Olefins, polymers, propylene and ethylene – to the average person, these terms might not have much meaning. But to PETRONAS Chemicals Group Berhad (PCG) Head of Manufacturing Mahadzir Rani, they represent human progress – one that helps this leading Malaysian integrated chemicals producer make a difference in the lives of millions around the globe and over 4,000 within its plants’ walls.
One of the most important factors enabling PCG to achieve this goal is its employees. “I am people focused,” Mahadzir confesses. “We deliver results through people. Coaching is one thing, but to make sure people really believe in what we’re doing, we need to lead by example by being passionate about progress. The development of people through culture is key to me.”
Mahadzir has been with PETRONAS for nearly three decades. As he worked his way through the ranks, he witnessed an array of leadership styles that ultimately shaped his own. “I started my career as an engineer, and I saw various leadership styles,” he shares.
“From my experience in the manufacturing environment, I truly believe we need to be firm on our targets. Yet, at the same time, we also need to take care of our people. It’s imperative that we coach them and equip them with the required skills.”
One Team. One Goal.
Twenty-seven years is a long time to be with a company. The challenges and the wins are many. Yet, when asked for the highlight of his career, Mahadzir doesn’t bat an eye. Right away, he pinpoints a time around five years ago when he contributed to the transformation of PETRONAS Chemicals Methanol Sdn Bhd, a subsidiary of PCG.
“It was 2014 and, compared to other plants, this plant’s performance was not at par with other plants,” Mahadzir remembers. “PC Methanol was facing some challenges due to reliability issues. As a result, the employees were managing new issues on a daily basis.”
Realising this, Mahadzir dived right in to find a solution. “Going into 2016, through a concerted effort in mitigating these issues, we were able to address the problem,” he explains. “We managed to bring the plant to be at par with the other plants within PCG. It became competitive.”
The best part of the story for Mahadzir, however, was the impact it had on his employees. “I saw them become a better team. I saw how close they became after working together those couple of years to resolve the issues,” he says.
“We have a tagline here, ‘One team, one goal.’ Thanks to this challenge, the people know each other and can work better together. Now, their team is one of the best teams at PCG. This is my biggest achievement.”
Reliable Partnerships
For the year ahead, Mahadzir says PCG will be focusing on strengthening its foundation. “From upstream to the end users, it is vital that our facility is reliable,” he says. “Reliability is key to our operations. We need to strengthen this. Molecule management is crucial in order for us to really capitalise the value for every single molecule and turn it into a valuable product downstream.”
“Reliability is key to our operation.”
The chemical giant is also heavily focused on excellence across operations. “We will continue to achieve turnaround excellence, which will sustain performance and drive cost excellence through collaboration with our contractors and partners,” he shares.
“We have a group in place called TACS – Turnaround Centralised Services – which serves as a centre of excellence, overlooking the governing of our plant and planning as well as the overall coordination of our turnaround activities within the group. For manufacturing, turnaround activities are very crucial. We have to be effective in delivering this because even a one-day delay can cost us millions.”
TACS basically captures and retains the company’s best practices and lessons learned. One way this is accomplished is through strategic collaboration. “This is a deliberate effort that we have made to cooperate effectively, strategising towards achieving flawless plant turnaround,” Mahadzir explains.
“This involves adding value, capitalising on shared ideas and initiatives related to the turnaround by both PETRONAS and its contractors. It’s no longer just an owner-contractor relationship but a collaborative effort where we are more like partners.
“Sometimes the contractor has ideas,” Mahadzir continues. “So, we listen to the ideas on how we can deliver the turnaround effectively, promptly and safely within budget. In our strategy, we have a 10-year turnaround plan with our partner that is integrated into this schedule and this takes into account the availability of skilled workers within the region.”
To help with this, PETRONAS has a special STEPS program in place. “The Systematic Turnaround Execution Planning Solutions is a digital system that allows cross reference to the best plant practices in terms of planning norms and execution,” he says. “This basically helps us improve and optimise planning and sharing for our turnaround activities, and this also assists us with greater coordination of onsite activities.”
