Lanxess considering expansion plans to meet growth

German specialty chemicals manufacturer Lanxess AG is working on capacity expansions for compounds production and is likely to announce its plans in the "very near future," according to Axel Tuchlenski, head of global product and applications development at the Lanxess high performance materials business unit.

According Tuchlenski, the company is currently expecting significant growth and is running with "very, very high capacity utilization rates."

Without going into further details, the Lanxess official said at the moment, "the capacity runs short in China and Europe, and this is where we work on expansion plans."

"Whenever there's need for new capacity, we will install new capacity. We can expand the existing sites with additional compounding units," Tuchlenski said.

In terms of markets driving the growth for Lanxess, Tuchlenski said the automotive industry is the biggest contributor.

"This is still the most important market for us, but also the E&E [electric & electronics] industry plays an important role in our business," Tuchlenski said.

Commenting on the key strategies of Lanxess, Tuchlenski said CEO Matthias Zachert has two top priorities — one being the successful integration of U.S. firm Chemtura, which Lanxess acquired in April, and digitalization.

The integration, explained Tuchlenski, started from the day the acquisition was completed. Integration teams were formed at different levels, including for R&D, logistics and production.

One major milestone was the reorganization of the company into "new Lanxess" with three segments, performance polymers, advanced intermediates and performance chemicals.

"The Chemtura integration also improved our stakes in the North American market, which is, from the strategic point of view, very, very important improvement for the Lanxess set-up," said the Lanxess manager.

According to Tuchlenski, Chemtura was the "perfect fit" for the existing business.

"We still follow the Lanxess strategy to enter midsize markets out of a leading position. This is a Lanxess strategy, and the Chemtura acquisition exactly matches it," he said.

And in addition to flame-retardants and lubricants, the Chemtura acquisition has offered a new business to Lanxess, and that is urethanes.

Lanxess has now developed a new business called Urethanes Systems following the acquisition, which is part of the company's engineering materials segment.

In terms of digitalization, Tuchlenski said Lanxess was running a "major project" to make itself digital.

"This holds for everybody within the company. It starts within the operations to make production facilities digital and follows with digital maintenance, predictive maintenance tools for the supply chain, all the way through to digital business models and digital marketplace," he added.

For this transition to a digital company, Lanxess said it invests in "people" and provides resources when needed.

"We invest whenever there's a reason business case behind it," explained Tuchlenski, adding that a digitalization group function has been set up within Lanxess to address the issue.

In terms of big trends in the industry that Lanxess is keeping an eye on, Tuchlenski pointed to lightweighting as one of the "most important" topics for the industry.

But what Tuchlenski sees as a game-changer is the new mobility concepts.

"The electrification of the powertrain will bring significant changes to materials suppliers, too. The way how we manage, install and set up the battery in [an electric] car, battery thermal management, battery lifetime maintenance, flame-retardance and other related issues will be very important," Tuchlenski said, pointing to the increasing dominance of electric vehicles in markets.

New mobility is also expected to bring new players to the fore.

"Nobody knows whether the existing supply chain will exist in five years' time," explained Tuchlenski, adding that there are many new players coming particularly from China and of course disruptive players such as Tesla.

This, according to the Lanxess official, is both a challenge and opportunity for the industry.

"We at Lanxess consider this as an opportunity. We will put significant emphasis on developing this market, and we will do this with a global kind of task force. We believe that now is the time to invest and develop applications and standards, while maintaining the existing business, which is the challenging part," he said.

For the lightweighting trend, in Fakuma this year, Lanxess is introducing Tepex, which is a continuous-fiber-reinforced thermoplastic composite.

According to Tuchlenski, Lanxess is the only "mass producer" of continuous-fiber-reinforced thermoplastics materials and the product is finding its way into the mass market.

The product, which is very light with high stiffness, is mainly supplied to the automotive industry, where it is used for under-the-hood protection, particularly in countries with poor roads where the engine could be damaged by rocks.

Another use, within the automotive industry, is where the materials is used as a container or a "holder."

This includes car door modules and infotainment systems that need to be contained.

Lanxess currently produces Tepex in Brilon, a small city two hours' drive away from Cologne, Germany, where Lanxess is headquartered.

Another use for the materials is the A-cover for electronic equipment, for which OEMs are switching from aluminium and magnesium to polymers.

Lanxess, Tuchlenski said, will equip two famous notebook brands, including Dell, with Tepex A-covers.

The Tepex solutions, he concluded, will provide stiffness while offering light weight as well as the ability to be decorated or colored.