Bayer sees more promising business in Indonesia
By Christiani Tumelap
SINGAPORE (JP): Germany's diversified chemical and health care manufacturer Bayer Group expects business to improve in Indonesia following its recent expansion into the polyurethane industry.
Bayer Group has just taken over a factory producing polyurethane raw material called polyol in Anyer, West Java, owned by the U.S.-based Lyondell Chemical Company as part of the group's US$2.45 billion global acquisition of Lyondell's polyol business line.
Wolfgang Piroth, president of Bayer Group's three joint ventures in Indonesia, said the new polyurethane business here was expected to contribute at least 30 percent of the group's total sales in Indonesia this year.
"Polyurethane is a new dynamic business," he told The Jakarta Post at the group's recent regional meeting.
Piroth said the group's Indonesian units recorded total sales of about US$170 million last year, lower than the average $230 million it obtained in the pre-crisis period.
"This year, hopefully, we'll be able to return to the pre- crisis level of performance with help from our newly set up polyurethane raw material business," he said.
Bayer Group currently has three joint venture companies in Indonesia, namely PT Bayer Indonesia Tbk, PT Bayer Kimia Farmasindo and the newly formed PT Bayer Urethanes Indonesia.
Founded in Germany in 1863, Bayer Group has production facilities at 19 locations around the world.
It currently markets more than 10,000 product items worldwide, ranging from pharmaceuticals and diagnostic systems through to crop protection agents, plastics, synthetic rubber, rubber chemicals, fibers, dyes, pigments, organic and inorganic intermediates as well as products for information technology.
In Indonesia, the group has two pharmaceutical and consumer care factories located in Jakarta, both managed by Bayer Indonesia Tbk, and the newly acquired polyol plant in Anyer, West Java, managed by Bayer Urethanes Indonesia.
Bayer Kimia Farmasindo operates solely as an importer of chemicals and diagnostics raw materials for local chemical manufacturers.
Bayer Indonesia Tbk, which booked a total sales of Rp 689.5 billion last year, produces its pharmaceutical and over-the- counter medicines in its factory in Cibubur, East Jakarta.
The plant produced some 185 million tablets, 5.29 million liquid bottles and 6 million ointment tubes last year.
The company's Pulogadung plant produces consumer care, except for those sold over the counter, and crop protection products. It produced 50,488 tons of consumer care products and 5,633 tons of crop protection products last year.
The Bayer Urethanes Indonesia plant in Anyer, which is worth at least $26 million, currently produces 32,000 tons of polyol per year.
Polyol is the raw material used in the production of polyurethanes, a group of foams with a wide variety of applications -- chiefly in the electronics industry, in heat and cold insulation, construction of technical parts, the furniture industry and in the fields of sports and leisure.
In addition to the Anyer plant, Bayer also took over the Lyondell Asia polyol production site in Kaohsiung, Taiwan, which has an annual production capacity of over 40,000 tons.
In addition, Bayer took over Lyondell's two polyol plants in the United States as well as one each in Belgium and France. All the plants together with the two factories in Asia have an annual capacity of some 700,000 tons of polyol.
Bayer AG's general manager for the polyurethane business group, Hans-Joachim Kaiser, said at the regional meeting that although Bayer's strength was in isocyanate chemistry, the company had never had sufficient capacity to supply the two main components of polyurethane, polyols and isocyanates.
The acquisition of Lyondell earlier this year has definitely changed that situation, he said.
"We are now in a position to supply customers with the full range of products, technologies and services they need for the production of polyurethane," he said.
He said Bayer's polyurethanes business increased its sales last year by almost five percent to 2.17 billion euros.
The acquisition will help increase the group's polyurethane business' sales to three billion euros.
Kaiser said Bayer Group planned to significantly strengthen its position in the Asian polyurethane raw material market following its acquisition of the two polyol plants in Indonesia and Taiwan.
"We hope to increase our share in Asia's polyurethane raw material market to 25 percent in 2004 at the latest, from 10 percent at present," he said.
He said, as part of Bayer Group's plan to strengthen its polyurethane raw material business in Asia, it would build several new production facilities in the region.
He said the group expected to finalize one or two new projects this year so that the new plants, which would likely have an annual capacity in the range of 150,000 to 230,000 metric tons, could start production in 2004.
"We also have plans to increase the production capacity of the Anyer polyol plant by around 50 percent," Kaiser said, but he did not give a time frame for this.