Big Bang Beginning - In its 100-year existence, Swiss fine chemical company Dottikon Exclusive Synthesis (Dottikon) has transformed itself from a company specialized in explosives to a manufacturer of high-quality performance chemicals, intermediates and exclusive APIs. Despite this rather extreme change in direction, the company has always had one constant: Its dedication to its one-site manufacturing strategy. Brandi Schuster asked CEO and Chairman Dr. Markus Blocher about the company's unusual history and its unique position in the market.

CHEManager Europe: How did Dottikon go from producing explosives to APIs?

Dr. Markus Blocher: In the beginning, Dottikon - at that time called Schweizerische Sprengstoffabrik (SSF) - was active in the mixing and production processing of the powdered explosive Aldorfit, used for tunnel construction. Due to the lack of raw materials during World War I, the forced back integration into distillation of gasworks tar waste was necessary to reclaim toluene, as well as its nitration to produce trinitrotoluene (TNT) - the majority of it for Swiss national defense.

After the drop of military explosives needs in the interwar years, the company found its way out of the crisis by entering into the production of gelatinized explosives made of nitroglycerine for civil purposes, and the purification of aromatic isomers for highly purified products through distillation and forward integration into the manufacturing of first chemical intermediates for the dye industry.

World War II also brought new explosives such as hexogen and nitropenta for military and later also for civil purposes. However, after the war ended in 1945, a fruitless attempt was made to compensate for decreasing business with the confederation and the Swiss army with civilian explosives and distillation products. It became clear that SSF could not survive with its existing product range. A change in direction towards higher, multi-stage intermediates for agrochemicals, dyes, pharmaceutical products and fragrances was gradually implemented over several years by extending the core technologies with catalytic hydrogenation and oxidation. Finally, there was a focused forward integration along the value chain to chemical end products, particularly APIs.

Dottikon is one-of-a-kind in the chemical industry, with its one-site strategy and being located in Switzerland, arguably one of the most expensive places in the world to produce chemicals.

Dr. Markus Blocher: Yes, for commodities that's true. But if you sell value for money, cost-effectiveness is the right measure.

What is the philosophy behind the strategy?

Dr. Markus Blocher: Our production site in Dottikon, located in the canton of Aargau, is specialized in hazardous reactions and employs highly skilled and qualified chemists. As performance leader, we are positioning ourselves as strategic development and manufacturing partner. Our safety culture created over the last 100 years guides innovative use of hazardous reactions, low-temperature and high-pressure chemistry, as well as continuous processing. This allows us to shorten conventional chemical synthesis routes, increase yields, selectivities and purities, and reduce waste. The versatile technology and equipment portfolio is used to design, develop and optimize chemical processes, and scale up from kilograms to multi-tons.

The combination of these factors at one site allows reduced decision and communication pathways, ensures rapid and efficient project development as well as clear and transparent communication with customers and results over all in superior cost-effectiveness and reliability.

At the beginning of April 2012 Dottikon founded an American cooperation, Dottikon ES America, Inc. Does this mean the era of being a one-site manufacturer is coming to an end?

Dr. Markus Blocher: No. Dottikon ES America is a business development-only company and was founded to meet the growing demands of business development there. Any operational activities such as route finding, process development, scale-up, process optimization, large-scale production, validation, stability studies, recycling and waste treatment are performed in Dottikon, Switzerland, in line with our one site strategy.

How important is the American market for Dottikon?

Dr. Markus Blocher: Although moderate, the U.S. economy is growing, and the fundamental outlook looks promising. In the context of competition for fiscal resources among different countries - and thereby the revival of trade barriers build-up - powerful nations as the U.S. are in a favorable position. Combined with the risk-taking "can do" attitude, a liberal job market and a long-term energy policy focusing on secure supply and economic prices, the U.S. is likely to maintain the unique competitive advantage in the long run that will foster innovation and re-industrialization. All these factors favor the demand for high-value and performance chemicals; therefore, America is an increasingly important market for Dottikon.

What other regions of the world are of importance to your business?

Dr. Markus Blocher: Europe, with many countries having a leading position in the arena of industrial engineering and precision technology, plays an important role in supporting the U.S. innovation as well as the development of emerging markets. The high standard of living and the ageing population are further stimulating the demand for APIs, high-value and performance chemicals. These positive economic factors are, however, on the long-term thwarted by overwhelming bureaucracy, ever increasing fiscal quotes and misleading and idealism-driven overregulation of labor and financial markets, as well as an energy and environmental protection policy that is mainly based on extra charges and their redistribution, hence missing effective environmental-friendly impact.

How big is the temptation to follow the trend to produce in low-cost countries?

Dr. Markus Blocher: Nonexistent. We follow the principle of effective, not low-cost. It's not only the price; performance also counts. Our customers seek effective value creation: It's about effectively solving challenging chemical problems and delivering in full, on time, in spec and at agreed costs. Given the trend of regionalization, this becomes an even more important and strategic success factor.

Where is the future of manufacturing in Europe heading? Do you think it will pick up in the years to come?

Dr. Markus Blocher: Success or failure of manufacturing in Europe is dependent on the willingness and ability of the political decision makers in each country to assure economically beneficial framework conditions. Education, labor, fiscal and environment policies have to be set liberally, farsightedly and sustainably. If these requirements are met, effective and reliable chemical manufacturing in European countries will have a market and therefore a future. In such an environment, there will be plenty of innovative customers willing to partner with a strategic development and manufacturing company having high performance aspirations and strong technological skills such as Dottikon.

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Visit Dottikon at the CPhI, Oct. 22-24, Frankfurt
Hall 5 Booth C18