E-Update Industry News 21257

PROCESSORS IN THE NEWS

Mid-summer, and the M&A rumor mill heats up

According to plastics M&A strategic advisor specialist Thomas Blaige & Co. LLC (Chicago, IL), 2003 saw a doubling of the value of mergers and acquisitions among plastics processors compared with 2002, and this year''s pace appears set to equal or pass last year''s. According to the firm, there were 369 deals completed in 2003, of which 125 involved plastics packaging processors. Supporting the firm''s case were two acquisitions-in-the-making reported in mainstream newspapers in early July.

Unconfirmed as yet is a report in the July 5 issue of the New York Post that equity investor Blackstone Group is in talks to acquire Owens-Illinois'' blowmolding operations. The purchase would come via Graham Packaging Corp. (York, PA), which is one of the largest blowmolders of rigid packaging and owned since 1998 by Blackstone. The newspaper says the acquisition will cost the New York buyout firm about $1.2 billion. It cited unidentified market observers. John Ford, VP corporate communications at Blackstone, says Blackstone has no comment on the story. O-I officials announced earlier this summer that they would make no comments on any aspects of their plastics processing business until a sale was completed.

O-I announced in December 2003 that it was considering divestment of its blowmolding business to reduce debt and fund expansion of its glass packaging capability. The purchase would give Graham additional capacity that it could use to counter recent moves by some leading competitors, including Austrian processor Alpla-Werke''s entry into the North American market, and Amcor PET Packaging''s acquisitions of the South American plastics container business of Alcoa Inc. in 2003, and the PET preform and bottle processing operations of Schmalbach-Lubeca in 2002.

A news items in the July 6 edition of Israeli newspaper Haaretz says privately held Keter Plastic (Herzliya, Israel) wants to partner with a financial investor, and is also pursuing the acquisition of Rubbermaid''s plastics division for $200 million. A subsequent July 13 article at Israeli business website www.globes.il.com reported that Keter is in takeover talks with seven plastics processors, including the Rubbermaid business and U.S. outdoor furniture processor Sirocco. The website quoted Keter''s CEO as saying, "If all goes well, Keter will be a $3- to $4-billion business." The processor will register about $700 million in sales this year.

Keter is the world''s third-largest processor of plastics household goods such as home and garden furniture, tools, and plumbing supplies. Rubbermaid''s plastics division processes similar items for home and office. Keter has 24 processing facilities: 12 in Israel, nine in Europe, and three in the U.S.

Development center opened

Sheet extruder Spartech Corp. (St. Louis, MO) has opened a new 30,000-sq-ft product-development center in Warsaw, IN, which will focus on the creation of new products for its Alloy Plastics and Product Transformation groups. The company will compound materials and produce profiles using two sheet-extrusion lines, a small lab line, two profile extrusion lines, a four-station rotary, and a single-station thermoformer.

Iretex draws a crowd for pallet project

Irish logistics packaging processor Iretex Group Ltd. (Dublin) has entered into a joint venture with VitroTech Corp. (Santa Ana, CA) to develop materials for thermoformable plastic pallets. VitroTech is a materials technology and research company with rights to purchase, process, and sell approximately 35 billion pounds of amorphous aluminosilicate deposits, which can be added to plastics to boost mechanical properties. Also involved in the development are material suppliers Nova Chemicals and Atofina. Technicians from the four firms met in late July and trial processing of a newly developed material was to start at an Iretex facility in Wellington, New Zealand in late August.

UPG adds moldmaking to Chinese offerings

United Plastics Group Inc. (Westmont, IL) has expanded its presence in Asia to include a product design and toolmaking center in Suzhou, China. Close to UPG''s other Chinese facility, which molds for the automotive, electronics, medical, and consumer products'' markets, the new moldmaking facility will have product-design assistance as well as production in the form of EDMs, lathes, grinders, and milling machines. By the end of 2004, the company anticipates having 20 employees, led by Bob Sassman, former president of Arizona Tool and Die (Phoenix, AZ).

Amcor PET adds European sales post

Rigid packaging processor Amcor PET Packaging Europe/Asia has appointed Bas Pije as sales director at its Center of Excellence in Brecht, Belgium. This is a new position. He joins Amcor from Dutch processor Schoeller Wavin Systems BV, where he was business unit manager for materials handling, responsible for sales growth and organizational development in returnable plastics packaging.

