Who knew the 2013 Color of the Year would be cobalt blue, or that the Fall/Winter 2014 hues would be bright jewel tones and soft romantic neutral tones? Who created the dyes and swatches of the Spring/Summer 2015 palette featuring a “rainforest” theme of tropical colors? And who makes those colors into a standard format that can be communicated to a global supplier base?
That would be a very well-known company in the textile industry—perhaps not so well-known here in Charlotte—but nonetheless right in our backyard: DyStar LP. Very simply put, DyStar LP and its parent conglomerate DyStar communicate major retailers’ constantly changing colors to international suppliers.
DyStar LP is a manufacturer and supplier of dye, chemical auxiliaries, specialty chemicals and services to the textile and leather industries throughout North America. They work to make sure colors in manufactured products are true to the intent of the retailers.
It is an impressive challenge that extends across all industries. DyStar LP relies on the resources and the reach of the DyStar group to interact with companies globally and to support their customers at all stages in the textile chain, from the first inspiration of a designer, through production and testing, to the finished product in the store.
DyStar prides itself on consistency and exceptional results. How do they do this? To understand, you first need to appreciate the company’s impressive lineage.
A Colorful Lineage
As it’s constituted today, DyStar’s lineage is a Who’s Who of over 150 years of integrations, mergers and acquisitions. At the same time, it also is a paradigm for successful survival of the decades-long exodus of apparel and textile production to Asia.
DyStar was a direct product of major changes that came to the textile industry during the 20th century—technological innovations, synthetic fibers, logistics, and globalization of the business.
By the late 1980s, the apparel segment was no longer the largest market for fiber products, with industrial and home furnishings together representing a larger proportion of the fiber market. Industry integration and global manufacturing closed down many smaller firms in the 1970s and ’80s.
Here in the U.S., 95 percent of the looms in North Carolina, South Carolina and Georgia shut down, and Alabama and Virginia also saw many factories close.
In the mid ’90s, globalization of the industry within Germany resulted in reorganization of companies and production chains, resulting in a vertical integration of the global value chain—from development to production to sale, a dynamic illustrated in the transformation of DyStar.
DyStar started as a joint venture in 1995 between the textile dye divisions of Hoechst Celanese and Bayer, functioning as a coloration specialist. It then embarked on an impressive expansion by strategic acquisitions of BASF, Mitsui, Zeneca, Color Solutions Inc. and Yorkshire Americas.
These acquisitions were pivotal in transforming the company into a solution provider, offering brands, retailers and their industry partners a complete range of colors, chemicals and services.
By 2004, DyStar was widely recognized as a leader in the textile market, and was acquired itself by private equity firm Platinum Equity for a price analysts estimated at $680 million.
With subsequent acquisitions of Rotta Group (2005), Boehme Group (2006), and Texanlab (2007), DyStar grew in strategic market segments—covering auxiliaries and leather, and becoming a full solution provider.
In the early 21st century disruption of the textile industry continued with advances in electronics, shifting global economics, and more restrictive chemical and environmental regulations. Massive consolidations among European producers were met with the expansion of Indian, Chinese and Asian firms closer to new consumer product makers.
Given the rapidly changing market, the complex collection of DyStar companies proved difficult for its private equity owner in the ‘credit crunch’ era: In the fall of 2009, facing liquidity pressure, DyStar’s German operations filed for insolvency.
In February 2010, China’s Zhejiang Longsheng Group (Lonsen) together with India-based Kiri Dyes and Chemicals purchased the assets of DyStar’s German operations and most of its global subsidiaries for a reported $70 million, and later that year, also Dystar’s North American operations for a reported $10 million.
Longsheng was a major manufacturer in dyes, intermediates and chemicals in China, and also a conglomerate with interests in steel, autoparts, real property and financial investment.
Kiri was one of the largest manufacturers and exporters of reactive dyes and intermediates in India, particularly known for its reactive “blacks” in the industry.
