Lanxess exec energized by firm’s North American turnaround

When he last spoke with reporters in Pittsburgh in 2014, Matthias Zachert had just started to lead a restructuring of Lanxess, the German specialty chemicals company that has its North American headquarters in Findlay.

On that visit, he had been Lanxess’ top executive for only four months and the company was preparing to cut jobs and streamline operations.

“People were not sure we could deliver” a turnaround, he acknowledged.

On Tuesday, he addressed an employee town hall at the Findlay offices and said the atmosphere “was energizing.”

“Fast forward to 2018, and we’ve made many investments in North America … and we’re strong,” he said in an interview Tuesday following the employee meeting.

Mr. Zachert, chair of the company’s management board, said Lanxess’ North American sales have outpaced the rest of its markets and North American employment now totals 2,800 — almost double the count from four years ago when it was embarking on a cost-cutting strategy.

The Findlay site has about 350 employees and total employment in the Pittsburgh region is more than 400, including facilities in Neville Island and Burgettstown, Washington County.

Lanxess has about 19,000 employees worldwide.

North American sales generated about 21 percent of Lanxess’ global revenues of 9.7 billion euros ($12 billion) in 2017.

North American growth has come through acquisitions, including last year’s purchase of Chemtura, a Philadelphiabased maker of lubricant

additives and flame retardants. The $2.7 billion acquisition was the largest in Lanxess’ history and doubled the number of Lanxess’ U.S. production facilities to 24.

In February, the company bought the phosphorus business of Belgian chemicals company Solvay, including its operations in Charleston, S.C.

The company hopes to invest more than $500 million in North American operations over the next five years, Mr. Zachert said.

Some investment includes hiring — with a focus on engineers and chemists.

Lanxess, which spun out of another German corporate giant, Bayer, in 2005, initially emerged as a leader in synthetic rubber products including materials for automobile tires.

But as part of its global restructuring, it focused on specialty chemicals and created a joint venture for the rubber business, Arlanxeo, which is 50 percent owned by Saudi Aramco, a Middle Eastern oil and gas giant.

Lanxess will begin deconsolidating the joint venture’s financials this year. “We did the hard work and now the team spirit is there,” Mr. Zachert said of the restructuring process.

Whether it will scoop up more companies in North America this year has yet to be determined, he said. “Acquisitions you cannot plan. It takes two to tango and we’ve tangoed a bit over the last few years.”

Mr. Zachert’s efforts have won the confidence of the company’s board of directors, which appointed him as management chair for another five years beginning in 2019.

“You can’t change a company in a few years,” he said. “If you want agility and global market positions and energizing chemistry, you need a decade. That was my time frame when I joined in 2014.”

Following a strong firstquarter report, Lanxess raised its guidance for 2018 saying earnings before taxes and other expenses should increase by 5 percent to 10 percent over last year’s profits of $1.1 billion.

Since its restructuring, Lanxess has attracted the attention of a prominent U.S. investor: Warren Buffett.

General Reinsurance, a subsidiary of Mr. Buffett’s Berkshire Hathaway conglomerate, bought a 3 percent stake in Lanxess in May 2017 and increased its stake to 5 percent in December.

Berkshire already owned Lubrizol, an Ohiobased company that makes specialty chemicals for engine oils, industrial lubricants and other products. “He liked the chemical industry and the strategy we’re executing,” Mr. Zachert said.

When the two met, he said, “I committed to continuing the strategy.”