Amcor PET Packaging is part of Amcor Ltd., the Melbourne, Australia-based global plastics packaging giant with 238 plants in 42 countries. Amcor PET has about 70 processing sites around the world.

Italtech sold to customer

Italian injection molding machine maker Italtech (Brescia) has been sold by Fiat-owned automation systems specialist Comau to GPM (Gruppo Pegoraro Macchine), a family-owned company based in Padua. GPM has since changed its name to Italtech. The Pegoraro family has interests in molding and in recycling, and is an important Italtech customer. Adelio Grasselli, who founded Italtech but left the company last year, has now returned as managing director.

Plant dedicated to multicomponent tooling

MGS Mfg. Group (Germantown, WI) has moved its Universal Multishot Systems manufacturing division into a new plant in Germantown. Started in 1999, the Multishot division creates turnkey systems for multimaterial parts, including tooling, portable injection units, hydraulic units, controls, inspection/degating fixtures, and onsite installation and training. The new plant will give the company greater capacity for the engineering, development, and testing of multicomponent programs. The company also fabricates rotary platens, indexing rotary stripper plates, and mold bases.

Atoglas streamlines its acrylic sheet business

Atofina subsidiary Atoglas intends to invest in new capacities in Carling-Saint Avold (France) by September 2006, and to concentrate there the cast acrylic sheet production that is now split between two sites in Europe. Production from its Leeuwarden site (Netherlands) will move to France and the site closed.

Last November the processor consolidated sheet extrusion at its plant in Bernouville, France.

B+K building cleanroom for films processing

Bischof + Klein (B+K) is building a Class 5 cleanroom at its Lengerich, Germany facility for processing its Clean-Flex films. The room is to be ready this month. These films see use principally in the pharmaceutical and food industries. The processor already has two other Class 5 cleanrooms, which will be integrated into the larger new one.

EPW Inc. adds to its equipment stable

Processor EPW Inc. (Elkhardt, IN) has acquired a Deckel Maho DMU 200 high-speed, 5-axis machining center, a thermoforming machine from Kiefel, and reaction injection molding (RIM) equipment to strengthen its position in the market for processing large automotive, recreational vehicle, and marine parts. As a result of the spending spree, the processor now has eight CNC machining centers and eight RIM metering machines.

Moldmaker meets new certification

Injection mold builder Mauston Tool Corp. (Mauston, WI) is the first firm to complete certification in both of the programs offered by RJG Inc. RJG (Traverse City, MI) began offering certification programs for moldmaking and mold tryout in June 2003. Companies obtain certification through a series of equipment and training requirements designed to give moldmaker employees a more thorough understanding of plastics processing, and how this knowledge translates to better moldmaking. RJG says it began offering the service to moldmakers after it was approached by a number of molding customers.

Medical device manufacturers merged

In mid-July, medical device manufacturer Memry Corp. (Bethel, CT) signed a letter of intent to acquire Putnam Plastics (Dayville, CT), an extruder of plastics tubing and sheathing for the medical market, among others. The transaction is expected to close this fall. Terms were not disclosed. Putnam''s primary products are multilumen, multilayer extrusions used for guidewires, catheter shafts, delivery systems, and other interventional medical procedures. Putnam CEO and founder Jim Dandeneau will remain with the firm.

MACHINERY MANUFACTURERS AND MATERIAL SUPPLIER NEWS

Financial investor takes over Dynisco

The Audax Group (Boston, MA) has acquired Dynisco from an affiliate of Madison Capital Partners. Dynisco makes more than 30 different auxiliary products for processors, including melt-pressure transducers and transmitters, testing equipment, screen changers, and pelletizers. Its businesses are Dynisco Instruments and Dynisco Polymer Test (Franklin, MA), as well as Dynisco Europe (Heilbronn, Germany), and Dynisco Extrusion (Hickory, NC). Audax says it will make additional acquisitions of companies complementary to Dynisco''s core businesses.

In November 2000 Madison Capital Partners acquired Dynisco, minus its hot runner manufacturing operation, which was renamed Synventive Molding Solutions in 2001.

