Massive purchase links North American PVC supply, processing

GEORGIA GULF BIDS FOR ROYAL

PVC supplier Georgia Gulf (Atlanta) has made a definitive agreement to acquire the outstanding common stock of PVC profile processor Royal Group Technologies Ltd. (Toronto) for $1.6 billion (which includes debt). The acquisition is pending Royal Group stockholder approval plus regulatory approval.

Assuming it is approved, the deal brings together Georgia Gulf-one of North America''s largest PVC suppliers and its second-largest PVC compounder-with Royal Group, one of the continent''s largest consumers of PVC for applications including custom window profiles, decorative moldings, siding, pipe and fittings, and other building and construction products.

In a conference call on June 9, Ed Schmitt, chairman, president and CEO of Georgia Gulf, defended the 43% premium his firm paid to Royal Group''s closing stock price of June 8, by noting the acquisition would decrease NYSE-listed Georgia Gulf''s dependency on the chemicals market and also could lead to numerous synergies by establishing a link from "the salt of the earth" (a reference to the salt used in PVC precursor chlorine''s production) to the "fabricated products."

One advantage Schmitt noted would be the combined firms'' ability to place greater pressure for lower prices on suppliers, with suppliers of PVC additives one group he specifically cited.

Royal Group has been for sale since May 2005. One early suitor, buyout firm Cerberus Capital Management LP (New York, NY), in mid-May 2005 announced a tentative bid of about $1 billion for Royal Group but eventually canceled the bid. The firm has had rocky times in the past years, including the resignation in May 2005 of its founder Vic De Zen. He and former Royal CEO Douglas Dunsmuir allegedly failed to tell the firm''s board about their relationship with a company that sold land to Royal Group. The firm still faces shareholder lawsuits and ongoing investigation by the U.S. Dept. of Justice into allegations of price fixing and accounting irregularities.

About 70% of Georgia Gulf''s revenue is generated by its chlorovinyls'' business, the rest from its aromatics operations. The supplier produces 2.7 billion lb of PVC/yr, selling 80% outright, and also sells, via its Royal Group subsidiary, 960 million lb of PVC compounds per annum. Royal Group is North America''s second-largest PVC compounder.

In Brief

100th WPC extrusion line

Cincinnati Extrusion (Vienna, Austria) has delivered its 100th wood-plastics composites (WPC) extrusion line, the milestone unit going to Finnish processor UPM (Helsinki), which plans to start extrusion of WPC baseboards as an alternative to PVC in Germany and the UK.

Cincinnati Extrusion''s 100th WPC extruder was recently delivered to the Finnish UPM Group.

Kraft chips bag wins

Kraft Food''s Gourmet Chips packaging from Norway won the gold award in this year''s OPPack Awards flexible films competition. ExxonMobil Chemical Films (Luxembourg), a processor of oriented polyolefin films, presented awards to six converters in its OPPack competition.

Big Addex line installed

Extruder manufacturer Addex (Stoughton, MA) has sold and installed a huge blown-film line to an undisclosed producer of agricultural films. The three-layer coex line can produce 12m-wide lay-flat film at up to 2100 kg/hr in thicknesses of 75-350 µm.

Fiberforge license sold

Advanced composites technology company Fiberforge (Glenwood Springs, CO; see MPW November 2005 for more) has sold a license for its composite blanks technology to Cutting Dynamics Inc. (CDi; Avon, OH). CDi will use the technology to make thermoplastic composite aircraft seats.

Engel bullish on future, all-electric presses

During the firm''s recent technology symposium at its large press factory in St. Valentin, Austria, Peter Neumann, CEO of Engel Holding, the firm''s family-owned controlling company, said Engel''s fiscal year (ended March 31) saw 2005 sales of 2725 machines for a ledger posting of ?545.9 million, a 6.9% drop from the previous FY but still earning Engel global leadership in sales for injection molding machinery. Engel North America accounted for about 23% of sales, with Neumann pointing to increased sales there of larger machines for automotive applications.

