What do you see as the major shifts impacting the Canadian Petrochemical industry today?

NJ: Let me start by saying that I have proudly spent 40 years in the plastics industry. Plastics, truly makes everyday life easier, healthier and safer for everyone!

I cannot imagine the modern world without plastics—food packaging, health care products, transportation, housing—as well all the conveniences of life that are taken for granted each day. It is in fact, an essential material in today’s world that has no real alternatives.

In my view, there are two fundamental shifts facing the chemical industry today. The first is environmental responsibility. This includes the move towards a circular economy, the focus and attention on plastic waste, the focus on climate change and a serious move away from fossil fuels and towards renewables. The second is consumer demand and behaviours. We now have close to 8 billion souls living on this planet and their lot is improving! As families rise out of poverty, especially in Asia, Africa and South America, they rightfully demand the goods and services that are freely enjoyed in Europe and North America. That’s not to say that they do not appreciate and value the needs of protecting the global environment so I expect that their behaviours will adapt to the needs of this century. We are going to see some ‘leap frogging’ outcomes as a result. The new generations of consumers are incorporating new and emerging technologies into their consumption habits and there will be some ‘catch-up’ pressures on developed nations.

The Canadian Petrochemical Industry must respond to these challenges in a positive way. This industry has pioneered the ethics and principles of Responsible Care and this is what we must base our response and actions on. North America produces the lowest carbon-footprint plastics in the world due to its fundamental chemistry being based on ethane feedstock rather than Oil or Coal.

As an Industry, we must do more to communicate some facts that are missing from the global conversations. Petrochemicals are essential to making cars lighter, buildings more energy efficient, food safer and energy less carbon intensive. The reality is that we can better protect our environment through the use of lighter feedstocks on our journey to our ultimate goal of a carbon-free world.

What do you see as the commercial success factors for accelerating Canadian chemical petrochemical development?

NJ: This industry has grown tremendously in the 40 or so years since I started in it. It is much more challenging today than simply churning out plastic resin and expecting the markets to soak it up. The need to work with the customer base and adapt to their needs is critically important. In the petrochemical markets you can certainly start off in the merchant market with primary petrochemicals such as ethylene, methane and propylene but the polymer markets are a whole different ballgame in my opinion. The plastics industry has evolved significantly since the 1960s and uses very sophisticated technology such as 11-layer structures for food packaging PE products. Critical success factors that I see include:

• Offer a broad range of products, but pick your markets and focus your highest energies on those markets. This requires you to keep a very strong customer-oriented focus.
• Build a fantastic, skilled and loyal workforce! Having a culture that values and nurtures creativity, innovation, open mindsets, welcoming bold solutions and relishing change, can be a very powerful competitive advantage.
• Maintain a strong corporate balance sheet that can sustain operations through cyclical downturns.
• Remember that customer and employee loyalty goes both ways.
• Diversify your production locations and regions.
• Be purposeful about developing and maintaining your social licence to operate in the communities where you locate your facilities. This includes close partnerships with local governments to navigate global competition.

In terms of accelerating Canada’s Petrochemical participation, creating or finding an environment where the above elements can thrive is a must. Southwestern Ontario as well as Alberta are absolutely fantastic regions primarily because of access to competitive feedstocks and proximity to markets. All Canadian Petrochemical producers adhere to the Principles of Responsible Care so I believe that the foundations for success are well established. What is needed is capital, a supportive government and citizenry, the right timing for investment and strong partnerships for success in serving global markets.

Speaking of the ongoing challenge of increasing offtake constraints in Canada, how would you describe the opportunity, or strategies, for hydrocarbon monetization in Canada?

NJ: These are frustrating times for hydrocarbon resource owners in Canada! This is unfortunate because global demand for energy keeps increasing as global population increases and people move from poverty into the middle class. However, I believe that the demand for plastic products is outpacing the demand for energy and this creates an opportunity for Canada.

In my opinion, the safest way to move hydrocarbon energy is through modern pipelines assuming that option exists. As raw hydrocarbon exports become more challenging, however, there is an opportunity for the next level of monetization through manufacturing and export of a different set of value-added products such as electricity, high quality polymer resins and other chemical products. The development of the domestic chemical industry should be a beneficial Canadian response to the offtake constraints.

What about the challenge companies have in developing fit for purpose strategies to address these major shifts or opportunities in the industry?

NJ: Labour and regulatory costs in developed countries are relatively high so organizational structure and operations MUST be as efficient and effective as possible. This means a collaborative, continuous improvement culture is critical for sustainability. Typically, the companies in these countries tend to be publicly owned, which adds an extra burden on costs and the pace of decision-making. To remain competitive, it is important that companies use the latest thinking on internal processes, procedures and culture to adapt rapidly to changes in technology and end-consumer behaviours. You can do this through the use of reputable experts who work with the broader industry players as well as striking the right balance between having experienced long-term skilled employees as well as constantly rejuvenating the organization with ‘new blood’.

How about the ongoing challenge of companies being able to realize their strategy? When we worked with you previously, you were a big proponent of ensuring goals are cascaded effectively and that teams in the organization are focused on the data that they impact. What reflections do you have on making that business performance management system effective and how that may act as a “GPS” for the company?