Embracing Growth
Driven by a “two-pronged” strategy, PCG is dedicated to providing sustainable, long-term growth. “Having delivered on the initial phase of growth since announcing in 2010, we are now well-positioned to focus our efforts on the second prong of the strategy – to selectively diversify into derivatives and specialty chemicals.”
Specialty chemicals are raw materials used to produce consumer products like high-performance tyres, perfume, LED televisions and even animal feed. It’s an initiative on which the company plans to spend approximately US$12 billion over the next 15-20 years.
“In this regard, our manufacturing team recognises the strategic growth trajectory we are on, hence the talent development platform and succession planning program are in place to ensure we achieve our objectives,” Mahadzir says.
“Our talent is firmly focused on the future we envision within this niche specialty market. We have focused on upskilling our people in this space so we can contribute to our strategy and vision of venturing into specialty chemicals.”
“We have focused on upskilling our people in this space so we can contribute to our strategy and vision of venturing into specialty chemicals.”
Mahadzir says navigating the specialty chemicals industry requires PCG to remain fluid and prepared. “Our commercial team used to be made up of sales people only,” he explains.
“In this new era of marketing, we see changes. The customer wants somebody who really knows the product and its technical details. So, now we have groomed our engineers to be part of our commercial team. When we meet with our customers, it’s not only about volume sales. The most important thing is to understand their needs. We want to know how we can work together and be their solution partners.”
Moving forward, it’s also of utmost importance that the company’s workforce embraces this new way of operating for it to be successful. Mahadzir, being the strategic and visionary leader he is, already accounted for this.
“We’ve been doing this with our talent for the last five years through our operation readiness program. And we’ll continue to do so with new projects,” he says. “I think it’s key to prepare people upfront. It’s important to get them ready, gearing towards the operations, construction and commissioning of these facilities. We need to ensure that during the commercialisation of the facility, we can deliver the intended goals.”
A leg – or 7 – up on the competition
Mahadzir says PCG doesn’t just have one competitive edge – it has seven.
- Integrated facility and infrastructure. It is inefficient to run a refinery on its own.
- Secure and competitive feedstock.
- World-scale plant.
- High asset reliability and cost competitive.
- 30 years of experience in petrochemical utilising leading-edge technology.
- Strategically located, reliable and efficient delivery.
- Familiarity with the market. In this current environment, we look at competitors as potential partners.
Peers as Partners
Growth in the industry takes key partnerships – even if that’s with other players, Mahadzir says. As PCG delves deeper into the second prong of its growth strategy, the company is focused on three key growth levers: Expanding Value Chain (EVC), building specialty platforms and long-term investments in technology.
“With EVC, we add value to our existing basic chemicals through downstream investment in derivative and specialty chemicals,” he explains. “The second lever consists of building a specialty platform by accessing technology and markets via mergers and acquisitions. And, in the third lever, we recognise opportunities for growth by making long-term investments in innovative, immediate technologies through corporate venture capital and internal research and development.
“The industry is partnering with peers to grow further,” he adds. “We have already done this with our petrochemical project in Pengerang. We are partnering with Saudi Aramco – one of our peers that became our partner.”
“The industry is partnering – even with so-called competitors – in order to grow further.”
Much of PCG’s success is attributed to its partnerships. Mahadzir has witnessed the company’s plants achieving ambitious goals thanks to these relationships. “It’s imperative for us to have strong, collaborative relationships with our partners and suppliers,” he says.
“Our collaboration with upstream suppliers has resulted in our plant in Labuan achieving its highest production with better supply and improved physical quality, despite turnaround activities. Likewise, we achieved comparable production volumes despite higher turnaround due to a strong collaboration with our upstream suppliers.”
These collaborative efforts have proven to be profitable in time and money. “The collaboration efforts across upstream and downstream have managed to reap more than RM1 billion (approximately US$238.5 million) additional EBITDA over the last two years,” Mahadzir shares.
“This is huge. We’ve also managed to resolve issues quickly through better visibility on the end-to-end molecule management and untapped opportunities.”
Solution to Plastic Waste
PCG, living up to PETRONAS’ Statement of Purpose of being a progressive energy and solutions partner enriching lives for a sustainable future, recently teamed up with Plastic Energy, a company that owns technologies to transform traditionally non-recyclable plastic waste.
