First-class organisational skills

09 September 2006 09:05  [Source: ICB]

Germany’s chemical parks have grown in importance since they appeared on the scene about 10 years ago. So, what do they have to offer?

 

GERMANY’S SUCCESSFUL organisation of the 2006 football World Cup this summer and its unexpectedly cordial reception of foreign visitors could help the country attract more international business, many commentators have suggested. But even before the season’s stellar event, operators of the chemical sector’s 40-plus industrial parks sites were doing their part to woo and welcome foreign investors.

 

The collapse of the old East German chemical industry more than 15 years ago and the downsizing of conglomerates in the West have left behind an abundance of brownfield sites, skilled workers and infrastructure management that park operators would like to see overseas and European producers share.

 

While the Germans have been rather successful in transforming single-company production complexes into multi-user sites, undoubtedly the outstanding achievement was the €15bn ($19bn) clean-up and modernisation of the East German socialist combines – backed by substantial aid from the EU and the German government. As Andreas Hiltermann, managing director of InfraLeuna, noted at the Leuna park management company’s 10th anniversary celebration on 31 August, the model has been “widely copied” by West German companies.

 

The premise that small and medium-sized chemical players can especially benefit from being part of backward-integrated sites is confirmed by many of the foreign companies that have already settled there. However, one thing site-marketing staff have discovered is that modern facilities, solid infrastructure, trained workers and generous aid schemes are not always enough to compete with sites in countries with lower wages and taxes or their own seaports. There has to be a more specific message.

 

After years of honing their profiles separately, the German site management companies have begun to band together into networks for improved clout. Aside from regional marketing initiatives, they have formed their own interest group, the German Association of Chemical Parks and Sites, as part of the German chemical industry association VCI.

 

The federal agency Invest in Germany, recently published a 51-page colour brochure listing vital statistics of the sites, and operators jointly presented themselves to potential investors at this year’s Achema chemical technology exhibition in Frankfurt.

 

As association president, Horst-Dieter Schudemagge, who subsequently handed over to Klaus-Dieter Juszak, pointed out at Achema, 160,000 people, more than a third of the German chemical industry’s total workforce are now employed in parks.

 

Some of the sites are geographically tight-knit, others are spread over a broader area. In most cases, the product mix is now more diversified than in the past. Most operators actively encourage innovative start-ups and R&D-focused organisations, as well as companies from outside the industry who buy chemicals or provide services.

 

Some Western locations are on major producers’ now oversized premises – BASF at Ludwigshafen or Bayer at Leverkusen, for example. Others are regional networks, such as the ChemCologne initiative that markets property and site concepts in the densely populated Rhine-Ruhr area, and ChemCoast, which seeks to attract investors to the more isolated northern coastal region.

 

The central European chemical network CeChemNet represents parks in central-eastern Germany that stretch across more than 55km² (21 square miles) with around 5km² still free for new projects. Its members, including the managing companies of ChemiePark Bitterfeld Wolfen, Leuna, Dow’s Value Park, BASF Schwarzheide and the Zeitz park, meet frequently to discuss regional, national or international issues and jointly promote investment. As each park has its own distinct profile and concept, the operators cooperate as well as compete, says CeChemNet project manager Peggy Padur.

Sites in East Germany

At Bitterfeld Wolfen, €230m has been invested in infrastructure since the Preiss-Daimler (P-D group) took over management in 2001 after a previous privatisation failed. The site is home to more than 350 firms with 11,000 employees who have altogether invested €3.5bn in facilities. The focus is on chlorine and processes requiring careful attention to environmental concerns. Property owners include Akzo-Nobel, Bayer, Degussa and Linde. With 1,200ha (2,965 acres) overall and 201ha free to develop, the old combine has a 27km (17 mile) road network, an 80km rail network and a 20km pipe bridge network.

