The Urethane Blog

Lanxess Overview

LANXESS aims to grow in mid-sized specialty chem markets

06 October 2017 22:51 Source:ICIS News
Antonis Papadourakis, president and CEO of LANXESS Corp. Source: LANXESS

Interview article by Joseph Chang

NEW YORK (ICIS)–Germany-based LANXESS aims to grow in mid-size specialty chemical markets that offer strong margins, the CEO of its North American operations said.

“The priority right now is to integrate Chemtura, and that is going well, as we are realising synergies and merging the two cultures. In North America, we have doubled in size and employees,” said Antonis Papadourakis, president and CEO of LANXESS Corp, in an interview with ICIS.

LANXESS completed its €2.4bn acquisition of US-based specialty chemical company Chemtura in April, picking up key businesses in lubricant additives, flame retardants and urethanes, among other specialties. It aims to achieve €100m in synergies from the combination by 2020, with about half from production and procurement.

The company earlier acquired US-based Chemours’s clean and disinfect business for €210m in September 2016.

“If we see acquisition opportunities that fit our strategy, we can do these. We have the capacity for bolt-ons,” said Papadourakis.

“Clearly the additives market is core for us. We have a large presence in lubricant additives, and are strong in rubber additives and plastic additives, including bromine. Also urethanes and cast elastomers are good businesses with healthy margins. Plus, the inorganic pigments and material protection businesses fits in the mid-size range where we can do bolt-ons,” he added.

LANXESS is also evaluating its manufacturing footprint around the world to optimise operations.

On 3 October, the company announced it is closing its base oils plant in Amsterdam, the Netherlands, by November 2018, and will consolidate production of base oils for industrial lubricants at its Elmira, Canada site.

In the key automotive market, which in the US has plateaued after years of strong growth, the CEO sees opportunities from the anticipated changes ahead.

“We are growing at above market rate, and when we look at how the market is evolving with e-mobility and electric vehicles, this plays into our portfolio of high performance materials such as nylon and PBT [polybutyral terephthalate],” said Papadourakis.

“Electric vehicles will require more electrical connectors and housings for batteries. We are very optimistic about growth in this industry,” he added.

The engineering plastics business is a key area for growth for LANXESS, driven by the automotive market, he noted.

LANXESS produces polyamide 6 (PA6) and buys PA6,6 resins for its compounds. In PA6, it is back integrated to feedstock caprolactam.

“This is a core business where we are looking at ways to grow. We have grown mostly organically by opening compounding facilities around the world. We have compounding in the US, Brazil, China and India,” said Papadourakis.

In Gastonia, North Carolina, US, LANXESS doubled capacity of polyamide and PBT compounds to 40,000 tonnes/year in January 2016.

LANXESS is also actively exploring digitisation and the business benefits it can offer.

“At the beginning of the year, we got a group of about 30 experts together and started engaging them. But also we brought in business partners outside of the company,” said Papadourakis.

“We are exploring the data and finding out how we can digitise the supply chain. We are developing digital business models, taking advantage of the cloud and also seeing how we can protect ourselves from potential breaches and cybercrime. This is a global effort and we are learning a lot in these early stages,” he added.

Overall, the CEO is optimistic on the future of LANXESS as well as the wider chemical industry, even as it faces major challenges.

“We are very upbeat about our industry. We do face challenges such as protectionism, raw material volatility and new competitors, but as an industry we are used to challenges,” said Papadourakis.

“And for LANXESS, especially in North America with the feedstock availability and cost of raw materials, we are well positioned,” he added.