“One of our company’s agendas is sustainability,” Mahadzir says. “A major concern in recent times, not just in Malaysia but around the world, is the war on plastic. It’s important for us to manage the plastic waste in Malaysia. Plastic should not become waste and this needs to be inculcated in our culture.
“With Plastic Energy’s technology, we can manage plastic waste and convert it into crude naphta. From crude naphta, we can turn it into ethylene/propylene and later on, polyethylene or polypropylene, depending on the feedstock. After that process, it becomes a virgin resin for plastic.”
From this product, Mahadzir says it can be put back into the manufacturing facilities, creating a circular economy. “The key is to put the waste back into our system; not through mechanical recycling but through chemical recycling,” he explains.
PCG is also collaborating with a partner to develop waste-to-energy plants in various locations across Malaysia. These plants will process municipal waste, including plastic waste, for electricity generation. In addition, Mahadzir says it’s important to educate future generations on the proper use and disposal of plastic.
“The most important thing is that we’re going to educate people and create the culture of 3R – the concept of reduction, reuse and recycling,” he says. “We have been working with the Ministry of Education to come up with a supplementary module to educate our school children, so they can have a better understanding of what plastic can do and how we can prevent plastic pollution.”
Mahadzir also wants people to understand how to manage plastic waste properly. “We need to improve on this. We want to segregate it upfront, collect it and reprocess it chemically to produce virgin polymer resin for a circular economy. Circular economy for plastics is the solution for plastic waste.”
A Plan for Innovation
Staying at the forefront of innovation is necessary for PCG to remain relevant and competitive in the fast-paced chemical industry. In fact, it’s imperative for the company’s operations to dedicate an entire department solely for innovation and technology. “Innovation is key and vital,” says Mahadzir.
“It allows us to adapt to the changing market conditions. It enables us to connect the dots for our customers from a wide range of industries. It also helps us secure our market position.”
“Innovation is key and vital. It allows us to adapt to the changing market conditions. It enables us to connect the dots for our customers from a wide range of industries. It also helps us secure our market position.”
PCG has two main strategies in place for driving technology and innovation: research and development, and providing the customer with a solution. These two go hand-in-hand. When PCG meets with its customers and develops a solution, the solution then becomes a new product offering.
“We have two labs, and these labs are dedicated to accomplishing PCG’s innovation excellence. These labs allow us to collaborate with our customers and address their pain points,” Mahadzir explains.
This face-to-face interaction allows PCG to create a customised chemical solution for its clients while infusing humanity into the approach. “By collaborating with our customers, we’re able to understand their pain points and develop innovative solutions specific to their needs,” he says.
“By collaborating with our customers, we’re able to connect with them and create innovative solutions specific to their challenges.”
“I just came back from meeting some of our customers in Thailand and they were very pleased with our efforts. They want us to do face-to-face interactions more often. So, this is something we will continue to pursue. We have commissioned a number of collaboration products, which have created higher value for the business.”
The company also has its sights set on digital. “In our manufacturing facility, we are heavily focused on digital solutions. We need to embark on this digital solution quickly in order to stay ahead in this business,” Mahadzir stresses. “We see benefits from this in the long term.”
Through innovation, PCG is well placed for growth in the industry. “In 2018, we delivered a total of 64 specialised product applications and technical solutions to our customers,” he says.
“With our surfactant labs and polymer labs, we are better equipped for our future growth. The picture is looking bright for both PCG and our customers.”
Executive Officer of PETRONAS Research SDN BHD Dr Shahidah Shariff was awarded the American Chemical Society International Fellow for the industrial and chemical division. She is the only Malaysian and the first woman in Asia to receive this honour.
High-Performance Culture
Mahadzir knows that in order for a business to be successful, it takes the work of many. “Our people are our greatest asset,” he says. “Establishing a high-performance culture is important to our business. For this, we have introduced PETRONAS Culture Belief – a six-part system that’s passed down not only to our employees but to our contractors as well.”
This program is carried out via frequent engagement sessions, allowing employees to give feedback or recognition of a behaviour that’s in line with achieving PCG’s goals. It also empowers the employees. “We are all leaders,” he says.
“Wherever we go, at all levels, everybody’s a leader. This experience creates beliefs that spur action and deliver results.”
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