Blowtec in limbo after bankruptcy filing

Extrusion blowmolding machine maker Blowtec filed for bankruptcy in early July. The Troisdorf, Germany-based Blowtec and its nearby sister firm, Kautex (Bonn), were acquired on May 1 from Swiss parent firm SIG by Munich-based buyout specialist Adcuram Beteiligungs AG. Both Blowtec and Kautex make extrusion blowmolding machinery: Blowtec, machines for processing packaging of less than 30-liter volume; Kautex, equipment for forming technical parts or industrial packaging. Now, Adcuram has backed out of its purchase of Blowtec, says Florian Meise, a member of the management board there.

Meise says he can reveal few details. He will not say whether his firm has already paid SIG for Blowtec, nor whether SIG has returned any money. Blowtec''s future rests on the decision of a German bankruptcy lawyer who will determine if the firm can continue to operate, or whether its assets should be sold. As of mid-July, Blowtec was still in operation and had orders to fill.

Meise adds that Adcurum legally separated Kautex and Blowtec upon acquisition, so that Kautex is in no way affected by Blowtec''s bankruptcy. He says Kautex, now named Kautex Maschinenbau GmbH, is "in good shape" and will continue to operate out of Bonn, with Roger Stehr remaining as managing director. Adcurum considers Kautex a long-term investment, he says.

In 2003 Kautex generated net sales of ¤43 million and had about 200 employees; Blowtec had net sales of ¤37 million, and approximately 150 employees. Both have had financial difficulties in recent years, as extrusion blowmolding machinery sales have plummeted.

SIG (Neuhausen am Rheinfall), in a July 12 statement titled "Unjustified claims against SIG," expressed its " considerable astonishment" at the bankruptcy filing and Adcuram''s claims that it is backing out of its purchase agreement. SIG says it divested Blowtec and Kautex simultaneously on May 1 for a "modest sales price that reflected the business risks that are related to this type of transaction." It goes on to state that Adcurum had all of the relevant financial information in advance of its purchase, and that SIG will take all legal measures to defend the claims.

"The new owners have not adhered to the contractually established agreements to merge the two units. SIG regrets that Blowtec has therefore unfortunately been obliged to file for insolvency proceedings," concludes the statement.

Milacron settles another PC controls dispute...

Plastics processing machine maker Milacron (Cincinnati, OH) has finalized a license agreement with blowmolding machinery manufacturer Graham Engineering Corp. (York, PA) for an undisclosed sum. The agreement settles Milacron litigation against Graham regarding Milacron''s patent on the use of personal computer-based control systems for plastics processing machinery. Graham becomes the latest in a string of machine manufacturers to have taken a license from Milacron on this.

According to the agreement, Milacron will grant Graham a paid-up, non-exclusive license to use the U.S.-patented control technology, and the suit pending between them in the Federal District Court for the Northern District of Ohio, Eastern Division, will be dismissed. Exact terms of the agreement were not disclosed. A Milacron spokesman says that he is not aware of other lawsuits Milacron has filed on this issue, but says the firm is studying other instances of potential patent violations, and is in dialogue with a few companies in an effort to avoid court.

... jostles its leadership...

Milacron (Cincinnati, OH) has made changes in the ranks of its North American injection molding machinery business.

As a result, Ross Anderson, a 15-year Milacron veteran, has been appointed VP and general manager for North America, with responsibility for all operations relating to U.S. injection molding machinery, including manufacturing, engineering, sales/marketing, field service, and finance.

Glenn Anderson (no relation), formerly FM of the firm''s extruder manufacturing business, is now VP and general sales manager for the North American injection molding machinery business. Jay Woerner is now VP global manufacturing and sourcing, working to cut manufacturing costs. He also continues as head of the firm''s operations in India and China.

...and successfully juggles its debt

Only two months after it found itself in an 11th-hour scramble to resolve debt issues, a series of transactions in early June have put machinery supplier Milacron Inc. (Batavia, OH) on substantially firmer ground as it moves forward into an apparently recovering marketplace.

One day after being granted shareholder approval for a financing deal that gives sizable stakes in the company to Glencore Finance AG and Mizuho International plc in exchange for repaid debt, the company undertook several more financial moves to increase cash on hand, created a new revolving credit source through 2008, and consolidated its remaining outstanding debt into a single obligation that won''t mature until 2011.

