In March, BASF (NYSE:BF) announced that it was making a $220 million investment in nanotechnology because it believed that the field would generate between $61 billion and $74 billion in new products and services within the next five years. In November, the large chemical manufacturer announced that it intended to derive an additional $5 billion in revenues from existing products due, in part, to its research in nanotechnology. In both cases, though, the company was short on offering specifics.
Well, over the weekend, I stumbled upon a small article that profiled the work of Franz Brandstetter, the head of BASF's Polymer Research Competence Center in Germany.
In the article, he identifies three specific areas in which he believes nanotechnology will transform BASF's work. The first is in the field of nano-additives. While Brandstetter doesn't identify what these nano-additives are made of, he does explain that by mixing them into existing plastics, the unique characteristics of the nano-additives decrease the viscosity of the plastic when it is molten.
This, in turn, allows plastic parts to be made thinner with less material and in a shorter amount of time. It also means the plastic parts can be molded at a lower temperature. All three properties result in real cost savings and should give BASF's plastic business a competitive advantage over other large plastics producers such as General Electric (NYSE:GE), DuPont (NYSE:DD), and Dow Chemical (NYSE:DOW).
The second area in which BASF's nanotechnology research is paying dividends is that of redesigning some plastics at the molecular level. The best example is with polystyrene -- the rather ordinary foam material. By manipulating the molecular structure of foam, company researchers have figured out how to significantly improve the insulating properties of the material. This could not only make BASF's plastics more desirable to customers, it could also lead to new applications.
Finally, BASF is making great strides in the development of special conductive nano-scale inks. This advance is particularly exciting because such materials might be able to be mixed directly into plastics, thereby facilitating the creation of plastic radio frequency identification tags (RFID), as well as helping to lower their cost.
With the news last week that two major pharmaceutical distribution giants -- AmerisourceBergen (NYSE:ABC) and Cardinal Health (NYSE:CAH) -- were engaging in a pilot RFID project using IBM's (NYSE:IBM) new WebSphere RFID software, it is clear that this development, too, could have a promising future.
All of this leads me to a conclusion that I have preached before about nanotechnology. The field does have a great many exciting future applications, and there is no shortage of very promising nanotech start-up companies, but the fact remains that nanotechnology will first transform some pretty mundane industries, such as plastics. And this revolution is likely to be lead by some pretty familiar -- and boring -- names, such as BASF.
So if you are looking for a relatively safe way to profit at least modestly from this emerging field, BASF is a good company to consider.
Interested in other BASF-related Foolishness? Check out these articles:
Dow Chemical is a Motley Fool Income Investor recommendation. For more great stocks that pay great dividends, help yourself to a 30-day free trial of the newsletter.
Fool contributor Jack Uldrich just wants a plastic smart enough to keep his wife from overspending this holiday season . He owns stock in GE. The Fool's disclosure policy knows there's a great future in plastics. Think about it.
