Interview with Eduardo Brandao, director of the area Admixture Systems Iberia of BASF Construction Chemicals

We need to distinguish clearly between the BASF Group worldwide and BASF Construction Chemicals which are basically business units which dealt with the construction in Spain sector. There are three areas: the first is that of additives for concrete, that I am, much more focused on public works (construction of tunnels, commuter, etc.); the second is the so-called ' Building system', much more focused to the finish in housing (mortars, waterproofing, etc.); and finally a small area dedicated to thermal insulating boards, whose factory we have in Tudela (Navarra). I would say that each of them has lived in a different way the crisis, and they have been these last two areas more linked directly with the housing, which have suffered from the crisis of the construction with increased virulence. In the business of concrete housing unit has been equal, but the easily verifiable decline by the numbers in cement production, has been subdued because in the years 2008 and 2009 the public work was still pulling. But in 2010 the situation has changed completely, because it has been precisely cut in public works and that has resulted in a feeling of uncertainty that until now we didn't have.

In the 12 years we have had in Spain, in the period between 1995 and 2007, there has been such demand of construction that almost everyone has worried more by the amount that for the quality. The client what we demanded was the material and we should serve him in significant quantities in the shortest possible time, because they had to build. I remember that in the past three years before the crisis (2005-2007) had problems to reach all demand that we had. We even set at any given time, and announced it in the press, build a third plant in the North, because we do not really arrived. Now we have the other side of the coin, with a crisis of unquestionable demand, developers who build anything, and at a time when we must ask ourselves where they go. In some forums that I have been able to participate, the message is clear, both for civil works as a public path is to reduce costs, and that means greater efficiency and bet on the quality of the construction. This means that certain trends that were already come in Europe and other parts of the world, move to Spain. All what contribution to savings in the cost (efficiency) of the building, durability of buildings, or the energy-saving of buildings and infrastructure to be built, will be key points to keep in mind.

Totally, because precisely with the experience we gained from the study of trends in other areas of business of our group, sustainability is clearly the element that connects all the trends at the industrial level in the future. There to be efficient in storing energy and also when it comes to save. BASF is involved in the business of oil and gas, but we ourselves know that all these elements have a limit, and therefore must develop solutions that lead to a different energy global management. And that management can then move to all the solutions applicable in the different industries. Construction was difficult when the time was buoyant, and the industry did not want to hear anything about changes if what already had worked them. But there have always been some who have thought a little further, some of them potential customers of BASF, and that while they did business, they thought about how follow a side for the future.

All the insulation sector will acquire great importance in the future. That tradition of thinking that in Seville is you don't have to isolate the houses just because it's very hot is completely the opposite. It is isolated because this way of air conditioning equipment will spend less energy. In this sense, BASF has a strong and clear commitment to efficient housing, with a low energy consumption, and thus is being demonstrated with projects being conducted in countries such as Germany for years. And on the other hand, though Spain not atisbe the possibility of a construction without cement and concrete, as it is the case of Northern Europe where they work much the wood, we have to promote a change in construction techniques. Not only applies to also include isolation modules, will be adapted techniques to do so.

On the other hand there is a new aspect, which the customer does not see in the House, already built, and is the change that is occurring in the production of cement. The cement industry is suffering in their own flesh pressure of protocols such as the Kyoto, and this pressure is transferred to their processes. This means that we have a product to be given the same performance, but with a few new features. And this is where BASF has many projects and where it is working with many cement in all Spain.

The great contribution of BASF in the world of construction has been the introduction of synthetic chemistry in a world based on the natural chemistry. The fact is that the cement, a product that comes from mixing aggregates and sand, can be worked today better thanks to some of our contributions at the level of additives. As an example, I would stress that it would be impossible that with concrete that was used several decades ago would have been able to built a tower as the skyscraper built in Dubai of 800 meters high. Chemistry allows that the concrete can pump at a higher altitude and that resistance is also much greater. This a few years ago was unthinkable.

BASF bought Construction Chemicals three years ago and we are already a tradition that we have not hesitated to maintain because it integrates perfectly into our strategy: global action to support the needs of each market. These awards mean on the one hand give to meet future employees of the construction industry which is BASF, and help them to enter this world. The prizes which valued projects showing what they are willing to do when they come out into the labour market, is very positive. Often universities not be soaked far enough from the outside world, and that the companies involved with this and other kinds of activities can help to create that connection Universidad-empresa. For example, in the University of Barcelona BASF participates directly in the Chair of innovation in the concrete, and this is not exclusive of Spain, as in several countries we maintain that relationship with the universities, because we regard it as a source of 'know-how' that needs support from a practical perspective as they may represent the companies.

Taking into account the figures for the group in Spain, currently represent around 20% of the business of the company. At the global level, given that the oil and gas business has a greater importance than in our country, the weight is slightly smaller, around 10%.

When BASF directly enters the world of the construction purchasing Degussa Construction Chemicals, the bet is undoubted. In the times we see very changing industries such as electronics, in which production can be here or in China. On the other hand, there is that possibility in construction, is a local industry. For this reason, when BASF was raised to invest in the world of construction, he did as a proposal for the future. It was a carefully thought-out decision because BASF integrates their knowledge at the chemical level in an industry that will remain local. The crisis is cyclical, and a historical company such as ours thought at future, considering that all industries sooner or later will return to development within a normal channel.

It has been difficult because BASF as a company has much of its business based on sales to industries and not directly to the client that uses the product. For instance, we sell the plastic used to manufacture a car, but do not sell the car. On the other hand, Construction Chemicals, BASF has taken a step beyond in the value chain, and now we as competitors to companies that were previously supplied by us. All this leads to adapt to a world which we did not know until now. We have changed from a universe of industrial clients to a client that is on site, and integrate an industry that already was the case in a more industrial, such as that of BASF, has taken his time. I come from the group, and for my has been very interesting to adapt to a direct business like this. The only experience I can regard it as good, and I think that the bet of BASF for this type of business has been winning because it has been shown as our chemistry could be integrated into a link of the supply chain. Perhaps a first step so that the same can also occur in future in other industries.

Our goal is to continue giving the shareholder value that has been invested in the company, that our customers remain convinced that our aid is positive for them, and finally our entire team to generate a sustainable business.

During these years of crisis, and I think that we will continue to do it in those who come, will maintain our structure according to the business that we have today, and we will continue to invest in growth factors that we see in every industry. At the level of construction, those factors already identified in other parts of the world, will come to implant in Spain despite the dust raised by the crisis that we are living in the sector.