NPE '03: Bayer Polymers eyes 25% of sales from China

23 June 2003 02:25  [Source: ICIS news]

CHICAGO (CNI)--Bayer Polymers is committed to increasing its sales in China to 25% of its total by 2007 - up from 18% last year - through completion of production projects in Caojing, the company's president, Ian Paterson, said at a press conference here Sunday.

Paterson touched on a wide range of economic and corporate issues in a meeting with reporters here the day before the official opening of this year's National Plastics Expo, an international conference held every three years by the Society of the Plastics Industry (SPI).

Besides commenting on the prospects for China, Paterson also noted that Bayer's reorganisation leaves the Bayer Polymers business unit as the group's largest with Euro11bn ($) in sales last year for 40% of the group's total.

Paterson also referred to the US natural gas situation as "crazy." He predicted the second half of this year would be as weak as the first and said the Pittsburgh, Pennsylvania-based unit of Germany's Bayer Group will have accomplished a global job elimination of 5300 by 2005 - reducing its headcount to 18 000 from 23 000.

The cost-cutting initiatives and ambitions for China represent equal parts of the Bayer Polymers strategy for meeting a series of challenges highlighted by Paterson here when he met the press.

He noted that Bayer Polymers as a unit has doubled its annual sales since 1993 and said sales now are split evenly between its two business divisions: plastics and rubber; and, polyurethanes (PU), coatings and fibres.

But Bayer sees China as a crucial new arena for opportunities and Paterson emphasised the company's commitment there, noting it feels it must have production in the region to generate sales there.

He said Bayer Polymers will target most of the production from the projects under way in Caojing for sales in China while studying opportunities elsewhere in Asia.

Paterson said: "Our goal is to be the leading supplier of polymers in the world."

But he listed several challenges forcing Bayer Polymers and all companies to get tough while calling the economic outlook "mixed" for the rest of this year.

Paterson cited four trends as keys to shaping the general outlook, headed by a recognition that sales of so-called "big ticket" items are slipping. While consumer trends might be on the rise, he said the big ticket sales affect Bayer's industrial customers, such as the automotive sector, which generates 25% of all sales for Bayer Polymers.

Besides the decline in sales of big ticket items, Paterson also cited the continuing high costs of energy and raw materials and signs of overall slowing demand for the second half as negatives.

In contrast, however, he said there are signs of increased activity in the US housing sector.

In the midst of this, he called it "crazy" to encourage consumption of natural gas without encouraging development of more gas production in the US. He said Bayer Polymers is examining several strategies for maximising its supplies of natural gas.

Besides the headcount reduction, Bayer Polymers also is eager to create alliances with other companies. And it has taken what Paterson considers important steps toward simplifying its structure for dealing with customers.

Formerly divided among product lines, Bayer Polymers has changed its customer relations structure into one where each customer has a primary contact at Bayer who will locate the proper contact anywhere in the company when the customer has a need in several product lines.

This year's NPE conference will meet here through Thursday.

By: Gary Taylor
+1 713 525 2653

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly