T H E E M P L O Y E E M A G A Z I N E O F E V O N I K I N D U S T R I E S A G 0 5 | 2 0 1 4

EN | International Edition

Full of energySupplier, consumer, technology driver: Evonik is playing many roles in the energy transition

Changing How a team in Japan turned a slump into a success storyGrowing Why robust finances create new leeway for the companyShaping How codetermination will support Administration Excellence

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MASTHEADPublisher: Evonik Industries AG,Dr. Klaus Engel

Office Manager: Urs Schnabel

Editor in Chief: Christof Endruweit (responsible according to press law) Senior Editor: Ursula Jäger

Managing Editor: Stefan M. Glowa

Authors in this issue: Christoph Bauer (BAU),Ute Drescher (UD),Christof Endruweit (CHE),Franziska Freudenreich (FF),Ute Heinemann (UH),Ursula Jäger (UJ),Etsuko Kubo, Tom Rademacher (TR),Urs Schnabel (US)

Editorial address: Relling hauser Straße 11, 45128 Essen, Postfach 103262, 45117 Essen,Germany

Design: Karsten Bootmann (Picture Editor), Martin Bartel (Design)/Evonik Industries AG

Wolf Dammann (Art Direction), Arnim Knorst, Susana OliveiraDirk Timmermann/Redaktion 4, Hamburg, Germany

Translation: TransForm, Cologne, Germany

Publishing house: HOFFMANN UND CAMPE VERLAG GmbH, a company of the GANSKEVERLAGS GRUP PE, Hamburg, Germany

Printing: Neef+Stumme premiumprinting, Wittingen, Germany

Copyright: ©2014 by Evonik Industries Aktien-gesellschaft, Essen. Reprinting only with source credit and voucher copy. The content does not necessarily reflect the opinion of the publisher.

3 EditorialHow Evonik produces energy and promotes the energy transition

4 Magazine Sale of STOKO, divestiture of Li-Tec, a new project house in the USA, Klaus Engel at Creavis, expansion in Thailand, lunch in Castro (Brazil)

6 Cover story When a company like Evonik Industries gets involved in the energy transition, its own power plants and investments in greater energy efficiency are only the beginning

12 Japan How a joint venture is success-fully managing change

14 Administration Excellence Three practical examples illustrate how sensible and efficient improvements of daily operations are generated

16 Interview Chief Financial Officer Ute Wolf talks about investors’ perception of Evonik Industries since the IPO and how it is impacting the company’s business operations

19 On site The Evonik facility in Bekasi, Indonesia, is posting record results

Evonik people Geert A. Zonnekeyn from Ronse (Belgium)

Cover photoMouhssine Brahim (left) and Daniel Suhren feel the effects of the energy transition every day in the control room of the Marl Chemical Park. Our pho-tographer Dirk Bannert took this pic-ture of them at their workplace, where they have a continuous overview of the flow of electricity, gas, and steam

2 C O N T E N T S

Robust financesIn an interview, Ute Wolf talks about Evonik’s image one year after its IPO and about the opportunities that are now opening up

Secure energyEvonik Industries is deeply involved in the energy transition as a major consumer, producer, and innovator. What does all this mean for Group?

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Dear readers,Reliability and competitiveness are basic preconditions for the energy supply system of the chemical industry. They were already important in the era of regulated energy markets, but they are even more crucial during the energy transition we are experiencing today. In the course of a dialogue that has at times become heated, policymakers and the business community recently found a way to improve the framework conditions for Germany as an industrial location while at the same time assuring greater fairness for consumers. At the annual meeting of Evonik Industries works council representatives, Michael Vassiliadis, the Chairman of the IGBCE labor union, called on policymakers to exercise their sovereign authority and create the framework conditions for a reasonable industrial policy.

One significant factor for industry is companies’ generation of their own electricity; in the chemical industry, the method generally used is the cogeneration of heat and energy. Because of their flexibility, these cogeneration plants have now taken on the important function of stabilizing the power networks and thus making it much easier to use wind and solar energy. Our editor Christoph Bauer and our photo-grapher Dirk Bannert went to the Marl Chemical Park to find out exactly how this works. In the process, they found out that combined heat and power technology, which has been used for decades in this chemical park, has long been playing an important role in other locations as well.

The energy transition is also creating a growing market for products and innovations from Evonik. Our editor Ursula Jäger found a whole series of examples that are now making it possible to effectively transform wind and sunlight into electricity.

Pleasant reading!The Folio editorial team

Christoph Bauer (second from left) talks to the experts at Site Services

Dirk Bannert Ursula Jäger

The Personal Care Business Line will be represented at NYSCC and FCE Cosmetique

May 13–14, Edison, New Jersey (USA): The New York Society of Cosmetic Chemists (NYSCC) is a network of scientists from the cosmetics industry. On Suppliers’ Day, the Personal Care Business Line from the Consumer Specialties Business Unit will offer information about its innovations in the area of cosmetics.

May 12–14, São Paulo (Brazil): At FCE Cosmetique, one of the most important platforms for the pharmaceuticals and cosmetics industries in Latin America, the Consumer Specialties Business Unit will showcase products and concepts from the Personal Care Business Line.

May 1–June 15, Recklinghausen: Evonik will once again be the main sponsor and patron of culture supporting Europe’s oldest theater festival, the Ruhrfestspiele in Reck-linghausen. In line with this year’s motto, “Island Empires: Land in Sight—Discoveries,” the festival is offering a top-quality program.

May 20, Essen: The Annual Shareholders’ Meeting of Evonik Industries AG will begin at 10 a.m. in the Grugahalle in Essen. Information about the meeting can be found on the website of the Evonik corporate unit Investor Relations (www.evonik.com/annual-shareholders-meeting).

May 20–22, Shanghai (China): At the SNEC PV Power Expo international exhibition and conference in Shanghai, Evonik will present its broad portfolio of products for the photovoltaics industry. The solar power industry team will support the Advanced Intermediates and Performance Poly-mers Business Units, which will be showcasing its products at the event.

The Evonik agenda for May

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LUNCH IN… CastroAlthough there’s lots to do, Tatiana Souza, Barbara Garbrecht, Cintia Husch, and Fred-erico Marquez (from left to right) have found time for a snack break at a construction site in Castro, Brazil. They are, respectively, a specialist for lab equipment, a construc-tion engineer, an administrative assistant, and a maintenance coordinator. They all belong to a team that is preparing for the commissioning of a new Biolys facility that is currently under construction. They will work in the provisional administrative building for a few more weeks until they can move into the new building. The facility in Castro augments the Health & Nutrition Business Unit’s production of the animal feed additive Biolys in Blair (Nebraska, USA). It supplies a large part of its output to the Latin Ameri-can market. Next to the Castro facility is a corn processing plant operated by the US company Cargill. Evonik Industries will obtain the raw material glucose from this plant.

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Research as a driving forceOn the Day of Research, Klaus Engel went to get first-hand infor-mation about the innovation strat-egies and projects at the business units, at Creavis, and at the pro-cess technology unit. At Creavis in Marl, Engel obtained an overview of the innovations and talked with researchers and their supervisors about the research topics. Engel looked at a series of concrete proj-ects that are expected to contrib-ute significantly to Evonik’s net income in a few years. “You have my full support for your innova-tions, and I cannot emphasize of-ten enough how important inno-vation is for Evonik,” said Engel. However, he also reminded his lis-teners that Evonik Industries has to “thoroughly think through” every innovation. It must be clear that each new development benefits the company and has a market. Dr. Peter Nagler, Chief Innovation Officer of Evonik, said that develop-ments not only have to be targeted at today’s customers, but also have to take into account the wishes of future ones. He also stated that the company’s research and develop-ment expenditures have steadily risen since 2009 and amounted to €394 million in 2013. “Our inno-vation pipeline is very full at the moment. In fact, it boasts some-where in the region of 500 proj-ects. Our aim is to make Evonik one of the world’s most innovative companies,” said Nagler. He also emphasized that achieving this goal is the responsibility of every one of the Group’s employees.

Klaus Engel went to see the various examples at first hand

Expertise in medicineIn April, Creavis launched a new Medical Devices project house in the USA. Creavis’ elev-enth project house is based in Birming-ham, Alabama, and has a branch in Hanau. The project house will focus on developing new system solutions for medical technology and on expanding Evonik Industries’ expertise in the areas of biomaterials and polymers. The main emphasis will be on applications for medical implants. “At the Medical Devices project house, we consolidate and increase the exper-tise in medical technology and bio-material research from all of Evonik’s business units,” says Dr. Peter Nagler, Chief Innovation Officer of Evonik. “By basing this facil-ity in the USA we are making our research and development activities even more international.”

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4 M A G A Z I N E

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Expansion in ThailandDuring a festive cere-mony, the company recently commis-sioned the expansion of the production fa-cility for precipitated silicic acid in Rayong (Thailand). With this investment, Evonik Industries increased its production capac-ity for precipitated silicic acid for the au-tomotive, food, and animal feed industries as well as for the paint and coatings industry. “The expansion of our production activi-ties in Southeast Asia, Australia, and New Zealand emphasizes our commitment to this region and makes it easier for us to supply this market with first-rate products and optimal solutions,” says Peter Meinshausen, Regional President SEAANZ. The combination of silicic acid and silanes is used in the tire and rubber industries. The plant is a joint venture between Evonik and Oriental Siam Company.

STOCKO® and R-COMPO® are registered trademarks of Evonik Industries AG or one of its subsidiaries. They are indicated in capital letters throughout the text.

In brief

By acquiring Silbond, a leading supplier of silicic acid esters in the USA, the Inorganic Materials Business Unit has focused its silane portfolio more strongly on specialty products, opened up attractive growth opportunities, and increased its presence on the North American market.

Daicel-Evonik Ltd. supplied R-COMPO brand shoe sole materi-als to the sports shoe manufacturer New Balance for two models

in the fall-winter 2013 collection. The shoes are designed for high-performance athletes. Athletes already wore shoes containing R-COMPO during the 2012 Olympic Games in London.

Evonik CEO Klaus En-gel recently participated in the China Develop-ment Forum, which was held in Beijing. At the forum, he held

talks with other top decision-makers from the international petroleum and chemical industries. As a panel member, Engel spoke about the “Modernization of Agriculture and Food Safety.” He called these issues a global challenge that Evonik is addressing.

Sale of STOKOEvonik Industries has sold its STOKO Skin Care brand of skin protection prod-ucts for professional users to Deb Group, which has its head-quarters in Denby (United Kingdom). “Although Stoko Professional Skin Care has an out-standing reputation on the market, its business model is very different from Evonik’s cur-rent business model,” says Executive Board Member Patrik Wohlhauser. “That’s why we chose the buyer that can most effectively exploit the unit’s growth potential and provide the employees with good prospects for the future.” Deb acquired STOKO in order to strengthen its market position in Europe and the USA and to intensify its expansion in mar-kets such as Russia and Brazil. STOKO’s product quality, ser-vice, and innovations ideally complement the Deb Group’s sales channels and its product portfolio.

Daimler acquires all of Li-TecEvonik Industries and the Daimler Group are reorganizing their lith-ium-ion activities. As a result, the automaker is acquiring the shares that Evonik has held so far in Li-Tec Battery GmbH (50.1 percent) and Deutsche Accumotive GmbH & Co. KG (10 percent). This acquisition will make Daimler the sole owner of both companies. Over the last few years, Daimler and Evonik have cooperatively set up an industrial facility in Kamenz near Dresden in order to mass-produce lithium-ion battery cells for electric vehicles. As part of its consistent focus on specialty chemicals, Evonik was searching for new future perspectives for its lithium-ion business. Li-Tec’s approximately 380 employees develop, produce, and sell large lithium-ion battery cells. The joint venture Deutsche Accumotive was established in 2009 in order to secure Daimler’s pioneering position in the area of electric mobility.

Production of lithium-ion battery cells in Kamenz

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Patrik Wohlhauser, Chief Operating Officer of Evonik, visited the company’s facility in Seoul (South Korea). He was accompanied by

Jan Van den Bergh, Head of the Advanced Interwmediates Business Unit. They met representatives of SKC, Evonik’s strategic partner in South Korea, and employees of Evonik Korea Ltd. and SKC Evonik Peroxide Korea Co., Ltd., a joint venture between the Group and SKC.

Jakub Blaszczykowski, a player of Borussia Dortmund soccer club and captain of the Polish national team, visited the Evonik stand at the

in-cosmetics trade fair in Hamburg. The Personal Care Busi-ness Line presented a range of products at the fair, including a new concept for men’s cosmetics. Athletes find this topic particularly interesting, Blaszczykowski told Markus Langer, Vice President Corporate Marketing at Evonik Industries.

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6 C O V E R S T O R Y

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Managing the Energy TransitionThe specialty chemicals industry consumes a huge amount of energy. Folio examines how it satisfies this tremendous appetite fo r power. In addition, the magazine looks at solutions and products from Evonik Industries that make the use of wind, solar, and biomass power significantly more efficient

Green electricity comes from the power plant in Marl—in any case, its flow is de-picted in green on the big screens in the

control room where Daniel Suhren and Mouhs-sine Brahim are on duty today. The electricity is green because it comes as a mixture from the two independent networks that supply the Marl Chemical Park. The power coming from the north is shown in blue on the screen, the elec-tricity from the south is depicted in yellow, and the mixture of the two creates a brilliant green. On their shift, Suhren and Brahim monitor and control the grid and load management system for the Marl Chemical Park and other Evonik In-dustries facilities in Germany. When they look to their right, they can see a photo of the old con-trol room ,which was decommissioned in 1999. The 15 years since then seem like an eternity on the energy market. The liberalization of the electricity and natural gas markets, as well as the large share of renewables now in the energy mix, have led to major changes. Still, regardless of whether you’re talking about the old or new energy world, the cogeneration system that has been operating in Marl for 75 years proves its value over and over again every day.

A reliable energy supply is the keyEvonik Industries consumes a tremendous amount of energy. Last year the Group’s gross energy consumption totaled approximately 86 petajoules, or enough to supply a year’s worth of electricity to 5.3 million average households in

Germany. “Electricity is more than just energy for the energy-intensive units at Evonik—it’s a genuine raw material,” says Dr. Christof Bauer, Head of the Group’s Energy Policy and Strategy department. Such energy-intensive units in-clude those for electrolysis, hydrogen peroxide production, precipitated silicic acid manufac-turing, and C4 chemistry. As Bauer points out, it’s crucial for a company facing global competi-tion to have an affordable and reliable source of electricity. The Group, for its part, is continually improving its energy efficiency in production—not only to reduce costs but also to become a more environmentally friendly company, which is one of its corporate goals. Evonik once again lowered its energy consumption in the last fis-cal year, this time by four percent, even as pro-duction increased by the same amount.

Nonetheless, continually increasing energy efficiency is not sufficient by itself to ensure the Group can meet its energy requirements. Af-fordable electricity prices and reliable frame-work conditions are also needed. Evonik CEO Klaus Engel therefore described the exemption of some Group locations to a large extent from the Renewable Energies Act levy as “mere com-pensation for an already existing severe disad-vantage.” The same can be said about the priv-ilege for energy generated by the Group itself, according to Engel. This applies to cogeneration power plants at Evonik.

“There’s no better way to use fuel than in a co-generation plant,” says Dr. Hermann-Josef

“Cogeneration will help us achieve the energy transition”

Dr. Hermann-Josef Korte

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Korte, Head of Supply and Disposal Opera-tions at Site Services. “Cogeneration plants are flexible, decentralized, and ecologically sound.” Energy supply is a central focus of his unit. A specialty chemicals company needs not only a lot of electricity but, above all, plenty of process heat in the form of steam. That’s why cogenera-tion plants are now being used as an ideal solu-tion at seven German locations and three facil-

ities abroad. These plants are usually operated to produce steam and thus heat; the electricity generated as a result is in effect a by-product. This is the preferred method because, unlike electricity, steam can not be purchased on the market and instead has to be produced onsite. That’s what the facility in Marl has been doing since 1940. These days, the plant generates be-tween 600 and 950 tons of steam per hour.

Michael Neumann is one of the people who make sure that a sufficient amount of steam is continuously produced. Today he’s one of four power plant operators working in the control room of Hard Coal Plant 1 in Marl. His screen also shows green electricity at the moment—but the green here refers to euros, more specifically to the fact that Neumann is currently operating the facility at a profit.

Evonik also produces steam at pressures of 70, 20, and four bars for itself and its custom-ers in the Marl Chemical Park. Ensuring such production is the top priority at the plant, but there’s a certain tolerance range as well. That’s because the deregulated electricity market also competes with the power the cogeneration plant produces. In other words, if the electricity on the market happens to be more expensive than that generated at the plant, the latter’s output can be stepped up a few percent to ensure that as lit-tle electricity as possible will have to be bought from the outside. Conversely, if the wind is blowing and the sun is shining, electricity prices

Evonik also employs wind power to generate electricity. At its facility in Antwerp (Bel-gium), the company joined forces with the Belgian energy supplier EDF Luminus to put a wind turbine into operation last year. The system has an output of 3.4 megawatts and covers three percent of the industrial facility’s entire energy needs.

The wind turbine is located near the Western Scheldt, which is the estuary of the Scheldt River and the southern-most sea inlet in the Nether-lands. Due to the favorable wind conditions there, it pro-duces 17 percent more energy than an average wind turbine. The new facility produces a to-tal of 8 million kilowatt-hours

of green energy per year. This reduces annual carbon dioxide emissions by 3,450 metric tons, which is equivalent to the amount produced by almost 1,500 cars or 575 households per year. In recognition of this project, Evonik presented the OPEX Gold award to the Smart Power team at the Global Technical Conference.

AN AWARD-WINNING WIND TURBINE IN ANTWERP

Michael Neumann (right, on the phone) and his colleagues in the Plant 1 control room seek to continually optimize energy use at the facility

“Electricity isn’t just energy. For us, it’s a

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Seeing the lightThe Solar Power Industry team develops products for generating electricity from sunlight. PLEXIGLAS Solar is used as a material in ancillary lenses that focus the sun-light in order to greatly increase efficiency. VESTAMID from Performance Polymers is an environmentally friendly, recyclable material for covering the back side of solar modules. VESTANAT from the Coatings & Additives Business Unit is contained in the adhesives used for solar panels. UJ

Joining forces for wind powerThe rotor blades of today’s wind turbines are made of composite components containing glass and carbon

fibers that are bonded together with epoxy resins. The rotor blades contain materials such as the crosslinkerVESTAMIN IPD from the Coatings & Additives Business Unit, adhesives and adhesive components from

Consumer Specialties, AEROSIL and DYNASYLAN adhesive additives from Inorganic Materials, and ROHACELL foam cores from Performance Polymers in the sandwich components. The foundations are pro-

tected by PROTECTOSIL from the Inorganic Materials Business Unit; the VISCOBASE base oil from the Oil Additives Business Line make the lubricants in the turbines’ main gearbox more efficient. Octadien from the Advanced Intermediates Business Unit is contained in the cables that transmit the electricity. New solutions

are being sought by the Composite Industry team, the Composites project house, and other units.

enters the grid is still often insufficient to main-tain a grid frequency of 50 hertz. Conversely, an excessive amount of such electricity might enter the grid and cause it to overload and col-lapse. In order to address the problem of short-falls and excessive production, balancing mar-kets have been established. Market participants here include many power plant operators and industrial companies such as Evonik.

For example, Evonik can step in to stabilize the public grid as a producer with its gas-fired cogeneration plants, and as a consumer with its Chemical Park. If there’s a shortage of electric-ity the gas-fired plants can be ramped up quickly and efficiently. And if there’s too much power the Chemical Park can consume electricity and use it to produce compressed air, for example, or for manufacturing operations. The Grid and Load Management team in the control room—Daniel Suhren, Mouhssine Brahim, and others—are also responsible for such procedures, which need down-to-the-minute precision when it comes to supplying or purchasing power.

will tumble, which means the power output will have to be stepped down as much as possible so that cheaper electricity can be purchased on the open market. The application of this method ends where the security of supply for Evonik’s steam customers begins, so the electricity price displayed on Neumann’s screen can also turn red. This of course means a loss, and losses have to be kept to a minimum.

95 percent is produced on siteIn other words, even though Evonik produces around 90 percent of the electricity it needs in Germany at its own cogeneration facilities and a further five percent at a hydroelectric plant in Rheinfelden, the company is still a participant in the electricity market. The Group’s coal and gas-fired power plants also enable electricity from renewable sources to be fed into the grid.

Wind and solar power are clean, but they’re not always available. Moreover, while wind and sun forecasting has become more reliable, the amount of energy from renewable sources that PH

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genuine raw material”Dr. Christof Bauer

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A new natural gas combined cycle power plant is scheduled to replace an old coal-fired power plant block at the Marl Chemistry Park in late 2015. Combined cycle facilities are among the most efficient power plants in existence, be-cause they optimally exploit the principle of combined heat and power. In this method, the gas turbine sucks in air that is mixed with natural gas. When the mixture is ig-nited, it expands and drives the gas turbine. The air that flows out of the gas turbine afterwards is hot—500 °C—and still full of energy. The fa-cility therefore causes the hot air to generate steam that drives another turbine to gen-erate even more electricity. But that’s not all, since the steam that is emitted by the turbine is still hot enough to be used as process heat. This heat isn’t lost, but is instead used to heat the chemical

facilities. This is an optimalcombination, since chemical plants need steam to produce anything. With this technique, the fuel utilization rate reaches 87 percent. “It en-ables us to make optimal use of the fuel,” explains Gregor Westphal, the project man-ager of the new Site Services power plant. “This heat is lost in large power stations.” This is the case even if the power plant is connected to a district heating system, because there is little use for the heat in sum-mer. Chemical plants, by con-trast, always need heat. The use of natural gas instead of coal will reduce CO2 emis-sions at the Marl facility by

280,000 metric tons per year. The new power plant will play a crucial role in the transition to renewable sources of en-ergy, such as wind and solar power. Germany plans to get 55 to 60 percent of its elec-tricity from renewable energy sources by 2035 and 80 per-cent by 2050. To ensure a se-cure supply, sufficient re-serves of energy must be available to offset fluctuations in solar and wind power. As a result, power plants that can quickly increase or decrease their output are needed. Sep-arate power plants owned by industrial companies, such as the new one in Marl, help to stabilize not only the facility’s electricity network but also the public grid. “We can vary the plant’s output between 50 and 100 percent,” says Project Manager Joachim Kissing. The old coal-fired block only has a range of between 80 and 100 percent. UJ

NEW POWER PLANT IN MARL

The team monitors the electricity balance around the clock, not only for Marl but also for many other locations in Germany. “We optimize the operation of our plants in line with the mar-ket situation,” says Frank Heins, Head of Grid and Load Management at Site Services. “Energy markets fluctuate and the volatility is increas-ing, so we face new challenges every day.” For example, every day a new forecast of the en-ergy requirement for the following day is pro-duced. If capacity is available, the company can offer power to the market; the balancing energy sector is an attractive option here.

The control room team also closely moni-tors electricity price developments on the en-ergy exchange throughout the day. Sunlight levels and wind speeds can defy forecasts and major power suppliers can experience problems at their plants, thereby creating a situation in which either less or more electricity than an-ticipated is suddenly available on the market.

