First Look: Industry News & Analysis 21693

Bioplastics in full bloom

The expansion of bio-based plastics continues, with new players, materials, and applications on display in Chicago at the Packaging Machinery Manufacturers Institute’s Pack Expo (Oct. 29-Nov. 1). NatureWorks (Minneapolis, MN), supplier of a renewable resource-based polylactic acid (PLA) of the same name, promoted new applications in shrink sleeves and emulsion coatings, among others, at the show.

Dennis McGrew, NatureWorks CEO, said that in spite of demand growth, supply at its lone production facility in Blair, NE remains capped at 140,000 tonnes, with all material commissioned and no publicized plans for expansion. Most is thermoformed or extruded as film, but injection stretch-blowmolding is gaining as is use in non-food packaging applications.

Metabolix (Cambridge, MA), which registered with the Securities and Exchange Commission on July 27 for an initial public offering, was at PackExpo, if without much comment, as it remains in a pre-IPO “quiet” period. Commercial-scale production of its polyhydroxyalkanoate (PHA) plastic is planned at a 50,000-tons/yr facility in Clinton, IA.

New, after launching in June, is PSM Bioplastic, a corn-starch-based plastic suitable for thermoforming, extrusion, foaming, and injection and blowmolding, from teInnovations Inc. (Warrenville, IL). Corey Knauer, business development manager North America, says PSM is fully biodegradable in soil, reportedly breaking down more than 70% in 95 days. Material currently is produced in China through a joint-venture partner, but PSM plans to bring production to the U.S.

In related biodegradable plastics news, Italy’s Novamont (Novara) is investing about ?100 million in a 60,000-tonne/yr ’biorefinery’ to derive plastics from sweet corn and vegetable oil. Novamont’s Mater-Bi thermoplastics, based on renewable resource materials, have been commercial for many years (see February 1992 MPW, p.62) and demand has jumped in the last few years. Current Mater-Bi capacity is 20,000 tonnes/yr.

Novamont’s new plant will be built in Terni, Italy, and is scheduled for startup in 2008. Novamont currently has about 120 employees and 2005 sales of €35 million.

Also, Alcoa Kama (Hazleton, PA), the sheet extrusion division of Reynolds Food Packaging, and Cereplast Inc. (Hawthorne, CA), a supplier of proprietary PLA-based plastics, announced that Alcoa Kama will extrude thermoformable and other sheet using Cereplast’s materials. The extruded rollstock will be marketed for food service packaging and other uses.

IN BRIEF

PMC nabs Nova PS range

PMC Group Polymer Products (Stockertown, PA) acquired the flame resistant PS compounds range of Nova Chemicals (Pittsburg, PA) for an undisclosed amount. PMC says the purchase makes it the largest polystyrene compounder in North America.

Banner year for Husky

Husky Injection Molding Systems Ltd. (Bolton, ON) enjoyed a record year for preform molds and preform molding systems, with sales up more than 30% to the highest level in company history. Recently introduced inmold and postmold cooling technologies, as well as dry-cycle reduction and hot-runner refinements reportedly have lowered cycle times by as much as 25% compared to 2003 figures.

Future licenses Jandi’s

Future Design (Mississauga, ON) and Jandi’s Industrial (Taipei) signed a licensing agreement to manufacture and distribute Saturn air rings for blown-film lines in Asia and the Pacific Rim.

Vecoplan invests in IN

Vecoplan LLC (High Point, NC), a manufacturer of industrial shredding and grinding equipment, opened a new sales and distribution facility in Floyds Knobs, IN to serve the Midwest, a key trading area for the firm.

Gusmer|Decker RIM relocates

Reaction injection molding (RIM) equipment maker Gusmer|Decker moved from Lakewood, NJ to North Canton, OH, from where it says it can better serve customers. Technical service and sales personnel remain geographically dispersed throughout North America.

Rexam announces dramatic changes in purchasing

Global consumer packaging company Rexam (London), in presentations to analysts last month at its facilities in the Chicago area, announced a number of changes that are certain to send waves throughout the rigid packaging industry. Rexam ranks its rigid plastics packaging business as fourth-largest globally, with annual sales approaching $1.5 billion; it is active in closures, cosmetics packaging, high-barrier food packaging, pharmaceuticals goods and packaging, and home/personal care products.

