Don Rutz, VP of Kemira, discusses the importance of water quality and how his company is tackling the world’s water challenges at the GCCA California Cleantech Collaboration which was organized by Finnish Cleantech Cluster.

Full Transcript:

Ben Lack: I’m here with Don Rutz, Vice President of the Industrial group for Kemira.  Thanks so much for being with us.
Don Rutz:  Thank you.  It’s good to be here.
Ben Lack:  I want to talk to you a little bit about what you guys do.  You guys are shifting your platform just a little bit, and I would like to see if you could shed some light on the new strategy.
Don Rutz:  You bet.  It’s exciting.  The world is changing, so that technologies that were very prevalent and kind of the main technologies that drove the water treatment industry over the past 30 or 40 years.  I mean they are still in use, but the world is changing, and the world is going to more mechanical separation, less emphasis on chemistry.  So, that if Kemira wants to stay vibrant and wants to remain a healthy company and prosper into the new markets, it’s going to have to learn these new technologies.  It’s requiring that we evaluate kind of what our core competencies are, and also evaluate a couple different aspects of our core competencies.  For example, we are a company that is based and relies heavily on petroleum-based chemistries, such as polyacrylamides and other organic-type chemistries.  If we want to maintain our position, especially with the volatile raw material situation that there is in the world, we are going to have to develop chemistries that are sustainable, so our research is focused in a couple different areas.First of all, our business model is now focused on applications development, so that we are trying to understand what the new applications are in the future and to position our capabilities so that we are able to manage those and to treat those situations.  To support that, we are going to have to develop some new chemistries. So, we are investing about 120 million Euros over the next four years into core research in looking at specific areas like water reuse and sustainable chemistry so that we can meet those needs of the future.  So what you got is Kemira that is a very strong player in the water industry market, but our vision is to be a true global leader in water chemistry.  In order to do that, we have to get very competent and become the best at some of the new applications.  We also need to look at changing our technology platform to meet those needs through different types of chemistries.
Ben Lack:  Can you shed a little bit of light on what some of these new applications are?  And what some of the learnings have been through this four-year project?
Don Rutz:  The four-year project is just now into its second year, so we are just getting up and going.  One area that we found that we really did not have much expertise that is as hot as has to do with membrane separations; desalinization falls into that, for example.  There is a lot of chemistry that’s used in it.  In fact, some of our chemistry is already used in it, but we really did not understand that very well.  Not only do we not understand it, but as water re-use comes into play and people are taking their wastewater and converting it back into processed water; so it’s no longer wastewater, it becomes processed water.  That water has chemistry problems that are unique.  As more and more companies do that, more and more problems arise related to that water that need some sort of solution, so that they can use some of this membrane technology to do that.  We are spending a lot of time in partnering with some strategic partners that we have, such as a Paul Corporation, to try to understand what those applications are and to really zero in on the application and also to bring in new technologies that will support those applications in the future.
Ben Lack: Are there other applications that are worth mentioning?
Don Rutz:  An example where Kemira is very, very strong right now has to do with our oil and gas group, and we are very active in an area that is somewhat controversial in North America, but it is a big growth area and it has to do with hydrofracking.  Okay, so we’re involved with the chemistry aspect of the hydrofracking process, but concurrent with that, there is a lot of water that comes back up, so we are looking at that as well, trying to understand how is it that we can solve some of the problems of this water that is produced through hydrofracking and gas production in the Marcellus Shale and some other areas in North America.  And what can we do about it?  How can we contribute to managing that?  Another area in oil and mining has to do up in Alberta with the oil sands.  Again, taking material out of the ground, you’re trying to separate the oil from it, which you’re doing, but you’re also creating quite a bit of mess.  You’ve got a lot of wastewater associated with that, that through the right application of chemistry and through applied research, we hope to find solutions that allow them to do that in a much more environmentally satisfying way, if you will, so that the water can be re-used and the environmental problems that they are experiencing up at the oil sands can be reduced.
Ben Lack:   Water is really becoming with every day more and more of a world issue, with the use of just usable water, whatever that definition may mean to whoever is ultimately consuming it at the end of the day.  Shed some light on us and the company’s perspective on how grave is this problem?  What areas of the world are more open-minded to trying new solutions to solve a lot of the problems that we face in many different parts of the world today?
