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March 1, 2008

18 Min Read
First Look: Industry News & Analysis

Engel exits Canada; Sumitomo scoops up DPG; potential Battenfeld buyers do due diligence

The injection molding machinery manufacturing world continues to undergo dramatic changes, including the late January announcement by injection molding machinery manufacturer Engel (Schwertberg, Austria) that in May it will close its plant in Guelph, Ontario, resulting in the loss of about 220 jobs. The Guelph site makes presses with clamp force of less than 500 tonnes; in North America, Engel also runs a plant in York, PA for larger machine manufacture.

Gerd Liebig, Engel’s group marketing director, confirmed the firm intends to expand the York site by an as-yet unidentified amount, but that North American molders ordering sub-500 tonne Engel presses now will have those delivered from one of Engel’s other facilities in Austria, Korea, or China. However, smaller Duo machines eventually will be made at the York site; the smallest of these now have clamp force of 650 tonnes.

According to a press release sent by Engel on February 1, it also intends to open several new technical centers in the next 18 months in North America.

Engel’s Guelph closure announcement came just weeks after competitor Battenfeld Injection Molding filed for insolvency, and just before Japanese injection molding machine manufacturer Sumitomo Heavy Industries’ announcement that it will acquire Demag Plastics Group (DPG; Schwaig, Germany). A Battenfeld (Kottingburn, Austria) spokeswoman told MPW in early February that due diligence of the firm was in progress by a number of prospective buyers; the number and names of these could not be revealed but she predicted then that a sale was likely to occur before the April 1 start of bankruptcy proceedings.

On January 28, Germany’s antitrust office gave its approval for Sumitomo’s takeover of DPG. On February 8, Sumitomo''s directors announced they would complete their firm''s purchase of DPG.

RTP, Solvay agreement

Compounder RTP Compaany (Winona, MN) and engineering thermoplastics supplier Solvay Advanced Polymers LLC (Alpharetta, GA) entered into a trademark agreement under which RTP will compound and market precolored Radel R polyphenylsulfone and Udel polysulfone globally, using Solvay’s trademarks. Ten colors will be available.

Greiner grabs Capsnap

Austria’s Greiner Packaging acquired the 50% stake in Capsnap Europe (Kremsmünster, Austria) held by former partner, and globally active closure molder, Portola, giving Greiner complete control of the European blowmolder of 5-gallon water bottles. Capsnap Europe was formed in 1999 by the firms; it employs about 30.

New GW silicones unit

Injection molder GW Plastics (Bethel, VT) will form a new business unit, GW Silicones, at its Royalton, VT facility. Larry Bell, VP business development and marketing, said the firm initially plans to install three Engel molding machines in a new cleanroom in its Royalton facility. GW Silicones is expected to be in operation by April 2008.

Fast Heat divests range

Fast Heat (Elmhurst, IL) has divested its U.S. range of heating elements and sensors to Tutco Inc. (Cookeville, TN), which makes coil and other types of heaters. Fast Heat’s hot runner system and temperature controller businesses are unaffected by the sale.

OMS picks US distributor

OMS Group (Milan, Italy), manufacturer of high-pressure and low-pressure polyurethane foam processing machinery, has named Polyurethane Process Industries (PPI; Latrobe, PA) as its exclusive U.S. distributor. PPI will still provide parts and service for other equipment.

Plastech filing knocks Chrysler for loop

Reflecting deepening challenges within an automotive sector that faces rising commodity prices with slackening vehicle demand, a dispute between Tier One supplier Plastech Engineered Products (Dearborn, MI) and automaker Chrysler LLC escalated in early February, with Plastech filing for Chapter 11 bankruptcy and Chrysler subsequently forced to temporarily halt production at sites in Illinois, Delaware, Michigan, and Ohio.

Chrysler, which is now a private company that’s 80.1% owned by equity investor Cerberus Capital, with a 19.9% stake for former partner Daimler AG, took a different tack with Plastech when that company announced financial difficulties. In the past, to avoid a shutdown, automotive OEMs often stepped in with financial aid and concessions for struggling key suppliers. This time, Chrysler decided it would not assist Plastech. At press time, Plastech had agreed to continue supplying Chrysler through at least mid-February.

