Opportunities abound for value-added rotomolders

Rotational molders need to leave commodity products behind and target high-end products that will provide a profit on investment to sustain competitiveness. That was a continuing theme from speakers at the Leonardo Seminar organized by Italian rotomolding equipment maker Persico (Nembro) in October.

Market analyst, rotational molding expert, and author Paul Nugent told the more than 160 in attendance at the one-day event that Europe is leading the way in this direction, coming up with innovative applications that take full advantage of rotomolding’s technology. But automation, says Nugent, is needed to sustain competitiveness. “Today, 85% of all rotomolded products are commodities with only 5% really making it into the technology category,” Nugent says. “The highest percentage of these value-added products is processed in Europe. Molders in other parts of the world need to consider altering their strategy.”

In Europe there are an estimated 450 rotomolders, with the highest numbers found in Italy, the UK, France, and Germany, but there is some growth coming from Scandinavia and Poland, he says. Today’s higher-end products are produced on molds milled by CNC, something that was non-existent 10 years ago. Persico’s Lorenzo Bergamo, product manager, says he expects that by next year about half of all of the company’s molds will be produced by high-speed cutting. Why has it taken so long in rotomolding to use technology that is standard in making tooling for injection and blowmolding? Bergamo says it is a simple matter of costs. Rotomolders have been unwilling to spend the money on such precise molds for commodity articles and are only now starting to see CNC’s advantages.

Always less packaging for Wal-Mart, always

Wal-Mart (Bentonville, AR) is asking its 60,000 worldwide suppliers to help it reduce overall packaging by 5%—a move that it says will save Wal-Mart $3.4 billion while eliminating the emission of 667,000 tonnes of carbon dioxide. Announced recently in New York as part of the Clinton Global Initiative, Wal-Mart will launch the program in 2008, but initial work starts this month when it introduces a packaging scorecard to more than 2000 private-label suppliers. Wal-Mart says the scorecard will help its buyers learn about packaging alternatives, including sustainable packaging materials. The scorecard will be rolled out to all suppliers on Feb. 1, 2007, and in 2008, the company will “measure and recognize the entire worldwide supply base for using less packaging, utilizing more effective materials in packaging, and sourcing these materials more efficiently through a packaging scorecard.”

The company has already announced a series of green initiatives, including the transfer of four produce lines to containers made from starch-derived polylactic acid (PLA)(MPW First Look, April 2006).

GE Plastics is “not for sale”

At a press conference in New York last month, Tim O’Brien, VP GE Plastics Americas, said despite rampant speculation, GE Plastics is not for sale. “We wanted to make sure it’s a non-story as quickly as possible,” he said. GE also announced a new-chemistry Ultem is slated for commercial quantities in 2007 from its Cartagena, Spain facility. “We’ve changed the process in how to make it. It’s a new portfolio, a new chemistry involving some copolymers. We’ve raised continuous heat resistance to 300 deg C from 230 deg C ; we keep flow characteristics, and improve them in some cases.”

Regarding GE Plastics’ ABS portfolio, Brian Gladden, VP and general manager-Lexan resin and global product companies, said, “It’s a terrific portfolio; we’ve had a helluva run turning it around. It''s a helluva business that fuels other products, and is a key part of our portfolio.” When asked about the impact of the downturn in fortune’s for Detroit’s Big Three, Gladden said, “We feel that. We’ve spent time with the transplants and in Korea, Japan, and China. We plan to win with the winners, ride through with the Big Three. To the extent we can diversify away, we will. Clearly they’re pressures we’re feeling today.”

The message from O’Brien to customers attending the New York Innovation Seminar was simple: “The earlier we’re in the design cycle, the more value we add. There’s too much upward pressure on price, so you have to design out cost, and differentiate in response to commoditization.”

