Lanxess unveils new company

07 November 2005 00:01  [Source: ICB Americas]

The fine chemicals business unit of Lanxess will operate as a new company called Saltigo from the second quarter of 2006, the group announced at last week’s CPhI meeting in Madrid. While remaining a wholly-owned subsidiary of Lanxess, Saltigo will focus exclusively on custom manufacturing. This already accounts for over 90 percent of the unit’s activities, said Axel Westerhaus, head of the fine chemicals business unit.

However, the planned reorganization will lead to the loss of 500 jobs (26 percent of workforce) by the end of 2007, as well as to closures of unprofitable facilities. “We must reduce our production costs by around a quarter,” said Westerhaus. “Through this and other measures we shall manage to close the gap between our cost structure and that of our competitors.”

Headcount will be reduced to 1400 employees, partly financed by an across-the-board 7 percent pay cut over the next three years for staff at Lanxess Deutschland and Lanxess to help find “socially acceptable solutions” such as outplacement and severance packages.

In a deal, hammered out with the workers council, Lanxess has also set aside a capital budget of €50 million ($60 million) for the new company to the end of 2007, with the possibility of a further €50 million investment to 2010. With sales of about €400 million, Lanxess’ fine chemicals unit already claims to be the world’s number-two custom synthesis manufacturer. Ten years from now, “the company believes that only ten or 12 custom manufacturers will remain in the market,” said Westerhaus. “Our target is to be one of them.”

Asset restructuring is already underway but will not affect high-tech innovations, Westerhaus noted. In addition, Saltigo will look to outsource some of its activities where this makes more financial sense. “We are confident that these measures will allow us to reach attractive margins soon, which should then reach market average in the following years,” he added.

The name Saltigo derives from the Italian saltare meaning “jump” or “leap” and symbolizes a “dynamic and successful” leap into the future, Lanxess said.

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