An ongoing issue is the proprietorship of 4000 pieces of Chrysler-owned “equipment,” which likely refers to tools, with the issue to be settled in a federal bankruptcy court. Michigan has two mold lien laws, one of which the Society of the Plastics Industry got passed in the state’s legislature in the early 1990s that states that in the case of non-payment for parts produced, molders have the right to hold the molds, even though they belong to the OEM. A second mold lien law, sponsored by the Southeast Michigan Chapter of the American Mold Builders Assn. (Chicago), fills in a gap that SPI’s mold lien law left open, and allows moldmakers to hold customers’ molds until payment terms are met.

According to a report in The Globe and Mail, a Michigan state court gave Chrysler permission to seize the tooling equipment just hours before the bankruptcy filing. However, under Chapter 11, other legal actions are put on hold through an automatic stay. Plastech was founded in 1988 with the purchase of an injection molder in Caro, MI, and by 1996, it had expanded outside Michigan. The February 2004 acquisition of LDM Technologies doubled its total number of facilities and employees and pushed combined annual sales to $1 billion. In August 2005, the company unsuccessfully bid $1 billion for ailing Tier One, Collins & Aikman. According to Forbes.com, 2006 revenues at Plastech were $1.07 billion, with total employees at 4768.

Karl-Heinz Bourdon joined KraussMaffei to lead its injection molding machinery business.

Bourdon joins KM; SkinForm for Mercedes

Karlheinz Bourdon, president of Milacron’s global plastics machinery business before leaving early in 2007, has been named managing director of the injection molding machinery division of KraussMaffei Technologies GmbH (KM; Munich, Germany). KraussMaffei is world market sales leader in machines and systems for plastics and rubber processing, breaking the euro 1 billion mark for sales in its last fiscal year.

Manfred Reichel, managing director of extrusion technology at KM, had managed the injection molding machinery division in a provisional capacity since August 2007, when the division’s former chief, Josef Märtl, left.

KraussMaffei manufactures machinery for pipe, profile, and sheet extrusion; plastics and rubber compounding; injection molding; and reaction injection molding; and it is likely that Bourdon’s experience in coordinating multiple types of plastics processing machinery—for extrusion, blowmolding, and injection molding—at Milacron was attractive to KM, which is determined to continue development of multi-machinery systems combining two or more plastics processes. One example is its SkinForm systems for forming, in a single processing cell, an injection molded thermoplastic substrate with a soft reaction molded polyurethane skin.

The process is entering commercial use at processor Schenk Plastic Solutions GmbH (Esslingen, Germany), which uses it to process headrests for Mercedes-Benz (more on this application in this issue’s Tech Trends section).

Sabic planning PE, PBT ventures

Officials from petrochemical powers Sabic (Riyadh, Saudi Arabia) and Sinopec Corp. (Beijing) signed a Heads of Agreement (a guideline for both parties before any legally binding steps are taken) for a 50/50 joint venture to produce 600,000 tonnes/yr of polyethylene and 400,000 tonnes/yr of ethylene glycol at a $1.7 billion site in Tianjin, China. Sabic has a current capacity of 2.5 million tonnes/yr in polyolefins.

All of the ethylene feedstock for the new Tianjin plant will come from an ethylene cracker owned by Tianjin Petrochemical Company, a division of Sinopec. The complex, scheduled to be completed by September 2009, marks Sabic’s first foray into China.

In related news, Sabic signed a Memorandum of Understanding with OSOS Petrochemicals, a new firm also based in Riyadh, to partner with OSOS in a new $1 billion petrochemicals facility in Yanbu industrial city. Plans are for Sabic to hold a 35% interest in the facility, which will produce 60,000 tonnes/yr of polybutylene terephthalate (PBT), as well as other chemicals. According to Sabic the new capacity would give it a 15% share of global PBT production.

Sabic already is the world’s fourth-largest polyolefins supplier, and leapt into the engineering plastics world by acquiring GE Plastics (now named Sabic Innovative Plastics) for $11.6 billion.