Natural gas consumption is another variable the Grid and Load Management team monitors.

Cleaning biogas SEPURAN brand high-performance

polymers convert biogases made from renewable raw materials into 99-percent-pure biomethane,

which can be fed into natural gas pipelines and used for climate-friendly operations. As a result of this high efficiency,

it received the German Innovation Award for Climate and Environment 2013 in the Environmentally-Friendly Technologies category.

Evonik is helping

10 C O V E R S T O R Y

A highly efficient gas-fired CHP plant is

being built at the Marl Chemistry Park

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AEROSIL®, Dynasylan®, PLEXIGLAS®, Protectosil®, ROHACELL®, SEPURAN®, VESTAMID®, VESTAMIN®, VESTANAT®, and VISCOBASE® are registered trade-marks of Evonik Industries AG or one of its subsidiaries. They are indicated in capital letters throughout the text.

Daniel Suhren (left) and Frank Heins in the control room of the Grid and Load Managementunit in Marl. The electricity, steam, and natural gas grids are controlled here

The aim is to produce as accurate a forecast as possible of the coming production day, and to stick to it precisely. There’s no risk that gas sup-plies might be cut off or lost (the gas that’s not used remains in the pipeline). However, it’s im-portant that roughly the amount of gas ordered is actually used, so that Evonik can rely on get-ting the best price for the gas. Any deviations in either direction generate additional costs. An arrow on the control room screen shows whether gas consumption is in line with the forecast and thus in the green zone. If not, the ar-row will move into a yellow and then a red field.

Korte is confident that “highly flexible, CHP systems will help make the energy transition a success.” The planned gas-fired cogeneration facility to replace Coal Plant 3 in Marl will oper-ate in line with an innovative concept and pro-vide important balancing energy to keep the grid stable. For years, every federal and state administration in Germany has made the pro-motion of cogeneration plants a top priority. Evonik too has pursued this goal through its in-

vestments. However, a different approach was taken in Darmstadt, where a waste-to-energy plant operated by Heag Südhessische Energie AG is located so close to an Evonik facility that a decision was made to build a steam line between the power plant and the chemical factory. This has created a highly efficient system for steam delivery and has also led to a substantial reduc-tion in natural gas consumption.

Using waste as fuelEfficiency doesn’t just mean high efficiency rat-ings. For example, Blocks 4 and 5 at Coal Plant 1 in Marl are also efficient because they can con-vert production residue as well into energy in an environmentally friendly manner. “In these two blocks, waste can replace as much as 25 percent of the fuel we normally use,” says Plant Manager Peter Kannacher. The residue is sent directly to the Marl Chemical Park safely and quickly, mostly via pipes.

What will happen when the share of energy from renewable sources increases further? “We

will make our power plants and facilities even more efficient and flexible,” says Andreas Stei-dle, Head of Energy and Fuel Systems at Site Ser-vices. “We’re already working on this at many locations—for example, in Krefeld and Worms.” Plans also call for more efficient use of the waste heat generated through production operations. Steidle adds that production specialists should make manufacturing processes more flexible in order to deal with the increasing fluctuations in the grid. “Even though some of the energy rules we’ve developed aren’t yet ideal, it might make sense in the future to produce 110 percent of the required industrial output when energy is cheap and reduce production to 90 percent when energy prices rise, for example.” Above all, this kind of flexibility requires security of supply. And that’s always the case in Marl when the screen in the control room is green. BAU

to stabilize Germany’s power networks

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Correspondent Report from Japan

DSL Japan, a subsidiary of Evonik based in Ako in the Kansai Region, is a perfect example of a

success story evolving after a difficult start

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It is a story about change and about achieving success in spite of a problematic start, but it also demonstrates what people can accom-

plish when their motivation is restored. DSL Japan was founded in October 2003 as a joint venture between Shionogi & Co., Ltd. and De-gussa Japan Ltd. and initially faced major prob-lems. Today DSL Japan supplies Ashai Beer and Suntory, Japan’s premier beer brands as well as Lion, a manufacturer of medical devices.

After the establishment of the company, lo-cal Shionogi employees were worried about switching to DSL from a well-known enter-prise. Although they had the option to trans-fer to another site of Shionogi, most employees had close ties with the Ako site for traditional and family reasons. By contrast, the company management was not concerned. “People said that Shionogi was one of the three top com-panies on Kansai, but some of its units, such as the silica division, were an odd fit outside of the pharmaceutical area. It therefore made sense for Shionogi to divest everything with the exception of pharmaceutical products,” says Yasutaka Oyaki, the deputy plant manager.

The joint venture ran into a big prob-lem right at the start when the investment plan for the years 2005 and 2006 failed. It had been the first major decision and the di-lemma first became apparent when the con-tract had been awarded and orders had been placed. Yoshifumi Naka, the Head of the Pro-

duction Technology Department, recalls the reasons: “We lacked competency and informa-tion and our English skills were simply not suf-ficient. We ended up developing another plan that would cost another 200 million yen, or ap-proximately €1.4 million,” an amount the com-pany did not have. As a consequence, the devel-opment department was downsized and staff had to be reduced—a painful setback. The pro-duction only operated ten days a month, DSL was in the red, and the employees’ motivation began to flag precipitously.

And then enthusiasm returned Although they were discouraged, the employ-ees at the plant in Ako joined forces with the Japanese sales team and began to make per-sistent efforts to improve quality and increase sales figures. “The main reason for our current performance increase is the fact that the qual-ity of our products has stabilized,” notes Hisato

Aoki, product development manager. There were no fundamental changes, but continuous improvements became an important factor in the plant. “Kanai magic,” the extremely posi-tive thinking of DSL president Tadashi Kanai, made significant contributions to changing the outlook in the company. When the manage-ment decided to do business with large corpo-rations, capacity usage increased and enthu-siasm returned. At the same time, a notable change in motivation and quality awareness occurred. As shift leader Satoshi Koyama re-ports, employees had previously considered it sufficient for the pH value and particle size to be within the permissible tolerance levels. To-day, DSL produces consistent quality with val-ues that are exactly in the center of the toler-ance range.

