DUSSELDORF, GERMANY - Despite a profit-margin squeeze from high raw material prices, Bayer AG plans to invest $1.45 billion (1.7 billion euros) in its polymers segment this year, Werner Spinner, a top Bayer executive, announced during a pre-K 2001 news conference.
Spinner also said Bayer must increase resin prices to become profitable this year. In the first quarter of 2000, Bayer saw its polymer sales increase by 17 percent but profit plunge 28 percent.
Most of the investment cash - $1.2 billion - will go to expand production. ``The lion's share will go into expanding our polycarbonate capacities, especially in Asia,'' said Spinner, who represents both the polymers business and the Asia-Pacific region on Bayer's managing board. That amount is almost half of the overall 2000 capital expenditure budget for all of Bayer - even though polymers account for just one-third of Bayer's total sales.
Late last year, Bayer announced plans to expand in Thailand, China and Texas, a move to double its annual PC capacity by 2005.
Spinner said Bayer, based in Leverkusen, Germany, also will increase polyurethane production in Southeast Asia. Bayer expects demand in the region to increase in the double digits - but after some short-term economic pain.
German business executives are worried about a global economic slowdown. In June, Bayer and another big German chemical company, BASF AG, both issued profit warnings.
Spinner said Bayer has been hurt by downturns in Asia and the United States, especially slowing U.S. car production. Bayer has announced a modest restructuring plan to save about $250 million this year, but Spinner declined to give specifics.
And he remains optimistic, even as European press reports hint that the economic slump is reaching the continent.
``We see the current cooling-off of the world economic climate as being temporary,'' he told 150 journalists from 25 countries at the news conference, held June 22 at Dusseldorf's Apollo Theater.
High oil prices have raised the price of raw materials. But Spinner said those costs ``will ease off slightly this year.'' Bayer will raise prices because the company needs to restore profitability in the next six months, he said.
Spinner spent much of his 30-minute speech on e-commerce. Bayer will roll out its Global BayerOne Web site Oct. 1 - just in time for the K 2001 show. One interesting feature of the site will be a program that calculates and predicts the molded part design and processing properties.
Bayer will continue to participate in outside Web sites, including Elemikca and cc-chemplorer. Bayer generated about $460 million in business through the Internet in 2000, a figure Spinner expects to increase tenfold in 2004.
Hagen Noerenberg, general manager of the plastics business group, outlined Bayer news for K 2001:
New grades of Durethan nylon that can be electrostatically coated with no need for primers. Showing an example of door handles and fuel-tank covers for cars, Noerenberg said the paint goes into the corners and covers the edge of the parts.
A laser-weldable grade of Durethan designed for joining parts with complex geometries, such as the car intake manifolds.
A new co-polycarbonate, Makrolon DP1-1848, which Bayer claims has outstanding transparency and improved properties, including greatly increased notched impact strength at very low temperatures.
A flame-retardant Bayblend FR 3000 generation of ABS resins. The plastic contains no chlorine or bromine, both of which cause toxic gases in a fire, so the extrusion grade is suitable for cable ducts and interior trim on buses or trains.
In the world of optical discs, Bayer has developed new grades of PC with much improved flow characteristics, required as manufacturers pack more data onto ever-smaller digital versatile discs.
Bayer also will show the Contura system for mold cooling, developed with Innova Engineering GmbH. The three-dimensional system separates the mold core into slices, then inserts water channels inside before fusing the mold together again. Bayer first announced details at NPE 2000 last year.