Bayer Corp.'s plastics business didn't live up to expectations in 1997 and is looking to rebound in 1998, said Helge H. Wehmeier, president and chief executive officer of the Pittsburgh-based firm.
``We suffered, particularly on the ABS side,'' Wehmeier said in a March 18 teleconference. ``It still had an impact on us in the beginning of this year.''
ABS was affected by volume and prices, while Bayer's polycarbonate business was hampered by prices in 1997, Wehmeier added.
``We need to invest in new applications,'' he said. ``And we need price increases in polycarbonate and ABS in 1998.''
ABS prices lost an average of 5 cents in 1997, while PC makers struggled most of the year to pass on price increases, with few customers seeing the complete increase amounts that had been announced.
North American ABS sales and captive use also dropped by 5 percent last year, while production lagged 7 percent, according to the Society of the Plastics Industry Inc. in Washington.
Bayer Corp., a division of Bayer AG of Leverkusen, Germany, holds the No. 2 position in North American production, behind GE Plastics, in both PC and ABS.
Globally, Bayer AG's 1997 plastics sales increased 15.3 percent, but exchange rate fluctuations kept sales around $2.67 billion.
Bayer Corp., which also focuses on health care, life sciences, chemicals and imaging technologies, posted $9.3 billion in sales in 1997. That total is 7 percent higher than the 1996 figure and represents 28 percent of Bayer AG's worldwide sales.
Wehmeier also offered an update of the company's $9 billion North American capital investment plan — including its joint venture with GE to use PC in auto windows — and outlined Bayer's plans to reduce the amount of waste it generates by one-third of its 1996 rate by 2001.
Bayer Corp.'s capital expenditures totaled $746 million in 1997, while its research and development spending came to $639 million. The combined 1998 total in those areas is expected to reach $1.7 billion.
The most significant capital expansion is a $1.2 billion project under way in Baytown, Texas, which includes expansions of $140 million in both diphenyl methylene diisocyanate and toulene diamine used in polyurethane production.
In addition, the company has planned an $80 million expansion in PC production. The project is scheduled to come on line later this year.
A toulene diisocyanate project originally slated for Taiwan also may end up in Baytown. Wehmeier said a relocation decision will be made in a few weeks.
The GE PC automotive window project is also on track, with plans to open a development and engineering center in the Detroit area later this year.
The plan also calls for the eventual opening of a facility that could produce 1.5 million window systems annually.
Officials have estimated the market for PC windows at $5 billion to $6 billion.
The project ``could bring the auto industry lighter weight than glass, but also offer totally new engineering possibilities for auto glazing in the future,'' Wehmeier said.
The waste reduction initiative is a combination of Bayer's efforts to surpass Environmental Protection Agency standards and to act responsibly in the communities where it operates.
Bayer currently produces 37.7 pounds of waste for every 1,000 pounds of product it makes. That number was as high as 60.5 pounds as recently as 1992. By the end of 2001, Bayer wants that number to be 30 pounds, Wehmeier said.
``We need to have the acceptance of the communities in which we live and work,'' Wehmeier said.