The shareholders approved Glencore''s and Mizuho''s exchange of $70 million in notes and $15 million in common stock for 500,000 shares of 6% Series B convertible preferred stock. Milacron also said it was on pace to meet its sales and segment targets for both the second quarter and the year, and it anticipated better overall earnings, in comparison to 2003, thanks to a 6% to 8% sales increase in 2004.

Clariant Masterbatches strengthens its Latin American operations

The world''s largest supplier of color and additive masterbatches, Clariant Masterbatches (Muttenz, Switzerland), has opened a Latin American business unit HQ in Suzano, Brazil, just east of Sãpaulo Paulo, and a new manufacturing plant with two compounding lines in Lomas de Zamora, Argentina. The Brazilian facility also includes a manufacturing plant and a collaborative design center. Officials expect the Argentine plastics industry to grow about 8% this year and 6% the next, driven by automotive market demands.

The supplier has had a sales presence in Argentina since 1997, importing products there from Brazil, NAFTA, and Europe.

New LFR pellet supplier appears

PlastiComp, the Winona, MN-based exclusive global marketer of the Pushtrusion process for feeding continuous fibers into polymer melt under high pressure, has started selling long-fiber-reinforced pellets made using the process. Woodshed Technologies (also Winona) developed the process so that molders would not need to purchase precompounded pellets separately; PlastiComp acquired marketing rights in June 2003.

According to PlastiComp president and CEO Steve Bowen, some processors want the benefits of Pushtrusion-fibers retain their length and thus their strength-but do not have the volumes to justify investing in a Pushtrusion line. "It is not uncommon to see both long-fiber pellet and direct inline compounding interest from our customers. Both processes have merits," he says.

Techmer PM boosts its compounding capability

The colorant and additive masterbatch supplier, with headquarters in Rancho Dominguez, CA, has added two twin-screw compound extruders manufactured by Coperion Werner & Pfleiderer to its plant in Clinton, TN, and will add two more there by year''s end in what it says is a move to boost its capacity and ability to rapidly meet customer orders.

Omnexus begins second act without material sales

Internet-based plastics purchasing platform Omnexus, closed by its previous owners in November 2003 (January 2003 MP/MPI), has been revived, at least in name, by the online information platform SpecialChem (Paris, France). SpecialChem has sites offering information on additives, pigments, and adhesives. The new Omnexus will not include online sales, as was the intention when a group of leading plastics suppliers announced the site''s formation at NPE in June 2000.

Instead, the site (www.omnexus.com) is now geared to provide technical services to plastics designers and engineers. "The purpose of this platform is to create innovative products and implement better solutions much faster," says SpecialChem founder and Chief Operating Officer Christophe Cabarry. "Time-to-market is the key in winning competition against low-cost producers."

The new site will have three primary areas of focus. The Innovations and Trends segment will provide news, reports, and research and development advances. The Polymer section allows designers to pick materials on the basis of desired product properties-more than 120 thermoplastics are profiled. The Solutions and Support area offers online interaction with material labs around the world. SpecialChem also recently acquired www.PaintandCoatings.com, which offers news and technical information relating to those topics.

Tetra Laval appeals EC fine over Tetra Fast

Swedish carton packaging machinery giant Tetra Laval is appealing a ¤90,000 fine levied by the European Commission against the firm. The fine is for an alleged failure to provide information regarding the firm''s acquisition, finally approved last year, of stretch blowmolding machine manufacturer Sidel (Octeville sur Mer, France).

The fine cites an alleged lack of information provided to the EC regarding the Tetra Fast blowmolding technology, developed by Tetra Pak''s blowmolding machinery division before that was effectively closed and its technology merged with Sidel. Tetra Pak is Tetra Laval''s carton manufacturing business. Tetra Fast is still in development, but could eventually be a bottle-blowing breakthrough; it uses a hydrogen/nitrogen mixture to create an explosion to expand heated preforms, rather than compressed air. The explosion also sterilizes the bottle, making it particularly promising for use in combination machines since preforms would no longer have to be treated prior to conveyance into the unit. Typically, preforms are treated-usually with ultraviolet or in a chemical bath-prior to stretch blowmolding. Caps are similarly treated before being shuttled into the unit.