 

Leuna, another former combine, with 1,300ha of total space and 70ha available, boldly claims to be bigger than BASF Ludwigshafen. This is essentially a geographical distinction, as Ludwigshafen undoubtedly leads in scope of production and value of plant, even if Leuna’s 100 firms have built new facilities worth €5.5bn. One of the newest investors is Ireland’s Quinn group, currently building a methyl methacrylate (MMA) plant. InfraLeuna chief, Hiltermann, has hinted at “a number of other good projects” in the pipeline, as part of efforts to diversify downstream. The accent will be on pharmaceutical active ingredients, industrial biotech and alternative energies.
Although BASF operates its own site at Schwarzheide near Dresden – where it produces polyurethane feedstocks and systems, crop protection agents, water-based coatings and engineering plastics, and offers third-party tenants access to its Verbund integrated production and site services – the group is widely believed to be planning to extend its presence at Leuna.

 

BASF actually founded the site, in 1916, to produce ammonia, but only returned last year with the takeover of polyamide compounds producer Leuna Miramid (now BASF Leuna). It holds a 13% stake in InfraLeuna, its principal shareholders are caprolactam producer Domo and industrial gases producer Linde with nearly 25% each.

 

Much of Dow Chemical’s vast site – 110ha with 40ha still vacant – at Schkopau near Leipzig was part of the plastics and Buna rubber complex, once owned by IG Farben and later by the East German state. Dow acquired the property by default – there were no other takers – from the privatisation agency BVS in the mid-1990s, promising to invest substantially in its own production and woo outside investors. On the space not needed for its own production, the US group established the Value Park, which now has 14 tenants – among others, Manuli Stretch and Ineos Vinyls – who have invested €350m. Dow also encourages plastics converters and applied plastics research groups to settle at Schkopau.

 

Unlike most of the eastern German sites, Zeitz is a new park, built for the purpose in 1996 on the site of a former hydrogenation plant. Among other firms, Radici Deutschland has set up adipic acid production facilities there.

West German sites
Since the break-up of the once mighty Hoechst, its Frankfurt site, now Industriepark Hochst, has attracted substantial new business. Principal shareholders of the management company, InfraServ, include Clariant (32%), Sanofi-Aventis (30%) and Celanese (31%, including spin-offs and subsidiaries). Basell, which owns 3%, and Bayer CropScience are among the more than 80 firms operating on the 460ha site (76ha unused). A new €13m “Trimodal” port on the river Main links road, rail and river traffic.

 

The ChemCoast initiative, whose partners Bayer, Dow, Honeywell and Ineos produce ethylene dichloride, vinyl chloride monomer and polyvinyl chloride and other polymers, isocyanates, fine and speciality chemicals, cellulose and fatty alcohols, has 3,000ha available for development at Brunsbuttel, Seelze, Stade, Walsrode and Wilhelmshaven. This is the only chemical site project with access to a deep-water port. Other big draws are two pipelines to major petrochemical hubs and a third in planning.

 

ChemSite, a private–public partnership of producers with state and local authorities, occupies 1,400ha in the Ruhr region. Emerging from a restructuring scheme at Huls – now part of Degussa – this initiative claims to operate one of the oldest and largest European chemical manufacturing clusters, linking the Marl Chemical Park, two BP sites, Rutgers at CastropRauxel and the Dorsten/Marl industrial park. Companies from “A” for Air Liquide to “S” for Sasol and Sabic Polyolefins produce base and speciality chemicals as well as petrochemicals at ChemSite’s six locations. The new €200m propylene grid supplements the ARG ethylene grid, which links Germany with the Netherlands and Belgium.

 

For more information go to...     

www.vci.de     

www.invest-in-germany.com     

www.cechemnet.de     

www.chemiepark.de     

www.basf-schwarzheide.de     

www.dow.com/valuepark     

www.industriepark-zeitz.com

www.industrie-park.com     

www.infraserv.com     

www.chemcoast.org     

www.chemsite.de

 

By: Dede Williams
+44 20 8652 3214

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