WEBVTT - Seeing Supply Chain Relief for Manufacturers 0:00:00.040 --> 0:00:03.280 You're listening to Bloomberg Business Week with Carol Messer and 0:00:03.360 --> 0:00:06.920 Tim Stenovic on Bloomberg Radio. Well, you know what, Maddie, 0:00:06.960 --> 0:00:08.920 we had some data are out earlier this morning. We 0:00:09.000 --> 0:00:12.120 talked about with Scarlett and Romain. It talks specifically about 0:00:12.400 --> 0:00:15.760 output at US factories up the most in January, by 0:00:16.480 --> 0:00:18.919 the largest amount in early a year. So we're talking 0:00:18.920 --> 0:00:23.439 about improving supply chains, firmer demand, getting and giving some relief, 0:00:23.480 --> 0:00:26.640 if you will, to what's been a really challenge manufacturing sector. 0:00:26.840 --> 0:00:29.120 So much needed relief after the past couple of years 0:00:29.120 --> 0:00:31.600 of supply chain shocks. Right, it's been crazy. Right, We're 0:00:31.600 --> 0:00:34.120 just talking a little bit about Cisco and the manufacturing 0:00:34.159 --> 0:00:36.680 and the and the backlogs just in general. We want 0:00:36.720 --> 0:00:39.680 to get to our next guest, cust Mattive Holdings is 0:00:39.720 --> 0:00:42.360 a publicly held UH company. It's got about a one 0:00:42.400 --> 0:00:44.280 and a half billion dollar market cap. It makes and 0:00:44.360 --> 0:00:49.120 sell special specialty materials for manufactory to customers in more 0:00:49.120 --> 0:00:51.560 than a hundred countries, so it's got a great global perspective. 0:00:51.840 --> 0:00:55.040 Julie Chartel is the presidency of the company. Just ringing 0:00:55.080 --> 0:00:57.360 the closing bell at the New York Stock Exchange and 0:00:57.400 --> 0:00:59.440 that's where we find our via zoom. Julie, good to 0:00:59.480 --> 0:01:03.080 have you here on Bloomberg Business Week on Bloomberg Radio. 0:01:03.200 --> 0:01:06.319 First of all, tell us a little bit about your customers, 0:01:06.360 --> 0:01:09.280 your business and what vantage point that gives you when 0:01:09.319 --> 0:01:13.520 it comes to manufacturing and the economic outlook. Sure, thank 0:01:13.560 --> 0:01:15.600 you for having me today. It's a real honor and 0:01:15.640 --> 0:01:17.840 privilege to be here at the New York Stock Exchange 0:01:17.840 --> 0:01:20.520 and it marks a key milestone formative as a specialty 0:01:20.560 --> 0:01:24.240 materials company, where you've created through the merger of two 0:01:24.280 --> 0:01:28.800 former specialty materials companies, Nina and SWM, and so combined, 0:01:28.880 --> 0:01:32.119 it's a really powerful statement that we're making into the market. 0:01:32.160 --> 0:01:36.240 We have complementary technologies that we sell into a diverse 0:01:36.800 --> 0:01:41.080 area of different categories, whether that's filtration media for cleaner 0:01:41.120 --> 0:01:44.319 air and water and the strong macro trends behind those things. 0:01:44.760 --> 0:01:49.480 It's release liners and applications for medical packing, packaging and 0:01:49.520 --> 0:01:52.760 its tapes and abrasives. Into the industrial space as well, 0:01:53.040 --> 0:01:55.920 we've seen great strength and really a supply chain that 0:01:56.000 --> 0:01:58.240 is starting to improve, and that's a great spot to 0:01:58.280 --> 0:02:01.360 be in as a manufacturer. How would you describe the 0:02:01.600 --> 0:02:05.120 overall manufacturing environment today? And what does that tell us 0:02:05.160 --> 0:02:08.320 about our overall economy. What's kind of an insight that 0:02:08.360 --> 0:02:11.360 you have because of your work in manufacturing that the 0:02:11.360 --> 0:02:14.840 rest of us might not. I think it's interesting because 0:02:14.880 --> 0:02:16.880 