Arlanxeo in position to deal with challenges in market

MAASTRICHT, Netherlands—Hans Joris has had plenty of exposure to both the tire and non-tire parts of Arlanxeo Holding B.V.'s global synthetic rubber business in his more than 13-year tenure with the firm.

He joined the then-named Lanxess in 2006 with a business engineering degree and spent much of his time on rubber chemicals. Following that was a stint in Switzerland, where he had global controlling responsibilities for the performance butadiene market.

Then he went to Asia to help launch a new NBR production site in Singapore, and served as strategic marketing manager for Asia-Pacific. After Arlanxeo was formed as a joint venture between Lanxess and Saudi Aramco, he spent nearly three years as the global marketing director of the non-tire side of the JV, before taking the same title for tires as part of Maastricht-based Arlanxeo's Tire & Specialty Rubber business unit.

"There is a large overlapping when it comes to the products that are serving those different industries," Joris said. "From a product perspective, most grades that go into tires also find their way into a variety of other industries."

The big differences are the value chains working in the different industries, along with some of the regulations governing such niche markets as food applications and pharmaceutical packaging.

Customer requirements also are quite different in non-tire compared to tire sectors.

In the synthetic rubber industry, Joris said it's important for Arlanxeo to go after both tire and non-tire business so the supplier maintains a diversified portfolio.

"Tires, of course, are the big driver because it's the big majority, so when it comes to innovations, it remains the biggest driver," he said. "On the other hand, the non-tire markets are still a very large portion of the business as well. It's a very important element of how we position ourselves in the industry."

Challenges in tires

When he returned to the tire side of Arlanxeo last spring, the economic environment was pretty tough, given uncertainties with global trade and the rise of protectionism over the past several years. But Joris said he believes Arlanxeo is in a good position to deal with such variables, given its position as a global player.

"We have 10 production sites around the globe and are present in every single continent," he said. "It somehow helps to mitigate some of those uncertainties and some of those changing trade flows."

Joris said Arlanxeo probably has the broadest portfolio of all SR suppliers, especially when looking at offerings to the tire industry. Having a global footprint also is a benefit when dealing with a tire industry where the Top 10 players account for a large share of the overall industry. "With that, global suppliers are key to this industry," he said. "I think with our setup we are historically well present not only in Europe, but also North America and South America, and of course Asia-Pacific, where the biggest consuming market is for those types of rubber."

While the increase of protectionist measures aren't helping the business, at least being a global player gives Arlanxeo more options to deal with the changing trade flows.

Changes in the future automotive landscape also will impact SR producers and their customers going forward. As electrification, autonomous driving and the concept of shared mobility become more prominent, the Arlanxeo executive said these trends will bring different requirements for rubber suppliers.

Some of the needs already are in play for such items as safety and environmental impact improvements, but those will be even more important in the future, according to Joris.

Different catalyst types such as neodymium BR are becoming increasingly important, and the trend to solution SBR as a functionalized material will continue to gain traction.

"When it comes to butyl, air retention remains extremely important," he said. "That's a big contributor as well to rolling resistance. If you don't have the right pressure on your tire, all the rest doesn't help."

Collaboration between SR firms and tire maker customers also is growing, a change from the old days when the tire industry was more conservative. "You need a very close collaboration and we're doing that with all the key manufacturers," Joris said. "It's about joint development and having the right level of technical exchange. For that we're also well-positioned with well-equipped technical service and innovation centers."

Sustainability is a topic that will continue to become more prominent, with all the tire makers publicizing their plans and targets, and other industries joining in the movement as well. He said an SR supplier's role includes continuously upgrading its products and dong things such as utilizing reusable packaging.

"Things will continue to evolve that are today not too prominent," he said. "One is more bio-sourced materials. So far that is still relatively limited."

An Arlanxeo spokeswoman said sustainability isn't just about the end product, but also is part of the design and manufacturing, how the firm operates, and compliance with national and international regulations. The firm contributes in various ways, but knows there is much work to do.

"We know that tires still have a long way to go to be a properly sustainable product," she said. "What we're trying to do at Arlanxeo the last three years is also to participate in other ways, from the beginning of operations and every part of production and design, to sustainability and to ensuring protection of the environment, but also protection of the community and special care for future generations."

Acknowledging that tires can't be considered a green product today—she said it's more black or grey—the spokeswoman said Arlanxeo operates in different countries and regions, following and adjusting to differing rules and standards. "And we follow them and we operate in a sustainable way as much as possible, or even more," she said.

Saudi Aramco ownership

It's been a year since Saudi Aramco took over full ownership of Arlanxeo, and Joris said, in general, that has been a positive development.

"In the past under Lanxess a lot of attention was given to this business, but under a joint venture structure, having two different shareholders, it's not always the easiest way of operating," he said. "For us, as a business and as an organization, it has sent a very strong message. Now we have one owner that also is clearly believing in this business and willing to further grow this business.

"I think both from an organizational (standpoint) for the people, as well as for our customers, I think that's a great commitment and a good step."

The Arlanxeo spokeswoman said for the roughly 4,000 employees of the SR producer and its customers, it's been business as usual since Saudi Aramco became the sole owner effective Jan. 1, 2019. That means keeping a focus on designing and manufacturing top quality product, something she said was in place before.

"Being part of a big and dynamic firm such as Saudi Aramco also is positive for us, and it's not something that's completely new," she said. "We've been working with these people before being solely owned by them, so they know us and also have contributed to what we are today."

Saudi Aramco's stated strategy includes diversification and going farther downstream from oil production, something that Arlanxeo's synthetic operations will aid. "It's clear that rubber has been seen by them as one of the good ways to fit into that broadened value chain," Joris said.