Bayer Cropscience

Source: Energy Digital

Date :27/09/2007 12:03:12

Concentrated Chemical Manufacture

The Bayer CropScience plant in Norwich, Norfolk, got there by something of an accident of history, but it will soon be the global chemical giant’s only UK facility, offering flexibility and the ability to produce diverse products.

Written by John O'Hanlon & Produced by Alex Smith

With annual sales of about €5.7 billion Bayer CropScience is one of the world's leading innovative companies in the area of crop protection, non agricultural pest-control, seeds and plant biotechnology. Headquartered in Monheim am Rhein, Germany, Bayer CropScience has a global workforce of about 17,900 and is represented in more than 120 countries. Monheim is right next to Leverkusen; probably today more people in the UK at any rate are familiar with the football club that Bayer first sponsored in 1903 than with the company!

Bayer is one of the big three German chemical companies, with Hoechst and BASF and there are three legs to Bayer CropScience too – Bioscience and Environmental Science as well as Crop Protection. This last, with sales of €4.6 billion, accounts for more than three quarters of the company and is the division the Norwich plant belongs to.

Dave Jones, site manager at the Norwich plant, admits that his site is only a corner of this vast empire, but it is a major employer in Norwich, with 185 people directly employed and up to a further 150 contractors’ staff on site at any given time. How it came to be there at all is interesting – May & Baker, its then owner, was in 1955 enticed by Norwich City Council to build its factory on its present site. “It’s ironical,” says Dave Jones, “that some people complain today that a chemical plant was sited so close to so much residential accommodation. In fact there was nothing but green fields around the site in those days – the houses all came later!”

There used to be three manufacturing sites in the UK crop science division, but a smaller facility at Cambridge closed in 2004 and the other, at Widnes where 100 people are employed, is also earmarked for closure in 2008. When that happens Norwich will be the only one left in the UK manufacturing agricultural chemicals.

Refining the company

This consolidation is in line with Bayer’s global strategy. When it took over the agricultural assets of Aventis in 2002, Bayer found itself with an unwieldy division having some 60 sites globally, may of them either inefficient or duplicating capacity available elsewhere. Its strategic aim is to reduce this number to around 35 highly effective manufacturing plants, of which Norwich will be one.

The site is divided into two distinct operations. By far the largest is the chemical process plant from which chemicals are distributed to Bayer formulation and filling plants all round the world – but Norwich has its own small formulation and filling operation, which supplies the local market and employs around 20 people. The bulk agrichemicals made here are, typically, herbicides that are used in a number of markets round the globe.

But herbicides are changing and the plant will have to accommodate these changes, Dave Jones explains. “In the not too distant past we were making thousands of tonnes a year of bulk chemicals that had been used for decades. Modern chemicals are much more specific, targeted, niche formulations, and they are much more active. They are manufactured in smaller quantities, perhaps 200 or 300 tonnes. We are moving more towards something that is very complex and difficult to make, using a lot of different manufacturing stages, but in application you only need a minute quantities. This has two distinct benefits. One is that you’re only putting small quantities of it into the environment. The second, in most cases, is a high degree of biodegradability.”

Traditionally, he says, a new chemical on the market would be produced in a purpose built plant that produces the same product, twelve months a year, and this is what happened when Bayer Norwich started to make Diclofenac sodium (DFS) many years ago. The chemical is long out of patent, and the plant itself was modified in 1987, but it still makes up to 700 tonnes of DFS annually for worldwide distribution.

But this type of plant has been superseded now, he says. “These days, you find that the volume of a chemical at its demand peak is around 2-300 tonnes. That means you are no longer building purpose designed plants for one product. You tend to build a multi-purpose plant, which you are able to modify very easily and change over from one product to another. It may be that the plant makes six or twelve chemicals over the course of a year.”

The last major plant to be installed at Norwich was completed in 2001 to make 1,500 tonnes, annually, of a particular intermediate chemical. However by the time this particular line was completed the market for this product had changed and it is now making no more than 500 tonnes – well under capacity. “One of our challenges now is either to find ways of using that capacity, or ways of reorganising the whole of our production,” says David Jones. “Increasingly generic manufacturing – products that have been in production for a long time – is being moved to the Far East. In Europe our future way to stay active and competitive is to take on the more complex chemical molecules and also to try to fit other products in.”

Nevertheless, China’s low cost profile has its advantages now that Bayer has its own operations there, says Jones. “We have been more successful than most in using raw materials from the Far East to lower our selling price. DFS is a good example of that. Over the last four or five years we have been increasingly sourcing materials from China and using them as the starting materials for DFS with the result that we have been able to reduce our DFS prices by 25 percent over that period. The rewards are significant.”

