Although Lanxess A.G. is working hard to completely withdraw from the synthetic rubber business, the German-based company can focus on special, high-margin businesses, where its technical expertise can play a role.
This includes its Additives business unit, which is part of LANXESS and Rheinchem's Specialty Additives business unit. LANXESS acquired Chemtura in 2017 and subsequently acquired Solvay's phosphorus additives business. Greatly promoted the development of this business unit.
Chemtura has annual sales of $ 1.6 billion, has 2,100 employees and 20 plants in 11 countries, and achieved exceptional growth in sales of lubricant additives and industrial synthetic lubricants.
Recently at the company's event at the Nudenberg-Wheeler Technology Center in Naugatuck, Anno Borkowsky, head of the Lanxess Additives business unit, said: "We are now one of the major suppliers of industrial lubricants with an integrated value chain."
The research park in Naugatuck has reached an agreement with Chemtura, focusing on the research and development and application technology of lubricant additives, flame retardants and polyurethane business. The center has 60 scientists and engineers, including two buildings that Chemtura has spent $ 10 million in refurbishing during the decade.
After completing the acquisition of Chemtura and Solvay, LANXESS's Additives business unit has 1,900 employees worldwide, approximately 2,000 customers in more than 100 countries, and more than 1,100 products. The company's products cover a variety of end uses such as construction, transportation, industrial manufacturing, and distribution, and their revenues in these areas do not exceed 15%.
North America is the largest market for this business unit, followed by Europe, the Middle East and Africa, and Asia Pacific ranks third. Regional head Borkowsky said the business needs to be expanded and enhanced.
Borkowsky said the business is expected to grow at an annual rate of about 3-4%. Most of them come from the Asian market, of which 50% of the construction is in Asia, and mainly in China.
Growing business
Lanxess was originally a spin-off from Bayer in 2004, and the synthetic rubber business dominated. But according to Borkowsky, Matthias Zachert has been named CEO after the chemical company has dealt with some financial difficulties, and he has set the company on a new path.
The company's synthetic rubber business unit has formed a joint venture with Saudi Aramco (LANXESS is currently seeking exit), while LANXESS plans to establish other investment portfolios. In the additive business, the development peak was reached after the acquisition of Chemtura.
Borkowsky said that the company's business is mainly concentrated in medium-sized markets, higher quality than quantity, special products and leading markets.
Borkowsky said, "After the acquisition, we have a very strong business in North America. This is a strategic goal, because as a German company, we have been focusing on Europe for a long time. Our strategy is to go out and grow in North America first. And then more growth in Europe. "
Borkowsky said that although LANXESS's acquisition of Chemtura has received a lot of attention, Solvay's smaller acquisition is of strategic importance because LANXESS's phosphorus business is basically a participant in the European market. "We are pleased to be able to acquire Solvay's Charleston (S.C.) production base, and it is very important for us to be able to grow the phosphorus business in the United States," he said.
Borkowsky said that this is the first time in his career that he has no close contact with the rubber industry, and recently he was responsible for the global operations of the Rheinland Chemical Additives business unit. "This is the first time I have managed a business unit with such a diverse range of terminal applications, which makes the business resilient to economic fluctuations," he said.
Similar to his experience in the rubber industry, he said he found the lubricant market to be a small world. "Everyone knows each other, so it's interesting to see how small these industries are," he said.
He said that some of the lubricants business also provides professional customized products like Rhein Chemical Co., Ltd.
He also said, "Most of the players in this industry are medium-sized companies, and they are very innovative. It's interesting. So is the flame retardant industry. Innovative companies focus on new trends in the industry and how we apply them.
The most important part of the Chemtura acquisition is the complementarity of the two companies. Borkowsky said: "This combination is really interesting. Then you can make people passionate about the whole thing, because suddenly they have a huge portfolio."
Cyril Migdal, Global Application Technology Leader for the Lubricant Additives business, said most of the product development efforts are aimed at improving fuel economy, energy efficiency and emissions improvements. "Every drop of lubricant that can be extracted to help save fuel is very valuable," he said.
Lanxess has developed some new technologies and plans to put them into commercial application in the near future, providing a lower coefficient of friction and enabling longer mileage per gallon of gasoline. Migdal said: "We have improved fuel economy by 5% over the reference finished lubricants," which is good for individuals, but if you are talking about the whole country or the world, it means a lot of savings fuel. "
Tariffs are unknown
Borkowsky said the North American business is now in a strong position and the focus will shift to Asia, but the trade war between the United States and China may affect these plans.
For example, although LANXESS is a competitor to BASF, the two are also suppliers to each other. "This is the world of the chemical industry, because we rely on a complete value chain. If this value chain breaks, that's a problem," he said.
Borkowsky said that more than half of his business's plants in the United States are exported, so tariffs could have a significant impact.
"Of course retaliation from China and eventually from Europe will cause problems," he said. "That's why in today's world, there must be a local factory. That's why we are now glad to have higher exposure in the United States. rate."
So far, the impact of tariffs has been minimal, but the latest list of chemicals that may be levied will have an impact. "For China, they have to do this," Borkowsky said. "They have to retaliate, otherwise they will lose face. This is the worst thing in China."
LANXESS currently has two wholly-owned subsidiaries, but producing chemicals in China can be a difficult choice. As the country begins to enact strict environmental regulations, it will be difficult to find suitable sites, as the government will order shutdowns and close factories that do not meet standards.
Borkowsky said: "In the end, China must do something because they can't continue like this. On the other hand, good companies with a proven track record and high standards will continue to be licensed. But if you violate any standards or licenses, then you You have to leave China. This makes the situation in China a bit complicated now. "