it's a little bit of a dichotomy. We are seeing, 0:02:16.960 --> 0:02:19.520 you know, the supply chain start to right size after 0:02:19.600 --> 0:02:22.920 what I would say is two years of challenges in 0:02:22.960 --> 0:02:26.359 our supply chain in manufacturing, whether that's driven by the 0:02:26.520 --> 0:02:30.080 rising interest rates, record levels of inflation, the Ukraine War, 0:02:30.560 --> 0:02:32.600 some of the conflicts in China, or some of the 0:02:32.600 --> 0:02:35.600 the outcomes of COVID and China. We're starting to see 0:02:35.639 --> 0:02:37.959 that settle in, and so our supply chain is opening 0:02:38.040 --> 0:02:39.919 up a bit, loosening up a bit, and that's really 0:02:39.960 --> 0:02:42.160 important for our customers. It means we're able to get 0:02:42.240 --> 0:02:46.120 back to a service level and predictability and lead time 0:02:46.440 --> 0:02:48.560 that is most valuable to them. And I think what 0:02:48.600 --> 0:02:51.880 we really recognize as manufacturers is it's important to have 0:02:51.919 --> 0:02:54.520 a global supply chain, but it's really important to have 0:02:54.639 --> 0:02:58.840 local supply because during this time, supply and availability became 0:02:58.919 --> 0:03:02.240 the number one prior already for all of our customers. Hey, Julie, 0:03:02.280 --> 0:03:04.680 two questions, So are you back? Are the supply chains 0:03:04.720 --> 0:03:06.480 back to where we were pre pandemic and all of 0:03:06.520 --> 0:03:10.480 the bottlenecks. And secondly, you talk about local supply chains, 0:03:10.560 --> 0:03:14.120 are we seeing more and more companies tap into that 0:03:14.720 --> 0:03:16.960 change their supply chains, make sure that they're kind of 0:03:16.960 --> 0:03:19.080 in their backyard. Um. So if you could address those 0:03:19.080 --> 0:03:22.440 two things, that would be great. Sure. On the supply chain, 0:03:22.480 --> 0:03:25.840 I'd say we're headed um and headed back to pre 0:03:25.919 --> 0:03:29.480 pandemic levels, but still not there. But we're seeing, you know, 0:03:29.600 --> 0:03:35.200 chemical availability become um more standardized or seeing lead times 0:03:35.240 --> 0:03:40.000 become more standardized. So the availability is really improving. We 0:03:40.080 --> 0:03:43.640 aren't seeing a tremendous amount of deflation yet, at least 0:03:43.640 --> 0:03:45.800 not in the categories in which we compete. We're seeing 0:03:45.800 --> 0:03:47.720 a start to moderate, but we still have prices at 0:03:47.840 --> 0:03:50.960 very high levels where most of our supplies um. And 0:03:51.000 --> 0:03:53.040 I will tell you that we're in the past. Maybe 0:03:53.040 --> 0:03:55.920 pricing was the number one discussion with customers. It is 0:03:55.920 --> 0:03:58.760 supply chain now. And so just as I was mentioning 0:03:58.760 --> 0:04:02.280 and to your question that local availability and there's different 0:04:02.320 --> 0:04:05.920 ways to do that, whether that's having manufacturing assets in 0:04:05.960 --> 0:04:08.440 the backyard of our customers in our markets, or having 0:04:08.520 --> 0:04:13.120 availability through different means of transportation and quick turn you know, 0:04:13.160 --> 0:04:17.440 an agile type of transportation system. It's significantly important because 0:04:17.480 --> 0:04:22.000 many customers and many suppliers and many manufacturers have learned 0:04:22.480 --> 0:04:26.479 how impactful it is when some of those materials that 0:04:26.560 --> 0:04:28.720 we did not anticipate. You know, you anticipate your big 0:04:28.760 --> 0:04:31.640 commodity materials to have fluctuations like we've seen. We did 0:04:31.640 --> 0:04:34.520 not anticipate specialty chemicals and