Messer’s strategic orientation
Messer Group acquired the majority of Linde AG’s gases business in North America and certain Linde and Praxair business activities in South America effective March 1, 2019 in a joint venture – called Messer Industries GmbH – with CVC Capital Partners Fund VII (“CVC”). Messer Industries invested a total of around 3.6 billion US dollars (3.2 billion euros). Messer Group contributed the majority of its Western European companies to the joint venture. Over the course of the next few years, the joint venture will be fully integrated into the family-run Messer Group, thereby establishing a global gas group under the leadership of the Messer family. Messer Group’s regional operations are currently focused in Eastern Europe and Asia. Asia already represents the largest industrial gases market and is expected to have the highest growth rate in the medium term. Also, with Messer Industries’ participation, in 2019 strategies were developed for the Americas and Western Europe, in order to sustain business success in the coming years. The common aim that they all share is to achieve safety, customer focus, profitable growth and fair payment for our products through a team culture focused on efficiency, success and motivation in combination with innovation and a highly satisfied workforce and clientele.
Messer Group is planning to implement improvements, especially in the areas of plant automation, sales, energy efficiency and logistics. Enhanced sales operations will contribute to positive earnings by implementing required pricing measures and by focusing on on-site projects, cylinder and special gases, and the sale of bulk gases in China. Cross-selling with MEC Group products and new medical gas products will be promoted. A higher number of customer visits will increase customer loyalty and sales. Customer satisfaction analyses are a valuable tool and an important metric of target achievement. We will also continue to expand the use of digital communication with the customer and networking within Messer such as video conferences. Alongside this, improving the procurement practices we follow when acquiring goods and services will cut costs. Moreover, the transport of cylinder gases and bulk products will be optimized through more efficient loading and higher payload transport vehicles. The development of a digital solution to support cylinder gas logistics is nearing completion. Using historical data, it will combine anticipated short-term customer needs with existing orders and planned deliveries in order to eliminate unnecessary haulage.
In the area of production efficiency, an initiative to automate the remote monitoring of air separation units has been launched. In 2019, Aspen DMC3 advanced process control software from Aspen Technology was successfully put into operation in two Messer Tehnogas air separation units in Smederevo. They will enable energy savings, higher yield, and more stable plant operation. Launched in 2019, the project to implement the level monitoring of mobile containers has entered the test phase. Results of long-term testing are expected by the end of 2020.
Marcel Messer, fourth generation Messer shareholder, has been serving as Advisor to the Management Board of Messer Group GmbH since February 1, 2019. In that function, Marcel Messer reports directly to the Management Board, providing it with support and consultation concerning, among other things, corporate strategy. In particular, Marcel Messer will contribute his experience from the finance industry in order to help Messer Group manage the planned exit of financial investors from the Messer Industries joint venture. In the function of owner (observer), Marcel Messer has also been named to the Supervisory Board of Messer Industries where he has been appointed Company Secretary.
Sustainable growth through investment
In June 2019, the cornerstone was laid for Messer’s third air separation unit in Germany. Together with the gas manufacturer basi Schoberl, Messer is investing some 32 million euros in the production of oxygen, nitrogen and argon. Construction on the grounds of SAINT-GOBAIN ISOVER G+H AG in Speyer is scheduled for completion in spring of 2020. Messer has already been supplying gases to the customer by trailer since May 2019. In the near future, the new on-site air separation unit will minimize those gas shipments and the accompanying carbon footprint.
In the past three years, Messer invested 37 million euros to build up its Hungarian market. With gas production units and plants at twelve major customers, Messer is the market leader in the on-site atmospheric gases business in Hungary. In 2019, Messer signed an agreement with MOL Petrochemicals, a leading petrochemical group, for the construction of a new onsite unit to supply nitrogen and instrument air for a new polyoil complex in Tiszaújváros in Northern Hungary. When the unit goes into operation in 2021, it will be one of Messer’s largest on-site units in southeastern Europe. Messer also built two new nitrogen generators in Hungary – one in Dunavarsány and one in Hatvan – and a third one is currently under construction. In response to the growing demand, the construction of two additional CO2 plants has tripled the utilization capacity of the carbon dioxide field near Ölbő, Hungary, over the past two years.