One big change: the firm will centralize purchasing of plastics, molds, and injection moldmaking machinery as it attempts to increase its purchasing power, exploit in-house moldmaking, achieve commonality on injection molding machinery, and of course better serve customers. It also intends to implement a common mold standard across the entire business, and have customers pay for mold inserts. In addition, the in-house moldmaking capacity to now part of the Home & Personal Care business unit will also be available to the other plastics BUs.

In other Rexam news, the firm sold three thin-walled food packaging facilities, one each in Denmark, Sweden, and England, and says it intends to increase its share of the high-barrier food packaging market in Europe. It already owns a 50% share of this market in the U.S., says the firm. Norway’s Polimoon acquired the thin-wall operations (and is itself being acquired; see related story next column).

Rexam also said it intends to sell its refillable PET bottle blowing operation; this serves Germany and Scandinavia, where refillable beer packaging is used.

K-Tron shores up North American and Chinese operations

K-Tron International Inc. (Pitman, NJ), a manufacturer of feeding and pneumatic conveying equipment, made two purchases in the last weeks including its acquisition of privately held Premier Pneumatics Inc. (Salina, Kansas), a manufacturer of pneumatic conveying systems and bulk handling equipment for the North American market; and its signing of a definitive agreement to acquire certain assets of Wuxi Chenghao Machinery Co. Ltd. (Wuxi City, about 100 km (60 mi) west of Shanghai), a manufacturer of feeder and ancillary equipment for China’s injection molders and plastics compounders.

K-Tron bought Premier for $27.6million. Robert Korbelik, previous owner and president of Premier, is retiring. The China acquisition is expected to close early next year, and could set K-Tron back by up to $3.5 million, with payment spread over the next five years. Wuxi Chenghao was founded in 2002 and manufactures volumetric and gravimetric single- and twin-screw feeders and controls, vibratory trays, pelletizers, and pneumatic screen changers.

Strategic, financial investors tussle over Polimoon

At press time it appeared the next owner of European plastics processing power Polimoon (Oslo, Norway), which serves the packaging, automotive, and electrical markets from 28 processing facilities, would be Promens (Reykjavík, Iceland), which controls a 20-facility rotational molding group. Promens and Capman, one of the leading private equity investors in the Nordic countries, both are vying for the Norwegian processor. CapMan dropped its bid on November 8.

Davis-Standard management acquires control

Current management, with backing from a private equity firm, Hamilton Robinson (Stamford, CT), acquired for $72 million the remaining interest in the manufacturer of extrusion and blowmolding machinery and converting equipment, from additives supplier Chemtura (Middlebury, CT).

According to Davis-Standard President Charles Buckley, the new ownership structure will continue to be led by the existing management team. Management will own more than 20% of the common equity, he says. Davis-Standard, which merged with rival Black Clawson Converting Machinery 18 months ago, saw a turnover of about $250 million for the fiscal year ending September 30, 2006.

Davis-Standard was part of Crompton; that firm merged with Great Lakes (as Chemtura) to focus on additives, opening the way for D-S’s divesture.

Bayer expands PUR network

Bayer MaterialScience (Leverkusen, Germany) will acquire Taiwan’s Ure-Tech Group, the largest thermoplastic polyurethane (TPU) supplier in the Asia-Pacific region, for an undisclosed price. The deal is expected to close early in 2007. Ure-Tech has 2005 sales of some $55 million. Sales of Bayer MaterialScience’s TPU business unit were ?192 million last year.

Bayer MaterialScience, together with Ure-Tech, will offer Bayer’s well-established Desmopan and Texin brands, and in Japan, Pandex (from the joint venture with Dainippon Ink & Chemicals Inc.) has been commercially available for some time. In addition, Ure-Tech’s Utechllan is a broadly recognized brand among Asian customers.

Also, Bayer MaterialScience established a polyurethane systems house joint venture with Pearl Insulation Materials Industries (Dubai, UAE). The joint venture will be integrated into Bayer’s system house network under the name BaySystems Pearl.