some of the other areas 0:04:34.800 --> 0:04:37.159 to have the type of volatility that we've seen. That's 0:04:37.200 --> 0:04:39.160 starting to loosen up and straighten out a little bit, 0:04:39.200 --> 0:04:42.800 but the local supply chain, the reliability, the predictability continues 0:04:42.839 --> 0:04:45.440 to grow in importance with our customers. Have you felt 0:04:45.480 --> 0:04:49.880 any impact from China reopening? Has that impacted you at all? 0:04:49.920 --> 0:04:54.640 And do you anticipated impacting you? You know, very minimal um. 0:04:54.680 --> 0:04:57.279 We have a very small footprint in China and a 0:04:57.400 --> 0:05:00.960 very small portion of our revenue in China. We're primarily 0:05:01.520 --> 0:05:04.400 uh North American and European and a little bit in 0:05:04.400 --> 0:05:06.560 South America, a little bit in Asia, so it's had 0:05:06.600 --> 0:05:09.719 a very minimal impact I'd say, not significant all right 0:05:09.760 --> 0:05:12.120 to the US and Europe at your biggest market. UM 0:05:12.200 --> 0:05:14.480 recession for either of them or how would you describe 0:05:14.480 --> 0:05:17.679 it at this point, you Lee, I think they're very different. 0:05:17.839 --> 0:05:22.680 I mean, we're definitely feeling um some contraction. In Europe 0:05:22.760 --> 0:05:27.279 in particular, we saw and felt and experienced them, you know, 0:05:27.480 --> 0:05:31.080 record level energy hikes. We have facilities in France and Spain, 0:05:31.240 --> 0:05:33.520 the UK and Germany and we felt it in all 0:05:33.560 --> 0:05:35.360 of those areas. I will tell you what it's helped 0:05:35.440 --> 0:05:38.360 us do is become more agile. So we've worked really 0:05:38.360 --> 0:05:41.320 hard to start and forward by some of those energies, 0:05:41.320 --> 0:05:43.159 hedge some of that energy cost so that we have 0:05:43.279 --> 0:05:47.360 greater reliability and predictability, and it's made as very agile 0:05:47.800 --> 0:05:50.760 with our pricing um so that we have shorter pricing 0:05:50.800 --> 0:05:54.080 commitments and contracts and different modifiers that are inclusive of 0:05:54.160 --> 0:05:57.240 different components and some of those specialty chemicals and energy 0:05:57.279 --> 0:05:59.920 that had not been in the past. So that's your 0:06:00.040 --> 0:06:02.039 up and I'd say Europe is where we're feeling, you know, 0:06:02.160 --> 0:06:05.680 more of a slowdown. It's a little bit hard right 0:06:05.720 --> 0:06:07.880 now to peel away how much of that is really 0:06:07.960 --> 0:06:10.359 pure demand contraction and how much of that is just 0:06:10.480 --> 0:06:14.440 customers right sizing their inventory. Because we know throughout the 0:06:14.600 --> 0:06:18.320 entire supply chain. There was significant inventory build as customers 0:06:18.320 --> 0:06:21.560 struggle to get the materials they needed. They ordered more 0:06:21.600 --> 0:06:24.760 and more in anticipation of getting their fair share, and 0:06:24.800 --> 0:06:28.159 as demand starts to correct itself, you know, they're often 0:06:28.240 --> 0:06:30.520 left with high levels of inventories. So there's a level 0:06:30.560 --> 0:06:33.560 of de stocking and we're feeling that in North America 0:06:33.640 --> 0:06:36.000 and Europe, but more contraction in Europe. I'd say our 0:06:36.000 --> 0:06:38.600 North American business has remained fairly healthy. You know, I'm 0:06:38.600 --> 0:06:40.800 looking at there's a great function on the Bloomberg terminal. 