Transformation strategy and intelligent manufacturing of Oriental Union Chemical Corporation

        From the first quarter to the third quarter of 2018, thanks to the enthusiasm of the petrochemical market, Oriental Union Chemical Corporation delivered a brilliant report, and its revenue reached a record high. However, the market of EG (ethylene glycol), the main product of Oriental Union Chemical Corporation, has been depressed since the end of last year, reducing the profit margin. The rapid change of industrial environment is not a new thing. In order to disperse risks and strengthen competitiveness, Oriental Union Chemical Corporation has already started the innovation and transformation plan. No matter in product, process or even service, it has found a new way with new thinking.

        

        

        Three strategies in response to the sudden change of environment

        

        

        In recent years, the global economy has been affected by the Sino US trade war, brexit, European economic weakness, political and economic instability in emerging markets, and the rise of trade protectionism, which has suppressed the overall economic growth momentum. Among them, the Sino US trade war has the most profound impact. In addition to directly affecting electronics, automobile, textile industry and other products that are vital to people’s lives. It has also significantly slowed down the widespread use of these products demand for ABS, PS, PE, PTA, EG and other petrochemical products. Taking textile as an example, China's polyester textile supply chain has been partially transferred to Southeast Asia, resulting in weak demand in the downstream in China, slow decrease of glycol inventory, and the price even fell below $600 per ton in the second quarter of 2019. Most glycol manufacturers are facing the dilemma of making ends meet.

        

        Located in the middle of the whole industrial chain, Oriental Union Chemical Corporation produces ethylene oxide (EO) from ethylene, and then produces ethylene glycol (EG) and other ethylene oxide derivatives (EOD). The impact mentioned above naturally affects Oriental Union Chemical Corporation. If the upstream raw materials become less, and there are no more extended products in the downstream, whether the operation is good or not will be subject to the market and single raw materials, which will increase the risk. Therefore, Oriental Union Chemical Corporation has developed three major business strategies in response to changes in the operating environment.

        

        1. Establish basic competitiveness

        

        

        When the market is turbulent and the petrochemical industry is in a downturn, only by reducing the cost of the core raw material EO, can we keep the profit margin of the main product EG. In this way, Oriental Union Chemical Corporation continues to focus on expanding production capacity, improving process efficiency and integrating energy utilization to ensure the competitiveness of core raw material EO. In 2015, OUCC have completed the re debottlenecking of OE in the Linyuan factory, which increased the production capacity by 50% to 360000 tons of EO per year, greatly reduced the production cost. At present, OUCC are also evaluating the new phase of EO debottlenecking plan, hoping to reach the annual capacity of 450000 tons of EO and provide the downstream with the demand of the derivatives and further reduce the cost.

        

        

        In terms of energy, in response to the government's "non-nuclear homeland" policy, the Linyuan factory plans to build a natural gas turbine generator set to meet 80% of the plant's own power consumption and improve the efficiency of clean energy use. In addition, in view of the large-scale construction of ethane cracking plants and integrated refining and chemical plants in the United States and China in recent years, the supply of ethylene in the future is expected to increase. Therefore, Oriental Union Chemical Corporation is starting to build a large-scale onshore ethylene raw material storage tank to increase the dispatching flexibility of imported ethylene, reduce the cost of transportation and storage and improve the overall competitiveness.

        

        

        2. Deep-ploughing of downstream specialized products

        

        

        In addition to improving the basic competitiveness of bulk products, in order to break away from the limitation of making profits of traditional bulk petrochemical products which is easily affected by the market, Oriental Union Chemical Corporation is also committed to the downstream research and development of ethylene oxide derivatives, adding hundreds of new products and winning the recognition of the project subsidy from the Ministry of economic affairs. At present, there are several factories on both sides of the Taiwan Strait, including ethanolamine (EA), ethylene glycol butyl ether (EB), ethylene carbonate (EC) and ethylene oxide derivative (EOD), with a total annual capacity of 340000 tons, which can be applied in different fields, such as daily chemicals, spinning, rubber, plastic, cement, paper making, construction, polyurethane and electronics.

