Several Billions of Euros to Advance Sustainability

Q: BASF will invest US$40 million in its North American automotive coatings division. How will Mexico’s operations improve?

A: A large portion of the money will be invested in Tultitlan, State of Mexico. Our focus is on developing waterborne coatings dedicated only to the automotive industry. Our priority is to increase our production capacity and we see high demand for these solutions in the automotive market as more companies move from solvent-borne coatings to waterborne solutions. All new investments of European and Asian OEMs in Mexico are focused on waterborne solutions.

We are also investing in our paint and spraying capabilities in Tultitlan. BASF is focused on the new generation of paint. We have more than 650 people working to support our customers in Mexico. To meet their needs, we must have the best paint application equipment. BASF is also working on improving the efficiency of its paint production equipment through modern and sophisticated processes.

Q: Being part of the Dow Jones Sustainability World Index, how important are sustainable practices in the automotive sector?

A: Sustainability is one of BASF’s core strategic principles. The company has implemented a 10-year plan to 2025 and sustainability is a crucial element. In the past, the general population considered the chemical industry the bad guy in terms
of environmental practices. We took this criticism seriously in an effort to understand what we could do better or how we could communicate our strategy better to other companies and potential clients. We concluded that if chemical not address these issues, no one would. As one of the biggest companies with a broad portfolio of products and solutions, we have a responsibility to reduce our environmental impact. BASF is investing billions of euros every year in R&D and almost 100 percent of our projects have a sustainable approach.

Q: How does BASF see its products adapting to meet the environmental challenges of an evolving world?

A: According to the UN, there will be approximately 9 billion people living on Earth by 2050, which means there will be an even more pressing need to find sustainable solutions for everyday operations. Besides nourishment, which is also a priority for BASF, we have identified mobility as one of the biggest challenges people will face in the future. Megacities will become a common concept and people will need to find a way to transport and deal with waste, energy and housing.

Coatings will be essential in transportation applications, not only for aesthetics and protection but to ensure the efficiency of lightweight components. Electric and hybrid vehicles will become mainstream, which means that polymeric solutions will become a standard to reduce weight and to ensure better heat-management results in powertrain and battery systems, leading to reduced energy consumption.

Q: How can companies incorporate green alternatives while maintaining accessible production costs?

A: One is not independent of the other. Companies need to come up with solutions that provide a benefit both for the company and its clients. If our R&D efforts are oriented solely on sustainability, we might end up forging a great but extremely costly solution. In the end, this would narrow our market potential to only the most exclusive companies that do not mind paying an extra cost to remain sustainable. We want to target these players as well as companies with mass production.

Our environmental vision has led us to analyze our own products and determine if they comply with the standards we want to set in terms of sustainability and if they are changing the industry for the better. We have denominated all products that meet our sustainable standards “accelerators” and we have worked to make sure our R&D efforts are always oriented toward  accelerator development. This is part of our Steering Sustainable Solutions program launched in 2015.

Considering our current portfolio, 27.2 percent of our products are accelerators, 68.3 percent meet basic sustainability standards, 4.2 percent have issues that are already being addressed and only 0.3 percent represent a concern for the company. Our goal for 2020 is to grow our accelerator percentage to 28 percent. We are working closely with all our clients to innovate in these solutions or scrap them when necessary. Automotive is a strong participant in this trend and we are pleased that each year more of our products become accelerators for the automotive industry.

Q: What can solutions such as the CathoGuard line offer to be considered an accelerator for the industry?

A: CathoGuard is an electrocoating solution used to protect components against corrosion and harsh environmental conditions. Due to their geometric complexity, parts must be submerged in a bath to ensure the coating covers all surfaces in direct contact with the environment. That guarantees that even though water might make its way to the interior of the car, parts will not be corroded. Before electrophoretic coatings, wax had to be inserted in all cavities in the vehicle to prevent corrosion but that was neither efficient nor aesthetically pleasing.

The added advantage CathoGuard offers to clients is that it is effective in reaching all a vehicle’s cavities with less material. Coatings are deposited in the component’s surface via an electric current. The effectiveness of the process depends on how easy it is for the coating material to be carried by the electric current.

Our results have shown that CathoGuard leads to an average 20 percent waste reduction in the coating process compared to traditional technology, which also leads to reduced energy consumption during the coating and once the component is dried in the furnace.

Q: How is BASF working to counter the negative effects of raw material price increments?

A: We have not announced a general price increase in 2017, at least for our OEM portfolio. The rise in raw material prices has been a challenging situation and our margins have been narrowed because of it. Both solvents and resins are byproducts of oil, which means the slightest increase in its price affects our operations. Nevertheless, we are always focusing on how we can optimize our operations and innovations, both in product and processes, and on reducing the impact on our clients of higher prices for raw materials.

Q: How can BASF help its clients find the most cost- effective and environmentally friendly solution available?

A: In 1997, BASF implemented eco-efficiency analyses to determine the true monetary and environmental cost of a product from its origin as separate raw materials all the way to its distribution and application as a finalized solution. We considered energy streams, raw material costs and the environmental impact of both raw materials and production processes, delivering a numeric value. We 193 also partnered with Dürr to analyze not only our products but the cost of their application to our customers. Our goal was to determine what paint process was the most cost-efficient and environmentally friendly to help our clients decide how to build their paint shop according to their needs and conditions.

We found the answer was not that simple because the most efficient paint shop application depends on the company’s environmental conditions. Climate, air and humidity all impact how paint is applied and how much time the process is going to take. The advantage of waterborne solutions is that water is an environmentally friendly compound. Unfortunately, it does not evaporate easily, which means it requires heat to finalize the process and the climate window in which waterborne paint works is narrower than that of solvent-borne products. Solvents, on the contrary, do not require that much heat, which reduces energy consumption. We arrived at the conclusion that if companies did not need to climatize their operations much, waterborne was the ideal solution. Otherwise, solvent- based paint would be the way to go. This is a complicated idea to explain, so we needed the right tools to show our customers the pros and cons of each alternative.

Back in 2000, I was told solvent-borne paint would be obsolete in 10 years. Seventeen years later, the technology is still used. Solvent-based products can be more harmful than waterborne paint. However, when coupled with a complete manufacturing process, solvent might just be the most environmentally friendly option.