Additive Investments Move East
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ADDITIVES ASIA By Philip Reeve ADDITIVE INVESTMENTS MOVE E A S T 1 COPYRIGHT 2021, LUBES’N’GREASES MAGAZINE. REPRODUCED WITH PERMISSION. FOR MORE COVERAGE VISIT LUBES’N’GREASES he markets for lubricants markets are growing, driven by Business rankings consider the and additives in North Amer- increasing urbanization, infrastructure regulatory environment and ranks the ica and Europe have shown development and more widespread countries that are most conducive minimal growth in the past vehicle ownership and regional to the foundation and operation of a decade. The level of vehicle production. The demand for better air local company (Table 2). Townership has remained static, and quality and carbon dioxide reduction Singapore consistently places near extended drain intervals have damp- is resulting in greater regulation and the top of such rankings, which helps ened lubricant demand, although tougher specifications, pushing oil to explain its position as a power- higher-quality lubricants have helped quality levels upward. Additive and ful regional hub. Furthermore, the to boost it back up. component manufacturers foresaw additives industry has had an active In contrast, Asian markets have such growth—particularly the rise in presence in the country for decades. shown significant growth in lubri- China—and have invested steadily China is a different story, though. cant and additive demand during the in manufacturing, business and R&D It presents more state and national same period, driven by significant facilities in the region (Table 1). hurdles to establishing operations, economic growth. Consequently, With this background, investment in including taxation and cross-border companies have switched their focus manufacturing and technical support trading. Keith Howard, Lubrizol stra- more toward Asia, where demand for has been sustained over the past 10 tegic technology manager, explained, lubricants and additives continues to years with regional hubs in Singapore “China has some complex rules on increase. Here is a look at how com- and specific investments in China. what can be built and where. This can ponent and additive companies have Chinese manufacturers are investing be an issue for new facility construc- increased their investment in Asia in increased additive capacity to take tion.” and the opportunities and challenges advantage of the growth opportuni- Despite the complexity, the market this poses. ties. Indian component producers size, growth rate and need to develop The Chinese lubricant market is have also made incremental improve- the supply chain has driven invest- now similar in size to that of the ments in capacity. ment, as the opportunities are too United States, and the Indian lubri- strong to ignore. cants market is the third largest in Where to Invest Although it ranked 142 five years the world. Almost all Asian additives The World Bank’s Ease of Doing ago, India is still only 63 on the World Table 1 - Major Additive Company Investments in Asia Year Investment 2013 Lubrizol opened its Zhuhai manufacturing and R&D facility in China. 2013 Infineum opened its Shanghai Business and Technology Center in China. 2014 Chevron Oronite expanded its Singapore manufacturing facility. 2014 Infineum’s salicylate plant opened in Singapore. 2015 Chevron Oronite’s Technology Center opened in Shanghai, China. 2016 Infineum’s Zhangjiagang manufacturing plant opened in China. 2016 Afton’s Singapore plant completed phase one of a major expansion. 2017 Chevron Oronite’s carboxylate plant opened in Singapore. 2017 Afton’s China Technology Center opened in Suzhou. 2018 Phase two of the expansion of Afton’s Singapore plant was completed. 2018 Chevron Oronite’s manufacturing plant in Ningbo, China, was announced. It is set to open this year. 2020 Phase two of Infineum’s Zhangjiagang manufacturing plant expansion was announced. 2020 China’s Jinzhou Kangtai started expansion of its manufacturing plant, which is set to open in 2022. Richful Lube Additive announced it is building a second additive manufacturing facility in Cangzhou, China, which will open 2020 in 2022. Source: Philip Reeve 2 COPYRIGHT 2021, LUBES’N’GREASES MAGAZINE. REPRODUCED WITH PERMISSION. FOR MORE COVERAGE VISIT LUBES’N’GREASES Bank’s list because of its relative- cultural and language barriers for for- ly high level of bureaucracy. This eign entrants. Vikas Gupta, Lubrizol’s includes registrations, contracts, sales director, South Asia, explained, taxation and other factors. Shailendra “Cultural and language barriers have Gokhale, managing partner of Mum- been the primary challenge. For Table 2 - Ease of Doing bai-based Rosefield-DAA consultancy, example, in South Asia, operations Business in 2020 in explained, “Historically, foreign invest- are in multiple languages, such as Selected Countries ment in India has been difficult. How- Thai, Vietnamese, Malay, etc. These Rank Country ever, the Indian government is now then end up complicating items, such seeking to change this, as reflected as label design. Customer communi- 1 New Zealand in a remarkable improvement in the cation also needs to be very specific 2 Singapore ranking on Ease of Doing Business. A and culturally sensitive.” 