The company now proudly reports record sales and profits. The full capacity utilization of the plant was extended to three years. The next difficulty to overcome will be to rejuve-nate the staff. Since the average employee age is 50, the challenge is now to pass know-how about maintenance and production on to the next generation. Plans also call for increasing the plant’s capacities to make sure DSL can con-tinue to serve the large customer accounts that stood by it in tough times. “We have become a success story,” says plant manager Takashi Nishiyama. “In a few years, we will probably be a case study for economists.”

FOR FOLIO FROM JAPAN

Etsuko Kubo works at DSL Japan in Tokyo, which is part of the Inorganic Materials Business Unit. As an adminis-trative assistant, she’s close to the company’s decision processes. In her correspon-dent report she looks back on the first ten years of DSL.

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The product quality is ex-cellent and the order books

are full. The employees at the DSL Japan are proud

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Many good ideas for efficient administration

In China, new suppliers are entered into SAP not only by Evonik’s purchasing department but also by other units

A whole series of control measures were needed as a result, and seven signatures were required before a new supplier could be entered into the system

SuppliersIn Asia, simplified purchasing

processes demonstrate that clearer structures can

substantially reduce the associated administrative effort,

leading to faster procurement

Insurance poolingThe pooling of foreign insurance

contracts for employee benefits enables Evonik Industries

to insure its employees at a lower overall cost and in

some cases at better terms

At many of Evonik’s companies outside Germany, health, life, and accident insurance are an integral part of the employees’ remuneration package. In such cases, Evonik bears either some or all of the associated costs

In order to provide employees with such insurance services, the local Evonik companies conclude appropriate insurance contracts with local providers for their employees

Brand manualBy simplifying the rules for its brand image,

Evonik Industries can transfer more responsibility to the communications staff

in the regions and the business units. This increases the speed and flexibility with

which the brand can be employed

When the name “Evonik” was introduced, the company used a wide variety of ways to make the new brand visible and tangible throughout the world

Many rules had to be written down so that the brand could be uniformly presented all over the world. However, the coordination processes were time-consuming

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Health insurance

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Even if a process is working well, this doesn’t necessarily mean that it can’t be made even better. However, habit is the

natural enemy of all processes of change. This is very understandable. After all, why would anyone want to change a process if it already brings about the intended result?

However, Evonik Industries has changed radically, and this transformation of the com-pany into a globally operating specialty chem-icals group will now be implemented in its ad-ministrative structure as well, thanks to the

Administration Excellence program. Evonik aims to become faster, more powerful, and more efficient. That’s why it’s worthwhile to examine even processes that are already work-ing well.

To enable the Group to prevail against the competition, the highest standards must be met not only by its products but also by its administration. Ultimately, this increased ef-ficiency will not only help the company but also serve as an effective means of prevent-ing increases in the workload. It’s not just the

big steps that will bring Evonik closer to its goal of creating a uniform administration; it’s also the many smaller good ideas that incre-mentally help make administrative processes faster, simpler, and more efficient.

In this article, Folio presents just three of many examples that show how a satisfacto-rily functioning process was substantially im-proved. At all levels, employees are helping to secure and even increase Evonik’s competi-tiveness by improving and changing existing processes. BAU

In the future, only purchasing department employees will be allowed to enter new suppliers into the system. As a rule, only two signatures will still be needed

At the international level, the local insurance contracts are collected in a variety of pools at Evonik’s multinational network partners. The resulting increase in the number of contracts improves the cost and damage situation for the insurers

As a result, Evonik can conclude better contractual terms for its employees. For example, it can enable them to obtain insurance at better conditions or without requiring a medical checkup. Employees at small locations benefit from this the most

Evonik receives a refund if the damage situation for a particular pool is favorable. This enables the company to save part of the insurance premium. The total savings can amount to hundreds of thousands of euros, which flow back to the local Evonik companies

Life insurance

Health insurance

Accident insurance

Now that Evonik is well-established, the rules can be greatly simplified. Training courses are replacing time-consuming coordination processes

The communications departments in the regions and the business units are being given more responsibility for the brand. The sim-plification of the rules is making Evonik faster and more flexible worldwide

If you or your team have ever accelerated or streamlined administra-

tive processes or made them more effective, we would appreciate it if you

could let us know by sending a brief description to folio@evonik.com.

GUIDE TO

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“Our scope for making acquisitions Ute Wolf, Evonik’s Chief Financial Officer, talks to Folio about the Group’s financial strategy, shareholders’

Ms. Wolf, preparing the Annual Report must have been a major project for you. When our issue is published, you will be in the final stage of preparations for your first Annual Share-holders’ Meeting as the Group’s Chief Finan-cial Officer. So we’re very pleased that you’ve nonetheless found the time to talk to us today.(laughs) Yes, long-term planning pays off.Are you referring to our persistence?Yes, that too. But you’re right: Both of these an-nual dates are very important for us and require a lot of intense work. That also applies to our planning for the year ahead. In other words, we’ve always got a lot of work to do, but some work phases are more intense than others. In addition to the specific deadlines, you’re also currently working on basic organization. What are your goals there? We’ve had several years of very successful busi-ness development, during which we achieved many of our strategic goals. In terms of the bal-ance sheet, that can be seen in the Group’s ex-cellent financial structure. A major task in the years ahead will be to reinvest our new finan-cial flexibility in growth projects.You’ll probably have intense discussions with Chief Operating Officer Patrik Wohlhauser concerning how to distribute these funds.We discuss these issues on all levels—in the Ex-ecutive Board, of course, but also with the busi-ness units that propose the projects and bear the operational responsibility.How do you define your role in this cooperation with the business units?It’s important to clearly analyze the opportuni-ties and risks involved in reaching our growth targets and balance them against one another. The business units conduct the business oper-ations, but I believe it’s very beneficial if we act as a sparring partner and ask a critical question now and again.And say “no” once in a while.That too. But I’d rather define our role as pro-viding constructive support. So instead of “no” I’d prefer to say “yes to solid growth.”Now that Evonik Industries is established itself in the specialty chemicals sector and is listed on the stock exchange, what has changed?

