Germany’s Lanxess AG, the world’s largest producer of synthetic rubber for car tyres, has confirmed that the company is in talks with potential partners for joint ventures or alliances for its synthetic rubber business to combat the challenges presented by weak prices and production overcapacity.
This is part of the company’s three-stage realignment program called “Let’s Lanxess Again.” The first phase involved reducing its workforce of 16,700 employees by 1,000, as well as consolidating the number of business units from 14 to 10.
It formed a new Tire & Specialty Rubbers unit, combining Butyl Rubber and Performance Butadiene Rubbers. It rolled Keltan Elastomers into its High Performance Elastomers unit. It also formed Rhein Chemie Additives out of Functional Chemicals.
The second stage, “Operational Competitiveness,” involves focusing on horizontal and vertical cooperation in the rubber business.
The market for synthetic rubber has been challenging in the past few years. Sales for the Performance Polymers segment, which houses the synthetic rubber business unit, declined 13% in 2013. The segment’s sales for the third quarter of 2014 dropped 4.3%. Lanxess will release its 2014 earnings on 19 March.
Earlier in February, sources told Reuters that Russia’s NKNK and Saudi Aramco showed interest in the possibility of alliances or joint ventures. Lanxess did not comment on this report.