How the big world economy develops can always be seen on a small scale. Especially with a company like Covestro, which produces primary products for many industries. At the beginning of 2020 there was quite a sadness: The plastics manufacturer stopped its plan to build a new factory for foam precursors for 1.5 billion euros. It was to be the largest investment in the company’s history. But at that time the trade conflict between the USA and China had slowed down industries such as the automotive sector, and plastic prices were low. And shortly afterwards, the corona pandemic caused the economy to collapse.
But now Covestro wants to try again: The planning of a new plant of a similar size has resumed, according to the Dax group. Because the demand for rigid foams, which are found in insulation materials, for example, meets high capacity utilization worldwide. The final decision as to whether the new building is to be built in the USA or China could be made next year and the factory could go into operation in 2026.
How times are changing: In fact, plastics are scarce now that many industries have recovered surprisingly quickly from the crisis; Delivery problems and weather-related production downtimes also drove prices up. Covestro suits this: the former Bayer subsidiary has already revised its profit forecast upwards twice for the current year. In addition to foam, the Leverkusen-based company also produces plastic that can be found in car headlights, for example. In addition, they recently made additional purchases in the coating resins business.
With all growth, the fixed costs – i.e. those expenses that are incurred regardless of the production volume – should remain as close as possible to the level of 2020, according to Covestro. That is why there are plans circulating in the company that up to 1700 of the last 16,000 jobs could be lost worldwide. Of course, CEO Markus Steilemann called this the theoretical maximum. In any case, Covestro rules out any redundancies for the next few years.
In addition, the plastics manufacturer wants to become less dependent on fossil resources such as oil or natural gas in the long term. To this end, Covestro is gradually using more green electricity and renewable raw materials, and the company is also working on new recycling techniques, including the use of CO₂ emissions. According to her own admission, she plans to invest around one billion euros in corresponding projects over the next ten years. The forecasts that Covestro presented at an investor conference are well received on the stock market. The share temporarily gained two percent in value on Tuesday.