Clariant buys Ciba’s masterbatch business

Specialty chemicals supplier Clariant (Muttenz, Switzerland) will acquire the masterbatch business of Ciba Specialty Chemicals (Basel, also Switzerland) for an undisclosed price in order to further strengthen its plastic colorants and additive concentrates’ business, in which Clariant claims global market leadership.

The transaction is to be completed this year. Ciba’s masterbatches business has annual sales of approximately CHF 80 million (about $64 million) and includes production facilities in France, Saudi Arabia, and Malaysia.

Balda up for grabs

Three days after announcing it would miss its profit and sales targets for the year, publicly listed German injection molder Balda (Bad Oeynhausen) announced it was approached by Audley Capital Advisors LLP (London) with an offer to purchase Balda.

Balda made the Audley offer public on September 29. On September 26 it announced its full-year profits would be less than half the expected €46-48 million, with sales diving in Asia, Europe, and North America. Balda made the announcement after a September sales meeting in China at which it saw forecasts from its customers that confirmed that poor sales in July and August were not a fluke but a trend, said the molder. Among the negatives, a major project for Nokia expected to begin this year has been delayed to 2007.

Mitsubishi to exit biaxial film line business

On Nov. 1, Mitsubishi Heavy Industries (MHI: Nagoya, Japan) exited the biaxially oriented and cast-film line business, selling this business unit to The Japan Steel Works (JSW; Tokyo) as a going concern for ¥650 million ($5.5 million). Annual sales of the business are about ¥6 billion ($51 million).

MHI feels its resources would be better focused elsewhere. Film extrusion lines are oddly part of MHI’s Paper & Printing Machinery Division. Injection machines are sold through a separate company—Mitsubishi Heavy Industries Plastic Technology Co.—and this business is unaffected by the current deal.

For its part, JSW has a wealth of experience in the extrusion field, with particular strengths in industrial film and optical film manufacturing lines, and will be able to augment its product portfolio in what it considers a core business through addition of technology to manufacture BOPP, BOPET, and BOPA (biaxially oriented polyamide) films. JSW will also take over servicing of existing MHI lines.

The deal involves no transfer of employees. Approximately 100 staff at MHI will be redeployed within the company.

Chinese demand for BOPP remains despite apparent overcapacity

Although global demand for biaxially oriented polypropylene (BOPP) films was 4.28 million tonnes last year, and capacity stood at 5.76 million tonnes, market analyst Simon King, managing director of PCI Films Consulting Ltd. (Guilsborough, England), speaking at a film symposium conducted by processing equipment maker Brückner Group (Siegsdorf, Germany) in late September, said, “Asia needs more BOPP film capacity—believe it or not!”

King says prices in China for BOPP film have already risen sharply in the last two months. Some of China’s demand may be absorbed by BOPP imports from Thailand or Malaysia. “The rest of the world is nicely positioned but will need more capacity in two to three years,” King says. He points to less demand for commodity films rather than specialist web such as for tobacco packaging, for capacitors, and for five-to seven-layer coextruded products.

China remains the largest Asian market for BOPP; there, commodity BOPP is commonly laminated to cast PP for packaging items such as dried noodles. He says, however, that the Chinese themselves are starting to look at value-added applications such as capacitor films and replacements for cellulose for packaging cigarettes. Demand growth rate of BOPP in Asia is now at 10%/yr.

King estimates that capacity utilization of European BOPP processing equipment is about 78% while East European competitors are thought to run at only 55% and producers in the Middle East at about 64%.

RTP adds thin films to its sheet division

Global thermoplastic compounder RTP Company (Winona, MN) announced on Sept. 22 that it acquired Wiman Corp. (Sauk Rapids, MN), a custom plastic films extruder for the medical, industrial, and consumer markets. The acquisition will combine RTP’s existing Sheet Division with Wiman’s line of flexible plastic films and its extrusion prowess.

Hugh Miller, RTP president and CEO, said, “Wiman strengthens our business position in the sheet and film industry by letting us manufacture down to 3 mm, and quite importantly we will now be adding PVC to our product mix.”

