PITTSBURGH (July 5, 4:40 p.m. ET) — The robust comeback of the North American automotive market is a big reason why Lanxess Corp. is building an engineering resin compounding plant in Gastonia, N.C.
The new plant is set to begin commercial production in September, with a little more than one-third of its output slated for automotive applications, marketing communications Vice President Terri Fitzpatrick said in a recent interview at Lanxess' North American headquarters in Pittsburgh.
North American auto builds were around 15 million in 2007, but the impact of the global economic recession sent those totals down below 9 million by 2009. They quickly bounced back to 13.4 million in 2011 and are on track to approach 15 million this year.
When Lanxess officials announced plans for the plant in early 2011, they said materials made there would allow auto engineers to design lighter-weight plastic parts to replace metal. Those plastic parts in turn would contribute to fuel efficiency and reduced emissions.
Lanxess is investing $15 million in the plant, which will make compounds based on Durethan-brand nylon 6/6 and Pocan-brand polybutylene terephthalate. Previously, Lanxess had imported those products from its plants in Europe. Fitzpatrick said the plant will employ 55 and start operations with one extrusion line.
Outside of automotive, the plant is expected to generate almost 15 percent of its sales from the electrical/electronics market and almost 10 percent from textiles.
The new plant is one of several compounding and resin initiatives announced in the last year by parent firm Lanxess AG of Leverkusen, Germany. In January, Lanxess opened a plant compounding similar materials in Jhagadia, India. The firm spent about $14 million on the Jhagadia plant, which has annual capacity of about 44 million pounds. Another compounding plant is being built in Porto Feliz, Brazil.
Lanxess also plans to open a massive nylon resin plant with almost 200 million pounds of annual capacity in Antwerp, Belgium, by 2014. The firm will invest more than $90 million in that project.
In the last year, Lanxess also has been active in the plasticizer market, buying phthalate-free plasticizer maker Unitex Chemical Corp. of Greensboro, N.C., and investing $10 million in a minority stake in bioplasticizer maker BioAmber Inc. of Minneapolis. The Unitex deal was Lanxess' first U.S. acquisition.
Fitzpatrick said that plasticizers are part of the firm's Functional Chemicals unit, which is separate from its High-Performance Materials business, which includes most of its plastic products. She added that Lanxess is looking into ways to integrate Unitex and BioAmber.
Officials at Lanxess also are optimistic about the development of shale gas in North America. Shale gas “may swing the pendulum in favor of North America, both as a raw material and in how it could affect utility costs,” Fitzpatrick said.
Lanxess also has been active in sustainability, working to develop bio-based forms of butyl rubber and ethylene propylene diene monomer, in addition to investing in BioAmber. “Our customers are looking at bio-based raw materials for every material they own,” Fitzpatrick added.
Lanxess got off to a promising start in 2012, with first-quarter sales of 2.4 billion euros ($3.1 billion) and pretax profit of 369 million euros ($480 million). Both of those totals were up 15 percent from the same quarter in 2011. The strong quarter led Lanxess Chairman Axel Heitmann to announce in May that the firm expects pretax profit to be up 5 to 10 percent for full-year 2012.
Almost 20 percent of Lanxess' first-quarter sales came from North America. In full-year 2011, the firm had sales of more than $10 billion and employed almost 17,000 worldwide.