With 2016 sales of € 11.9 billion, Covestro AG (formerly Bayer MaterialScience) is one of the world’s leading players in plastics & polymers industry. Giving it an edge over its competitors is its focus on developing innovative solutions for products that find applications in a wide range of industries such as automotive, electrical & electronics, construction, sports & leisure, etc.
The company aims to constantly innovate by pushing the boundaries of what is possible and doing so in a more sustainable way, says Dr Markus Steilemann, member of the board of management responsible for innovation and head of polyurethanes (PUR) business unit, Covestro AG.
In this interview with Rakesh Rao, Dr Steilemann discusses the research focus of Covestro and role of India in the company’s future growth strategy.
In June 2016, Covestro inaugurated the first plant for CO2 based polyols. What is the significance of this event for the company & industry? Is there anything for India or Indian customers?
The plant in Covestro’s Dormagen site near Cologne, Germany, is the first worldwide to manufacture a precursor for polyurethane foam with 20 percent of the waste gas CO2 as raw material. To make that happen in an efficient manner is nothing less but a revolution in the field of chemistry. The new process at the same time saves about the same amount of the traditional oil-based raw material, thus making it more resource efficient and sustainable.
For science, our industry and customers alike this is a big step forward: CO2 from now on is not just the ubiquitous waste gas; it can also be recycled and be made useful again as raw material.
Our tests have shown that polyurethane foam based on CO2 has at least the same high quality as conventional products have. They are especially designed to produce mattresses.
If the new CO2-based precursor and the foams made from it are received as warmly as is hoped, we might consider a production expansion in the long run. In addition we are also working on manufacturing many other plastics with carbon dioxide. Our vision is to spare more and more crude oil in plastics production.
Since we just started our very first plant with this brand new technology, our focus currently lies in the European market. In the long run, we may consider producing CO2-based materials in other key regions as well. This will depend on market conditions and other factors.
Which are the focus areas for innovations at Covestro?
We aim to solve contemporary issues such as urbanisation, increasing mobility, climate protection and the scarcity of fossil resources. To achieve this, we work closely with customers in key industries such as the automotive, construction and electrical/electronics sector to develop new products and improve existing ones to meet those challenges.
Examples for such product innovations are light and stable materials for ultra-lightweight notebooks, highly efficient luminaires, material solutions to make wind energy more efficient or research on alternative raw materials. In Rajasthan, we try to improve the lives of local citizens by providing affordable houses made out of our materials. In a broader sense, we constantly innovate to push the boundaries of what is possible, benefit society and reduce our impact on the environment.
What is your view about Indian market?
Covestro strongly believes in the APAC region; especially India whose economy is growing constantly. India comprises a considerable part of our APAC revenues and it will be a formidable part of the Covestro growth strategy in the region.
We are committed to the Indian market with our assets in place and active collaboration with industries. Our growth targets are aligned to the industry’s plans of accelerated growth.
What are the key challenges faced by global chemicals (materials) companies, such as Covestro, when they want to expand their business in India?
Every country has its own socio-cultural and economic dynamics. That must be considered when operating in any country. Covestro too has to comply, for example, with the environmental and manufacturing regulations that are in place. There are no particularly tough challenges that we have faced though. On the other hand, we believe that we can contribute to providing sustainable solutions to local issues in India such as food wastage or increased energy consumption. We do that by, for instance, supporting government initiatives such as Swacch Bharat Mission.
Which are the key end-user industries that are driving demands for Covestro products in India?
India is a growing market and holds a lot of promise. The three key industry verticals driving the growth for polymers there are automotive, electronics and home furnishing. The automotive sector is the strongest contributor to our revenues in India.
What role do you foresee for India in Covestro's R&D/innovation activities? Do you think Indian unit can play a role in developing innovative products for the global market?
We have research and development facilities around the world, where we constantly seek new possibilities for industry-specific solutions. In 2016, we spent about € 259 million on research and development, corresponding to slightly above 2 percent of total sales.
Our Indian innovations hub is on a good way to establish itself within our global innovation network. We profit from our excellent contacts into key industries and to thousands of customers that are also active within India. We definitely expect good ideas coming from this hub that can be implemented group wide – as we expect from all our hubs around the globe.
What is the short-term and long-term growth plans for India?
India is a significant and growing market. We want to bring our bold vision to this country and make it a brighter place as well. In the short term we want to drive core volume growth of our products through collaborative projects and activities. We are in India for the long haul. Our growth plans therefore are as inclusive as possible. We engage in creating an ecosystem for sustainability through initiatives supporting STEM education and academia, and support local communities with sanitation, solar dryers or affordable housing – all made out of our material. We intend to be a good corporate citizen and follow our guideline to benefit the people, the planet and then gain something for us out of it.