OSOS was formed after an announcement made by Saudi Arabia’s petroleum and resource minister in 2006 that the government would open two new petrochemical complexes.

Making a case for plastic bags; recycling program started

Measures taken by governments against the use of plastics bags are unlikely to bring net environmental gains, says the European Plastic Films (EuPF) group, a sector of the European Plastics Converters (EuPC; Brussels, Belgium) lobby. The EuPF contends the bags make up only a small percentage of the total waste stream.

“Abandoning plastics bags may not be as environmentally friendly as [some] people think,” says Bjørn Hoem, president of EuPF. Rather than outlawing plastics bags, The EuPF says a better means of controlling waste is to reduce plastics packaging in the waste stream, reuse bags, and recycle packaging waste plastics into alternative applications. “We want to promote sustainability by moving away from the single-use and disposability mindset toward that of maximizing the utility of everything we use, thus protecting the environment. Continuous education is the key,” Hoem says.

In related news from the U.S., Penn Jersey Paper Co. and Poly-Pak Industries have launched programs providing end-to-end recycling infrastructure to facilitate plastic bag recycling. The initiatives drew praise from the American Chemistry Council’s Progressive Bag Affiliates group, which predicts further such programs are likely as companies appreciate the growing demand for plastics recycling programs.

Brown Machine changes ownership

Thermoforming machinery manufacturer Brown Machine (Beaverton, MI) has a new owner in Spell Capital (Minneapolis, MN), which acquired a majority interest in Pacific Production Technologies (PPT; Mt. Carmel, IL), the group that controls Brown and sister firm Epco Machinery (Fremont, OH), which services, repairs and refurbishes plastics processing machinery. No financial terms were disclosed. Spell bought its stake from Madison Capital Partners (Chicago, IL), which last January merged Brown and Epco into Pacific Press Technologies.

Brown Machinery is the largest North American manufacturer of thermoforming machines. Through its Pacific Press Technologies division, PPT is the largest North American manufacturer of hydraulic presses, press brakes, and shears. PPT CEO Mike Stein and his colleagues will remain with the business.

Madison Capital soon may part ways with two other plastics machinery properties: one, Demag Plastics Group, was sold last month to Japanese competitor Sumitomo, while the other, KraussMaffei Technologies GmbH, which includes the Netstal injection molding machinery business, reportedly is preparing for an initial public offering.

ExxonMobil boosts Louisiana compounding

With an initial capacity of 40,000 tons of specialty compounds, ExxonMobil Chemical (Houston) has completed a new $20 million facility at its integrated Baton Rouge, LA site. Products made there include Exxtral thermoplastic olefins and Santoprene thermoplastic compounds. The move supports ExxonMobil’s 2007 formation of a new specialty compounding business focused on engineered polyolefin compounds, including a new line intended for automotive use.

Tube processor CCL increased PCR content in tube walls and heads.

Tube maker CCL adds more PCR; shifting production

Plastics tube processor CCL Tube (Los Angeles, CA) claims it is the first in the industry that can process tubes that include post-consumer resin (PCR) in the tubes’ heads. The processor also has increased the potential amount of PCR in its tubes’ sleeves.

CCL has manufactured tubes containing PCR since 2001, and now offers them with up to 70% by weight PCR in a tube’s sleeve as part of a three-layer coextrusion. Now it also offers tubes with up to 60% PCR in tube heads.

In related news, the processor said it would move its Los Angeles processing facility to a nearby purpose-built facility adjacent to the San Diego 405 freeway that falls within a Foreign Trade Zone. The new facility will include new tube-making equipment that will increase the firm’s capacity by some 50 million tubes/yr, or about 50%.

Pipe ops for sale

After acquiring Lamson & Sessions Co., Thomas & Betts Corp. (Memphis, TN), which makes electrical connectors, announced it would divest the former firm’s polyvinyl chloride (PVC) and high-density polyethylene (HDPE) conduit, duct, and pressure-pipe processing operations. These generated $230 million in sales in FY07.