The acquisition included access to DyStar’s 16 manufacturing plants in 12 countries, its brand, patents, technical know-how and most importantly, a 21 percent global market share.
Able to acquire the assets of DyStar without liabilities, Lonsen and Kiri turned around the DyStar business, making it more cost-effective and moving it more towards the growing Asian textile market.
DyStar has continued to expand and diversify in recent years. In October 2012, DyStar acquired the exclusive dealer for DyStar products in Andean countries—Anglostar LLC and its subsidiaries.
And just last fall, DyStar acquired Lenmar Chemical Corporation of Dalton, Ga., a specialty chemical products manufacturer, to further diversify its product portfolio and technical expertise into the textile and carpet, fiber processing, laminate floor, water treatment, oil and agriculture industries.
Since 2012, all DyStar operations come under the umbrella of DyStar Global Holding (Singapore) Pte. Ltd., with shareholders Lonsen (63 percent) and Kiri (37 percent).
Today, the DyStar Group has 14 production facilities in 12 countries and sales companies in all major areas, over 2,000 employees worldwide, and serves about 7,000 customers. Last year, DyStar earned nearly $850 million, with 45 percent coming from Asian markets and 55 percent split between Europe (30 percent) and America (25 percent).
In the first half of 2014, DyStar has achieved a 13 percent increase in revenue compared to the same period last year and doubled the earnings after tax.
In Charlotte, DyStar’s operations include DyStar LP and Color Solutions International.
Color Solutions was itself a product of the textile consolidation going on here in North Carolina. In 1999, John Darsey and Freddy Miller combined businesses to form Color Solutions Inc. Initially focused on creating cotton color standards, they were able to attract major retailers—their first account being Wal-Mart—and transitioned beyond to meet customer needs.
In 2002, DyStar acquired Color Solutions Inc., changed the name to Color Solutions International (CSI), and provided the financial resources, global exposure and technical expertise to expand their product line and services.
Ron Pedemonte serves as president and CEO of DyStar Americas, DyStar LP and CSI . With a background in chemistry, Pedemonte started his career with DyStar in 1991 as a research chemist focusing on developing novel reactive dyes and then was relocated to Germany to continue on new product developments.
Since 2000, he’s been in Charlotte as regional America product manager for reactive dyes, three years later becoming the regional business manager. In 2007, he was promoted to his current position and is also responsible for global textile services. He is the inventor or co-inventor of more than 25 patents in the field of reactive dye chemistry and has published numerous papers in biochemistry.
Although headquartered in Singapore, DyStar’s global head happens to reside here in Charlotte as well. In early 2012, Harry Dobrowolski took the reins as group president and CEO.
Dobrowolski brings a strong financial background to his leadership at DyStar. A native of Ravensburg, Germany, he has lived in the United States since 1985. He received his education in Germany, with a degree in business administration and finance.
He started with DyStar in 2005 as the head of Finance and Business Services for the Region Americas. Previously, he was CFO for Rohwedder North America, an automation systems provider and before that, he had a 20-year career with Siemens Company, which included management positions in Germany and South Africa, as well as the U.S.
Speaking of the 2010 acquisition of DyStar by Lonsen and Kiri, Dobrowolski says, “This was a totally new beginning for us. Since 2010, we’ve had very positive and sustainable growth in our results.”
Dobrowolski attributes the financial turnaround of the company to the right strategy and support from shareholders as well as integration of the supply chain. DyStar now has offices, competence centers, agencies and production plants in over 50 countries.
“This helps to ensure our expertise is both local and global for brands and retailers, mills and dye houses,” he reports. “What’s more, there are no superstars. We used to have very good managers; now we have the best team.”
Dobrowolski paints the larger picture: Following the reorganization in 2009, DyStar instituted several changes in operations. It closed some production plants in Germany and Indonesia as they had become outdated and were highly energy-intensive.
