LANXESS: Promoting the development of additives business through acquisitions

While Lanxes A.G. is trying to exit the synthetic rubber business al completely, the German-based company can focus on specialty, high-margin businesses where its technical expertise can play a role.
includes its additives business unit, which is part of LANXESS, part of Rhein chemical specialty additives, which was greatly boosted by the acquisition of Cojua in 2017 and then Solvay's phosphorus additives business.
Chemtura, with annual sales of $1.6 billion, has 2,100 employees and 20 plants in 11 countries, and has achieved a special increase in sales in lubricant additives and synthetic lubricants for industrial .
In our most recent event at the Nudenberg-Wheeler Technology Center in Naugatuck, Anno Borkowsky, head of Lanxes' additives business unit, said: "We are now one of the major suppliers of industrial lubricants with an integrated value chain."
agreement with Chemtura at naugatuck's research campus to focus on the development and application of lubricant additives, flame retardants and polyurethanes. The center has 60 scientists and engineers, including two buildings that Chemtura has spent $10 million renovating over the past decade.
the completion of Chemtura and Solvay's acquisition, LANSA's additives business unit employs 1,900 people worldwide, has approximately 2,000 customers in more than 100 countries, and produces more than 1,100 products. The company's products are used for a variety of end-use applications, including construction, transportation, industrial manufacturing and distribution, all of which account for no more than 15% of revenue.
North America is the largest market for the business, followed by Europe, the Middle East and Africa, with Asia Pacific in third place, and regional head Borkowsky said the business needed to be expanded and strengthened.
Borkowsky said the business was expected to grow at an annual rate of about 3-4 per cent. Most of this comes from the Asian market, with 50 per cent of the construction in Asia, mainly in China.
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growing business, Lanxess, was originally spun off from Bayer in 2004 and the synthetic rubber business dominates. But Matthias Zachert, who was appointed chief executive after the chemical company dealt with some financial difficulties, has set the company on a new path, according to Borkowsky.
a joint venture between the company's synthetic rubber business unit and Saudi Aramco, which is currently seeking to exit, while LANSAM plans to build other portfolios. In the additives business, it reached its peak after completing its acquisition of Cojua.
Borkowsky said the company's business was concentrated in medium-sized markets, with higher quality than quantity, special products and leading markets.
Borkowsky said:
We have a very strong business in North America after the acquisition, which is a strategic goal because as a German company we have been very focused on Europe for a long time. Our strategy is to clearly go out and grow first in North America and then more in Europe.
Borkowsky said that while LANXESS had received a lot of interest in the Cojua deal, Solvay's smaller acquisition was strategically important because LANXESS' phosphorus division was essentially a participant in the European market. "We are excited to acquire Solvay's Charleston (S.C.) site, and it is important for us to grow our phosphorus business in the United States," he said. Mr
said it was the first time in his career that he had no close ties to the rubber industry and had recently been in charge of the global operations of the Rhine Chemical Additives business unit. "This is the first time I've managed a business unit with such a diverse distribution of end applications, which makes the business resilient in times of economic volatility," he said. Mr
similar to his experience in the rubber industry, says he finds the lubricants market a small world. "Everyone knows each other, so it's interesting to see how small these industries are, " he says. He
that some of his lubricants businesses, like Rhein Chemical Co., Ltd., offer professionally customized products.
, he says: "It's interesting that most of the players in this industry are medium-sized companies that are very innovative. The flame retardant industry is also where innovative companies focus on new trends in the industry and how we apply them.
part of the Chemtura deal is the complementarity of the two companies. "It's a really interesting combination," Borkowsky said. Then you can get people to be enthusiastic about the whole thing, because all of a sudden they have a huge portfolio.
Migdal, Head of Global Application Technology for the Lubricant Additives business, said most product development efforts were aimed at improving fuel economy, energy efficiency and emissions. "Every drop of lubricant that can be extracted to help save fuel is very valuable," he said.
has developed new technologies that are planned for commercial use in the near future, providing lower coefficients of friction and longer mileage per gallon of gasoline. "We've improved fuel economy by 5 per cent compared to the finished lubricants we referenced," says Migdal, which is good for individuals, but if you're talking about the whole country or the world, that means a lot of fuel savings. "
tariffs are unknown
Borkowsky said, north American operations are now in a strong position and the focus will shift to Asia, but a trade war between the US and China could have an impact on those plans.
, for example, that although LANSA 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," he said. If this value chain is broken, that's a problem. Borkowsky
the U.S., said tariffs could have a significant impact because more than half of his business unit's U.S. plants are exported.
"Retaliation from China and, ultimately, retaliation from Europe, certainly creates problems," he said. "
so far, the impact of tariffs has been minimal, but the latest list of chemicals that may be subject to tariffs will have an impact. "For China, they have to do this," Borkowsky said. The
currently owns two wholly-owned subsidiaries, but producing chemicals in China can be a difficult choice. As the state begins to enact strict environmental regulations, it is difficult to find suitable locations, as the government will order work to stop work and close factories that do not meet the standards.
, China has to do something because they can't go on like this, " says Mr Borkowsky. On the other hand, good companies with good track record and high standards will continue to be licensed. But if you violate any standards or permits, you have to leave China. This complicates the situation in China now. "
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