Engel late this year will begin manufacturing large machines in Shanghai, China, and expects with that plant to grab a larger share of the burgeoning Chinese automotive market, with Neumann noting that the reduction in transport and production costs for these large machines will be significant. The manufacturer scored a recent coup when Stephen Greif, a longtime Asia hand and the sales manager in China for competitor Demag Plastics Group, moved to take a similar position for Engel in China.

Georg Tinschert, president of Engel Austria, said Engel''s range of all-electric molding machines now accounts for 10% of sales (about 200 units sold in FY2005/06), a figure he said could climb to 15% by year''s end. Engel now offers all-electric machines with clamp forces from 55 to 280 tonnes, but Hans Wobbe, chief technology officer at Engel, said he expects the firm to have a 500-tonne model ready by the K show in October 2007. These larger machines are necessary to process applications such as large LCD screens, which the firm is already researching, he said.

Wobbe also introduced the firm''s E-Motion Combi range of machinery, for multicomponent/material processing and available for now in three sizes: 55, 100, and 150 tonnes. Neumann adds that the firm has already sold its first three-component all-electric press, to a German automotive parts supplier. Wobbe said prices for Engel''s all-electric presses have dropped about 25% since October 2004, and are now about 10% higher than comparable hydraulic machines. He said the goal in the next two years is to make them cost equivalent.

New manufacturer forms for all-electric injection presses

A new company has been established in Germany to assemble high-end all-electric injection molding machinery, with its initial target market being electronics/ electrical components molders operating in Asia. Zhafir Plastics Machinery enters the molding machinery market during a rough spell for the more established firms, but it brings with it a solid pedigree.

The firm this year begins building an assembly facility in Ebermannsdorf, in northeastern Bavaria. Helmar Franz, the former CEO at Demag Plastics Group who left DPG in March 2005 and in January 2006 officially joined the board of directors at Ningbo Haitian, will manage the new firm and continue his duties at Haitian. Demag early this year concluded its takeover of the 40% share owned by Ningbo Haitian in the two firm''s former Ningbo, China-based joint venture Demag Haitian Plastics Machinery Ltd.

Franz, Haitian CEO Jianming Zhang, and other unidentified investors are backing the newly formed company. Franz, Zhafir''s managing director, says the firm is independent of Haitian, though he envisions a marketing, sales and supply agreement with Haitian giving Zhafir access to Haitian''s existing (and growing-see related story) sales network.

Franz said the firm intends to manufacture high-performance all-electric molding machines, likely in a clamp force range up to 500 tonnes. "We see a developing premium machine market in Asia, and we intend to address it," he said. The company estimates that about 20% of the current 71,300 injection machines sold per year in Asia are top-end machines, and expects that to rise to 30% by 2010. He said sales of "anything over 1000 machines per year" would be a good start.

Zhafir will source most of its sub-assemblies in Europe, with the Zhafir machines assembled as standard with equipment often now sold as options. Options, and the requirement for flexible manufacturing to add those options, drives up manufacturing costs, insists Franz.

Assembly of complete machines should be on-line by early 2008. The Zhafir machines will not compete with the recently introduced range of all-electric molding machines from Haitian, Franz insists: "The current Haitian all-electric is the workhorse. The Zhafir one will be a racehorse."

Haitian not satisfied with China

Ningbo Haitian Group (Ningbo, China), with 14,000 machines sold last year making it the world''s largest injection molding machinery manufacturer based on units sold, intends to increase its presence outside its domestic market, where it already claims a 25% share of China''s 50,000 (in 2005) injection molding machine/yr market. The firm has revamped its sales/service structure in Europe, and rebuilt it in North America, though its primary goal is to increase its share of the Asian market, where the firm estimates some 71,300 of the 93,800 injection molding machines sold last year were delivered.

Haitian makes machines with a clamp force range from 58-4000 tonnes. Sales for 2005 were $490 million. Jianming Zhang, CEO of Haitian and speaking through a translator at a press event in Frankfurt, Germany, said sales in 2006 are increasing, and he predicted would hit 17,000 machines this year. His goal is to increase sales to $625 million by 2010.

Haitian in June presented two all-electric machines during the NPE trade show in Chicago. Helping sell those and other machines will be the firm''s new sales and service partner, Absolute Machinery Corp. (Worcester, MA), an established seller of used processing machinery. A new firm, Absolute Haitian Corp., will operate out of Absolute''s facility and be focused on selling and supporting Haitian''s business.