Thomas & Betts completed its acquisition of Lamson & Sessions for $450 million in November 2007. Lamson & Sessions processes and assembles plastic electrical boxes, enclosures, fittings, wiring devices, and other electrical components, as well as the operations to be divested.

A Balda mold for cell phone covers; the processor is selling its European telecom molding business.

Nokia shuts last German cell phone plant; Balda sells German ops

Cellular phone production in Western Europe is on its final legs. In January, Finnish mobile phone manufacturer Nokia announced it would shut its operation in Bochum, Germany, not long after cell phone parts’ injection molder and contract manufacturer Balda (Bad Oeynhausen, Germany) sold its German molding and moldmaking operations, both in Oeynhausen, as well as its molding facility in Veszprem, Hungary, to KS Plastic Solutions GmbH, newly formed by financial holding company Aurelius AG (Munich, Germany). Balda maintained its small medical molding business in Germany.

Nokia announced on January 15 it would close its 2300-employee facility in Bochum and transfer much of the work done there to a new Nokia facility in Romania. The announcement raised a storm of protest among German officials who claimed the Finnish firm should either reconsider or be forced to repay the subsidies it was given.

Mobile phone production in Western Europe is almost entirely gone, and Nokia’s Bochum facility is the last such production in Germany. In 2006 BenQ Mobile, the former cell phone business of Siemens, filed for bankruptcy in Germany, with about 3000 losing their jobs, and last summer Motorola shut its manufacturing facilities in Flensburg, Germany. Sony Ericsson maintains a facility in France and Nokia maintains one in Salo, Finland.

Balda Solutions Europa, the recently sold mobile phone operation on that continent, includes about 500 employees in Germany and another 150 in Hungary, along with contract employees. In early 2007, Perlos (Espoo, Finland) closed its last two cell phone molding and assembly facilities in Finland and laid off about 1100 workers. Perlos has since been acquired by Taiwanese optoelectronics supplier Lite-On.

Following the sale, German financial papers repeated market rumors that Balda would have to pay up to euro 40 million to the buyer to cover losses and expected costs for employee layoffs and plant closures, while officials at publicly traded Balda countered the figure will be much lower. Speculation is that short sellers may be spreading the rumors. If true, then they’ve likely done well; Balda in mid-December 2007 issued euro 68 million in shares at euro 10/share, only to see the rumors drag its stock price down to about euro 6.30 in early February.

At last October’s K show, Stork ran a 730-ton press from its S+ range (above) at 3.8-second cycle times, using a 8+8 stack mold made by Stackteck.

Stork flies to North America

Dutch injection molding machine manufacturer Stork Plastics Machinery (SPM; Hengelo, the Netherlands) in early February made official what its officials discussed at last October’s K show: The firm now sells into North America. Stork makes presses sized to 1550 tons clamp force.

Although the North American injection molding machinery market has shrunk considerably in the last five years, Johan Visser, at the firm’s Dutch HQ, said that, even as a smaller market, North America still offers plenty of potential for a relatively small manufacturer such as Stork. Also, he said, based on its experience in Europe, Stork is confident of solid demand there for its specialty—high-tonnage presses for packaging.

Stork named Tony Thompson, formerly of Netstal, as its North American sales manager, with SPM USA’s headquarters in Shirley, MA.

Husky, Conair pair in PET; Husky reshuffles execs

Husky Injection Molding Systems (Bolton, ON) has reached a global agreement with auxiliary equipment manufacturer The Conair Group (Pittsburgh, PA) to jointly develop systems for molders of polyethylene terephthalate (PET) preforms. Conair, which recently introduced its EnergySmart line of PET drying technology (see MPW July 2007 Tech Trends for the initial report), plans to pair its dryer offerings with Husky’s line of PET preform molding machines.

Also at Husky, Mike Diletti now will focus exclusively on the company’s Americas business as VP service and sales, while Volker Neuber is now VP service and sales for Europe, the Middle East, and Africa. Those regions formerly fell under the purview of Diletti. Neuber was VP service and sales for Western Europe; he joined Husky in 2004 from then-GE Plastics (now Sabic Innovative Plastics). In an additional move, Keith Carlton, VP hot runners and molds, has assumed leadership for Husky’s global operations as the new COO. Mike Evitts, who was VP machines, left Husky.