Wiman specializes in the development of specialty films, for example helmet liners—often in quantities far lower than the industry standards.

Elopak makes overture for SIG

In late September, Norway’s Ferd Group, the parent firm of beverage and food carton and bottle packaging processor Elopak (Spikkestad, Norway), made an all-cash offer of CHF 2.1 billion ($1.7 billion) to acquire the entire share capital of SIG Holding Ltd. (Neuhausen, Switzerland). At press time, SIG’s board of directors still were recommending its shareholders reject the bid on grounds it doesn’t properly value the company, and said other strategic and financial investors also had made inquiries.

SIG includes businesses that make cartons, beverage filling equipment, blowmolds (Moldtec), plasma coating equipment for plastic packaging (Plasmax), and SIG Corpoplast (Hamburg, Germany), which makes stretch-blowmolding machinery. SIG and Elopak together would pose a greater competitor to the carton packaging market’s giant, Tetra Pak.

Hella closing U.K. automotive lighting plant

Internationally active automotive components supplier Hella KGaA Hueck and Co. (Hella; Lippstadt, Germany), intends by December 2007 to end production at its Hella Manufacturing Ltd. (HML) subsidiary in Banbury, Oxfordshire, England, shifting the molding and assembly of automotive headlight systems done at that sight to other Hella facilities in Eastern Europe.

HML manufactures automotive lighting for car companies in the U.K. including Jaguar, Land Rover, Honda and Nissan. The Oxfordshire plant employs 500 people, of whom 450 will lose their jobs, with the remainder serving as service/support for the U.K. customer base.

Hella management says the decision to close the plant is due to rapidly falling prices for automotive lighting, in combination with increases in the cost of both materials and energy and the declining demand in the U.K. automotive manufacturing market.

New boss wants closer customer contact

Changes at global plastic additives leader Chemtura (Middlebury, CT) place Marcus Meadows-Smith as the new executive VP of plastic additives, replacing Myles Odaniell. In an interview last month, he says his goal is to help thesupplier regain its focus on customers. “Our organization was too inwardly focused, which maybe was natural as it was the business most affected by the merger” of Crompton and Great Lakes in July 2005. “This (renewed customer focus) is also about not passing our disadvantages to our customers,” he says, explaining that Chemtura will drive more costs out of its own manufacturing, logistics and back office operations. “We became a very complex logistical business after the merger,” he notes; the supplier plans to reduce the number of warehouses used in a way that speeds, not hinders, deliveries.

Change is not just about rationalizing logistics. Meadows-Smith says the firm sees tremendous growth opportunities for its OBS heavy metal-free PVC stabilizers; sales of these have doubled in the last 12 months and are predicted to quadruple in the next three years. The supplier also believes its experience in developing additives based on renewable resource materials offers continued growth opportunities. Examples he cites include vegetable based additives for polyolefins and customized waxes to replace petroleum-derived ones. Meadows-Smith joined Chemtura in 1993.

K-Tron builds bulk-handling presence with Premier

K-Tron International (Pitman, NJ) has acquired conveying and bulk-handling equipment supplier Premier Pneumatics Inc. (Salina, KS) for $27.565 million in cash. Premier, and its various iterations, go back 50 years, with well-known bulk-powder-handling products including Aerolock rotary valves, Series II 2400 vacuum receivers, blower packages, and diverter valve product lines. The company’s 12-month revenues ending in August were $25.8 million.

Premier management, including Mike Wedel, VP sales and marketing; Todd Smith, VP engineering and manufacturing; and Gary Lee, VP finance, will be retained. K-Tron Senior VP Kevin Bowen, who’s responsible for K-Tron’s Process Group, will act as Premier’s president.

Malaysia spared, others hit on European bag duty

The European Commission (EC) has imposed antidumping duties ranging from 4.8% to 28.8% for imports of certain polyethylene sacks and bags (under the Combined Nomenclature code 3923.21.00) from China and 5.1% to 14.3% for imports from Thailand. The decision was made after a 15-month EC investigation on exporters from China, Malaysia, and Thailand. The said antidumping duties on imports from China and Thailand shall be imposed for a period of five years and took effect after being published in the Official Journal of the EC by Sept. 30, 2006.