0:06:40.839 --> 0:06:43.360 It's all about supply chains, and basically it looks at 0:06:43.400 --> 0:06:45.560 who are your top suppliers and then who are your 0:06:45.680 --> 0:06:49.080 top customers? UM. But when it comes to your suppliers, 0:06:49.120 --> 0:06:51.839 a lot of it is in the energy space. How 0:06:51.839 --> 0:06:56.920 would you describe that industry right now? The energy space, 0:06:56.960 --> 0:06:58.960 I think they're just going through a tremendous amount of 0:06:59.040 --> 0:07:01.640 change and I think there you know, it's difficult to 0:07:01.760 --> 0:07:05.240 predict um the future right now. There's a lot of 0:07:05.360 --> 0:07:08.680 pressure from getting to clean energy, and then there's the 0:07:08.720 --> 0:07:12.000 availability and you know, some of the efforts that we're 0:07:12.000 --> 0:07:14.480 seeing or the impacts that we're seeing in Europe with 0:07:14.520 --> 0:07:17.640 the Ukraine war and um, you know that created some 0:07:17.720 --> 0:07:20.200 of the issues that we saw earlier this year. So 0:07:20.320 --> 0:07:22.600 for us, it's really been about how do we control 0:07:22.640 --> 0:07:26.520 our own destiny. Knowing there's this there's lack of predictability 0:07:26.560 --> 0:07:29.480 in the marketplace and particularly an energy how do we 0:07:29.520 --> 0:07:32.640 make sure we become more agile, we become more consistent, 0:07:32.680 --> 0:07:35.160 and we really take control of those factors that we 0:07:35.240 --> 0:07:37.840 can to push forward through some of those issues and 0:07:37.880 --> 0:07:41.239 reduce the volatility. And are you still seeing consumer demand 0:07:41.320 --> 0:07:45.040 for sustainable manufacturing even with some of the volatility that 0:07:45.040 --> 0:07:50.600 we're experiencing. Yeah. Absolutely. I think sustainable manufacturing is it's 0:07:50.680 --> 0:07:52.840 not a it's not a friend. I think it's here 0:07:52.840 --> 0:07:55.480 to stay, and so it's really important that we continue 0:07:55.520 --> 0:07:58.600 to move in that direction. And much of our platform 0:07:58.680 --> 0:08:01.920 from an innovation standpoint is on sustainability. We're often the 0:08:01.960 --> 0:08:05.080 preferred alternative to plastics for some of our packaging material 0:08:05.160 --> 0:08:08.320 and medical packaging materials, so it's a really important part 0:08:08.320 --> 0:08:10.920 of how we move forward. Hey, Julie, twenty seconds, what 0:08:11.040 --> 0:08:12.920 keeps you up at night? What's the biggest risk in 0:08:12.960 --> 0:08:16.040 the outlook? Very quickly if you could, you know, it's 0:08:16.080 --> 0:08:19.280 just the overall global economy, the factors were moving in 0:08:19.400 --> 0:08:22.000 the indicators are moving in different directions. When we look 0:08:22.040 --> 0:08:25.400 at interest rates versus job rates versus manufacturing p m I, 0:08:25.560 --> 0:08:28.240 typically they've moved in unison and they just they're not 0:08:28.400 --> 0:08:31.760 quite doing that right now. So it's the lack of predictability. 0:08:31.880 --> 0:08:34.120 That's why for us, it's really important we focus on 0:08:34.160 --> 0:08:36.160 those things we can control. We just merge. We have 0:08:36.200 --> 0:08:38.920 great synergies, we have great scale, we have great cost 0:08:38.920 --> 0:08:42.760 reduction opportunities as well as unlocking growth. So I'm thrilled 0:08:42.760 --> 0:08:44.520 with where we're headed, and we're going to focus on 0:08:44.559 --> 0:08:47.000 those things that we can control. Well, get great to 0:08:47.040 --> 0:08:49.280 get a check on your business and talk outlook as well. 0:08:49.360 --> 0:08:52.880 Julie Schutel, she is president CEO of Mattive. She just 0:08:52.960 --> 0:08:55.240 ring the closing belt of New York Stock Exchange and 0:08:55.320 --> 0:08:57.120 that is exactly where we were just talking to her, 0:08:57.200 --> 0:08:58.560 so good to catch up with her.