In 2019, Messer achieved another breakthrough in the electronics industry and put gas supply plants into operation in Sichuan at Truly and BOE for, among other things, high-purity nitrogen. BOE and Truly are leading companies in the electronics market in China. In addition, Messer China signed a supply contract for ultra-high-purity industrial gases with HKC Mianyang Photoelectric Technology Co., Ltd. HKC is a leading supplier of large-format LCD displays. In March, another CO2 recovery unit of Messer China began producing food-grade CO2. Located on the grounds of Yunnan Dawei Ammonia Producing Co., Ltd., it is Messer’s fourth CO2 unit in China and its second in Yunnan Province. Through purification and liquefaction, it converts the excess carbon dioxide generated by Dawei’s production process into quality products for use in food, pharmaceuticals, and industrial and agricultural applications. In September, Messer China laid the cornerstone for another air separation unit and a condenser in Hunan Province. In October, a second air separation unit and a condenser were put into operation in the central Chinese city of Chongqing. The new capacity makes Messer the leading supplier of liquefied atmospheric gases in Chongqing and now also enables us to supply gas via pipeline to other industrial customers and chemical companies in the chemical park.
In 2019, Messer put two new air separation units into operation to supply industrial gases to a new Hoa Phat steelworks in Dung Quất, Quảng Ngai Province. That makes Dung Quất one of our company’s largest production sites in the world. In Hai Duong, Messer Vietnam put the fourth air separator into operation to supply the same customer. In the electronics segment, Messer has been supplying Seoul Semiconductors with oxygen from a generator since June 2019.
Since January 2020 the still-young Messer Thailand has been operating for two years. In 2019, a new head office opened in Bangkok and a bulk tank farm opened in Samut Prakan. The company expects to have its own production site within the next few years.
In 2019, Messer Industries USA invested in the construction of a new CO2 plant in Keyes, California. The plant delivers 450 tons of carbon dioxide per day and supplies many companies in northern California and surrounding areas. Carbon dioxide is primarily used in the food and beverage and electronics industries. Messer currently operates two CO2 plants and two air separation units in California. Messer Industries USA put a new air separation unit (ASU) into operation in Adel, Georgia, investing more than 40 million dollars in the highly efficient plant. It supplies gases to companies across in the southeastern U.S., strengthening Messer’s presence in that growing region. Our customers there serve the healthcare sector, produce food and beverages, manufacture metal and glass, and operate independent welding and gas centers. Messer Industries USA is also investing more than 34 million euros (38 million dollars) in the construction of a new air separation unit in Indianapolis, Indiana. Scheduled for completion in early 2021, the facility will produce the atmospheric gases oxygen, nitrogen and argon in technical and medical grades. Future customers will come from the healthcare sector as well as from the chemical, food and beverage, glass and metal processing industries.
Awards for sustainable management
In 2019, Messer was honored with the “Axia Best Managed Companies Award.” The honor is awarded to extremely well-managed, medium-sized companies by the audit and consulting services firm Deloitte, the weekly magazine Wirtschafts- Woche, and the Federation of German Industries (BDI). According to Deloitte: “As with all of the award recipients, Messer is also characterized by exemplary management with a unique approach that combines strategic worldview with innovative force, a culture of corporate responsibility, and good business stewardship. In so doing, they help to ensure the economic future of Germany as a manufacturing location while serving as a role model for other companies at the same time.”
In 2019, the credit agency Bisnode D&B Schweiz AG granted Messer in Switzerland a “Credit Rating Certificate” with “Risk Indicator 1” (which stands for minimum default risk) for the ninth consecutive time. Only two percent of all companies in Switzerland meet the requirements for that best category. The certificate sets Messer in Switzerland apart as a trustworthy, reliable, financially healthy and stable business partner. Bisnode D&B is a partner in the network of Dun & Bradstreet, the world’s largest service provider for business-to-business economic data.
The Economic and Technological Promotion Bureau in Foshan, China, honored Messer as a leading company in the manufacturing sector. The award is based on market share, technological innovation and quality. Every company that receives this award is recognized by the consumers in this sector as a market leader in China with strong technical strengths and good quality.
