It has also gained a longer term five or 10-year horizon in polyurethane research and development, explained Lauren Kjeldsen, SVP and general manager of Evonik’s Comfort & Insulation business line, and Roland Hubel and Christian Eilbracht, who are both VPs in this group.
The three were speaking exclusively to Urethanes Technology at the recent PU China event in Guangzhou.
As Kjeldsen explained, ‘There are considerable opportunities to develop the business because of the complementary nature of the two companies’ products. Because Evonik concentrated on surfactants and Air Products on polyurethane catalysts, there are opportunities to further develop the two businesses.’
Both sides of the coin
She added that the aim is to leverage the two businesses’ core competences. ‘In the past, each focused in their core area,’ she said. ‘We would see a catalyst problem and may not have known how to fix it, while Air Products would see a surfactant problem. In most markets, you need both sides – catalyst and surfactants – to make good products. The merger is creating a new solution space. We are sitting together to examine the problem.’
Following the agreement to buy Air Products’ PU catalyst business, the first step was getting the business running smoothly for our customers, said Eilbracht. ‘The next step is to start innovating,’ he said.
Kjeldsen continued: ‘We bought not only physical assets, but we also got great people and the know-how that came with them. We now have the opportunity to use this talent and mindset, focusing into new areas that were less focused on in the past.’
In terms of business processes, Kjeldsen said, the next stage is to get into network optimisation, bringing the two sets of fundamentals together. ‘This phase is starting right now,’ she said. ‘We are asking, “How are we able to ship materials altogether in more efficient ways? Can we streamline order processing? Can we make this more efficient?” Our customers will start to see this in the next few months as our business systems become harmonised.’
In terms of continuity, she added, the two groups of people that are joining together have a long history in this market. As part of the integration process, workers from each company train each other Eilbracht explained.
‘The sales people get special training because we really want them to become experts for both sides of the business,’ he said. ‘There are cross selling opportunities, and we want to be even closer to the customer than we are already today. We have more boots on the ground in the organisation to provide even better technical and commercial services.’
The integration process comes in phases, Kjeldsen claimed. ‘We can do some of the network part first, then we can do some of the innovation part, and our customers will see the benefit of it. It can also echo what Christian [Eilbracht] says. Air Products PMD was a US-based company and they have big assets in America. Evonik is a German-based company, with big assets in Germany. Both organisations had a significant presence in Asia. As a result, our new organisation is well balanced globally, and can provide best-in-class offerings in all regions.’
Looking to Asia, Kjeldsen said, this region is particularly important because of the number of new product developments and demands that are coming out of the region, especially in the areas of automotive VOC reduction.
And this brings us back to materials. The combined business will focus on three product pillars: flexible foam, rigid foam and advanced polyurethanes.
In Advanced PU, Evonik will, for example, focus on products with very high density, Hubel said. He hinted that there could be more opportunities in thermoplastic polyurethanes and the polyurethane composites sector.
Evonik is looking to see which areas will benefit most from the extra talent. ‘We can now move additional resources into areas which we couldn’t serve properly as individual companies,’ Kjeldsen claimed. This is as true of the research and development teams as it is of sales and more customer-facing parts of the business. ‘We have double the capabilities in R&D and they are globally distributed.’
The senior team at Evonik can see a real opportunity for the combined business. This is because of the reduction of the number of systems houses in the polyurethane industry over the past 30 years.
‘We can provide R&D, and we can help the customers differentiate,’ said Eilbracht. ‘This will help to continue to support our customers and the industry.’
As example, Evonik sees two areas for development in the medium to long term: sustainability and flammability. ‘These are two big challenges for the foam industry and these are two areas that our development teams are focusing on,’ Kjeldsen said. ‘At the same time, we look at this highly fragmented industry, from machinery to commodity raw material suppliers and ask how do we all come together and enable the technology to get on the board.’
This process could accelerate, Eilbracht suggested. ‘With two businesses, we get more R&D resources,’ he said. ‘Evonik is a financially stable company,’ added Hubel, ‘If it commits to something, it will be supported.’
‘We’ve been in the business for more than 50 years, and we support the customers when needed,’ said Eilbracht. ‘We have managed the balance between the urgent and important things. We now have a great chance to work with the important things, such as long-term projects. We always knew where we were going in the mid-term, but now we know where we are going in the long-term.’