The management team for the new organization includes Mike Ortolano and Nathan Smith, current co-owners of Absolute Machinery Corp., and Glenn Frohring, former North American sales manager for Demag Plastics Group (Strongsville, OH).

In Europe, where Haitian has about 1100 machines installed, the firm has installed new leadership at its sales/service center in Brescia, Italy. Uwe Baer, formerly financial controller for the now-defunct Demag Plastics Group/Haitian joint venture, is CEO at Haitian Europe since January, and in May a new sales manager, Eric Taveau, joined. Haitian is expanding the Brescia site.

Berstorff, Krauss-Maffei join in Russia

The two extruder manufacturing subsidiaries of Mannesmann Plastics Machinery group (Munich) set up a joint subsidiary in Russia to extend and improve the range of services for their customers in the region. Newly formed BKM will concentrate on services such as assembly and commissioning as well as modernization and repairs. Spare parts stock will be established.

Merger creates lab equipment giant

Thermo Electron (Hampton, NH) has agreed to merge with Fisher Scientific to form a global provider of lab equipment, including for the plastics sector, with $9 billion in expected revenues and $1 billion in cash flow in 2007. Under the terms, Fisher shareholders receive two shares of Thermo common stock for each Fisher share, so that Thermo shareholders will own about 39% of the combined company. Headquarters will be at Fisher''s site in Waltham, MA.

Marijn Dekkers, president and CEO of Thermo, becomes president and CEO of the combined company while Paul Meister, vice chairman of the board at Fisher, becomes board chairman of the new company, Thermo Fisher Scientific Inc. The deal requires shareholder and regulatory approvals.

SPE honors mold designer and moldmaker

Steve Hoare, owner and president of Pyramid Mold & Tool (Rancho Cucamonga, CA), earned the Society of Plastics Engineers (SPE; Brookfield, CT) Mold Maker of the Year Award from the trade group''s Mold Division. Ten years ago Hoare founded Pyramid Mold, which specializes in designing and building Class 101, high-cavitation injection molds for a variety of industries including the medical, irrigation, connector, and caps and closures. The company operates in a new 31,000-ft2 facility equipped with robotic automation cells for lights-out operation, and employs 30.

The SPE Mold Maker of the Year award is sponsored by Milacron subsidiary D-M-E Co., and comes with a $500 honorarium to be given to the post-secondary institution of Hoare''s choice.

SPE''s Mold Division also recognized Ealias Joseph, applications manager for StackTeck (Brampton, ON), as the recipient of the Mold Designer of the Year Award, which was presented during SPE''s annual technical conference Antec (May 7-11; Charlotte, NC).

Joseph will donate the $500 honorarium to the Dept. of Mechanical Engineering at the University of Ryerson in Toronto.

New supplier enters European fray

A new plastics supplier has been formed with the intent to supply European automotive systems suppliers and paper converters with styrene maleic anhydride (SMA). The supplier, Polyscope Polymers BV, was founded earlier this year and is based in Geleen, the Netherlands, and plans to start production later this year at a facility that formerly made SMA for another supplier. Other leading SMA suppliers include Sartomer and Nova Chemicals.

SMA copolymers can be produced with a broad range of styrene:maleic ratios; as the styrene content increases, the polarity of the copolymer transitions from very polar at low styrene levels, to less polar at higher levels. Controlling the polarity helps control with which other plastics SMA is compatible. SMA can help improve mechanical properties, reduce viscosity, and improve adhesion or dispersion.

Clarifiers prove worth in blown PE film

In what may well prove significant news for processors of polyethylene film, Milliken & Co. (Spartanburg, SC) used the three- and seven-layer blown film lines in the development center of extruder manufacturer Battenfeld Gloucester (Gloucester, MA) to test the effects of Milliken''s newly developed Hyperform HPN-20E nucleating agent on the optical and physical properties and processing behavior, of blown polyethylene film.

Hyperform HPN-20E is Milliken''s entry into the polyethylene market; to now Milliken''s clarifiers and nucleating agents have seen use in polypropylene applications, and occasionally in PET, and almost exclusively in rigid packaging applications. Milliken says its new nucleating agent could prove useful for processors of PE shrink film, food packaging, stretch-hood film, greenhouse film, and overwrap.

