Welcome to LANXESS Annual Report 2012!

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Research and development

Research and development plays a significant role in increasing our competitiveness and expanding our business through the development of innovative processes and products as well as the ongoing optimization of existing production processes.

Therefore, we continued to systematically expand our research and development activities in 2012. Existing products and processes were refined and optimized with a short- to medium-term time horizon. In addition, the Innovation & Technology Group Function focused above all on initiating medium- to long-term research projects to ensure success in the high-growth areas of the future and thus safeguard the Group’s sustainable performance.

Important research projects were advanced in the Performance Polymers segment, which focuses on the mobility megatrend. Investments in this segment have included the further development of high-performance rubbers that help improve the braking performance, abrasion resistance and wet grip properties of tires. Within this context, we developed a concept tire that has already received a double-A rating for fuel efficiency and wet grip under the new E.U. tire labeling regulations. Our high-performance rubber Nd-PBR also contributes to improving durability. In this way, we are cementing our position as a leading company in the field of specialty chemicals for green mobility. Sustainability in raw material sourcing is also particularly important. In this area, LANXESS is focusing on bio-based rubber. Since the end of 2011, we have been marketing various EPDM rubber grades produced in part using ethylene derived from sugar cane rather than from petroleum.

The Performance Chemicals segment is also setting trends in the area of research and development. Following the successful start-up of the membrane element production plant in Bitterfeld, Germany, we added new membrane separation elements with high rejection and high flow rates to our product portfolio. We also developed a highly effective synthetic iron oxide for removing hydrogen sulfide from biogas that can be easily metered into the fermentation reactor as well as iron oxides for the production of cathodes for lithium-ion batteries. Thanks primarily to their good morphological properties and high reactivity, the products are ideally suited for use in the field of electromobility.

Cost trend and employees

Our total research and development expenses in 2012 increased by 33% on the prior year to €192 million, or 2.1% of sales (2011: €144 million, or 1.6% of sales). The Butyl Rubber, Technical Rubber Products, High Performance Materials and Saltigo business units accounted for the largest share of these expenses in 2012 at 61% (2011: 54%). Butyl Rubber, Saltigo, Material Protection Products and Ion Exchange Resins were the business units most active in research in terms of their ratios of research and development expenses to sales.

The table below shows research and development expenses in the last five years.

Research and Development Expenses
  2008 2009 2010 2011 2012
Research and development expenses (€ million) 97 101 116 144 192
% of sales 1.5 2.0 1.6 1.6 2.1

A commitment for long-term financing from the European Investment Bank (EIB), the E.U.’s Luxembourg-based development bank, will increase our scope for funding research and development activities over the next six years. It covers a €200 million credit facility that carries attractive conditions. We see the partnership as affirmation of our innovative potential and recognition of our clear focus on developing sustainable products and production processes.

Number of Employees in Research and Development
  2008 2009 2010 2011 2012
Year end 453 489 519 731 843
% of Group employees 3.1 3.4 3.5 4.5 4.9

At the end of 2012, we employed 843 people (2011: 731) in our research and development laboratories worldwide. We created the Group Senior Scientist awards in 2012 to honor top researchers and scientific experts for their achievements, generate motivation and prospects for careers in research and development, and place the focus even more firmly on innovation and our premium strategy. The first awards have already been made for outstanding achievements in the area of sustainable science and technology with commensurate contributions to earnings.

Our largest research and development units are at the sites in Leverkusen, Krefeld-Uerdingen and Dormagen, Germany; London, Canada; and Qingdao and Wuxi, China. The development and testing of high-performance rubber products for energy-saving green tires and high-tech plastics for lightweight construction applications in the automotive industry are examples of the work we perform there. In December 2012, we also opened a development center for high-tech plastics in Hong Kong to strengthen our relations with automakers in the Asia-Pacific growth region.

Fields of activity and patent strategy

In 2012, we conducted around 235 research and development projects (2011: 210), around 145 of which (2011: 125) aimed to develop new products and applications or improve existing ones. Some 90 projects (2011: around 85) concerned process technology issues with a view to reducing costs, improving efficiency or increasing capacity. We plan to have roughly 25% of the research and development projects we started in 2012 in the market or technical implementation stages by the end of 2013 (2011: about 20%).

