BAYER:Ambitious expansion that began two years ago to make Thailand a regional chemical centre is beginning to bear fruit

The links between Thailand and the German chemical and pharmaceutical giant Bayer date back to the 1920s, when the first Bayer dyestuffs were imported to the kingdom.

‘Thailand is located in the centre of Southeast Asia; it has the advantage of being the gateway to other countries in this region. Therefore, our group decided to build a regional centre here’
AXE FOELLMER
Managing director

However, it was not until April 1962 that Bayer achieved an official corporate presence with the formation of Bayer Thai Co, in which Bayer AG holds 86% of the shares.

In 1969, the first head office, Bayer House, was opened. Today, with the opening of Bayer Centre, Bayer Thai has established a formidable local presence, with 1500 employees involved in marketing more than 3,000 products through 21 business groups.

Two years ago, the company signalled the start of an ambitious expansion, establishing four affiliated companies as part of a US$500-million plan to develop Thailand as a major chemicals centre in Southeast Asia. By 2000, total turnover of the Bayer group in Thailand is forecast to reach 13 billion baht.

Thailand was a logical choice as the group's regional centre, according to Axel Foellmer, managing director of Bayer Thai.

"Thailand is located in the centre of Southeast Asia; it has the advantage of being the gateway to other countries in this region. Therefore, our group decided to build a regional centre here." Mr Foellmer also cited government support and openness to foreign investment, though he believes some regulations could be streamlined further as an incentive to overseas companies.

Expansion has created a demand for highly-skilled people in the engineering, data processing and chemical fields, and they have been hard to find locally, Mr Foelliner acknowledged.

More surprisingly, he said that despite major layoffs in the financial sector, the roup still finds it hard to recruit skilled people in international finance and accounting.

In Thailand, Bayer's major focus is on polymers, chemicals and agricultural products.

"We're doing very well in the agricultural and chemicals business. The polymers business is increasing, and products for the textile industry are quite all right because our distribution sales customers are exporting and were able to obtain funds. However, [demand for] products for the construction industry is decreasing because of a stagnant market.

"Bayer Polymers came onstream in October 1996 at Map Ta Phut industrial estate to produce plastics to supply the local and Asian markets. HC Starck(Thailand) Co, on the same site, produces tantalum and niobium powders, mainly for export.

Mr Foellmer said that pharmaceuticals were currently Bayer's most severe problem since the weak baht had pushed up prices of imports. The company is perhaps best known for Aspirin, producing in excess of 10 million tablets a year, mainly at its plant in Germany crease prices. The Public Health Ministry's budget has been cut. Generics are being used more, while higher-grade brands are being used less," he said.

The pharmaceutical business also includes a range of equipment and chemical reagents for use
in laboratories and pharmacies. The company's strength is in the areas of urine chemistry, diabetes and clinical chemistry.

For the first half of this year, Bayer's revenue was lower than its target, but still 40% ahead of the same period last year. The company expects sales to reach 10 billion baht by the end of the Year about 10% below its target. Sales in Thailand last year were 7.3 billion baht.

The need to upgrade skills in line with the group's expansion has resulted in local staff being sent for technical training programmes in Singapore, Germany, the UK and the United States,

"We are offering skill enhancement, attitude im-provement, Dale Carnegic orientation. Our staff will also be sent to visit our manufacturing plants overseas,"Mr. Foellmer said.

Two employees of Bayer(Thailand) are now working in Germany in a long-term programme to obtain more hands-on-training, he said. The group also offers career-developi.nent planning, screening, succession planning and regular performance appraisal.

Expatriate experts are brought in to share technical expertise, but Mr Foellmer said the emphasis was on supporting local staff. The ultimate goal is to have local people in all top management positions.

The company now has 18 expat staff or about 1.5 % of the total. "The figure should be less than 1% in the future."

Most of the group's research and development facilities are located in Germany, other countries in Western Europe, along with the United States and Japan. Most of the R&D budget emphasises health care and agricultural research.

"Most of our research and development is done in Germany," Mr Focilmer said. "We want to make sure all of our products have the same standard, especially for pharmaceuticals."

However, Bayer contin-ues to fund research into core activities that will bring leadership and innovative products to Thailand.

The group also is committed to taking the lead in conserving natural resources it has been a key promoter in the Thai chemical industry to join Responsible Care, a global environmental protection programme that stresses the health and safety of employees and the public in general. Chemical producers from more than 40 countries are now members.

"Our management team in Thailand is also working closely with the Chemical Industry Club of the Federation of Thai Industries to prepare Thailand to be a member of Responsible Care Lead-ership Group in the near future."

Social contributions in-clude help for flood victims and sponsorship of the Oriental Princess Environmental Envoys project. The latter enables Thai students to visit environmental- protection facilities in Germany, including Bayer AG, with the aim of encouraging them to raise environmental awareness when they return to Thailand.

Bayer Thai Co Ltd
Established: 1962
Registered capital: Six billion baht
Major shareholders: Bayer AG, Germany (86%), Thai nationals (14%)
Subsidiaries: Bayer Polymers Co Ltd, Dystar Thai Ltd, Agfa products (distributed by Berli Jucker Plc), Haarmann & Reimer (Thailand) Co Ltd, HC Starck (Thailand) Co
Number of employees: 1,200 (1.5% expatriates)
Assets at end-1997: Nine billion baht
1997 sales revenues: 7.3 billion baht

Worldwide
Headquarters: Leverkusen, Germany
Number of Countries: 150
Number of employees: 144,600
1997 gross sales: DM55 billion
1997 net profit: DM5.4 billion