Recent hints of a dwindling interest in plastics at Hoechst AG (HQ: D-65926 Frankfurt) pertain only to commodities and not to engineering polymers, division head Bernd Sassenrath emphasised recently in a talk with journalists. While Chairman Jürgen Dormann, speaking at the autumn press conference in Frankfurt, said investments in plastics will have low priority in future capital spending budgets, Sassenrath said funds will be available for new production capacities in engineering plastics, as well as research and development, on which the division currently spends around DM 50m annually.

Engineering plastics represents DM 2bn in annual sales for Hoechst, including turnover of the Japanese subsidiary Polyplastics Co Ltd, a joint venture with Daicel Chemical Industries Ltd. Hoechst holds 7% of the overall world market for these upmarket plastics. The business has returned to the black this year, following losses in 1994, and sales rose 17% in the first nine months. But Sassenrath said the general "earnings situation is not yet satisfactory," and further price increases will be necessary if the division is to contribute to the 15% group return on equity targeted by Dormann.

Most of the problems in Hoechst's engineering plastics business are in Europe, where its largest product groups, polyacetals (POM: "Hostaform", "Celcon"/"Duracon") and fluoropolymers (PTFE: "Hostaflon") continue to perform below expectations. While fluoropolymers are losing money, POM earnings are "positive, but not satisfactory," he said. By contrast, Hoechst is more pleased with results in the United States. POM has "contributed overproportionately" to earnings of Hoechst Celanese this year, PBT ("Celanex"/"Vandar") has begun to earn money and PPS ("Fortron") and the liquid crystal polymer (LCP) "Vectra" have shown "double-digit growth". A full-scale expansion in Asia has just begun (PIE No 22, 1994).

For Hoechst, as well most European manufacturers of engineering plastics, the golden days are over. As Sassenrath pointed out, growth in the Western industrialised countries has slowed down to 3-5%, contrasted with expansion rates of 5-10% in Asia. In future, the major players expect the sector to grow worldwide at about the same rate as the GNP. Against this background, Sassenrath noted that Hoechst's projections of 5% average growth for all its engineering polymers are "particularly ambitious."

The Frankfurt group's strategy for survival in increasingly competitive plastics markets is to become less dependent on economic swings, as far as this is possible in light of soaring raw materials prices, such as tripling of prices for POM feedstock methanol this year, Sassenrath said. He explained that this will require more intensive efforts to get costs under control, simplification of operating structures, more consequent attention to customer demands and particular attention to product quality.

Spotlighting the business by product segment, Sassenrath said Hoechst intends to further widen its position as world market leader for its biggest production group, POM. This product, which represents 66% of its business, accounts for 45% of the world's 500,000 t/y output and Hoechst claims market leadership in each of the triade regions. New capacities of 20,000 t/y will bring its worldwide output to 240,000 t/y by 1996.

A "strategic re-orientation" is planned for Hoechst's PBT business, to utilise synergies with its polyester business, in particular PET ("Impet"). But Sassenrath gave few hints as to how his group might reorient its weak European PBT business in view of the new 60,000 t/y capacity planned by BASF and GE Plastics at Schwarzheide. As he pointed out, this will cover 80% of the current European market. As leader for PBT in Japan and second in the US (along with Hoechst's strong worldwide stance in PET), Hoechst and Polyplastics have 15% of the world market for polyester-based engineering plastics. But Hoechst has only 5,000 t/y of PBT capacity in Europe.

In PTFE, for which it controls 16% of the 41,450 t/y world market, the Frankfurt group wants to further expand its leading position in Europe, improve its standing in the US and Asia and increase the number of specialities in its portfolio, as well as paying closer attention to recycling. Hoechst picked up a small position – 20,000 t/y – in the nylon 6.6 business as part of the 1987 acquisition of Celanese. While admitting that this is a "non-core" area, Sassenrath left open questions as to its future in the group's portfolio.

In combination with its jv partners Kureha and Polyplastics, the Hoechst group has 19% of the 21,900 t/y world market for PPS ("Fortron"). Once a highly competitive field, the market seems to be narrowing down to fewer players. After Bayer's exit, many observers believe Phillips will eventually follow suit. Hoechst could step into the gap. Sassenrath hinted at expansion plans, saying that the group's linear product, as well as its application technology, are superior. As an investment in the future, Hoechst is spending R&D funds on a cylic olefin polymers, based on previous work with metallocene catalysts.

READER SERVICE: Text of press conference speeches (German), with many charts: Prof. Utz-Hellmuth Felcht, Hoechst managing board member in charge of research: PIE-No. 37095 – Sassenrath: PIE-No. 37096 – Dr. Herman Schaap, head of high performance polymers (PPS, LCP): PIE-No. 37097.