May 2009
What We’re Reading
Here are some of the stories that caught my eye recently:
LA Times: At Burt’s Bees, business is humming
The Los Angeles Times reports that, despite the higher cost of “boutique brand” cosmetics and toiletries, natural personal care producer Burt’s Bees is not only thriving, they are also hiring new employees in one of the highest rated states for job loss. According to Chief Executive John Replogle, “more and more consumers want products they think are good for them — and for the environment.”
CNNMoney.com: Renewables: America’s next heavy industry
Highlighting Minster Machine Company, which builds parts for wind turbines, CNNMoney.com reports the rise in renewable energy companies in “the Rust Belt.” Still behind European countries that snatched up renewable business decades ago when the U.S. was not able to attract it, these states are hoping to tap into “a population known for its industrial skills, engineering ability and work ethic.”
Seattle Post-Intelligencer: Local Obama administration member learns to ‘listen’ and ‘understand’
In June, Raj Shah will become Undersecretary of Agriculture for Research, Education and Economics for the Department of Agriculture. The Seattle Post-Intelligencer reports that Shah, who currently serves as director of the Gates Foundation’s agricultural development program, is preparing himself for the move from Washington State to Washington, D.C. by reading Doris Kearns Goodwin’s “Team of Rivals” and recognizing that he is now serving an entire country, a country that values results. As Shah says, “Americans are willing to support public actions, and public institutions, but they expect results.”
Personal Care Innovations
In April, Elevance joined our personal care development partner Dow Corning Corporate, along with other manufacturers and suppliers of raw materials and ingredients, at the in the In-cosmetics show in Munich. In a follow up article, Chemical & Engineering News highlighted some of this year’s interesting ingredients, including our HY-3051 soy wax blend that is used in skin and hair care products.
As Chemical & Engineering News pointed out, the makers of personal care products are eager for innovation. At Elevance, we believe they are like many of our customers and are looking for new solutions: more naturally derived products, relief from rising petrochemical costs, building blocks with improved (or new) performance that will enable innovative new products, improved environmental impact or footprint.
In fact, I have been pleased to see the increase of natural personal care products on the shelves at drug and grocery stores, especially from name brand lines. Our HY—3051 is already incorporated into several of these. And Elevance is excited to be able to provide the industry with a cost-effective alternative that deliver results consumers demand.
The Advanced Research Projects Agency
The Obama administration continues to advance its agenda of support for renewable energy projects, with the DOE’s recent announcements of the creation of the Advanced Research Projects Agency – Energy (ARPA-E) and the announcement of nearly $800 million in funds for renewable energy projects coming from the stimulus bill. These announcements are welcomed by those of us in the renewable energy sector as we work to create real, economically viable bio-based businesses. I’ll leave it to others to detail the specifics of the funding announcements (you can read the press release from the DOE here) but one item is really noteworthy: about 85% of the total, over $660 million of the $785 million dollars is being allocated for biorefinery projects.
As evidenced by the rash of bankruptcies of major biofuel players, producing a single, low value commodity is a tough business at its best, even with subsidies. Biorefineries, by contrast, will act more like petroleum refineries, making multiple end product fuels and chemicals from their feedstocks, thereby allowing greater value to be extracted while simultaneously smoothing margins. While the DOE’s definition of a biorefinery does not require the inclusion of chemicals as an output product, at Elevance we think it is absolutely critical. You may recall our oft-cited statistic about petroleum refining: Only 8% of a barrel of petroleum goes into making chemicals, which then deliver 40% of the profits generated from that same barrel. Make no mistake, chemicals are what make petroleum refining profitable, and similarly, chemicals will be what make biorefineries able to be economically viable businesses without subsidies. At Elevance, we strongly believe this is the right model for the industry and are thrilled to see the Obama administration pushing us towards this right direction.
It’s About the Environment and the Economy
Recently the ICIS “Green Chemicals” blog explored how the economy is effecting consumer’s purchasing choices related to green products, which is a market typically known for its higher price points. The post cites two studies, one by Green Seal and another by Harris Interactive, that both found the amount of green products purchased remains unchanged despite the economic downturn. But what really caught my attention was the notion that while the majority of consumers were interested in buying environmentally friendly products, they were more worried about cost and efficacy.
I think its important to emphasize the point that “sometimes concerns about product performance and credibility of the environmental claims are the reasons shoppers opt not to buy green products.” That’s why Elevance focuses BOTH on the performance and the economic viability of our products, while still using renewable feedstocks and providing a sustainability benefit. We feel that creating green, sustainable chemicals is the right thing to do, but we believe it is equally important to ensure products perform well and are economically attractive to all consumers.
GCI Magazine Names Elevance As Lead Innovator
Innovation is at the core of what we do at Elevance and we are honored to have been featured in the April 30 GCI Magazine article entitled “Honing a Competitive Edge.” The article is the magazine’s annual appraisal of the impact of innovation on the cosmetic industry. Elevance is proud to be recognized as having “built and executed innovation on top of innovation.” “ We look forward to continuing to share our innovation and future success with GCI, its readers and the entire cosmetics industry.
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