Flexible film typically is too thin to require a clarifier or nucleating agent. Plus, nucleating a polymer causes its stiffness to increase (because the polymer then crystallizes at a higher temperature), which is usually not a property desirable in film. One exception is film for wrapping hard candies; for that application, stiffness is a desired trait. But now Milliken indicates it can give blown film processors the benefits of nucleation-haze reduction and improved gloss-while also keeping stiffness low enough to not negatively affect film''s flexibility. Nucleation also cuts polymer crystallization time, facilitating shorter cycles or, in film''s case, faster line speeds.

According to Milliken, LLDPE containing the nucleating agent and blown into film at the Gloucester facility, showed a 40% haze reduction and a two-fold increase in gloss compared to films processed of unnucleated LLDPE. The nucleated film maintained its dart impact strength; had a 30% increase in MD tear; and had a 20% increase in stiffness compared to common LLDPE blends with LDPE. Decreased crystallization half time, driven by nucleation, also enabled line speed to increase by 7%.

New ownership for MPM

Mannesmann Plastics Machinery (MPM; Munich, Germany) has been acquired for an undisclosed price by financial investor Madison Capital Partners (Chicago, IL) from previous owner Demag Holding (Luxembourg). Equity investment firm Kohlberg Kravis Roberts & Co. owns 81% of Demag Holding and acquired control of MPM in September 2002; German conglomerate Siemens owns the remaining 19% of Demag Holding.

MPM includes injection molding machine makers Demag Plastics Group, Krauss-Maffei Kunststofftechnik and Netstal, plus Berstorff, which makes compounding and sheet extruders plus rubber extrusion machinery. Krauss-Maffei also makes extruders and polyurethane processing equipment. Former MPM group member Billion was acquired by its management earlier this year. In the fiscal year to Sept. 30, 2005, MPM recorded sales of ?1.3 billion.

Under KKR ownership, MPM management, to include executives at group member companies, had a stake of unknown size in the group; MPM spokesman Jörg Hettmann says it remains to be seen whether the terms and extent of that ownership remain the same under Madison Capital. It also remains to be seen if Madison decides to maintain the four manufacturers as a group; according to MPM''s press release, Madison supports the group''s multi-brand strategy.

Madison capital''s portfolio includes processors (Holm Industries) and machinery and equipment manufacturers (Brown Machine, Epco). Madison signed a binding agreement for the acquisition of MPM on May 26 and expects to close the deal by mid-July.

Masterbatch supplier ColorMatrix sold to equity group...

Boston-based private equity firm Audax Group acquired ColorMatrix (Cleveland, OH) from its cofounders John Haugh and Michael Shaughnessy, as well as ColorMatrix''s European shareholders/directors, but these individuals have retained ownership positions in the company and will remain in their present positions within the firm.

ColorMatrix is the world''s largest supplier of liquid colorants and additive concentrates for thermoplastics and has production facilities in Texas, England, the Netherlands, Brazil and Hong Kong.

...and Ampacet sells TX facility

Color and additives masterbatch compounder Ampacet Corp. (Tarrytown, TX), which has expanded abroad in the last year in Central America, Europe, and Asia, is selling its Crockett, TX toll-compounding plant to Alloy Polymers (Richmond, VA). The facility primarily served customers in the wire and cable segment. Alloy, primarily a toll compounder of polyolefins, will use the acquisition to expand its offerings and clientele, adding the plant to manufacturing operations in Richmond, VA and Gahanna, OH.

Nissei a victor in magnesium molding settlement

Injection molding machine manufacturer Nissei Plastic Industrial (Nagano, Japan) and thixotropic molding technology licensor Thixomat (Ann Arbor, IL) have reached a settlement proposed by the Tokyo District Court regarding their respective technologies for processing magnesium and its alloys. This lawsuit stemmed from Thixomat distributing several documents in early 2001 to Japanese licensees of Nissei''s magnesium (Mg) molding machines and Mg molding technology claiming that they were infringing upon numerous patents possessed by Thixomat.