The results of our research and development work are protected by patents, where this is possible and expedient. In the course of 2012, we submitted 90 priority applications worldwide. As of December 31, 2012, the full patent portfolio included approximately 1,100 patent families covering around 7,600 property rights.

Organizational focus

Our research and development activities are closely allied to the needs of the market and our customers. Organizationally, the LANXESS Group’s research and development units are assigned to the individual business units. For example, business units with a substantial proportion of products in very mature markets, such as Advanced Industrial Intermediates, concentrate on constantly improving their production facilities and processes (process optimization). Other business units focus their research and development activities more on optimizing their products and product quality and on developing new products to meet market requirements and customers’ special needs. We have set ourselves the goal of aligning our research programs in the future more directly and more systematically with the major global megatrends: the expanding need for mobility, sharply rising global food requirements, increasing urbanization and the growing demand for water.

Our basic research is conducted mainly via alliances with universities and research institutes. Generating knowledge in this way is substantially more efficient and cost-effective than if we were to maintain our own resources for this purpose. In 2012, we had a total of 203 (2011: 145) major research and development alliances, 78 (2011: 50) of which were with universities, 66 (2011: 55) with suppliers or customers, and 59 (2011: 40) with research institutes.

Innovation & Technology Group Function

As a central unit, the Innovation & Technology Group Function complements our business units’ research work with new, longer-term, cross-business unit projects to ensure that potential synergies are exploited to the full and innovations can be applied in various LANXESS units.

We further expanded this group function in all areas in 2012, thereby significantly strengthening our expertise in both chemistry and technology. Against the backdrop of rising energy prices, we established a central energy task force comprising experts from various disciplines to implement energy efficiency projects across the Group and act as a competence center for energy technology. We also broadened our engineering expertise with the aim of being able to implement large-scale capital expenditure projects on the basis of our own know-how.

The group function’s research concentrates on both process and product innovation, which are handled by separate units.

In the area of process innovation, we direct our efforts toward developing new processes and integrating new technologies into existing production processes with the aim of achieving cost and technology leadership. One focus is on reviewing current production processes using mathematical and experimental methods in order to pinpoint optimization potential. In this way, we have already identified and in some cases achieved considerable savings on raw materials and energy. We made further savings in operating costs by implementing our process control concepts in a number of facilities. These newly implemented concepts – including online analytics – enable us to run plants even closer to the optimum operating point, which, in addition to reducing costs, in some cases even increases their capacity. Against the backdrop of our strategic growth initiative, we are also stepping up our efforts to refine the technological aspects of our processes for growth projects. To this end, we opened a new process technology laboratory in 2012 where we can optimize existing processes as well as develop new processes and investigate their transferability to industrial scale.

Product innovation is focused on the development of new products and new applications for existing products as well as on product modifications. The search for new products is more broadly based than in the business units, the main topics are generally applicable to multiple business units, and there is a medium- to long-term time horizon. Here, too, our research goals are derived from the global megatrends. Since launching our Xplore ideas platform on the company intranet in 2011, we regularly issue challenges that result in the development of ideas and solutions for future-oriented innovations worldwide. For instance, the winning team in the “Sustainability” challenge that concluded during the reporting year developed an innovative method for removing organic impurities from drinking water. The great success of this platform has made a significant contribution to the promotion of our corporate innovation culture. We have already transformed a large number of ideas into concrete projects with the help of standardized processes. These projects are regularly evaluated with regard to their technological and financial attractiveness. We have further expanded our broad network of external partners through the establishment of new alliances with universities, institutes and leading companies in various fields such as biotechnology, nanotechnology, microtechnology and membrane technology.

In 2010, we began collaborating with the Russian Academy of Sciences (RAS) and have since established a research network with leading Russian institutes and universities. RAS ranks among the world’s most distinguished scientific institutions and has a history dating back over 285 years. Under the motto “Chemistry – Shaping the Future,” we hosted a joint scientific symposium in Moscow in November 2012. The conference with scientists from both countries, which was organized as part of Germany Year in Russia, offered a wide range of topics from various chemical disciplines – from catalytic chemistry and polymer and organic chemistry to material science.


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