Germany's BASF AG has taken a major step toward its goal of becoming a global giant in the automotive coatings industry by forming a joint venture with Japan's NOF Corp. The 50-50 joint venture will integrate NOF's coating business with BASF's Asian paint operations.
BASF is aiming to be 'the first global player in the coatings industry to maintain significant positions in North and South America, Europe and Asia,' said Klaus Peter Loebbe, head of BASF Coatings.
The focus of the joint venture will be on automotive OEM coatings, automotive refinishes and industrial coatings and production. Plans for the new company target annual sales of 100 billion yen ($952 million).
Nissan Motor Co., a major NOF shareholder and customer, has been pushing its parts suppliers to strengthen their European ties. BASF already has an established cooperation with NOF in Japan through BASF Nichiyu Coatings R&D Co. Ltd. and Nippon R-M Co. Ltd. But BASF's relationship with NOF 'acquired significantly more weight against the background of the Renault-Nissan alliance,' said Loebbe.
Last spring BASF Coatings took a 51 percent stake in BASF Wattyl Coatings Ltd., a joint venture with leading Australian paint manufacturer Wattyl Ltd. The joint venture is Australia's second largest supplier of automotive coatings.
Loebbe said 1999 saw significant growth in sales in Europe and North America. That increase largely offset a decline in South America due to economic uncertainty in the region.
Loebbe said BASF intends to invest DM670 million (euro 339 million) in organic growth of the coatings division in the next five years. BASF is also looking at 'some promising and potentially high-earning acquisitions,' plus more joint ventures.
NOF posted group coating sales of 32 billion yen for the year ended March 31, 1999, with the majority of sales to auto-related companies.
Loebbe said there was a trend towards waterborne paints in Japan, an area where BASF is strong.
NOF plans to transfer all of its coating business, including research and development, production and marketing, to the joint venture.