successful lately?
It is certainly one of the more complex areas to make inroads into. First and foremost markets and producers still don’t seem to have made their minds up about this sector. The market has been experiencing a certain pressure from consumers who are keen to embrace the concept of biodegradability without minimally taking into consideration other factors, first and foremost how this will affect producers. As far as we are concerned we have no interest in “exploring the unknown”, and consequently we favour the development of solutions based on actual LCA research, which deals with the development to ? engineering polymers with monomers from renewable sources that could open up some interesting niche markets.

And what about 3D printing? How are you approaching that market?
I am convinced that in the mid-term this sector will see significant growth given that we are already seeing a great deal of demand for new materials that will help improve the performance of this kind of technology. I don’t think 3D technology will ever rival injection moulding, but it could easily carve out its own niche in sectors that are not interested in mass production. It will be helpful for those producers who need short production runs of tailor-made items that don’t justify the expense of creating the moulds you need for traditional production systems.
In this field, sectors such as specialist bio-medical products and prosthetic limbs may be able to look forward to years when quality will grow exponentially. If we take bio-medical as an example, which for us currently accounts for only 1% of our turnover, we can see on-going growth in the demand for highly specialised solutions. Let me be clear; we are working a lot with companies that produce parts for diagnostic machines, X-ray machines and operating theatre equipment.

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Some details from the Torba plant

Which sectors are contributing most to your turnover?
Electric and household appliances account for about 60% of our turnover. This is followed by 20% from the automotive industry, which is a very strategic field for us, above all due to the type of margins we can achieve by supplying very highly specialised solutions and special parts for Audi, BMW, Mercedes, Renault… The rest of our turnover comes from a range of niche sectors we are involved in. As far as we are concerned it’s vital that we continue to invest in research so we can find other ways of producing metal replacement materials that combine the benefits offered by plastic with performance and mechanical properties comparable to those of metal. Then there are other exciting possibilities in sectors such as espresso coffee capsules, heating systems and especially the alternative energy sector with high efficiency, condensing boilers.

In general, which compounds are the most in demand?
Last year we saw a significant increase in turnover thanks to our special products which went from 13% to 18%. Our definition of a “special product” is one made-to-order, which means developed as a solution to some new requirement or for very new applications. One example is the use of thermal conductive compounds in the production of the lighting element in LED bulbs. Developed in 2005, in the last two years they have become a product we “make to stock”. Other very popular compounds are self-lubricants or compounds containing a high amount of glass fibre (up to 65%).

Now let’s move onto the Italian market. What trends are emerging?
It might seem incredible, but the rising demand for special polymers is being driven by the domestic market. Our impression is that Italian businesses are feeling the need strongly to develop niche products with innovative content and interesting margins. In other words to use an everyday expression they want to “work well”. We feel they really are up to the job, actually I believe that the last decade, which has been very difficult for businesses in our country, has had the effect of distilling quality.

In closing, can you give us a glimpse of what your future strategies might look like?
We are convinced that we can stay strong and competitive by continuing to invest in ourselves and in our strengths; first among these is our high level of specialisation. Inevitably this will to a certain “natural selection” within the sector. This is true of the situation abroad, where high quality manufacturing is recognised and appreciated and not only in terms of the price people are willing to pay. We would like to continue to deal with our customers knowing we can develop the right kind of materials for their needs at the same time showing, even our smaller commercial partners, that we are going to be around when it comes to after-sales assistance too. This adds value to compounder businesses like ours because the bigger groups find it difficult to provide cover for smaller customers they consider as not generating large orders. For a company like ours neglecting this slice of the market would be a fatal error. Our strength, fed by word of mouth among other things, is that we can supply the best technical solution, which must, however be used correctly in order to produce results. It isn’t easy, but it’s what has to be done.

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