Can you talk about the recent measures to elevate Octal’s manufacturing prowess, enhance the company’s export portfolio, and increase the strategic value of its trade management operations in international markets?
Octal’s story of growth and success in the PET manufacturing industry is best described as game-changing, trend-setting and value-creating. Octal continues to push boundaries in R&D to deliver the highly established quality attributes in the market, while meeting the future environmental demands for circularity and re-consumption of post-consumer waste.
During the course of 2017-2018, our major focus has been on elevating the process development and product performance. This has been two-fold; we want to ensure our products run better on our equipment, as well as on the downstream operating equipment of our customers. Elevating such performance increases the productivity of our investment and also the throughput. Therefore, we are exploring several opportunities to further optimise performance of our product portfolio in order to continue meeting customer demands with an emphasis on new, higher margin products.
In 2017, we were able to reach new records of production capacity. These levels were thanks to a progressive high performance shift team system, developed as part of our commitment to continuous innovation in all aspects of operations and activities. Contributing to Octal’s sales momentum is the successful expansion of our global reach to the high volume markets in the US, Latin America and stretching into Asia. Our focus in these markets is rapid growth with applications for the dairy, bakery and other food industry items. These inroads provide us with the capabilities to support the growth of special formulas and platforms for high volume and high margin products.
Strategically speaking, our position as one of the Sultanate’s principal exporters could not have been achieved without harnessing the power of innovation to develop new applications for PET including injection-molding, high temperature as well as frozen applications. Our solid foundation is allowing us to compete on multiple fronts, with our hub in Saudi Arabia exceeding expectations and our production in Cincinnati selling out due to increased orders from more than 60 customers within the US. We have signed multiple supply agreements with leading companies’ right through December 2020, with the 50 per cent expansion of Cincinnati plant in 2018 also on schedule to be delivered on time. The full integration of our operations in Saudi Arabia and North America will allow us to fill the void in the PET industry for cutting-edge solutions that deliver enhanced technical and sustainable advantages.
Do you have plans to launch new products, increase the capacity, introduce new technologies and explore new international markets?
With our ongoing product innovations, we are targeting large scale conversion opportunities with new performance features. Our road map calls for setting a new platform from which we can continue to elevate our performance on all fronts. We are exploring several opportunities to further optimise performance of our product portfolio and continue to meet customer demands with an emphasis on new, higher margin products. Successful partnerships are also key in our business model; we are partners rather than suppliers to our clients. This in turn means beneficial interests that result in accelerated growth. This is particularly the case in the food service segment where our growth is enabled by the positioning of sharing capacity within the same geographies.
In tandem, we have introduced our next generation DPET complex allowing for a sustainable approach to plastic recycling. The method involves taking apart the polymer chain and putting it back together as new, restoring the product to its initial state. By avoiding conventional PET recycling procedures that create irreversible reactions, Octal has produced an eco-friendly, uncompromised and reusable material. This recycling method aims to retain the product’s key performance characteristics, as well as to maintain the same quality as virgin resin. This is a cutting-edge technology that continues to position Octal’s DPET sheet as the most superior on the market.
What are the new developments /achievements with respect to improving the company’s recycling capacity?
Octal presently recycles 70,000 tonnes of PET and is one of the largest in the world and the largest in the Middle East by deploying three different technologies which are coordinated from our manufacturing facilities in Oman, KSA and the USA. Our ambitions are to continue to grow these capacities in all three sites and significantly improve on the access for distribution on a global basis. The most promising technology allows for the continuous recycling of the raw material thereby operating a loop system which allows for a significant reduction of disposable waste.
Our innovative fully recyclable packaging solutions and integration of new technologies have made it possible for us to create a superior product that is now the choice for many food, beverage and pharmaceutical businesses. Although PET resin is recycled, the final product maintains its integrity and performance for the course of its life. We are pleased to bring Oman into this venture and together shape the future of PET resin and sheet applications. These new processes will challenge the direction of DPET sheet manufacturing process and prove that with the right mix of expertise, ingenuity and creative spirit, we can make a difference. Our strategic, strong collaboration with Oman and hard work are the ingredients that make DPET the best packaging material there is. Octal is the only manufacturer of PET that has dedicated recycling capacity at the reactor level for PET Sheet level. This is a significant advantage on both the quality and cost levels.
Octal is expected to introduce grades with additional high performance characteristics in 2018. Can you elaborate on this?
The most important product launch this year is the development of our recycling platform and the introduction of a unique formulation for melt to melt direct injection, which allows for a wide range of applications.
Octal leads the development of sustainable clear rigid plastic packaging by implementing patented technologies that enable the advancement of innovation in PET processing. In doing so, we are producing high performing plastic with low environmental impact. Through the use of innovation and technology, Octal is able to revert the reused materials back to their original resin. However, in the case of DPET sheet, the conventionally used crystallisation step has been eliminated for its ability to alter physical properties, thus compromising its value. Therefore, an alternative PET recycling procedure has been created that chemically disassembles the sheet properties back to its original element.
Can you talk about your strategy to build local human capital, by hiring and developing homegrown talent?
Focus on developing our human capital is continuous with the development at the material, chemistry and converting phase. This is done through on-the-job development, as well as in-class and training process. We have an active training programme and budget in place with monthly sessions and evaluations conducted internally and externally department wise.
As part of our strategy to support the government’s Omanisation efforts, we recently created a talent development manager position. The role is designed to nurture the next generation of manufacturing leaders through a number of on-the job training programmes to significantly accelerate the skillsets required by those entering the employment market and increase their success rate. The step is in line with our vision of building a world-class manufacturing industry in Oman that is dedicated to systematically hiring and developing home-grown talent across all departments. We are also investing in building the plant of the future, Octal’s plant in Salalah is fully digitised and dash boards upstream and downstream are fully available.
Is there any update on your downstream expansion and your long-term plan for an initial public offering?
Octal’s market leadership status is a result of a strategic phased approach. We are where we are right now as a result of introducing our proprietary DPETsheet with its superior mechanical performance and environmental benefits in established markets. In turn, this has strengthened our position as a market leader. Then, our strategy was to disrupt existing markets through material science, conversion and new technologies. Moving forward, we are working on expanding the universe of DPET applications through the deployment of new processes and downstream growth.
The growth in 2018 is expected to mostly come from the application of new technologies in the pipeline. With that said, an IPO is in the cards to support our global expansion.
Muhammed Nafie is an Assistant Editor at Oman Economic Review.