Nova adding PE; names Pappas president

Nova Chemicals Corp. (Pittsburgh, PA) will add up to 250 million lb/yr of PE capacity over the next 2 years. Specifically, this includes expanding the low-density PE unit at Mooretown, ON; optimizing the high-density PE unit at Mooretown with a throughput increase; and debottlenecking the HDPE and LDPE production lines at its St. Clair River site in Corunna, ON.

Also, Chris Pappas was made president and COO of the supplier effective Jan. 1. Pappas had been Nova’s Sr. VP and COO. Jeffrey Lipton will stay on as CEO.

M&A trends downward

Mergers and acquisitions (M&A) in the North American plastics industry declined 6.3% to 75 deals for the first nine months of 2007, from 80 deals in the comparable 2006 period, according to Curtis Financial Group LLC (Philadelphia, PA), an M&A and financial advisor for mid-market companies, which compiled the data.

According to the firm, North American deal activity through the first nine months of 2007 was the lowest since 2001. Also, for the first time in the 19 quarters since the firm began tracking M&A data, extrusion was the most active M&A segment, accounting for 38% of the total and passing injection molding, which accounted for 31.6% of all deals.

New boss at Kraton

Kraton Polymers LLC (Houston), a leading producer of styrenic block copolymers (SBC), named Kevin Fogarty as president and CEO effective Jan. 14, 2008, succeeding George Gregory, who leaves Kraton after three-and-a-half transformative years. Gregory will stay on as an advisor to Kraton through June 30.

Fogarty was promoted from executive VP. He joined the company in May 2004 from PET supplier Invista. Kraton has production facilities in the U.S., Netherlands, Germany, France, Brazil, and Japan.

Label maker adds brand

Inmold, heat-transfer, and pressure-sensitive label converter Multi-Color Corp. (Sharonville, OH) has acquired Australia’s Collotype International Holdings Pty. Ltd. for $175 million. Collotype, which specializes in pressure-sensitive labels for wine and spirits, has operations in Australia, South Africa, and the U.S., with customers including eight of the top 15 global wine brands. Multi-Color has eight manufacturing locations in the U.S., with 650 customers spread across the Americas.

RTi adds PE unit

Plastics purchasing consultancy Resin Technology Inc. (RTi; Fort Worth, TX) has created a polyethylene strategic business unit to offer processors advice on best purchasing practices. The BU will be headed by Mike Burns, who brings 28 years of experience in PE, including more than 16 years as extrusion PE manager for North America with H. Muehlstein and Co. Inc. According to RTi, 38 billion lb of PE was manufactured in 2007.

Ticona adds China compounding site

Targeting high-temperature engineering thermoplastics, Ticona (Florence, KY) announced plans for a 15,000-tonne/yr compounding unit to be installed at parent firm Celanese’s Nanjing, China complex. The facility is scheduled to come online in the first quarter of 2009.

Ticona recently opened an application development center in Shanghai. Ticona, and its partners, currently operate five compounding sites in North America, one in South America (Suzano, Brazil), two in Germany, and one each in Japan, South Korea, Taiwan, and Malaysia.

[ On the record ]

“To be in Southern California without all-electrics doesn’t make sense.” Michael Sansoucy, national sales manager for Netstal, on the machinery market in California, where medical is influential and utilities are expensive. Sansoucy spoke with MPW at Plastec West.

“The whole key is to really have very strong working relationships with your customer base. Know and understand as much about their businesses as you possibly can, and have constant communication.” Jack Sparacio, president and CEO of Plastic Engineering & Development Inc. (PEDI; Carlsbad, CA). More on PEDI in As I See It.

“We’re making every effort to take advantage of the exchange rate.” Dana Hanson, president of extruder manufacturer PTi (Aurora, IL), on his firm’s increased international marketing effort, and its export success.

“We couldn’t fit in all of the companies who wanted to be there.” Bernd Jablonowski, project manager for the Interpack tradeshow, on response to a bioplastics special exhibit at the upcoming event (April 24-30, in Düsseldorf).

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