Business Area How Plastics & Coatings creates value

Plastics & Coatings is comprised of sector-leading businesses that serve markets ranging from packaging, consumer goods, medical, and textile to transportation and agriculture. It serves both multinational and local customers. With such a broad scope, the overall growth potential of Plastics & Coatings is strongly linked to global gross domestic product growth.

Additives
Applications
Flexible packaging films reducing waste and increasing recyclability	Light and heat stabilization, flow properties improvements	Light and thermal control of agricultural films for improved crop yield	Waxes, flame retardants and polymer additives with functional effects in plastics, coatings and printing inks, adhesives, textiles and fibers and other applications
Masterbatches
Color and additive concentrate solutions for plastics processing	Concentrates for functional packaging, medical devices & pharma packaging	Protection against moisture and oxygen in drug packaging	Small lot color plastic compounds for the use in automotive, electrical and electronics markets
Pigments
Applications for conventional printing inks, inkjet inks, and electrophotographic toners	Coloration of plastic applications	Decorative, industrial, and automotive coatings	Special applications

Differentiated management to unlock value creation

Although Plastics & Coatings is Clariant’s largest business area, it operates primarily in saturated markets and thus requires a differentiated management approach from other parts of the Group to meet the needs of customers and shareholders. In order to take full advantage of the business area’s value creation potential, absolute profit and cash generation, rather than margin, need to be in focus here. By legally separating Plastics & Coatings into separate subsidiaries on 1 January 2016, while still maintaining the existing structures of its Business Units Additives, Masterbatches, and Pigments, Clariant has supported this differentiated steering. Corresponding benefits of recapturing and expanding business were already felt during this first year.

Additives offers solutions with functional effects for example for plastics, coatings and printing inks, adhesives, and textiles and fibers. Its products include a large variety of waxes and polymer additives that improve heat, light, and weather resistance, among other benefits. This Business Unit also offers innovative products, such as non-halogenated flame retardants providing environmental benefits, also for electrical and electronic equipment. Masterbatches, which includes the Healthcare Packaging business line, offers color and additive concentrates and small lot color compounding for engineering and high temperature resins, whilst the business line healthcare packaging offers moisture and oxygen protection solutions for the pharma industry. Pigments supplies organic pigments, pigment preparations, and dyes that meet the high standards for colors in industrial, decorative and automotive coatings. It also provides solutions for the plastics industry and special applications such as personal care, aluminum, fertilizer and seed treatment, stationery, etc. Solutions for traditional printing as well as inkjet and toner applications complete the strong portfolio of Pigments.

Increasing customer demands and challenges create opportunities

At its press conference at the K 2016 trade show for the plastics and rubber industry, Clariant focused on the global trends influencing the plastics industry, demonstrating how the company is bringing true value to its customers based on their real needs. For example, nutrition bottlenecks caused by population growth and urbanization are leading to growth in packaging needs in the agricultural sector, while lifestyle and mobility trends are driving the demand for miniaturized and lightweight solutions in transport technologies and environmental and energy applications. At the same time, in a global environment of increased emissions regulations and an intensified focus by customers on sustainability, such solutions must be developed in an ecologically compatible manner. These dual mandates present not just challenges, but rich opportunities for business growth.

In 2016, the business environment remained challenging, with limited, albeit stable economic growth. Each Business Unit assesses economic opportunities through the lens of its specific market environment. Additives sees growth options in Asia, especially China, and the United States. Masterbatches expects only marginal growth in Europe and North America, but more significant growth in Asia, particularly China and India where it continued to invest in new assets and leverages emerging opportunities. Pigments sees Chinese and Indian market players responding to an environment of increasing commoditization and become even more aggressive on pricing to keep and extend market position. It also witnessed oil countries in the Middle East refocusing their economic drivers to invest in industry and construction, and anticipates market opportunities in 2017 as a result.

Differentiated steering Since 2016, Plastics & Coatings is successfully steered towards higher absolute profitability and cash generation.

Watch the Sustainable Additives movie

»Every detail matters if you want a safe environment.«

Nicolaus Rogge Carpenter
Schönhorst, Germany

Along with their innovations for industrial applications, the Business Area Plastics & Coatings brings their solutions also into the home. Therefore, health and safety are of utmost importance. The Discover Value story describes how many crucial details are necessary for the inhabitants of a home to feel safe with respect to house construction. Humans have a natural desire to create safe shelter for themselves and their loved ones. The feeling of safety and comfort is what transforms a house into a home. However, as the world’s population grows, this deep human need is intensifying the demand for innovative and sustainable materials that harmonize with the increasing demands for safety. After all, the house protects its inhabitants, but what protects the house?

