Bayer CropScience sees a positive long-term market development in North America and is committing significant resources to spur further growth. "We see future growth driven by increasing and sustained demand from customers for improved seeds and innovative crop protection products," said Bayer CropScience CEO Liam Condon at the official inauguration of the company's new integrated R&D site in West Sacramento, California.
"We are investing heavily in R&D infrastructure such as laboratories, greenhouses, and breeding stations as well as new production capacities and seed processing facilities," Condon explained. He said that the company aims to grow faster than the U.S. market. Bayer CropScience plans to invest close to US$ 1 billion (EUR 700 million) in Capital Expenditures (CAPEX) in the United States between 2013 and 2016, mainly to ramp up research and development and to expand a world-class product supply of its top crop protection brands.
These expenditures are part of a global investment program Bayer CropScience started last year, with a total CAPEX for the period 2013 to 2016 of EUR 2.4 billion (approximately US$ 3.3 billion). Bayer CropScience seeks to better leverage its full research and development capabilities by consolidating and expanding its global R&D organization. "Our integrated West Sacramento site represents a major step forward in our efforts to enhance our vegetable seeds and biological crop protection innovation efforts," said Dr. Adrian Percy, Global Head of Research and Development at Bayer CropScience. "The investment into this state-of-the-art facility creates an environment where our researchers and experts can find the best possible conditions to discover solutions that growers across the globe can depend on to produce high-quality food in a sustainable manner."
The new West Sacramento site, which also serves as the global headquarters of Bayer CropScience's Biologics Business, has the capacity to house up to 300 employees. The approximately $80 million facility is situated on 10 acres of land and features a 100,000-square-foot building and a 35,000-square-foot pilot plant to support research and development of biological crop protection products, as well as a 30,000-square-foot Vegetable Seeds research building. The facility will also include a 2,000-square-foot greenhouse and five acres of nearby land for future greenhouse space.
Expansion of production capacities in the U.S.
In addition to building its R&D network in the U.S., Bayer CropScience is also investing significantly in the production capacities of its crop protection products. "Along with capacity expansions at our Muskegon, Michigan, and Kansas City, Missouri sites, the construction of our new plant in Mobile, Alabama for the production of our herbicide LibertyT will contribute significantly to our future growth plans," stressed Condon, who pointed out that the increased production of LibertyT will help U.S. growers fight weed resistance, a key challenge for U.S. farmers.
"The single biggest investment item in the U.S. is our planned capacity expansion of LibertyT herbicide. This is a strong signal to the market as LibertyT is the only non-selective herbicide that controls glyphosate resistant weeds," said Jim Blome, president and CEO for Bayer CropScience LP and Head of Crop Protection for the North American region. "Two-thirds of our planned investments in the United States between 2013 and 2016 are intended to expand our production capacities. This includes measures to further optimize our supply chain in order to increase flexibility and thrive despite market volatility," Blome added.
Investments in Seeds business and U.S. infrastructure
Bayer CropScience is also investing constantly in its Seeds business. In June 2014, the company announced plans to expand its North American and global Seeds headquarters in Research Triangle Park (RTP), North Carolina. The RTP site has experienced significant operational growth in recent years, and approximately $200 million will be invested through 2016. "The construction of greenhouses as well as the necessary infrastructure and land development represent our continued commitment to growth in RTP," said Blome.
The overall RTP investment program includes further important projects, for example, the construction of the Development North America facility dedicated to Crop Protection and Environmental Science research; renovations to Bayer CropScience's North American headquarters, scheduled to be completed in 2015; construction of the 6,000 square-foot North American Bee Care Center; and the purchase of 70 acres of land to accommodate future growth, which includes a new 29,500 square-foot greenhouse.
Bayer CropScience also plans to invest approximately $90 million in its Cotton Research and Development Laboratory in Lubbock, Texas. Founded in 1998, the company's global cotton headquarters is focused on providing cotton growers with the products and solutions they need to meet the world's growing demand for fiber. With a staff of around 120 experts, Bayer CropScience operates two breeding stations, a seed processing plant, a quality assurance lab, a seed warehousing facility, and a state-of-the art research and development lab.
Complementing this, the company also invested $17 million in the expansion of its Memphis Research and Development site, bringing total greenhouse capacity to 76,000 square feet. Located in the heart of the Mississippi Delta, a world-class group of scientists, researchers, technicians, and agronomists with a specialized set of skills is developing high quality cotton and soybean varieties as well as trait innovations. Their aim is to support Bayer CropScience's growing global cotton and soybean seed businesses through molecular breeding and other innovative technologies.