BAYER SPENDING BIG ON PU, PC AT BAYTOWN

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Bayer Group's subsidiary in the United States will boost production of engineering thermoplastic polycarbonate and two key polyurethane components at its Baytown, Texas, facility.

Helge H. Wehmeier, president and chief executive officer for Pittsburgh-based Bayer Corp., said the company is raising expenditures for capital improvements and research and development to new levels.

With its industrial partners, Bayer plans to invest $1.2 billion at Baytown from 1995-2000, and the company expects to add ``roughly 400'' jobs at the site, which now employs about 1,300, Wehmeier said in an April 2 news conference.

Three major projects are scheduled for completion by the end of 1998:

Bayer will construct additional phases of a facility to make diphenyl methylene diisocyanate, a PU component. In December, the firm completed an initial phase to make an intermediate MDI product and will add about 300 million pounds to its existing MDI capacity of 220 million pounds. Cost for all phases: about $140 million.

The company has awarded engineering contracts and expects this spring to begin building a $140 million facility to make raw materials for toluene diisocyanate, another PU component, for domestic and foreign markets.

Nameplate capacity to make PC will increase more than 40 percent. Bayer has cut operational bottlenecks and, for $80 million, plans to add 120 million pounds and boost total PC capacity to 400 million pounds.

Also, by mid-1999, Bayer will build a $150 million bisphenol A plant to supplement the PC operation that competes for market share with niche-dominant GE Plastics. Bayer, lacks this capability, and now mainly buys bisphenol A from Shell Chemical Co.

In addition, Bayer will invest about $500 million for infrastructure and other raw materials for its isocyanates manufacturing lines. A new chlor alkali facility will come on line in 1999.

In addition to jobs created at Baytown, the projects will bring another 3,000 workers to the site next year when construction peaks. About 35 percent of the 1,000-acre site is developed.

Current industrial partners in the Baytown development include First Chemical Corp. of Jackson, Miss.; Borden Chemicals of Columbus, Ohio; and Air Products & Chemicals Inc. of Allentown, Pa., according to Bill Forester, senior vice president for polymers manufacturing in Pittsburgh.

Though Bayer Group is the world's largest PU producer, it faces strong U.S. competitors, such as Arco Chemical Co., which acquired Olin Corp.'s toluene diisocyanate and aliphatic diisocyanate businesses in early December.

Bayer leads in production of MDI, a key component for rigid and semirigid PU foams and for elastomers. TDI is used in making flexible PU foams. Construction and appliance markets drive major PU growth, raising demand for MDI and TDI.

Compact discs, automotive components, medical products and sporting equipment push the market for PC, including Bayer's Makrolon brand. Bayer estimates the global market for PC is growing 8-10 percent a year and will exceed 3 billion pounds by 2000.

Separately, Wehmeier praised the performance of the styrenics business that Bayer acquired from Monsanto Corp. in November 1995. He said that the transition at the Addyston, Ohio-based operation went ``smoother than expected,'' and noted that Bayer is ``constantly investing'' in the business.

Bayer Corp. reported profit of $196.7 million on 1996 sales of $9 billion.

Parent Leverkusen, Germany-based Bayer Group recorded 1996 worldwide sales of $32.4 billion, mostly in chemicals and pharmaceuticals.