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June 25, 2018 11:00 PM

Meyer: Taking a measured approach to Covestro’s polyurethanes business

Simon Robinson
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    Daniel Meyer was recently appointed to head up the polyurethanes unit at Covestro after many years with the company. He outlined his plans for the business to Simon Robinson.

    Maastricht, Netherlands – Daniel Meyer wants to add value to Covestro’s polyurethane business, but first, he wants to understand where that can best be done.

    Daniel Meyer. Credit: Covestro

    In an interview on the fringes of UTECH Europe in late May, he said: ‘I’m being very modest about the fact that I don’t know, and that the people that do know have been in this industry for quite some time. They know what they’re doing, and I have to learn from them.’

    Meyer was appointed as head of the polyurethane business in September 2017, after a background in general company management, sales and finance.

    He started at Bayer in the titanium dioxide business 25 years ago. From there, he moved into iron oxide pigments and then organic pigments, before shifting to the coatings and adhesives and specialty business.

    Most recently, he was the head of the CASE business for Bayer MaterialScience, and latterly, Covestro. ‘They have given me the biggest business in Covestro, and I am looking forward to earning that trust,’ he said.

    Back to a volume business

    Meyer believes that experience in both large commodity markets and the contrasting niche world of CASE has given him skills that he can use in his new role.

    ‘I’m sensitive to value levers,’ he said. ‘I understand the economies of scale, and in the polyurethane, industry it’s pretty big. It makes me relentless about understanding where the value lies.’

    He added that cost is a key element of success. ‘Cost is a licence to operate in this business,’ he claimed. ‘In many places, in many technologies, we are cost leaders. I absolutely believe it’s important to be innovating and to get the cost down.

    ‘If you are just shaving the eggs, you get fewer resources, less quality and, of course, less cost, but less growth. So the equation doesn’t work. You have to be innovating.’

    If you are just shaving the eggs, you get fewer resources, less quality, and of course less cost, but less growth. So the equation doesn’t work -- Meyer

    Digitalisation is a key thrust of Covestro’s communications and business strategy. Meyer thinks that it could help to restructure the way that companies do business.

    He said that digitisation could give companies the ability to understand the end-to-end, digital – or sometimes analogue – value and volume streams. ‘This helps us to understand what is available, where it is, and when can it be delivered,’ he said. ‘If this becomes transparent, it is possible to make much better decisions.’

    Pricing clarity please

    While that is true for individual companies, Meyer thinks the concept could be applied more widely, and be used to improve interactions between customers and suppliers and their peers, too.

    ‘I think there’s enough publicly available data that prices may become more transparent for customers, and I think the market is big enough and liquid enough’.

    It’s about product flow from end to end along the value chain, Meyer explained. ‘From the benzene molecule up to the mattress, [it allows us] to really understand where it is in terms of value as a function of time.’

    This poses a number of challenges for the large companies in the polyurethane industry. ‘It’s a new challenge for diversity. We are coming from an epoch where diversity was about racism, homophobia – really bad things that needed to be fixed,’ he said.

    ‘The next generation of integration is about integrating a physicist, a mathematician, a data scientist, a software programmer, an engineer and a chemist. It is already difficult to get a chemist and an engineer to talk together well – they sometimes have different technical vocabularies.’

    Profitable capacity growth

    Away from digitalisation, Meyer has clear views about how Covestro will participate in capacity growth.

    ‘Covestro has a major advantage: we are brown-field all over the continents; we can debottleneck or use smart capex. So we probably don't have the need for a big green field asset.'

    ‘We will enhance existing technology to push on cost leadership. In MDI, it seems there is demand for further investment.  Currently, it looks like demand is going to outgrow supply over the next five years. We will participate in that. ‘

    He added that, for TDI, the demand might not outperform supply, and there seems to be a need for more polyether capacity. ‘We are preparing our bets, and we have to see if the board will take them,’ he said. ‘The board of management and supervisory board are interested in extracting the maximum value from the investments, where we are the credible best owner.’

    And Covestro sees itself as ‘absolutely the best owner’ for its machinery division, Meyer added. ‘If you look at the elastomer business, we consider this to be a venture in itself,’ he said. ‘Having machinery in the elastomer business makes a lot of sense, as it is an enabler of elastomer technology. In the elastomer business, it is critical to our success.’

    Covestro keeps the CASE business and the high-volume isocyanates and polyols businesses separate because they have such different business models, he explained. This means management time and resources would be badly allocated for both business streams if they lived under the same umbrella.

    ‘By separating them, it makes it extremely clear to management that the two businesses need different focuses,’ he concluded. ‘You have to invest in what you are good at, and what enables your business. The elastomers and the Baule business are fantastic businesses.’

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