The Malaysian Plastics Manufacturers Assn. (MPMA) reported that the EC confirmed that plastic sacks and bags imported from Malaysia into the EC would not be subject to any antidumping duties.

According to the EC, total import of plastic sacks and bags from China, Malaysia, and Thailand, amounted to 430,000 metric tonnes in 2004 and accounted for 80% of all the plastic sacks and bags imported into the EC market. Plastic sacks and bags originating from Malaysia totaled 125,000 tonnes, with China accounting for about 235,000 tonnes and Thailand 68,000 tonnes.

With restructuring behind it complete, Milacron looks ahead.

Go to the web exclusives page at www.modplas.com for the full story.

APC requests roadmap to drive plastics’ use in automotive

Proclaiming that “plastics- and composites-intensive vehicles are the future of sustainable transportation,” Michael Fisher, senior director of technology at the American Plastics Council (APC; Arlington, VA), called for stakeholders in the materials, processing, and automotive businesses to lay a roadmap for greater adoption of polymers in vehicles.

Fisher spoke at the Society of Plastics Engineers’ recent Automotive Composites Conference (Sept. 10-12, Troy, MI). Go to this web-exclusives page for the complete story.

In Brief

Lanxess’ next phase

During a press event at the Leverkusen HQ of the styrenics supply major, Lanxess Chairman Axel Heitmann noted that with restructuring largely complete, “We are ready to switch on the next phase of our strategy: acquisitions.” He foresees a continuing shift at Lanxess from commodity products to high-tech compounding.

Total: layoffs, investments

Total Petrochemicals (Brussels, Belgium) says sluggish demand in Europe and growing polystyrene overcapacity force the company to make layoffs. But the supplier also plans a ?400 million investment for two of its French facilities, Carling and Gonfreville. The Gonfreville investment would increase styrene production to 600,000 tonnes/yr.

Wavin IPO

Plastics pipe and fitting processor Wavin (Zwolle, Netherlands) made its initial public offering on the Eurolist of the Euronext Amsterdam stock market. The firm also acquired the Greek plastics pipe and fittings business of Aristovoulos G. Petzetakis, Wavin’s first entry into the Greek market, for €60 million.

New facility in Turkey

Additives supplier Rohm and Haas (Philadelphia, PA) has signed a letter of intent with Turkish chemicals supplier Polisan to build a 40,000-tonne/yr facility for acrylic impact modifiers and processing aids at the Polisan site in Gebze, Turkey.

Fischer’s PE hydrant

Swiss processor Georg Fischer (Schaffhausen) has developed a polyethylene fire hydrant for an all-plastics pipe system. The hydrant resists corrosion and frost, says the company.

[ On the record ]

“People have stopped demanding price cuts, banging their fists. At first they said ’Make it go away.’ Then they said ’Make it go away.’ Then they said ’If you can provide stability and visibility into what''s going on, provide some indexing, at least I know you''re not gaming me.’” Tim O’Brien, GE Plastic’s VP Americas.

“There are really two fundamental driving forces in the world today: cost/performance balance and a host of issues loosely defined as ’green’.” Michael Goode, VP technology at additives supplier Chemtura.

“Once the market has volume, it educates itself to utilize top-end machinery as the productivity requirements are intense.” Prawit Yodprechavigit, GM molding machines at Krauss-Maffei (Thailand).

“The market is ripe for mergers and acquisitions…a consolidation must take place.” Frank Bruns, president of Europe’s Federation of Reinforced Plastics, commenting on his branch.

“As a company, we are very bullish on the long-term development of the plastics industry.” Ron Brown, CEO at Milacron Inc., at an open house at subsidiary Ferromatik Milacron.