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has grown” and analysts’ expectations, and the fascination of specialty chemicals

We used to rely heavily on our own invest-ments. Recently we’ve made small but very im-portant acquisitions such as Silbond. But thanks to our new financial flexibility, I’m sure that bigger acquisitions will once again be consid-ered. In any case, we have to analyze the risks involved very carefully, and after acquiring a company we have to successfully integrate it.You’ve been Evonik’s Chief Financial Officer for over half a year. In this position, what has really been new for you?The dialogue with new investors and the road-shows after our initial public offering. That’s because it’s important to demonstrate our re-liability on the capital market over and over again. And because this is a new process for us as an organization, we have to practice a little. It’s not a skill that comes automatically.We’d love to take a look behind the scenes. How do discussions with people from the world of finance—analysts, shareholders, and investment companies—proceed?They vary greatly. The groups that have al-ready invested in Evonik shares are very well informed. In such cases we talk in detail about our strategy, our markets and market positions and, naturally, our financial figures. There are also investors from smaller and less special-ized investment companies; in such cases it’s a challenge to explain a complex industrial group such as Evonik with its many diverse success factors. Finally, the analysts from the banks also ask very detailed questions, because they are on the lookout for recommendations concerning stock investments.How is Evonik being perceived in the world of finance one year after its IPO? It’s undisputed that we have a good product portfolio, tremendous technological know-how, and outstanding capacities for research

and development. However, we have to gen-erate even greater trust in our track record. In-vestors want to know where the Group is going and how reliable our forecasts are. Transpar-ency is important, because we want to present ourselves as a reliable partner. Share prices can undergo tremendous highs and lows during a single day. Does a long-term strategy pay off on the stock exchange?Absolutely. There are many good examples of that on the stock market. Many investors have a long-term investment horizon, and ultimately a share can develop positively only if the compa-ny’s long-term strategy is right—even if various issues cause short-term fluctuation. Can you give us an example?Let’s take the growth regions. Two years ago they were still booming, but today the as-sessments are once again more modest. We shouldn’t get too carried away.Because of the Group’s initial public offering, the ownership structure has changed. What does that mean for Evonik?Through the ups and downs of its share price, a company gets daily feedback on how the cap-ital market regards the company’s develop-ment. In addition to our major shareholders RAG Foundation and CVC, we now have many new shareholders, and some of them, such as the Singapore-based company Temasek, have a long-term orientation. A listing on the stock exchange poses huge challenges to a company concerning the transparency of its corporate data. The positive effects of transparency are a further upgrading of our image in the world of finance and greater scope in case the Group de-cides to make a larger acquisition.What has been the response to Evonik’s transformation from a conglomerate to a specialist chemicals industrial group?The transformation is regarded as a very log-ical step. For example, power plants have ex-tremely long-term financing, and real estate properties have different key figures, invest-ment cycles, and requirements regarding the return on investment than chemical compa-nies do. Having to weigh all these factors against one another within an industrial group was

“We have to demonstrate our reliability on the capital market over and over again”Ute Wolf

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always a challenge in itself. Our focus on specialty chemicals now allows us to simplify many processes.You’re referring to Administration Excellence. Does the world of finance also look at such projects?Yes, but on the capital market it’s almost ex-pected as a matter of course that companies will always be trying to increase their efficiency.Your area of responsibility also includes procurement and IT. Which major tasks in these areas are on your agenda?Procurement has already been reorganized in recent years, but we’ll work on it some more in the future.What about IT?There we’ve got a different starting situation. Previously IT was distributed across several Ex-ecutive Board members’ areas of responsibil-ity and organizational units. That made things rather complex. Consolidation into a single IT unit will eliminate interfaces and simplify the organizational structure. We will then take an-other close look at the IT processes, keeping in mind that IT in particular is incredibly fast-paced and that we want to stay abreast of all the latest developments. We’re now highly moti-vated, and we’re forging ahead in this area.You once said that efficiency sets high requirements for transparent procedures and processes. Can you be more specific? Let’s stick with IT as an example. In my previ-ous position as the Head of Finance I discovered that for some projects it was hard to even find out who our service provider was, what with all the different departments and subdepartments. That was inefficient, but it didn’t mean the em-ployees weren’t doing their jobs right. It meant the organizational structure was too compli-cated and not sufficiently customer-oriented.Apropos complexity, how many key figures do you have to keep an eye on in your capacity as the CFO?

At the top control level there are very few: about half a dozen leading key figures. Of course many other indicators feed into them. In individual business units there are also addi-tional specific key figures for fine-tuning, for example concerning warehousing and the sup-ply chain.What are the most important key figures that you always keep an eye on?Sales development and profitability—in other words, the development of EBITDA and return on capital employed or ROCE. We also have to focus increasingly on the cash flow. For in-house controlling we have the leverage key figure...Could you explain that, please?The leverage key figure indicates our degree of indebtedness. To calculate that, the EBITDA is put in a ratio with the Group’s total indebt-edness—in other words, its financial debts plus pension liabilities. As the saying goes, you can spend every euro only once. Would you agree?Yes, that’s definitely the case for companies.With that in mind, how can you make sure Evonik has enough money to reach its growth targets? Thanks to Evonik’s strategic realignment, we now have a very good financial cushion. We’ve paid off many of the Group’s debts, from a le-verage key figure of about 4 to the current 1.8.

