Düsseldorf, Germany — A recent restructuring move by BASF SE will help the chemical company attend to customers and improve efficiency, according to Martin Jung, president of performance materials.
Launched to enable themes such as cocreation and empowering the future, the “small revolution” involves a decentralization process, which will give business units greater authority over functions such as human resources, engineering, finance and procurement.
“In the past, we very much believed in keeping our functions central,” Jung said. “And these functions were serving all the diverse businesses of BASF.”
The old structure, however, did not allow for the level of differentiation BASF needed for its businesses.
The move will see “a couple of thousands” of employees from central functions moved into individual businesses, Jung said.
“One of the big topics for BASF is to refocus on customer centricity. BASF has a huge variety of businesses, from crackers all the way to downstream businesses like ours. These operations require different levels of customer centricity,” Jung said.
A prime example of cooperation with customers, said Jürgen Becky, head of BASF’s performance materials Europe business unit, is the VisionVenture campervan, which was launched last month by German recreational vehicle maker Hymer GmbH and uses more than 20 different BASF materials.
“This is a concept that was developed together with the customer, and the point is to start from what the customer needs and developing that product together with the client,” Becky said.
But the restructuring goes beyond designing and cocreating new products. The move will balance the rhythm of the business.
“If you have a shortage in the market, you have to act immediately; you have to orchestrate your supply chain, your procurement and your sales force, in a very short time and in a very coordinated manner,” Jung explained.
Under the central structure, functions did not necessarily work in the same direction, meaning that responses to market developments and to customer demand were hampered.
“Today, everyone wants to have everything fast, no one wants to have an inventory, and you have to be very fast in terms of your reaction. And this is what we are trying to do here,” the unit president added.
With 7.6 billion euros in sales last year, the business unit represents approximately 10 percent of BASF’s consolidated sales, and the size makes the process even more critical.
Jung expects the restructuring move to be completed by the end of the year, and he is ready to reap the rewards next year.
Also by the end of the year, Jung expects to complete the 1.6 billion euro acquisition of Solvay SA’s nylon business and start the integration process.
As a company with strong reputation in vertical integration, the acquisition of the Solvay business is of strategic importance as it offers BASF access to the only European production site for essential precursor adiponitrile.
The move will complement BASF’s engineering plastics portfolio while enhancing its access to key growth markets in Asia, where the company sees strong growth opportunities.
In China, which represents more than half of BASF’s sales in Asia, the German company expects new trends such as electromobility and urbanization to continue to drive business.
To meet the growing demand, BASF’s planned $10 billion integrated petrochemical complex, currently under construction in Zhanjian, China, will include engineering plastics and thermoplastic polyurethane plants.
The two plants will be the first units to come on-stream at the site and will manufacture advanced performance materials for segments such electronics, consumer products and automotive.
Slated for operation by 2022, a plastics compounding plant will supply up to an additional 60,000 metric tons per year in China, bringing the company’s total capacity for such products to 290,000 tonnes in the Asia-Pacific region.
“China is by far the biggest market, accounting for 40 percent of the world’s chemicals consumption. Despite a double-digit decline in the Chinese market this year, the country is still the biggest growth market, and nothing will change there,” Jung said.
The country, in fact, has a huge mobility demand that will drive the plastics industry.
The penetration of cars per drivers, for instance, stands at 150 per thousand, while this figure is 650 and 700 per thousand for the Europe and the United States, respectively.
“With growing income, people buy cars. Perhaps it won’t happen this year or next year, but in the long run, it will.
“China is also very interesting from an industry point of view. The country is the market for electromobility with more than 40-50 brands there. We are also improving our portfolio to cater for these demands,” Jung said.
At K this year, BASF is highlighting its collaborative approach toward product design, showcasing, among others, an all-TPU-based athletic shoe developed in cooperation with Adidas.
Also on display is a front-end carrier for Jaguar I-PACE using BASF’s recycled content materials, which are produced using the company’s ChemCycling process.
BASF launched the chemical recycling project late last year and has recently stepped up the activities with the planned investment of 20 million euros in Quantafuel, a Norwegian company that specializes in the pyrolysis of mixed plastic waste and purification of pyrolysis oil.
BASF then uses the Quantafuel oil to make polymers that match the properties of virgin resins.
Bosch and Schneider Electric have used the recycled content materials in their products.
Headquartered in Oslo, Sweden, Quantafuel plans to start up a pyrolysis and purification plant with a nameplate capacity of approximately 16,000 tonnes at Skive, Denmark, in the fourth quarter of 2019.
“The feedstock production plant, for now, is in Denmark, but if we decide to scale up in the future, we will need different [business] models,” Jung said, suggesting that commercial-scale plants can be installed nearer to the polymer production unit for scale-up.