Nearly all of the raw materials he uses are now sourced from low cost centres, a fact that incidentally concentrates the minds of European suppliers where specialised chemicals have to be bought closer to home. It is a valuable negotiating tool, he says.

Manufacturing efficiently

While low cost sourcing has helped significantly, a great deal has also been done to refine processes and help keep the Norwich plant viable. “Typically 50 percent of the cost of our products may be in raw materials; the rest is overhead, depreciation and manufacturing costs. In the case of DFS, though, 80 percent is raw materials; hence we were able to reduce that cost dramatically over a short period. But the cost reduction was also gained through efficiencies in things like recycling solvents, better production methods and a number of other initiatives we have taken.” Following an initiative in the USA, where a plant was required to reduce its costs by 25 percent, Bayer Norwich is in the process of restructuring its management – essentially this is a process of ‘delayering’ – removing unnecessary strata of management, and it is expected to be completed by the end of 2008.

The objective is to optimise the strength of the plant, which is its flexibility compared, say to the massive Leverkusen site. “We don’t tend in this country to see the industrial park concept that they have in Germany,” says Jones. “There are 50 chemical companies on the site, and all the infrastructure is supplied by InfraServe, an independent company that manages all their energy, steam, security, maintenance and even a fire brigade! In one sense that makes sense, but here we have control of all our own infrastructure as well as the operations, so we have our own CHP plant, for example. We are self contained and don’t have to rely on anyone else.”

“In terms of our own people we are victims of our own success,” says Dave Jones. The turnover of staff is so low – less than one percent in some areas - that in order to make room for new blood it has been necessary to introduce an early retirement scheme. Allowing some long-serving people to leave early without any reduction of their pension is a way of bringing in younger workers and helping the local employment. Of course it is not all plain sailing, he admits: “We do struggle with the specialist engineering management areas – control technicians, electrical installation people and the like.” When it comes to design or diagnostic staff there is a problem, he says, and to solve it he has had to look on one or two occasions, to Eastern Europe to find the right people.

Like the rest of the Bayer organisation, the site bases its IT platforms on SAP. Dave Jones remembers when it was first implemented here, in 1996. “It runs most of our operations, from purchasing and supply right through to sales and marketing, and as far as the manufacturing operations are concerned though SAP doesn’t provide the base platform it provides the interface so everything works seamlessly. Our German colleagues are very much into Siemens which supplies the control software for plant operation, and links directly into SAP. At the moment we are piloting an electronic batch manufacturing record which is a paperless way of capturing the data for the manufacturing operations and again inputting that direct into SAP. And we are planning to introduce electronic logs in a similar way.” It is all part of the automation that is needed if the delayering process is going to work, he adds.

Plenty of energy

Dave Jones feels there is an opportunity for more centralised sourcing of chemicals, and also for increasing the amount of consignment stock held by suppliers of fast moving maintenance items on the site. Of course energy is one of the most important items the plant consumes: Norwich has, as already mentioned, its own CHP plant, which exports electricity to the National Grid for nine months in the year. “It was built in 1995, and it generated about £500,000 a year in revenue for us in its first few years; after 2001 it was no longer sensible to export any electricity because of the pricing structure, though now we are exporting it again,” says Jones.

In fact Norwich has become something of a centre of excellence when it comes to energy management. “We do the energy purchasing for all Bayer’s UK sites – we manage to negotiate rather good deals on that! And in 2002 we appointed an ‘energy champion’, with the target of reducing energy consumption year on year In the first year we managed about 15 percent and have managed some level of energy reduction every year since then.”

Finally, Dave Jones is determined to let the world know that Bayer has always done its best to be a good neighbour to the people of Norwich. Because it’s chemical factory, there will occasionally be a certain amount of noise and even some smells, though on the day of my visit I have to say that none were detectable, only the scent of wildflowers, planted on some of the site’s many green areas. “Because of our position in Norwich we have to maintain a high level of visibility with neighbours. We spend a lot of time working with them, and we have a rolling programme where we invite them in every six months or so to the ‘community forum’. We have figured out that the better they know us the better they will understand us, and we really have nothing to hide here.” If he had, that would have been discovered by the many ISO inspectors who have given the site progressive accreditations, from the quality standard 9001, to the environmental compliance standard 14001 and, since 2005, the occupational health & safety ISO 18001.

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