Bayer: Product Glut May Force Cuts
Global demand for polyurethanes, polycarbonates and coating chemicals has cooled after several heated years, leaving a top world producer with an oversupply that may spur cutbacks.
Bayer MaterialScience AG, an independent business within 150-year-old Bayer AG, is being squeezed between excessive capacity and rising costs, Chief Executive Marijn Dekkers told reporters at a dinner Monday night (Sept. 16) at the company's headquarters in Leverkusen, Germany.
"Our margins are under pressure, and we need to save costs," Dekkers said, according to news reports.
With more than 14,500 employees and more than 2,000 chemicals in its product portfolio, Bayer MaterialScience is one of the largest materials producers in the world. The company is the global market leader in polyurethane and polycarbonate production and is one of the largest suppliers of raw materials for coatings, adhesives and sealants.
Polyurethanes, invented by Otto Bayer, are used in a wide variety of foam insulation, seals, gaskets and other building products as well as in high-performance coatings, adhesives and sealants.
Chemical companies had increased output capacity in recent years in anticipation of the construction booms in emerging markets, but that building fever is quickly cooling, news reports quoted Dekkers as saying.
Growth in China "has weakened considerably," he said, according to a Reuters report.
Bayer MaterialScience is the top global producer of polyurethanes and polycarbonates and makes hundreds of raw materials for coatings, adhesives and sealants.
He called the problem temporary.
"In the next two or three years, our margins will improve again," he said, according to a Wall Street Journal report.
Meanwhile, Dekkers said, the company had been discussing "small adjustments" with labor representatives but declined to disclose specifics or whether the cuts would include job losses, according to the Pittsburgh Post-Gazette's website.
Bayer's polyurethanes are used in a wide range of paints and coatings.
With German elections set for Sept. 22, Dekkers also called for policies to reduce energy costs, saying that MaterialScience in Germany "pays double the amount for electricity as in the U.S.," according to the Journal.
Bayer MaterialScience's competitors include Sabic, of Saudi Arabia, for polycarbonates and BASF for polyurethane foam chemicals, Reuters noted.