Interview Tiny helper makes the difference in saving lives

Wolfgang Diegritz, Head of Marketing & Business Development, Nilit Plastics Europe (portrait) — Wolfgang Diegritz Head of Marketing & Business Development
Nilit Plastics Europe

Flame retardants are found throughout the house wherever fire could cause significant damage – from fuse boxes in the cellar to upholstery in the living room to insulation in the attic. Wolfgang Diegritz, Head of Marketing & Business Development at Nilit Plastics, explains how flame retardants work and whether non-halogenated products adequately do their job.

What are the most common causes of fire?

Wolfgang Diegritz In newspapers and other media, we surprisingly often read reports about fire accidents and combustion processes. From my perspective the main reasons for the break-out of fires are technical defects in electrical and electronic devices (e.g., short circuits) or industrial devices (e.g., malfunction of machinery) as well as human failure and inadvertence (e.g., burning candles).

How do flame retardants reduce the impact of fires on people, property and the environment?

In an early stage of the ignition process, flame retardants can substantially contribute to extinguishing a smoldering fire (e.g., overheated electric device). At a later stage of fire – or when the fire is spreading too strongly or quickly – the flame retardants cannot stop the flashover of a fire anymore. However, they can limit the impact and damage (e.g., flame retardant curtains not catching fire rapidly). And, providing a very important benefit, they can save human lives by increasing the time available for people to escape the fire (e.g., flame retardant-equipped plastics in public transportation).

What are the advantages of halogen-free flame retardants over halogenated alternatives?

Conventional halogenated flame retardants do their job. It’s clear. But the »Achilles heel« of these chemicals are their toxicity and their side effects: On the one hand, some of these additives are listed as Substances of Very High Concern according to the EU regulatory framework. On the other hand, a fire can release many toxic substances from halogenated flame retardants, like brominated dioxins and furans. Halogen-free flame retardants have been developed to lower the smoke toxicity and to prevent the migration of the additives. Furthermore, there is no compromise in flame retardancy and little impact on technical parameters of the final application. In the meantime, rethinking leads to a significant variety of halogen-free flame retardants, most often tailor-made for individual polymers and applications.

No health hazard

Clariant is the pioneer in non-halogenated technologies. With this exclusive know-how, flame retardants have a significantly lower smoke toxicity.

Fire safety

Long-term, reliable products pass demanding fire safety standards and minimize secondary fire damages, all with multiple uses, from thick to thin-walled applications.

Environmental protection

The product portfolio consists of highly efficient, non-halogenated flame retardants with preferable environmental profiles.

Did you know? How did humanity get from cave to smart home?

The house has seen many shapes and forms in its evolution – each adding to its functionality, comfort, and aesthetics. The first insulated homes were pit houses, constructed using mammoth bones and animal hides. 3 000 years ago, humans started to use wood as material. It was the birth of the yurt: round, self-supporting structures with poles arranged into a lattice. In the 1950s, balloon-frame houses with their simplified construction method were popular throughout the United States. Homes today are wired for the future. Household electronics, such as light switches, devices, and appliances, are connected via a central grid to form an independent interface and logic.

Business Area Value Creation Phases

Idea to Market Systematic and deliberate approach to innovation

Market to Customer Strong customer focus and benefits of differentiated steering

Customer to Cash Streamlining the value chain and eliminating bottlenecks

Idea to Market Systematic and deliberate approach to innovation

Clariant uses market deep-dives, customer innovation workshops, joint development agreements, and collaboration with its clients’ customers to constantly fill the global innovation pipeline. One result of these efforts was Additives’ commercialization of Hostavin® NOW – a light stabilizer and non-halogenated flame retardant for polyolefin fibers and films, which was awarded the EcoTain® label for its sustainability benefits. With optimum shielding properties, chemical resistance as well as retardancy effect, Hostavin® NOW brings agro films to a higher level of performance.

In addition to its regional innovation activities, Clariant made excellent progress on major innovation projects at the Project House facility, the first R&D facility of its kind for the Masterbatches industry. These projects all use Clariant Innovation Excellence methods to help manage and accelerate ideas to market, and are run by dedicated and trained Innovation Black Belts.