NJ: A Business Performance Management System (BPMS) is absolutely necessary for a petrochemical manufacturing company. The data monitoring system should be as rapid as possible and should cascade down from the CEO level to the front line level in a way that decisions on course-corrections can be made as effectively and rapidly as possible without undue pressures from a hierarchical perspective. Success with this requires a collaborative culture.

A great example I came across was that of a global refining company that uses the latest in digital technology to centrally monitor all its worldwide major rotating equipment using their best skilled mechanical experts in one location. So the team, which might be based in India or Singapore, monitors its global critical equipment performance parameters in real time and will alert the refinery in Texas that a certain piece of critical equipment might be ready to fail before the local team is aware of the danger! This is simply one example. We found that as you explored each area of our business, there were opportunities to make improvements that directly improved our bottom line as well as our reputation with customers.

That said, if your “GPS” system is faulty but you rely on it exclusively, you will not get to your destination and you may not have a way to correct the course. It is very important that you set up your BPMS correctly at the outset and have a way to test and update it regularly.

How do you keep your people connected and excited about your strategies and direction?

NJ: In a cyclical business, where your business is subject to margin peaks and troughs, this can be very challenging. Building trust is extremely important as a foundational element of leadership. This again relies on developing an innovative and collaborative culture of the organization. Employees will understand and go with you as long as there is a foundation of trust.

One key success factor here is the need to always maintain a strong balance sheet along with a long-term vision for the company that remains steady. Employees will feel whipsawed and disillusioned if decisions are forced due to financial stresses. It is management’s responsibility to manage these two key elements (balance sheet and vision) and to promote the culture of trust.

In my early days in this industry, our senior leadership team took the position that labor is a commodity and that you can downsize and upsize as needed. This proved to be an absolutely wrong strategy. I am a believer in the strategy that your people and their attitudes and behaviors are critical to business success. At the same time, management needs to make sure that poor performance issues are recognized and addressed as quickly as possible and managers must constantly look at themselves in the mirror and be willing to accept accountability.

There is obviously a growing concern about climate change and also about the final disposition of plastics. How do you balance these concerns against the economic growth opportunity?

NJ: The most powerful component of the product cycle is the end user and consumer. We all better listen to that voice or else perish! Climate change is a very important and real concern and shutting down our senses to this concern does not make it go away. I might add that the employees and managers of the petrochemical industry are equally concerned about the environment and the future of this planet for their own children and future generations.

My personal view is that the principles of Responsible Care developed by our own industry and adopted by over 60 countries worldwide and by over 95% of the major petrochemical producers in the western world is important. I am proud to say that Canada was a pioneering founder of the Responsible Care program back in the mid 80s. Responsible Care is a set of conduct and standard that goes above and beyond the minimum as a way to build trust with the regulatory bodies, customers, communities where our facilities are located as well as the general public. This is a foundation that we must all build upon as the industry focuses its energies and resources on dealing with the plastic waste issues and transitioning to a circular economy as quickly as possible.

The Industry has to do its part in demonstrating success in this objective. The recent commitment by the industry in the form of major funding for the Alliance To End Plastic Waste is a start. There are a number of other initiatives undertaken by this industry within the past few years, such as Project STOP.

The public can do its part as well. A better understanding of the chemistry involved can be very helpful if we are to succeed in improving the lives of people everywhere. An example I use is that it is much better to produce plastic from light hydrocarbons such as ethane rather than produce it from heavier hydrocarbons such as naphtha, gasoil and especially coal! Yes, at the incremental level, plastics are newly produced from coal in Asia! This is significantly more harmful to the environment than producing it from ethane, as it is in North America. All plastic is not the same and even if we have an aim to eliminate fossil based plastics in the long term, we should at least eliminate the most harmful methods first. It makes little sense to me to ‘kill’ light feed-based cracking in North America simply to see a coal-based plant take its place in Asia, if we truly want to improve the planet’s environment.

What do you see as the big opportunity for Canada to maximize its hydrocarbon base and “close the sustainability loop?”

NJ: Building on my comment above, Canada has a significant supply of ethane so it makes sense to me to prioritize that as the source of plastic products for the world. The US is in a similar situation with its newly found ethane reserves in its various shale basins. In time, humankind may find better sources of new materials that can replace plastics but in my view, this is an ambition yet to be achieved. Existing alternatives such as wood and metals are simply not viable as demonstrated in studies showcased by the American Chemistry Council (ACC) and the Canadian Industrial Association of Canada (CIAC). It is a good time for our smart university kids to get those thinking and creativity caps on (with available funding from Industry and non-industry sources) to work on those long term solutions. Here I’d like to stress the extreme importance of STEM education for our youth. That focus, unfortunately, has deteriorated substantially over the past few decades.

What are you focused on these days?

NJ: After thoroughly enjoying my 39 years in the petrochemical industry, I am focused on reflection, hoping to find ways to give back to community, and enjoying closer connections with friends and family. We welcomed our first grandchild last May and my wife and I are enjoying bonding with Hayes, who is such a happy boy! I am rediscovering the amazing aspects of childhood. The trust, happiness, curiosity and love that a baby demonstrates is very, very, satisfying!

COVID has interrupted our travel plans in the short term (compensated by time with Hayes!) but we are truly looking forward to a time when we can safely resume our global travel ambitions.