Engagement in the economic sphere
As Vice President and member of the General Assembly of the Frankfurt am Main Chamber of Commerce and Industry (IHK), Stefan Messer holds the office of Chairman of the foreign trade committee. He is also an Honorary Senator of the Technical University Darmstadt, Germany, and Honorary Senator of the Goethe University Frankfurt, Germany, as well as a member of the board of trustees of the Faculty of Economics and on the board of trustees of the China Institute at the Goethe University Frankfurt and a member of the steering committee of the Deutsche Universitätsstiftung (German University Foundation). In addition, he is a member of the board of the German-Swiss Chamber of Commerce, a member of the advisory committee for the FrankfurtRheinMain economic initiative, a member of the advisory committee of Mainova AG, a member of Engagement in the economic sphere Commerzbank AG’s advisory committee for the state of Hesse, a member of HDI Gerling’s state advisory committee. He is also a member of the Friends of the German-Vietnamese University and sits on the board of Dachser Group SE & Co. KG. Since January 2009, Stefan Messer has been Honorary Consul of the Republic of Slovenia for the consular district of Hesse, Rhineland- Palatinate and Saarland. Stefan Messer is also involved in the association “Die Familienunternehmer” (The Family Entrepreneurs) and in the foundation “Stiftung Familienunternehmen” (Foundation for Family Businesses), which support the fundamental values of a social market economy, in particular free enterprise. Furthermore, Stefan Messer is a member of the steering committee and board of the East Asian Association (OAV) and Chairman of the inter-state committee on Thailand.
The Messer Group is a member of the European Industrial Gases Association (EIGA). The Brussels-based association represents nearly all European companies that produce and market industrial, medical and food gases. The association’s members cooperate with the aim of achieving the highest possible safety and environmental standards during the production, transport and use of gases. Messer is also a member of the IOMA (International Oxygen Manufacturers Association), the German Committee on Eastern European Economic Relations and the German Asian-Pacific Business Association (OAV). Messer employees are represented on all governing bodies of these associations. The Messer Group is a member of the German Welding Society (DVS e.V.). The DVS is a non-profit, technical and scientific association based in Düsseldorf. Messer employees are involved in expert committees, support research projects, and establish and maintain contact with expert groups in technologically advanced fields. The subsidiaries are engaged in various local industry associations. The Messer companies are also involved in organizations in their local regions. Messer Americas is also a member, inter alia, of the following associations: American Chemistry Council (ACC), Compressed Gas Association (CGA), Chemistry Council of New Jersey (CCNJ), Texas Chemical Council (TCC), California Large Energy Consumer Association (CLECA), Indiana Energy Consumers, West Virginia Large Energy User Group, West Virginia Manufacturing Association, Pennsylvania Energy Consumers Association, Ohio Energy Group und California Large Energy Consumer Association.
On 19 November 2019, the general assembly of the Chemical Business Association of Tarragona (AEQT) named Rubén Folgado, Technical Director of Messer Ibérica, as its new president. The primary objective of Rubén Folgado’s three-year term as president of AEQT is to develop a new strategy to address the current challenges that sustainability, digitalization, energy and talent promotion pose to both the AEQT and the chemical industry in general. The AEQT chemical business association was established in 1977 with the goal of promoting the leading position of the Tarragona chemical complex in Southern Europe, in order to help make individual companies more competitive and to contribute to the sustainable development of the area. Messer was one of the founding members of the association at the time. Today all of Messer’s major customers in Spain are members.
In the spring of 2019, beverage industry experts gathered in Charlotte, North Carolina (USA) for BevTech®, the annual meeting of the International Society of Beverage Technologists (ISBT). Messer participated in the meeting for the first time as one of today’s leading providers of industrial gases in North and South America with more than 70 production sites in the region. Sal Calandra, in parallel with his role as Head of Quality & Food Safety at Messer in North America, assumed the function of First Vice President on the Board of Directors of ISBT effective May 1, 2019. ISBT is an international organization whose members exchange information about the business and technical aspects of the non-alcoholic beverage industry.
As an ISBT member, Messer provides its beverage industry know-how to support, among other things, the development of guidelines and training materials for the Beverage Institute by ISBT®. Messer is recognized by many members of this organization as a leader in quality and safety. Our company will use its expertise to generate further growth in the region.