Initiatives in 2016 also included the implementation of a new Innovation Strategy by Pigments. This initiative highlighted cost leadership, game changers, and growth projects, focusing particularly on Preparations as well as on customer needs in the Indian and Chinese markets. Innovation projects included the Sanolin® Lave Liquid colorant range for brilliant color shades for liquid fabric and home care cleaning products. These non-staining colorants can easily be rinsed off textiles or skin or surfaces and are suitable even for children’s paints.

Hostavin® NOW The light stabilizer and flame retardant is an easy-to-handle granular product with improved processing and fiber-spinning properties without fiber discoloration.

Market to Customer Strong customer focus and benefits of differentiated steering

Plastics & Coatings fosters tight customer interaction, joint project work, and collaboration as essential aspects of creating value. To enhance customer-centricity, Additives strengthened its sales and marketing network, particularly in Asia and the United States. Masterbatches focused its efforts on growth in all regions, particularly focusing on strategic market segments and product lines, while Pigments’ initatives succeeded in significant market expansion in India, Greater China, and intensifying the production footprint in Mexico.

Differentiated steering is a powerful tool for net business expansion and has enabled Masterbatches to recapture previously lost business. With this lever as part of the strategy, Masterbatches has returned to a solid growth trajectory and is also able to increase the utilization rate of its assets, again contributing to improved performance. In a similar manner, by focusing on absolute earnings rather than just relative margin, and by matching pricing more closely to customer requirements, Pigments has regained position in a very competitive environment and is going after business that was previously difficult to secure. In addition, Pigments was a source of growth through dedicated projects with specific customers and an enhanced focus on product groups of strength, such as Pigment Preparations.

Other examples of increased customer focus include Additives’ marketing excellence project on Exolit® OP, our patented halogen-free flame retardant for engineering plastics, which involved more than 50 customer interviews around the globe. These interviews allowed Clariant to better understand unmet customer needs and to improve customers’ understanding of Clariant’s value proposition. Masterbatches collaborated with industry-leading machine manufacturer Brückner to co-develop Cesa®-Solar, a novel Masterbatch product providing a hydrolytically stable PET film for solar panels back sheets application, overcoming problems in conventional backing film technology and supporting the viability of clean energy for the needs of our planet’s growing population. Masterbatches also formed a partnership with the industry leading security ink solution provider Sicpa to provide Plastiward®, an in-plastic anti-counterfeit solution for the pharmaceutical packaging and medical devices markets. Pigments has been working with global and regional agricultural companies to support the growing demand for attractive and regulation-compliant seed colorations. Such colorations are mandated in many countries for safety reasons and support the seed industry in branding and marketing. Clariant’s dedicated range of Agrocer™ products, launched in the United States in 2016, meets international seed testing standard requirements and broadens the choice of colors for the customer.

Exolit® OP 1400 When plastic containing Exolit® OP burns, it releases gases that cause the plastic to foam and rapidly form a protective layer of noncombustible foamed char.

Plastiward® Incorporated into plastic products, a covert taggant additive is detectable with a platform available through Clariant’s partnership with SICPA, a secured information provider.

Agrocer™ With Agrocer™, Clariant offers a dedicated range of pigment powders and pigment preparations for seed coloration. Every product meets strict U.S. EPA regulations covering inert ingredients.

Customer to Cash Streamlining the value chain and eliminating bottlenecks

A key element of optimizing reliability throughout the value chain and ultimately benefiting the clients is the Integrated Planning Landscape (IPL). IPL is a multidimensional project that streamlines and harmonizes the planning processes to handle planning complexity and enhance capabilities in a new governance model for supply chain management. Introduced in 2016 in the Business Units Additives and Pigments, IPL supports Clariant’s goals to improve supply reliability to the client.

Since raw materials sourcing accounts for a large portion of formulation cost, Masterbatches worked with the Clariant Procurement Excellence (CPX) initiative to harmonize and optimize sourcing. Additives also worked with CPX to optimize procurement by reducing overseas logistics costs, designing a leaner process, and participating in the Together for Sustainability (TfS) program for prudent supplier audits.

To ensure a reliable supply of scarce products for demanding markets, Additives has invested in overcoming capacity bottlenecks in key plants, and expects to make further investments in Asia in 2017. Safety enhancements also led to a record zero lost time accident rate (LTAR) in Additives’ plants. As China is today the largest market for plastics, Masterbatches have invested in building capacity and capability not only for concentrates but also in small lot color compounding for engineering and high-temperature resins to address the growing market needs. In addition, further strategic investments in capacity were made in North America and the Middle East. Pigments expanded its preparations plant in Santa Clara, Mexico, to increase efficiency and on-time, in-full delivery to the client.