Before it was allowed to acquire Sidel, Tetra Laval had to agree that its Tetra Pak subsidiary would sell licenses for its Tetra Fast and other blowmolding technologies; Sidel has acquired one for Tetra Fast.

Ciba hopes new products spark higher demand

Additives supplier Ciba Specialty Chemicals (Basel, Switzerland) is counting on a 5% to 7%/yr growth in demand based on new product introductions the company is making, says Brendan Cummins, segment head plastics additives at the company. Speaking to the press recently, he said he expects recently introduced value-added additives to account for up to 33% of sales (presently less than 30%) in the next five years based on present higher demand compared with the company''s traditional additives. Sales of plastics additives were up 5% in the first quarter of this year. "We''re experiencing an upswing in demand in North America," but Ciba is being hampered there by queues at docks during unloading of material and a lack of available trucking, he says.

Huntsman chases governor''s job

Jon Huntsman Jr., son of the billionaire founder of Huntsman Companies, the world''s largest privately held chemical company, won the Republican slot to run for governor of Utah. Jon Huntsman Jr., 44, was a Deputy U.S. Trade Representative under President George W. Bush. Huntsman received 65% of the vote in the primary elections held June 22. The operating companies of Huntsman manufacture basic products for a variety of global industries including chemicals, plastics, paints and coatings, and others. Huntsman-held companies have more than 15,000 employees, operations in 30 countries, and annual revenues of approximately $9.5 billion.

Report: Big film extruders in Europe get bigger

The leading polyethylene film extruders continue to expand at the expense of smaller companies, according to new research from AMI (Bristol, England) presented in its 127-page report entitled "Corporate performance and ownership among polyethylene film extruders: A review of Europe''s 50 leading players."

AMI reports these top 50 European film processors have increased their production by a third over the past three years, compared to a 10% increase for polyethylene film overall. As a result, their share of the market has grown from 55% in 2000 to 60% for 2003. This increase has often been achieved through acquisition but there have also been some substantial investments. The top five processors by tonnes/yr processed are British Polythene Industries, Rheinische Kunststoffwerke, Trioplast Industrier, Armando Alvarez, and Manuli. The report costs ¤510. More information is available via www.amiplastics.com.

Report: IBCs capture more of industrial containers market

Intermediate bulk containers (IBCs), often sized up to 1000-liter volumes, will continue to take market share in the plastics industrial packaging market from open top drums. This move to larger containers will slow the demand growth for the high-density polyethylene used in these applications, since it takes twice as much HDPE to blowmold five 200-liter drums as it does to process one 1000-liter IBC.

That is one of the conclusions in the report "Turnover and production of blow molded industrial transit packaging in Western Europe 2003", published by AMI Consulting (Bristol, England). The report also highlights steel''s continuing use in packaging of more than 50% of all volume, largely because of its dominance in the oil, agrochemicals, and solvents sectors. Here, though, multilayer-barrier plastic containers continue to make inroads.

The shift from drums to IBCs also impacts the number of units processed. According to AMI''s research, just more than 27 million blowmolded drums and IBCs were manufactured in Western Europe in 2003, and while the market is expected to grow to 29 million units in 2008, this represents growth of just 1.6% per year over the five-year period.

The AMI report says Germany''s Schütz Werke has a dominant position in the IBC sector accounting for more than 20% of production, while Germany''s Mauser and Italy''s Marmor each have about 18% of the plastic drums market. Overcapacity should lead to consolidation, according to the report.

Survey says: Consumers prefer the clear closure

Consumer preference for soft drink and bottled water brands is significantly influenced by whether the beverage container closure is clear or opaque, according to an independent research project commissioned by Milliken & Co. (Spartanburg, SC), a leading supplier of the clarifiers that might see greater demand should the survey results influence beverage brand managers.

Research Inc. (Alpharetta, GA) conducted the project, including 400 in-person intercept interviews with consumers purchasing beverages at retail outlets. "Going into the research, our suspicion was that the closure design impacts consumer preference, but we were surprised to learn that it exerts a stronger influence than even we had suspected," said Martin Horrocks, a market manager with Milliken.

For the study, the research firm set up a beverage cooler that contained an equal number of beverages with clear closures and with original opaque closures. Consumers were asked to pretend they were purchasing a bottled beverage and asked which beverage they would select. Bottled beverages with clear closures were 62% more likely to be chosen than a beverage with an opaque closure, with that number rising among consumers under 18.

