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.’