It would be very difficult to miss the factories and headquarters of BASF, not least because they occupy a site of over seven square kilometres in the town of Ludwigshafen in central Germany. There are 2,000km of above-ground piping, 200km of rail track, 115km of roads and 2,000 buildings.
In 2002, BASF had a turnover of €32.2bn employing around 38,000 people in Ludwigshafen alone, making it the largest single-company integrated chemical production site in the world.
Founded in 1865 as Badische Anilin and Soda Fabrik, BASF made coal tar dyes. It still makes dyes, but from oil rather than coal, among a host of other products. After 1945, and eight years’ reconstruction, BASF was moving into the plastics age. Since 1965, this largely European-oriented company has been globalising, although Ludwigshafen remains the hub. Europe has a 55% share of total turnover, North America 24%, Asia-Pacific, Africa and the Middle East 16% and South America 5%.
“BASF sticks to its core competences and to its idea of integrated production networks, which is described by the German word Verbund,said Dr Ralf Sonnberger, group vice-president of the regional business unit (RBU) Glues and Impregnating Resins Europe. “This makes BASF the leading chemical company in the world today.”
The glues and impregnating RBU comes under the umbrella of the inorganic chemicals division and has two production units.
The first is for methane-based chemicals from natural gas which include products such as ammonia, methanol, carbon dioxide (from the ammonia process) the production of urea (using ammonia and carbon dioxide); and of melamine. The woodworking industry accounts for 75% of melamine consumption in Europe.
The second production unit is for glues and impregnating resins and formaldehyde.
Thus the whole production process follows two paths: through ammonia to urea and melamine; and through methanol to formaldehyde. Ultimately there are around 250 products made from these two paths, including urea formaldehyde (UF) and melamine urea phenol formaldehyde (MUPF) glues and UF and melamine formaldehyde (MF) impregnating resins.
“As well as ammonia, BASF also created the process for formaldehyde in the late 19th century and developed the Kaurit line for the production of UF glues in 1931,said Dr Sonnberger.
The company employs an ‘integrated process chain’ which involves the input of customers’ and market information, product management, sales and technical service, the laboratory and the production and supply chain, into what is basically one process.
The furniture industry accounts for 21% of RBU Glues and Impregnating Resins sales and construction around 13% (mainly panels but some laminated beam manufacture). The balance goes to producing chemicals, fertilisers and for other group customers.
“This spread of industries distinguishes us from our competitors,said Dr Sonnberger. “Most of them buy urea, melamine, methanol and ammonia and cook the glues. They don’t produce the raw materials as we do – in other words they are not backward-integrated and that is one of our strengths.”
The glues go to particleboard, MDF, OSB and plywood producers; impregnating resins to the production of short-cycle film, paper foils and laminates.
There are four registered BASF trade mark resins: KAURIT for particleboard, comprising UF and UFm (less than 12% melamine content); KAURAMIN for particleboard, comprising MUF and MUPF glues; KAURITEC for MDF production and KAURATEC used mainly for OSB.
The problems of the furniture industry in Europe, and especially Germany, in recent years are well known and, as Dr Sonnberger pointed out, companies all use particleboard and MDF. “Between 1995 and 2001, production has decreased by 34% in value for the overall furniture industry in Germany and consumption has fallen by 33% in the same period,he said.
“Looking at the global furniture business, the western European trade balance has gone from over three billion US dollars surplus to plus US$0.4bn in 2001, indicating only a slight export in that year. So the import ratio is 35% even though consumption is down, so western European producers are in a bad way.
“For North America, the NAFTA region imports more than it exports, with an import ratio of minus 25% and just under 40% of imports coming from China.
“Eastern Europe and Asia show positive export ratios of 73% and 24% respectively.”
So what does the future hold, according to BASF?
“Our forecast is that imports from eastern Europe and the Far East will increase for the lower-priced mass furniture market, the higher quality production will stay in Europe and the mid-range market will disappear,said the vice-president.
The company’s market research suggests stronger growth in the repair and remodeling sector and this could be a further opportunity for laminate flooring, Dr Sonnberger suggests. But, he says, there are challenges for the industry. “These are in the areas of cost, innovation to develop the markets for the product and, for the strongest players, globalisation – seeking out the growth areas in the world.”
It seems that all is not positive even for this product, with production in Europe, at 390 million m2, exceeding demand at 295 million m2 in 2002, said Dr Sonnberger.
In NAFTA and Asia, the picture is more promising, with room for imports but installed capacity is increasing, so export opportunities for Europe will decrease further, while China’s rapidly increasing capacity will mean it will have to export.
For panel products, BASF sees particleboard capacity stagnating or decreasing slightly, while MDF and OSB will increase by 5% to 10%, and 10% to 20%, respectively.
Dr Sonnberger also predicts a continuing concentration of manufacture in both the furniture and panel industries – he pointed out that 66% of European MDF capacity is already held by only five companies. Although there is a continuing move towards multi-panel mega-sites in Europe, he does not see an increase in the trend for these companies to make their own resins on site, except in remote areas.
For the future, he believes the western European market for MDF and OSB will continue to grow. And BASF is readying itself for this by increasing its production capacity for melamine-containing glues by installing a new reactor system. Together with ongoing re-engineering of its existing production processes, the capacity for amino-plast glues and resins will increase by around 250,000 tonnes per annum (tpa) to nearly one million tpa by the end of 2004.
“Our strategy is to support these growth segments and to push melamine-containing downstream products in glues and resins and jointly with our customers to drive the innovation process forward,said Dr Sonnberger. One such innovation is mass coloured MDF, in which the panel is homogeneously coloured throughout and is thus not damaged by scratching. This is an example of employing different chemical competences within the company, as the dyestuff dispersions were also developed by BASF.
Another example is in laminate flooring. The group can supply resins, glues, printing inks, coloured pigments and dispersions, underlay foams, polyurethane and paper additives – an advantage of a diverse group, said Dr Sonnberger.
He concluded: “We will help our customers to be successful in order to survive by offering them reasonably priced glues and resins and looking at ways to reduce their costs by increasing glue reactivity, for example – even though this will reduce our sales of glue per m3 of panel produced. In this business you have to have a long-term commitment to your customers through good and bad times.”