3 Hong Kong Make-in-India agenda is providing Additionally, China has a history of incentives for foreign investment to intellectual property theft in some ar- 4 Denmark create a wider manufacturing base eas, which is challenging for western 5 South Korea for India to supply local and export companies. However, an IP protection needs.” law is now being enacted. 6 United States China is challenging with respect 7 Georgia Opportunities and Challenges to recruitment and retention of staff 8 United Kingdom The opportunities for growth in Asia as well. Howard explained that the were well recognized by the major “very high level of education in China 9 Norway global additive suppliers and have means there are very good-quality 10 Sweden been capitalized upon with improved people available. However, they may 12 Malaysia regional and local manufacturing. lack relevant practical experience, This better serves local and regional so training, mentoring and on-the- 15 Taiwan customers, providing a shorter and job learning are key. High turnover is 21 Thailand more robust customer supply chain. an issue, as many of our positions Eugene Ng, sales and marketing man- require significant investment to 22 Germany ager for Chevron Oronite, Asia-Pacific get someone up to speed. So the 29 Japan region, told Lubes’n’Greases, “Chev- payback period can be long. Lubrizol 31 China ron Oronite’s new Ningbo manufac- does a great job at staff retention, but turing facility will supplement our the changing labor market and talent 32 France current warehouses in China and market due to more flexible working 63 India increase local supply capabilities by arrangements globally have an indus- enabling shorter supply lead time trywide impact.” 70 Vietnam and reliability.” Additional production Ng added, “We needed to over- 73 Indonesia capacity allows for market growth come challenges in attracting talents, Source: World Bank and gives improved supply security to competency development and train- other regions, which is a key concern ing of our project and manufacturing for customers, he added. teams.” “We needed to overcome Additive companies face challenges Fortunately, the industry can provide challenges in attracting in facilities construction. “There were opportunities for an international ca- talents, competency de- learnings with regards to local regu- reer and good pay, which is attractive velopment and training of latory processes and requirements, to new employees. Howard asserted which were important in the success- that “there is less of a reliance on ex- our project and manufac- ful execution of the manufacturing patriate expertise these days, but it is turing teams.” project,” Ng said. “Understanding and still sometimes required for specialist incorporating these took time, but areas, such as emissions.” — EUGENE NG we were fortunate to have the local On the customer side, relationships CHEVRON ORONITE authorities guide us.” have been cultivated with such re- Other challenges are more related gional lubricant marketers as Sinopec, to culture, and Asia has significant Petrochina, Indian Oil Corp., Bharat 3 COPYRIGHT 2021, LUBES’N’GREASES MAGAZINE. REPRODUCED WITH PERMISSION. FOR MORE COVERAGE VISIT LUBES’N’GREASES Petroleum Corp. and Hindustan equivalent to moving from Euro 4 to user and the environment. Emphasis Petroleum Corp. while continuing to Euro 6.” Tighter emissions regulations and compliance on clean air and zero support the major global players. Ng create opportunities for premium emissions has surely accelerated the said that having local facilities “helps lower-SAPS [sulfated ash, phospho- implementation of higher emission to accelerate the development and rous and sulfur] lubricants and asso- norms, leading to changes in ICE marketing of innovative solutions to ciated additive packages, like those hardware and growth of EVs in these address emerging new emission reg- developed for the European market. markets. Pollution is at an all-time ulations as well as OEM and custom- Gokhale added, “This is in addition to high in major cities, and that calls for er needs.” the ongoing upgrade in diesel engine eco-friendly solutions. The EV space More local additive manufacturers oils from API CF-4 to CH-4 and CI-4 brings in huge opportunities due are expanding in China and India, Plus, which is increasing