More work, less play on tap in Germany

In Germany this summer, talk of longer working hours is a hot-button issue. Politicians, employers, and even some employee union officials there seem to have simultaneously realized that the 35-hour work week for union members is not the answer to the country''s unemployment, now at about 10%, nor will it help the country stay competitive. A similar argument is raging in France, which implemented the 35-hr work week a few years ago to try to increase employment.

In German national media, on television news, and everywhere else one turns, the talk is of more work for the same wage, just to keep the country competitive. For German plastics processing machine manufacturers, speaking during their annual VDMA (German association of machine manufacturers) meeting in Frankfurt in July, the solution to the country''s manufacturing woes needs to be multifaceted and urgent. "We are at a very dangerous time for manufacturing in Germany," said Wolfgang-Dietrich Hein, CEO of the Coperion Group, which includes compound extruder manufacturers Buss and Werner & Pfleiderer. "It is not so much the wages as it is the flexibility of my workforce that needs to change." And, he adds, management needs to have its own flexibility "to reduce my workforce in bad times."

Helmar Franz, president of injection molding machine manufacturer Demag Ergotech (Schwaig, Germany), also highlighted the flexibility issue, and contrasted domestic, union-delayed changes with those at his firm''s plant in China. He explained, "At our plant there, the managers noticed that power was often unavailable on Mondays when all of the local factories started work again after the weekend." Within a week, the management was able to switch the workweek from Monday-to-Friday to Tuesday-to-Saturday.

Like Hein, Franz said he does not believe the answer to Germany''s troubles is simply to cut salaries, now averaging about ¤23/hr for union labor. "People have grown to expect a certain niveau of living standard. The question should be not whether salaries should be cut, but rather-should people be expected to work more to stay at this niveau?"

VDMA highlights German machine sales'' shift

Not surprisingly, the shift is to China, which has become the leading export country for German plastics processing machinery manufacturers. Officials at the plastics and rubber machinery division of the VDMA, Germany''s machine manufacturing organization, provided a wealth of machinery statistics during the group''s July 7 press conference in Frankfurt.

The group reported that this year''s orders appear headed for an 8% to 10% increase versus 2003. "Value of manufactured goods and exports could each grow by about 6%," said Helmar Franz, chairman of the group and president of injection molding machine manufacturer Demag Ergotech (Schwaig, Germany). In 2003 orders grew by 13% compared to 2002.

Germany remains the leading land for plastics processing machinery manufacturing and export, with about 25% of the world''s machines by value made there, followed by Italy with 14%, Japan with 10.3% and the U.S. with 9.7%. Germany''s share of total plastics processing machine exports is about 25.3%, said Franz. In 2003, China passed the U.S. as the most important single-country market for German plastics machinery. Value of goods shipped to China grew 29% to ¤438 million, while those to the U.S. sank from ¤402 million in 2002 to ¤383 million last year. The European Union countries remain the largest export market for German machines at 29.9% of total exports, but outside Asia, German exports to Eastern Europe grew by 33% in 2003 to ¤480 million, or about 15% of total exports.

Injection molding machines made in 2003 were valued at a total of ¤809 million, or 17.4% of total German production. Extruders and extrusion lines account for about 16%, and blowmolding machinery 6.1%. Thermoform machines valued at ¤156 million were made in 2003, accounting for only 3.6% of total German machines'' value. But thermoform machine makers export about 80% of their equipment and thus have a 33.1% hold on the total world export market for these.

Looking forward, China holds the manufacturers'' eyes. Demand there grew 75% in 2002 and almost 30% last year, with a similar figure expected for this year. On a slightly smaller scale, but also with high demand growth, are Eastern European countries.

According to CIPAD, the Council of International Plastics Assn. Directors, the China Light Industry Machinery Assn. reports production value of plastics machinery made in China hit ¤1.2 billion in 2003, up 20% from 2002.

K-M opens lab in response to RIM''s growth

Business at Krauss-Maffei''s Reaction Technology division is growing, according to firm officials at its Summer Forum open house (June 23 and 24) who unveiled its new product design, development, and process trial lab in Florence, KY.

"Right now we''re in the middle of the best year the division has ever known,"