Don Rutz:  It all depends on who you talk to.  No matter how you look at it, the world’s use of water for food production, for industry and for agriculture. Those three major uses the water use is increasing at a rate such that we are quickly getting beyond our available supply.  The problem is most acute in the areas that need water the most.  If you look at the world, for example, where the famine is right now in the horn of Africa, that is a very, very dry area.  To a large degree, a lot of the issues associated with that region in the world had to do with the resource availability of water. Some of the acuteness and some of the pain that we are feeling is going to become more and more acute, so that not only do you feel it in the horn of Africa, but you could very well feel it in Southern California and certainly in Arizona, parts of Mexico, and then parts of Asia, which leads me to the point that of all the industries in the world at least that I see, and I’ve had a lot of experience in this industry, that seems to be the most wide open and seems to be the most amenable to looking at things out of the box.
Don Rutz:  Really looking at things out of the box is going to be Asia Pacific.  I mean I don’t know that they had the same regulatory hurdles that we have here in North America and Europe, but I see a lot of interesting things coming out of Asia related to membrane separation, related to different types of chemistries for water treatment that seemed to not get much interest in the United States because in North America the industry is so entrenched in the status quo.  As long as it is working well and there is not a large economic incentive to change, then it’s very reluctant to change, and I just don’t see much occurring until someone forces change due to some sort of need not being met- like a priority pollutant not being able to get taken out of the water.
Ben Lack:  Do you think society is pushing these issues in Asia?  Or do you think it’s the government is recognizing that there could be a real problem quickly down the road and they are trying to be proactive about how to tackle that?
Don Rutz:  You know that’s a good question.  I’m not 100% sure, but I’m going to speculate that its one part the government allowing innovation and it’s another part the nature of the Chinese entrepreneur who feels less encumbered by, pardon the expression, by rules, or feels less encumbered than maybe we do in the United States.  They are just much more aggressive in terms of their being wide open to different business models and different types of technologies to try it out and to see how it works.  Whereas in the U.S., the EPA might say you can’t do that because that’s not EPA approved.  I don’t know that the Chinese government has those same restrictions.  I think it’s a combination of a more relaxed regulatory environment coupled with a more entrepreneurial spirit and you put those two together and you see a lot more movement.
Ben Lack: From a business perspective, how do you guys enter a market that is a little more open-minded to the types of chemistries you guys are doing R&D for?  How do you attack a market like that and really try to be the first players out there or the market leader or the established leader in the space?
Don Rutz:  Yeah, that’s a great question.  First thing you do is you throw your old game plan out the door.  It goes out the window because what worked in the United States and in Europe doesn’t work in China.  That business plan just has failed us, frankly.  What we’re doing is we’re hiring locals.  We’re letting locals run their business and we’re letting locals do it the local way.  We are giving them the empowerment to experiment and to try way beyond what the rest of the world does.  I mean I see this firsthand where we try things in China that I think we would not try here or in Europe because of our own paradigms one part, but just because it would be very, very difficult.  It would be very difficult to get the resources together to do it cost-effectively, and I just don’t know that it would succeed here as much as it would in China because of the experimental kind of mindset that they have.  The answer is we’re kind of throwing the old game plan out and we’re trying to do it in a hybrid Chinese way by letting our Chinese Nationals who run the business over there run it their way and supporting them with whatever resources we give them.
Ben Lack:  From a personal perspective, why have you chosen to work in this industry? And why are you spending your time doing what you are doing?
Don Rutz:  Because it’s in my blood.  I’ve been doing it for 32 years.  Ever since I got out of college, it’s been the industry I’ve been in.  Every time I think it’s over, meaning when I think it’s done, that the run is over, something happens to keep it going.  Now, to me, the future is so unclear and it is so mysterious and it’s sometimes kind of scary.  You can’t help but be excited because you know there is opportunity in it.  I’ve been through the ups and downs and now I see it going to really dropping into a fifth gear, and I see an acceleration of the business, not only in its financial opportunity but almost in its social impact and its social relevance.  It wasn’t very cool to be in the water treating business when I started.  It is now.  People hear about it and they start asking questions.  It actually becomes good cocktail party fodder and people really want to hear what’s going on.  Everybody has their own opinions, but it’s kind of a cool business to be in now and it’s gone that cycle.  That’s why I stay in it.  The company, Kemira, has been in business for 91 years now. It is a good company, it is well run, and it has been very, very successful.  One of the things I’m proudest of, of the company is the fact that it sees where it is today and it recognizes that we can’t maintain the status quo and survive, so there is active change within many levels, all levels within the company, to find those aspects of change that will help us be successful in the future.  It’s not content to rest on its laurels.  It insists on evolving.  There are some people in the company who don’t like to see that.  They say, oh we’ve been successful for 91 years.  We don’t have to change.  We can continue to do this.  Yet, leadership doesn’t see it that way.  Leadership knows better and, as such, I see this company as one that is successful today and will guarantee its success in the future, so that’s what I think I enjoy the most and that’s the message I want to leave.

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