We’ve also reduced risks by more fully funding our pension liabilities. In this way we’ve made Evonik quite a bit more weatherproof.How robust, or weatherproof, is Evonik today?We are very broadly positioned, and we serve a large number of different markets. That’s a big advantage that helps us balance out fluctuations in the individual markets. Of course we’ve had very favorable situations for various products in past years, and in some cases these situations are moving back to normal. That has noticeably reduced our net income and affected the bal-ance sheet for 2013. In the future we want to balance our portfolio even better so that such factors have even less of an impact.Do social and environmental data also play a role in your work in addition to business data? Is this of interest to the world of finance?Absolutely. Ultimately, a company is successful in the long term only if it has firmly integrated sustainability and social responsibility into its strategy. There are enough examples of compa-nies that were negligent in this regard—and this had serious consequences for their reputation and their business results. That’s why many in-vestors look very carefully at a company’s sus-tainability strategy.Your area of responsibility also includes the region North and South America. That means a lot of travel for you.Yes, but there are several reasons for that. Re-sponsibility for the region is one factor, but the finance community also extends throughout the entire Group. In both cases, important is-sues sometimes have to be discussed on site. But we deal with many things nowadays via video-conferences. It also contributes to sustainability if I don’t have to fly halfway around the world to attend a two-hour board meeting.You originally trained as a mathematician. Have you also developed a close relationship with chemistry by now?Of course! What fascinates me about specialty chemicals is the breadth of their possible appli-cations and the innovative strength of this field. On a recent visit to Creavis, one of the things that impressed me was the range of new possi-bilities opened up by biofermentation.What does 2014 hold in store for you next?My appointment calendar is well-filled. For ex-ample, I have to explain to the financial market our outlook for the coming year and our first quarterly report for 2014……and the first Annual Shareholders’ wMeeting on May 20. Yes, the Annual Shareholders’ Meeting has a very high priority. At the meeting I’ll be mov-ing on familiar territory. That’s because I’ve worked previously at other companies that were listed on the stock market. But it will be exciting all the same. US/CHE

“Our focus on specialty chemicals allows us to simplify many processes” Ute Wolf

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Indonesia’s 245 million inhabitants make it the world’s fourth most populous country. In the past several years its gross domestic product has grown at approximately 6 percent annually. Bekasi has about 2 million residents. The facility holds numerous certifications. The halal certification, which ensures that production is in accordance with Islamic law, is very important in the world’s Muslim countries.

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Expansion in IndonesiaA small facility in a gigantic metropolitan area. Not far from Jakarta, the capital of Indonesia, Evonik Industries produces surfactants and esters in Bekasi

Working to increase production: Zartono (left) and Zacharias Mur-dianto at the Bekasi plant

Somewhere on the ride to Bekasi uncer-tainty sets in. Are we still in Jakarta, a city of millions of people, or already in its sur-

rounding suburbs? But the driver masterfully navigates through heavy traffic among thou-sands of mopeds, past stores, street vendors, and food stalls, then takes another left across a small river and through the gate to the Bekasi facility, which is operated by Evonik’s Personal Care and Household Care Business Line and its joint venture partner Sumi Ashi. Since 1996, PT Sumi Ashi and its 77 employees have been producing surfactants and esters, which pro-vide betaines used in shampoos, shower gels, and detergents as light stabilizers or to stabilize foam. The head of Evonik in Indonesia, Kamal-udin, says, “Thanks to strong domestic demand we’re currently experiencing double-digit an-nual growth rates.” Evonik has already built a similar facility in Shanghai; together, the two

facilities are primarily intended to ensure that the Asian market’s demand is met.

Production doubledOffices, production areas, storage areas, and tanks are distributed across an area of at least 5,000 square meters. “From Monday to Friday we operate three shifts a day. On Saturdays we work half days,” says Sigit Tri Pramono, the plant manager. Drumming of the final product runs continuously, since the facility is striving to dou-ble its production to about 33,000 tons with its “Betaine Expansion Project.” A new reactor, an additional distillation column, and an additional tank for precursor material support the produc-tion increase. Safety coordinator Erlangga Genta Prasasti keeps a sharp eye on things to ensure that the process remains accident-free. Cur-rently the accident-free days sign shows more than 2,200—a new record for Bekasi. CHE

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“I’ve got staying power”

My name is Geert A. ZonnekeynUnit: Legal Services Europe Position: Senior Legal Counsel Nationality: Belgian Age: 40 Place of residence: Ronse (Belgium) Marital status: Married with two children

How would you describe your home town of Ronse in just a few words to a colleague from a foreign location?Ronse is a cosmopolitan city with inhabitantsfrom 70 nationalities. It’s located in the heart of the Flemish Ardennes region and has beautiful hilly landscapes and many forests.

What can you still remember about your first day on the job?The warm and sincere welcome I received from the team in Brussels and the Evonik tie they gave me as a present. I love ties.

What’s the most important lesson you’ve learned in life?Perseverance is always rewarded. Diplomacy is necessary, and so is a healthy dose of ambition.

If you had €500 to spend as you like, what would you buy?A parachute jump for two.

When you were a child, what did you want to be?A policeman, like my grandfather.

You never leave for work without…?…drinking a cup of coffee and letting the dog out.

In which film would you have liked to play the lead?In “Forrest Gump.” It’s a fantastic film in which the main character plays an active role in historic events after the Vietnam War.

What’s your favorite sports club?The soccer club RSC Anderlecht.

In which band would you like to play the lead?I’d like to play with “The Proclaimers.”

With whom would you like to change places for a day?With the EU Trade Commissioner, Karel de Gucht.

What drives you up the wall?Disorder and chaos.

And what calms you back down?Taking a ten kilometer run through the forest in the morning.

Where would you like to go on vacation one day?In Tierra del Fuego, Argentina.

What was the last experience that left you speechless?The marathon in Paris. After 35 kilometers I experienced the notorious “man with the hammer”—hypoglycemia.

We all have our little extravagances. What’s yours?Waking up at 6 a.m. on a beautiful Sunday morning, running 20 kilometers, and enjoying the fine weather.

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