Subsequently, Nissei sued Thixomat in February 2004 under Japan''s Unfair Competition Prevention Law. The case appears to have been fought around whether the magnesium being molded is in a thixotropic (semimolten) or fully molten state in the injection barrel. The latter applies to Nissei''s process.

Under the settlement, Thixomat will pay Nissei an undisclosed sum, while Nissei machines will be deemed not to be infringing upon Thixomat patents if the magnesium or magnesium alloy is in a fully molten state and a screw extruder is not employed.

Nissei says the settlement will allow users to export parts manufactured with its machinery without fear of litigation, while it could also accelerate adoption by potential users who had until now held off from purchasing equipment due to similar fears.

Nissei currently markets the FMg 3000-type molding machine for low-melting-point metals. This machine has a clamping force of 1370 kN (140 tons) and an injection volume of 120 cc. Nissei now plans to introduce new machines suited to molding of even larger parts, while at the same time stepping up marketing efforts. As of last year, Thixomat estimated it had 54 licensees running its process on about 280 machines worldwide (see July 2005 MPW for more).

RTP Co. increases LFT capacity

Compounder RTP Co. (Winona, MN) has opened a new facility near its headquarters to meet the increased demand for long fiber reinforced thermoplastic compounds (LFTs). The firm says it also has added more personnel to serve this market.

In addition to the new facility in Winona, additional long fiber compounding lines have been established in several of RTP''s worldwide operations.

Names in the News

Rick Keller, a 25-year-plus veteran of the plastics film machinery industry, has been promoted to VP of sales for converting systems at processing equipment maker Davis-Standard (Pawcatuck, CT). He is responsible for sales in North and Latin America as well as sales of blown-film products globally.

Julie Huber has rejoined American Maplan Corp. (McPherson, KS), part of the SMS Plastics Technology group, as sales associate for screw and barrel products. She started her career with American Maplan in 1984 and is returning after being at Theysohn Extrusionstechnik.

Heiner Markhoff is the new general manager of GE Plastics-Europe. He takes over from Golnar Motahari Pour. Or maybe she takes over from him; her new position is president and CEO of GE Bayer Silicones, the position Markhoff just left.

Harald Lauke has taken over responsibility for BASF''s Performance Polymers division. He succeeds Raimar Jahn, who became the head of BASF''s coatings business in July. Lauke joined BASF in 1986 as a research chemist in its plastics laboratory.

Only days before NPE''s start last month, Larry Doyle joined auxiliary equipment manufacturer Conair (Pittsburgh) as the firm''s new VP of marketing. Doyle comes to Conair from Demag Plastics Group (Strongsville,OH), where he most recently served as director of sales and marketing.

Rigid and flexible packaging processor/converter Anchor Packaging (St. Louis, MO) has appointed Don Brockman as its national account manager, foodservice. He previously served in a similar position at competing packaging processor Pactiv Corp.

Peyton Simpson, president and founder of Pollution Control Products Co. died May 17 in Dallas, TX at the age of 78 after a brief illness. Simpson was born in 1928 in Lufkin, TX.

An accomplished engineer, inventor, and entrepreneur, Simpson''s career highlights include the firm he established, Pollution Control Products Co., an important contributor to the development of the plastics coating industry.

Early in his career he was credited with the invention of the first coin-operated carwash, the first coin-operated washeterias, and one of the first automated chicken fryers. Simpson is survived by his wife of 59 years, Rose Harvey, and a daughter.

[ On the record ]

"Growth is a result of innovation and technology. That''s what makes the difference between operations that are successful and those that stagnate." Paul Strassen, marketing/sales manager, specialty compounder Addcomp (Nijverdal, the Netherlands).

"For a lot of reasons, not the least of which is `it''s the right thing to do,'' there are market opportunities out there if you develop products that speak to being `green''." Howard Kenney, director of marketing at sheet extruder Spartech (St. Louis, MO).

"The window profile extrusion capacity in China is about double that which the domestic market requires." Wolfgang Studener, president of

Battenfeld Extrusion (Bad Oeynhausen, Germany).

"We''ve learned that cheap machines cost too much in the long run." Derek Tan, regional general manager at injection molder First Engineering in Shanghai.