Meridium Cements SABIC deal

In a brief press release  dated the 22nd of January, Meridium announced that it has signed a license deal with SABIC.

The release goes on to talk about a "project"which includes training, consultancy and software elements; so there is a hint that this is more than a license deal. But it stops short of stating the scale or scope of any project or initiative.

I have had some knowledge of this project and of the negotiations, and I think it is fair to say that this represents a phenomenal opportunity for both Meridium and SABIC.

SABIC covers a range of industries including petrochemical, plastics and steel - all of which are feeling the effects of he economic downturn. According to AFP  their December quarter showed a 95.7% drop against the previous quarter.

It is also still digesting the GE plastics acquisition purchased for some $11.6 billion dollars.

So to say that SABIC is feeling the pressure of the twin perils of costs and debt is probably the understatement of the year. The deal with Meridium, no matter what the scope and size, will allow them to roll out a uniform platform for their reliability and asset management improvement programs, as well as providing them with a common reliability data architecture to leverage for future improvements.

It's a big deal and a big opportunity.

Meridium also benefits from this. Unless there was any doubt the announcement of this deal sets them up as definitely the product / company to beat in the provision of broad based reliability solutions to the process manufacturing and processing industries globally.

For the rest of us it also shows that now is the time for large scale organizations to be thinking strategically about asset management initiatives. many company find themselves compulsively trying to prevent the last crisis (BP Refinery disaster for example) instead of looking forward and preparing for the things that lie over the hill.

SABIC appears to be in "thrive" rather than "survive" mode.Laying the groundwork for tighter fiscal discipline and the ability to ramp up performance in a sustainable fashion when/if prices and demand begins to reverse.