(Jiangxi New Materials Co., Ltd.)

Remember the “Sutra” of Innovation: Notes on Cost Reduction and Efficiency Increase of Xinghuo Silicone Company (Jiangxi New Materials Co., Ltd.)

Introduction: In the trough period of the industry, faced with the unfavorable situation of severe overcapacity, inverted product prices and vicious competition in the entire industry, there is such a Jiangxi company that has handed over a number of achievements by practicing its internal skills, reducing costs and improving production capacity. A beautiful report card that bucked the market trend and rose. It is Jiangxi Lanxinghuo Silicone Co., Ltd.

(Jiangxi New Materials Co., Ltd.)

In the trough period of the industry, facing the unfavorable situation of severe overcapacity, inverted product prices and vicious competition in the entire industry, there is such a Jiangxi company that has handed over a reverse by practicing its internal skills, reducing costs and increasing production capacity. A beautiful report card for the market’s rise. It is Jiangxi Lanxinghuo Silicone Co., Ltd.
In the golden autumn, the reporter drove to the Yongxiu Yunshan Economic Development Zone, where Xinghuo is located. Founded in 1968, it is my country’s first organic silicon production enterprise. Its establishment ignited the spark of China’s organic silicon industry. After decades of evolution and development, Jiangxi Lanxinghuo Silicone Co., Ltd. still has a national market share of 15% and is one of the leading companies in my country’s silicone industry.
In recent years, Xinghuo has faced a severe operating situation due to the downturn in the entire industry. “The total annual demand of the national silicone industry is about 1.5 million tons, and after years of disorderly expansion, the annual production capacity has exceeded more than 2 million tons, and the overcapacity exceeds 40%.” The person in charge of operations of Xinghuo Company told reporters, “From From last year to now, the price of silicone products has continued to drop by 30%. At present, the entire industry has entered a trough, and most companies are losing money.”
How to survive the “ice age” of the industry, how to survive and develop in difficult times? Starfire kept thinking. Starting from the beginning of this year, Xinghuo Company has been in compliance with the national requirements of “three cuts, one supplement and one reduction”. On the one hand, it has carried out technological innovation, improved production efficiency by “debottlenecking” production capacity, and explored a way to reduce costs and increase efficiency. On the other hand, sustainable development can be achieved through product structure adjustment.
On October 29, in front of a large-scale production facility, Jiang Gansheng, the person in charge of the company’s management office, seemed confident: “In the past, the operating rate of our company’s silicone rubber production line was less than 30%, and we produced less than 5 grades, and we were always in a state of loss. Now, the operating rate has reached 100%, the number of brands has increased to 20, and the company has turned a profit.” This is the immediate result of technological innovation.
In the first half of this year, the company’s main product output increased by 60% year-on-year, costs dropped by 29%, and cumulative sales revenue increased by 27% year-on-year.
This is indeed rare in the current silicone industry. Behind the report card is the resilience of Jiangxi veterans who dare to face difficulties and challenge themselves in the process of technological innovation.
In the chemical industry, if the temperature differs by half a degree and the pressure differs a little during the production process, the results will be very different. Spark has a core device that failed to achieve the expected goals after several debuggings. In the face of difficulties, Spark people never give up. They traveled thousands of miles to invite experts from France to tackle the problem. During that time, foreign experts were working at the front, while Jiangxi engineers were studying on the side. After several rounds of technical improvements, the goal was finally achieved, raw material consumption was reduced, and the product yield increased from the original 80% to the current 85%. “Don’t underestimate this 5%,” an engineer calculated for a reporter: In the silicone industry, every 1 percentage point increase in product yield can increase performance by 1.6 million yuan a month.
Through technological innovation, we can not only improve production efficiency, but also turn waste into treasure. In the past, waste hydrochloric acid, a by-product produced during the production process, had to be paid to be hauled away by a specialized waste disposal agency, which cost more than 2 million yuan every month. Now, through the application of new technologies, waste hydrochloric acid can be effectively recycled and used, which can save more than 1 million yuan a year.
By introducing new equipment, the waste gas during the production process is collected, and the steam generated after all is burned can be used for reproduction. After the company’s sewage station was transformed, industrial wastewater emissions were reduced by 40%.
Now Xinghuo has begun to bid farewell to the previous single profit model. From only producing upstream silicone crude monomers with low profits, to rapidly moving towards higher value-added downstream, this old company is slowly regaining its leading edge through technological innovation.
Reporter’s Notes:
Like silicone, Jiangxi Province’s coal, steel, photovoltaic and other industries are currently facing varying degrees of overcapacity. Facing the severe situation, what should established enterprises do when their technical barriers are broken and their traditional distribution channels, brands, funds and other advantages are gradually lost? The successful practice of Spark has given us some inspiration.
Facing the downward pressure on the economy and the reshuffle of the industry, established companies can only stand on the commanding heights of the industry again through bold reforms and continuous innovation of process technology, management systems and capital operation models. From another perspective, the process of oversupply and elimination of backward production capacity in an industry is actually a manifestation of the self-regulating function of the market economy. For those enterprises that have the courage to reform and innovate and are good at seizing opportunities, crisesThe opportunity may be a turning point. By practicing internal skills and continuously improving production efficiency and the technological content of products, we can increase the added value of products, open up a broader market, get rid of difficulties, achieve nirvana and rebirth, and push the enterprise to a new stage of development.

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