        

        

        Unlike bulk chemicals, which own large quantity and fixed customers, the demand for specialty chemicals of the single customer is relatively small, and there are many categories of items, and most of them are customized. Even for the same product, when it is sold in different industries, the customer's demand and habits, technical problems, and even storage material flow problems are often different. It is necessary to rely on the technology and sales team to closely cooperate with downstream customers. And after a long time of verification, the development can be completed, the entry threshold is high, and the development time is also relatively time-consuming. However, once the validation is successful, the customer's confidence and dependence will be greatly improved, and the possibility of product replacement is very low. Therefore, in addition to high-density technology R & D energy, business promotion and technical services are also extremely important part when proposing special chemicals solutions for different industries and customers. In this way, Oriental Union Chemical Corporation integrates R & D, technology, business and production into a special project team, establishes an online information integration management platform, strengthens horizontal communication between units, accelerates product commercialization, and provides customers with more complete technical services and more stable and excellent product quality.

        

        

        3. Expand propylene industry chain

        

        

        With the increase of shale gas production in the United States after 2009, the supply of propane is loose and the price is low, and there is a profound impact on the structure of the petrochemical industry. International petrochemical companies have imported cheap propane raw materials from the United States or the Middle East, and built propane dehydrogenation (PDH) plants in the nearby market to produce competitive propylene raw materials. One part of propylene is used to produce downstream propylene products such as polypropylene (PP), acrylonitrile (an) and propylene oxide (PO), and the other part of propylene is directly sold as commodities. Therefore, it can be expected that propylene supply will be more in the future.

        

        

        Oriental Union Chemical Corporation has always wanted to extend its industrial chain from ethylene to propylene to reduce the operational risk of single raw materials. Therefore, it has planned to focus its research and development energy on PO and its further processed polyether polyols, which are the most synergistic products with EO in the propylene industrial chain. In combination with EO, a product which Oriental Union Chemical Corporation occupies the market in Taiwan, by virtue of the distinct physical and chemical properties of EO and PO, the special polyether polyols and epoxy derivatives suitable for various applications are prepared and manufactured from the hydrophilic EO and lipophilic PO materials. With the addition of propylene oxide and polyether polyols, it is expected that Oriental Union Chemical Corporation will continue to launch more specialized products in the future, improve the added value of products and meet the higher-level and customized product needs of customers.

        Occupy a favorable position in the new "intelligent" wave

        

        

        In the face of the era of industry 4.0, AI (Artificial Intelligence), Internet of things (IOT), 5G, big data, etc., the issues that how to make use of intelligent manufacturing, optimize and improve the productivity of traditional industries are emerging. In terms of production management, chemical industry relies on Big Data analysis and management for a long time, which is absolutely necessary for the investment and strengthening of new technology. With the continuous evolution of electronic instruments and software, the machine can accurately collect data, such as the real-time temperature, pressure, flow and other operating indicators of each production equipment, so that the personnel can remotely monitor the process, and immediately warn, bringing more possibilities for the automation of the chemical industry.

        

        

        1. Real time database system (PI) as a pioneer

        

        

        Adhering to the concept of intelligent manufacturing, Oriental Union Chemical Corporation introduced the PI real-time database system of OSI soft company, installed sensors on important production machinery and equipment, giving feedback of the operation status in real time, automatically uploading the production index to the control system to monitor the real-time production overview through the remote control interface, and displaying the present and historical operating conditions on computers or various mobile devices through reports, analysis tools, etc., so that managers can optimize production immediately and deal with production abnormalities, and meanwhile improve equipment reliability, predict the demand for repair and maintenance, and effectively reduce failure rate and maintenance costs.

        

        2. Implement intelligent logistics and services

        

        

        Oriental Union Chemical Corporation actively incorporates the new information element "Internet of things (IOT)"and promotes intelligent logistics and services. Taking the supply of liquefied gas products as an example, a storage tank monitoring system was established at the client-side, which can dynamically analyze the use of customers, automatically schedule the goods, and promote the transparency and level integration of supply chain information, provide the fastest corresponding services to strengthen customer loyalty.

        

        

        3. Cultivate a new generation of AI management talents

        

        

        It is worth mentioning that Oriental Union Chemical Corporation is planning to cultivate a new generation of AI management talents. Recently, it has sent more than ten people from different professional fields to study AI related knowledge and skills in Taiwan artificial intelligence school. With the integration of manufacturing, research and development, technology, public works, business planning, information, human resources and other multiple perspectives, through theoretical practice, peer exchange and mutual discussion, they have brought the problems of operation to school and brought back the solutions to the plants. In the future, AI technology is expected to be used to improve operation efficiency, reduce production risk and create new value. In the new era of "intelligent" manufacturing, it is expected to occupy a strategic position and take the initiative.