DSM takes growth in Asia in its stride

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Netherlands-headquartered DSM Engineering Plastics is one of the world’s leading suppliers of engineering thermoplastics offering a broad portfolio of high performance products for the automotive, flexible food packaging, electrical and electronics, and consumer goods industries. PRA spoke to Shanghai-based Ivo Lansbergen, President, DSM Engineering Plastics Asia Pacific, to ascertain the company’s goals and growth in the Asian region.

Ivo Lansbergen became the Asia Pacific President of DSM Engineering Plastics in March 2014. Lansbergen has had over 17 years of working experience with DSM – the Life Sciences and Materials Science company as well as DSM Composite Resins and DSM Engineering Plastics, initially based in Sittard, the Netherlands, and later in Singapore.

DSM posted an uptrend financial growth in the second quarter of 2014. Do you see this trend continuing? How does Asia fare in this growth?

Ivo: DSM delivered improved results in 2014 Q2 versus the first quarter, despite persistent currency headwinds. Performance Materials saw continued positive momentum in a number of end-markets. DSM targets for 2014 to deliver an improved underlying business performance in a challenging macro environment. DSM is on track to meet current market expectations, notwithstanding the adverse impact from foreign exchange rates . As commented by DSM’s CEO Feike Sijbesma: “We continue to focus on efficiencies to protect profitability and improve cash flow in the current environment. Despite the challenging macro environment, we continue to anticipate to deliver improving financial results in the coming quarters.”

Regarding the growth in Asia, sales to High Growth Economies reached a level of 42% of total sales in Q2 2014 versus 39% in Q2 2013. Sales in China amounted to US$487 million, versus US$395 million in Q2 2013, increasing by around 23%.

2015 will be a significant year for DSM, having completed its investment of US$1 billion in China and the launch of the technology centre in India. What further strategies will DSM employ to further strengthen its commitment in Asia?

Ivo: DSM began trading with China in 1963 and established its first China sales office and first manufacturing facility in early 1990s. The company currently has 42 affiliates in China including 25 manufacturing sites and employs about 3,400 people. DSM China’s regional headquarters and China Science and Technology Centre is located in Shanghai. DSM’s business is growing healthily and steadily in China with revenue of more than US$1.7 billion in 2013.

With its extensive capabilities as a leading high performance materials producer, DSM will continue to apply Bright Science around the globe to deliver winning applications, outstanding customer benefits, and long-term sustainable solutions. Our strategy and innovation are addressing the megatrends of the industry. We are fully committed to do everything we can to contribute to a more sustainable world. In the years to come we will further strengthen our capabilities to be able to respond to local market needs. Supporting local customers will be critical in our growth strategy.

Are there any other plans for expansion in other parts of Asia?

Ivo: DSM continuously reviews its capabilities to supply the market and will make public announcements when expansions are happening. With the ongoing growth in the Asia market, it will be inevitable that DSM will further expand. An example is the scheduled launch of a technical centre in India in 2015.

Are there new material technologies that DSM is developing or will soon be introduced to Asia?

Ivo: DSM is continuously developing new material technologies to deliver winning applications, outstanding customer benefits, and long-term sustainable solutions. In our R&D centre in Shanghai, DSM added since this year product development to our competences, so we cover the full range of chemistry, physics and mechanics in order to develop the latest technologies dedicated to the Chinese market.

Early next year DSM is unveiling the next generation of Diablo high temperature resistant grades in its Stanyl polyamide 46 and Akulon polyamide 6 portfolios. These new Diablo grades are aimed at applications in automotive engine compartments such as air intake manifold, ducts and charge air cooler combinations, where temperatures can reach as high as 250°C. The Diablo technology, which can be applied to various types of polyamide, provides a significant improvement in long-term temperature resistance.

Besides, other developments are actively being worked on and will be announced in due time.

What is DSM’s take on green technology?

Ivo: The need to cut carbon emissions and make vehicles more fuel (and cost) efficient has never been greater – not just in petroleum-based vehicles, but increasingly in electric and hybrid vehicles.

Our family of engineering plastics is changing not only the anatomy of the car but also the composition thanks to a broad range of properties ranging from low creep and outstanding mechanical performance to high-heat resistance – a crucial point, as next generation engines get smaller, and therefore hotter.

With our people, our local R&D facilities in Asia as well as our local production facilities we work closely together through the value chain, from moulder to OEM, to enable the production of more sustainable vehicles. With solutions for e.g. metal replacement to reduce weight or friction reduction to reduce the fuel consumption, DSM has proven in Asia to be a partner in solutions for a greener automotive industry.

In addition, by developing new grades based on non-halogen containing flame retardants, DSM actively contributes to some of the biggest challenges associated with the ever growing electronic waste (E-waste) problem: increasingly more electronics devices are being bought and eventually binned. DSM actively tries to minimise the impact on the environment and health by applying non-halogen containing flame retardants.

How is DSM pushing its green technologies in Asia?

Ivo: During this Chinaplas 2014 at Shanghai, DSM showcased some recent key applications for various polyamides, one of which was our high flow halogen free polyamide Stanyl polyamide 46 and Stanyl ForTii polyamide 4T grades. Electronics companies are choosing them to use in housings for the latest generation of synchronous dynamic random-access memory (SDRAM) connectors. These so-called DDR4 connectors — with data transfer rates up to twice those of current DDR3 versions - demand even more from thermoplastics in terms of thermal and mechanical performance.

A majority of the connector makers are already using Stanyl ForTii for DDR4 connectors. LOTES Co in Keelung, Taiwan chose DSM’s Stanyl ForTii ahead of LCPs and PPAs, which it also tested for the application. Bill Lee, director of Product Design at LOTES, says, “Among the outstanding properties of Stanyl ForTii that we value are its very low warpage after the reflow soldering process, its outstanding toughness and stiffness, excellent pin retention forces and the freedom it gives us to make components in different colours for our customers. Stanyl ForTii is also our material of choice for other SMT connectors.”

At the end of the day, it is not about cost of purchase but about cost in use: our customers recognise that by applying sometimes more expensive but better products, their cost in use is actually lower (less rework, less quality related issues).

Which markets in China will DSM be focusing on?

Ivo: DSM wants to accelerate growth in the materials sector, where our plastics portfolio includes a broad range of polyamides, plus polyesters, thermoplastic copolyesters and other high-performance materials. We aim to seek partnerships in the high-performance plastics field. Our engineering plastics find use in a variety of end markets, including automotive, electrical and electronics, flexible food packaging, and consumer goods.

In view of the upcoming ASEAN integration in 2015, how will this affect DSM’s business activities in Southeast Asia?

Ivo: DSM is hopeful that ASEAN’s further integration will result into more economic activity and reduce barriers for trade. This eventually should result in a positive business climate supporting growth in the entire region.

As announced already, DSM moved a few of its business group headquarters from the Netherlands to the ASEAN region (based in Singapore) based on the conviction that both Asia and ASEAN will play a much more prominent role in the global economic activity than a few years ago. By being locally present with some of its Executive Management teams, DSM is able to respond much better to dynamics and growth.

In other regions of Asia, in Jiangyin plant in China, the construction of the new Line 7 in the compounding plant has been accomplished and put into production, which will greatly increase our production capacity and innovation capability.

We invested and will do further in R&D capabilities to support the “local for local” developments in products and applications, including the launch of a technical centre in India in 2015. We see ourselves more and more as a development partner for key and leading companies in Asia.


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