Interview: “We have and will further invest in our plants”
How do you rate the additives market?
Gops Pillay: The additives business is an important field for BASF. These raw materials add value to a coatings formulation, as they can enable certain attributes, such as sustainable elements, or different utilities or functionalities in a product. Therefore, we expect a growing market. The coatings market is growing by 2.8 %, and the additives market is growing at least twice of that percentage.
The projections are easily around 5 % on average on a global basis. In my opinion, this projection will remain valid for the next ten years. In certain segments you will have a disproportional growth, of course. We anticipate growing faster than the market.
Gops Pillay, President
Dispersions & Pigments, BASF
To what extent will you strengthen your activities in this field?
Pillay: We have and will further invest in our plants for dispersions, additives and resins. We are investing for growth. There is no reduction in innovation budgets or investments. The approach on how we invest is just becoming smarter and hence more efficient. And this is true for our additives business. We have a strong footprint in every region of the world with our dispersions business and we are now beefing up our additives business in this regard. On a corporate level, we are investing approx. EUR 2 billion. When it comes to investments in our additives business, it is a significant triple digit number.
Which region(s) is/are the focus to strengthen your business?
Pillay: We have a global footprint in our dispersions business. In this regard, we are continuously investing in Asia and the entire ASEAN region. The next step is to establish this global network for our additives business. For that, we have invested in the United States, in our facilities in The Netherlands, in Germany and in China. The capabilities are now given to produce additives in more regions.
We do not need to follow our customers as we are already there. China for instance is enforcing regulations and we are excited about that. We see our core competence in water-based solutions. Not only in China but also in Europe and the US we have assets on the ground to participate in this growth. Solutions for the substrate wood are very popular in Europe but the demand is growing in the USA and Asia, this is another example where we see potentials for us.
What are the current customer demand when it comes to additives?
Pillay: Customer demand were often directed at lowering prices. This is shifting. It is not just a demand about the price for one raw material that gives you higher functionality, but the total cost in use is much more attractive. To have a better cost in use you need innovation and the reputation of the brand is significant. The third part is, they want a paint from “low to no”. More to less chemical description but more consumer functionality. Coatings will always be regional. Consumer taste have a common denominator. If you go and buy a decorative paint in China, the USA or Europe you will have different functionalities and brands.
How do you rate the competitive landscape?
Pillay: The additives space will remain a very fragmented supplier landscape. There are certain product lines where you have a concentration of stronger players. However, there are so many products in the market that we hear from customers a consolidation could be in favor to take the complexity out of the business. So, the consolidation will be ongoing, but I do not see negative impacts on the supplier or customer side.
Interview by Damir Gagro