NAUGATUCK, Conn.—While Lanxess A.G. works toward fully exiting from the synthetic rubber business, the German-based firm can focus on specialty, high-margin business where its technological expertise can make a difference.
That includes its additives business unit—part of Lanxess' Specialty Additives group along with Rhein Chemie—a business that got a huge boost with the acquisition first of Chemtura in 2017 and then the phosphorous additives business of Solvay.
The Chemtura business generated annual sales of $1.6 billion, brought in 2,100 employees and 20 sites in 11 countries, and gave a particular increase in the areas of lubricant additives and synthetic lubricants for industrial applications.
"We are now one of the leading suppliers of industrial lubricants and possess an integrated value chain," Anno Borkowsky, head of the Lanxess additives business unit, said at a recent event at the firm's Nudenberg-Wheeler Technical Center in Naugatuck.
The research campus in Naugatuck came with the Chemtura deal and focuses on research and development and applications technology for lubricant additives, flame retardants and urethanes businesses. The center boasts 60 scientists and engineers and includes two buildings that Chemtura spent $10 million to refurbish earlier this decade.
After the Chemtura and Solvay deals, the additives business unit employs 1,900 worldwide, has about 2,000 customers in more than 100 countries and manufactures more than 1,100 products. Its goods go into a diversified array of end uses such as construction, transportation, industrial manufacturing, distribution and a number of others, none of which account for more than 15 percent of revenues.
North America is the top market for the unit, followed by the Europe, Middle East and Africa unit, with Asia-Pacific third, an area Borkowsky said the business needs to build up.
Borkowsky said the business expects a nice growth rate of roughly 3-4 percent annually. Much of that is coming from the Asian market, with 50 percent of construction going on there, mainly in China.
Lanxess itself was a spinoff from Bayer in 2004, with the synthetic rubber business taking a leading role. But after the chemicals firm dealt with some financial difficulties, Matthias Zachert was named CEO and set the company on a new course, according to Borkowsky.
The synthetic rubber business was put into a joint venture with Saudi Aramco (a JV Lanxess is now looking to exit), and Lanxess set to build up its other portfolios. For additives, this culminated with the Chemtura acquisition.
Borkowsky said the business concentrates on mid-size markets, quality over quantity, specialty goods and being in markets where it can take a leading position.
"After the acquisition, we have a very strong presence in North America, and that was a strategic goal because as a German company we were very much focused on Europe for a very long time," Borkowsky said. "The strategy was to clearly go out and first grow in North America, and then grow more in Europe."
While the Chemtura deal gets a lot of attention, he said the purchase from Solvay was smaller but strategically important, as Lanxess' phosphorous business was basically a European player. "We were very happy we were able to acquire from Solvay the Charleston (S.C.) site," Borkowsky said. "That was very important for us to be able to grow with phosphorous in the U.S."