Production was shifted to more modern plants, primarily in China, where DyStar invested in state-of-the-art production technology. The new shareholders also helped to integrate the supply system and continue to be an important part of the leadership team.
“It is more than a partnership,” says Dobrowolski, “They need us to sell product and we need our shareholders to provide both suppliers and marketing information,” says Dobrowolski. “We work together very closely on a daily basis.”
A Colorful Presence
DyStar LP operates out of two production sites in Reidsville, N.C., and Dalton, Ga., and four warehouses located in Reidsville, Dalton, California and the Dominican Republic.
Through its CSI division, the company uses DyStar dyes to create over 5,000 CSI formula colors for fabric manufactured across the globe. These colors are developed through face-to-face contact with designers and color managers who have a specific color in mind.
“Globally, we are establishing color standards for more than 100 well-known brands,” says Pedemonte. “Some dyes have a lineage of 50 years or longer.”
“A retailer comes to us with a color palette for the season, whether it is spring or summer, fall or winter, holiday or back to school. They ask us to replicate the color in such a way that it can be communicated to their supply base,” describes Pedemonte. “We are smack in the middle of the textile supply chain, supplying color standards.”
“We take a retailer’s inspirational color pieces and make them into a standard format that can be communicated to a global supplier base,” continues Pedemonte. “Not only are we providing a service, but we are producing a color standard that is produced with dyes found in other countries; we lend technical support.”
The product offered to retailers consists of a certified standard (dye recipe with DyStar dyes) that is sold to global textile mills and vendors via the international website. The textile mill customer then uses this formulation to produce its fabric samples and production using DyStar dyes.
There are limitless applications for DyStar products—apparel, automotive, carpet, specialty chemical, denim, military/workwear and retailer/brand are their seven key markets.
DyStar LP maintains strong relationships with its customers; Pedemonte says that of the top 50 customers, 15 have been with the company for at least 10 years. Its diversified and well-balanced customer base of leading companies across a broad range of industries protects it from market fluctuations. High profile customers include Hanes, Fruit of the Loom, Shaw, Mohawk and Guilford Performance Textiles.
DyStar always has products in development. One of its current focuses is the denim industry. With a history of almost 120 years of producing Indigo, DyStar has developed a patented DyStar Indigo Vat 40 percent solution which represents the state-of-the-art in pre-reduced Indigo liquid. It allows for cleaner denim production and a reduction of the sodium hydrosulfite usage by 60 to 70 percent.
Coloring In the Future
As one of the premier companies in the field with a truly global reach, DyStar operates in many different legal jurisdictions and cultures and is responsible for complying with the laws in the countries in which it works. Additionally, the company aims to conduct business across boundaries with integrity and the highest ethical standards.
“It is our vision to become the world’s most sustainable and responsible supplier of colors, chemicals, and services to the global textile industry,” states Dobrowolski. “Our commitment to sustainability covers all three of its pillars, namely economic, environmental and social sustainability.”
Increasingly, rising wages in China and other countries, combined with higher transportation costs and new environmental regulations, have prompted a number of foreign and American textile companies to consider returning to the U.S. Also, with more consumers looking for ‘Made in the USA’ labels, some companies are turning back to American products.
Wal-Mart, for example, has pledged to buy $50 billion over the next decade in American-made products, including towels and washcloths.
Dobrowolski believes the trend back to Americas will continue—at least for the next few years. He adds that the textile industry itself is expanding because of consumer consumption.
“One of the factors undergirding a growing textile industry is the fact that consumers are buying more,” he says. “People don’t just buy what they need; they buy because they want the latest style or fashion color.”
With a growing industry and an expanding company, Dobrowolski expects DyStar to continue its growth path. But managing a large company with a complicated global supply chain can be challenging.
“We have to make sure our products—and the processes we use to produce them—are safe, follow strict environmental guidelines,” says Dobrowolski, “and their quality is top-notch and consistent worldwide.”