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Partnership opportunities include:

BLENDING • STORAGE • PACKAGING • DISTRIBUTION

Interview with Steve Overdeck, President of KOST USA

Steve, what prompted KOST USA to make a move like this and why?
Our core business, anything that is glycol related, has grown significantly over the last several years. We have outgrown our current facility and we see opportunities to partner with our current customer base along with other potential companies to blend, package, distribute, etc. This investment is larger than our current needs, but will create the flexibility for expansion as our business continues to grow.

What do you envision for the future of the company and how does the new facility fit into this?
We have not put a major focus on the retail market in the past due to warehouse space and the economics to be competitive in this area. This new facility will allow us to bring in-house all aspects needed to compete in the retail market. Also, there is continued focus for companies to shed overhead, especially in the manufacturing segment of their businesses. This new plant allows us to fill that void and free up capital for these corporations to spend on sales and marketing.

You mention partners, how do you envision them at your facility?
We are offering many different arrangements that will benefit both parties. Some of these include strictly toll-blending and packaging, other options are turnkey arrangements that allow companies to piggyback off our purchasing power, along with warehousing and distribution.

With current economic conditions, how is KOST able to make such a move today?
We have had the good fortune to obtain many new accounts over the last several years that has offset the decrease in volumes from older accounts. All of this has added up to increasing our volume while doubling our profitability. This growth has given us the comfort that we have found a niche in the marketplace that withstands economic conditions that we have seen recently. Once the economy recovers, we believe that we will be in an excellent position to continue our growth and profitability.

KOST has had much recent success in supplying to the Heat Transfer Fluid Market, how will the new facility assist with that?
The new facility will offer larger storage and blending capabilities along with additional floor space for packaged inventories. Turn around time is a key in this business, so keeping finished product in all dilutions is very important. The investment in the size and capabilities of the lab bring the service that is required to the end-users of these fluids. The turnaround time for accurate analysis is critical for these accounts.

You have dedicated a large amount of space to your lab, why is this so important and what are some abilities of your lab?
Many well-known labs in the marketplace are really only set up for lubricant analysis. When it comes to Coolants, Fire Resistant Hydraulic Fluids, and Heat Transfer Fluids that have to be tested, specialized equipment that goes beyond the typical analysis of freeze-point, pH, RA, and other critical qualities must be used. We have testing equipment dedicated to glycol fluids that are used to fingerprint a fluid and see what areas are depleting to create spike additive additions. This has saved some of our customers hundreds of thousands of dollars. This equipment is also used for R&D purposes in building new and improved fluids specific to an application and/or for our general off-the-shelf products.

What type of private label abilities will this facility allow you to offer?
We currently have several private label products that we produce today, and with the new capabilities and cost structure, we will be able to successfully package larger volume brands for retail and/or other marketing companies. Our new facility will be ISO certified by the 4th quarter of 2010, again helping to capture higher profile brands.

Your core business has been the Glycol, Antifreeze, and Fire Resistant Hydraulic lines, what other products or services are you looking to offer?
We will be offering an ASTM certified lab for glycol related products, Diesel Exhaust Fluid for 2010 on-road heavy duty engines, some of our existing products packaged in smaller containers, along with other opportunities that our customers and prospects might approach us with. With Cincinnati being in such an ideal distribution area, we will be looking at warehousing of products that might or might not be related to the businesses we are in today.

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