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Synthetic rubber company Arlanxeo appointed Joosang Kim as Managing Director of Arlanxeo Singapore Pte Ltd, effective 1 February 2018. He replaces Georges Barbey, who has left the company to seek new career opportunities. RJA interviewed Joosang Kim to find out what plans the rubber company has for the future.
The growing appetite for synthetic rubber is hinged largely on an increasing trend for fuel-efficient tyres and the need for cost-effective alternatives to natural rubber. As well, synthetic rubbers are receptive to material technology advancement, which many manufacturers are making headway in.
Notably, Asia Pacific (APAC) represents the largest and fastest growing market for synthetic rubber, projected to reach a value of nearly US$38 billion within the next five years, amid the booming automotive as well as non-tyre industries in the region.
The region’s market potential is vast and is anticipated to remain so over the coming years. Arlanxeo, the Lanxess and Saudi Aramco joint venture synthetic rubber maker, reveals the important role the APAC region plays for the company, in this exclusive RJA interview with Arlanxeo’s new Country Managing Director for Singapore, Joosang Kim.
Prior to joining Germany-headquartered Lanxess and Netherlands-based Arlanxeo, Joosang Kim accumulated over 15 years of experience in the chemical industry. Since joining Lanxess in 2007, Joosang Kim has served in various leadership positions within Lanxess’s synthetic rubber business in several Asian markets, including Japan, South Korea, and China. With the establishment of Arlanxeo in 2016, the South Korean executive headed the Tyre and Specialty Rubber Business Unit for APAC and was based in Singapore.
RJA: Arlanxeo is aiming to be a leading global supplier of synthetic rubber. What steps have been taken so far to achieve this?
Joosang Kim: Arlanxeo is focused on the performance elastomers business to be the leading global supplier of performance elastomers. We are focused on our core business on the development, manufacturing, and marketing of high-performance rubber for use in several industries like the automotive, tyre, electrical, construction, and oil and gas industries, among others. Furthermore, we have the backing of Lanxess and Saudi Aramco, two strong shareholders who have laid a solid foundation for us to build a backward-integrated value chain in the mid-term.
This is made possible through our network of eight R&D centres and four applications laboratories and we have developed the most competitive and innovative range of products of the highest quality. We have continuously strengthened our R&D to optimise our production processes in terms of energy efficiency, resource consumption, and the quality of our rubber products to provide the best solution for our customers.
Arlanxeo has also made sure to have a presence in all key markets and to be near our customers with a global presence of 20 production sites in nine countries, allowing us to support their operations locally. This further ensures we remain close to the market to better understand our customers’ needs and tailor solutions to meet those needs. We have also deployed the latest technology and efficient business processes at our plants to ensure we maintain a sustainable production process as well.
RJA: What growth in turnover has Arlanxeo seen compared to last year and how did the Asian market fare?
Joosang Kim: Asia is one of the key markets for Arlanxeo and accounts for more than one third of global sales, with the China market being one of the key drivers of our steady operational performance. For the FY 2017 full-year results on a global level, sales were up by 19.2% to EUR3.23 billion against EUR2.71 billion a year earlier. EBITDA pre exceptionals amounted to EUR385 million, 3.2% higher than the prior-year level of EUR373 million.
However, with the continuous challenging competitive situation, highly volatile raw material prices and the weak US dollar, the EBITDA margin pre exceptionals came in at 11.9%, down from 13.8% in the previous year.
RJA: Will the rubber prices and supply volatility in Asia affect Arlanxeo’s results in the future?
Joosang Kim: The challenging competitive environment posed by volatility and prices is expected to persist in the synthetic rubber business in Asia. The current market environment with overcapacities and price pressure is a major challenge for our business.
However, we foresee huge demands in high performance and sustainable products, both from customer needs and the growing advocacy for industry upgrade on the supplier side. With our strong foundation, Arlanxeo is well positioned to meet various customers’ needs in different industries, with a focus on innovation and product quality.
RJA: What new developments in the automotive sector and synthetic rubber segment are expected to provide benefits to Arlanxeo?
Joosang Kim: We foresee a huge increase in demands for high performance and sustainable products be it new concepts or otherwise. This increase is largely due to changing customer needs for eco-friendly and sustainable products, as well as the general shift in government’s advocacy towards industry upgrades, such as supply-side reforms in China.
We have already developed a number of products and projects with this trend in mind, such as our self-sealing tyres that are currently undergoing further tests in extreme conditions to guarantee optimal sealing in any climate zone. And also, we are aggressively developing products that can make an important role for energy saving cars.
The market for eco-friendly and sustainable products will continue to grow and will soon become a core requirement for all products within the industry. Our offerings already include products such as Keltan Eco 6950, a bio-based EPDM rubber that will be used to make the official soccer ball of the World Cup 2018 and Keltan 13561C DE, a high elastic semi-crystalline EPDM that boasts collapse resistance in high filled. With products such as these, Arlanxeo is already in a good position to take full advantage of this market shift.
RJA: Which markets is Arlanxeo reaching across following the launch of Keltan KSA?
Joosang Kim: Arlanxeo is strategically expanding its activities in the market for EPDM rubbers and will start to supply the new EPDM grades within the first half of 2018. Extending the Keltan portfolio underscores Arlanxeo’s strong commitment to these products. With Keltan and Keltan KSA, Arlanxeo will provide a unique and broad EPDM portfolio in order to serve customers in a comprehensive manner.
RJA: What new plans are there for the Asian region?
Joosang Kim: Arlanxeo’s strategic focus remains on the APAC region and the strengthening of our leading market position within the region, and with the strong site set up we currently have.
Arlanxeo has clearly placed high importance on Asia, the largest market for its products – as shown by the building up of high-tech and highly competitive manufacturing infrastructure in Asia (EPDM and NBR plants in China, butyl and Nd-BR plants in Singapore).
We will continue to stay close to the markets and invest in the markets to meet customers’ various needs through extending production network, enhancing technology capability, and providing excellent product and service quality.
RJA: As the company’s new Managing Director, what is your vision for Arlanxeo in the coming years; and what are the future plans for Arlanxeo?
Joosang Kim: I foresee Arlanxeo continuing on its path as one of the global leaders in the field of performance elastomers with a solid start that we have seen in the first year. In terms of business direction, we have already moved away from the role as a traditional product supplier towards being a solution provider and innovation partner for our customers – a combination of services that customers are increasingly demanding from their suppliers. This shift in approach has already given us an edge in the market and will continue to do so as we refine our offerings further.
Currently, Arlanxeo’s two business units cover a comprehensive portfolio of synthetic rubber applications for a diverse range of industries. Our current and continued focus is on strengthening our leadership position in key markets such as China and the Asia Pacific region, which are key to our global growth strategy. However, we will not rule out expansion if opportunities for growth arise.
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