Wal-Mart details packaging report card, makes sustainability Pack Expo buzz

Given that its pull over the packaging world is in direct proportion to its colossal size, Wal-Mart’s September announcement of plans to reduce packaging across its global supply chain by 5% grabbed the attention of brandowners and packaging converters, many of whom gathered in Chicago for Pack Expo (Oct. 29-Nov. 1; McCormick Place), making sustainability the buzzword of the show.

“Sustainability is not the flavor of the day,” asserted Harris DeLoach, chairman, president, and CEO of $3.5 billion packaging supplier Sonoco (Hartsville, SC) in a keynote address to attendees. It was certainly a theme of the show, however, with Dennis McGrew, CEO of corn-derived polylactic acid (PLA) plastics supplier NatureWorks (Minneapolis, MN), telling attendees in his address, “The green consumer is here, and they’re here to stay.”

The most buzz, however, was reserved for Wal-Mart itself, with Matt Kistler, VP of package and product innovations, and Amy Zettlemoyer, director of packaging for its warehouse chain, Sam’s Club, delivering the keynote on Nov. 1 and offering details on its “packaging scorecard,” which will allow suppliers to evaluate their performance relative to competitors on nine weighted metrics.

“[Wal-Mart] has a unique opportunity to have a positive impact on the environment through our own actions, those of our customers, and those of our suppliers,” Kistler told attendees.

The supply chain is listening, with DeLoach and McGrew both citing the so-called ’triple bottom line,’ composed of operating performance, social responsibility, and environmental stewardship. DeLoach says converters like Sonoco have the opportunity to act as a “white knight” for their brandowner customers, innovating sustainable packaging solutions that appease new retailer and consumer demands.

PolyOne purchases Hong Kong vinyls compounder

PolyOne Corp. (Cleveland, OH) has signed a definitive agreement to acquire the assets and operations of Ngai Hing PlastChem Co., the PVC compounding subsidiary of Ngai Hing Hong Co. The current shareholders of Ngai Hing Hong (HQ: Hong Kong) will retain a 5% interest in a new company that PolyOne will establish to compound PVC in Asia.

PolyOne CEO Stephen Newlin noted, “This acquisition will allow us to bring manufacturing for one of our primary businesses, vinyl compounds, to China.”

Included in the transaction is the transfer of a manufacturing facility in Dongguan, a city in the Guangdong province of South China. This plant will be PolyOne''s fourth in China.

Clariant’s China pigments JV on stream

Clariant International (Muttenz, Switzerland) and Hangzhou Baihe Chemicals have started their joint-venture production facility for high-performance pigments in Hangzhou, southwest of Shanghai. “With this facility, the country really moves into high-performance pigments from domestic production. This is a big leap,” said Gary Fielding, regional president Asia, of Clariant International. The joint venture products—six lines of red and yellow high-performance pigments—will be marketed and sold by Clariant’s international organization.

SMS: new boss, minus injection machine business

In mid-October the SMS group, whose plastics machinery brand names include Battenfeld, American Maplan, and Cincinnati Extrusion, announced that Pepyn Dinandt had joined as a member of the board, responsible for the firm’s plastics technology business. Dinandt was president of the mannesmann plastics machinery group (mpm; Munich)—which includes Demag Plastics Group, Krauss-Maffei Kunststofftechnik, Netstal, and Berstorff—from February 2002 until July 2006, when Madison Capital Partners (Chicago) acquired mpm.

On Friday, October 13, SMS group announced it had sold its Kottingbrun, Austria-based injection molding machinery manufacturing business, Battenfeld Kunststoffmaschinen GmbH, to Adcuram, a Munich, Germany-based private equity group. The sale is the culmination of seven years of on-again, off-again attempts to sell the molding machinery business, and leaves SMS’s machinery business focused on film, sheet, foam, profile and pipe extrusion.

Adcuram acquired Kautex Maschinenbau GmbH (Bonn, Germany), a well-known name in blowmolding machinery manufacture, in mid-2004.

The Battenfeld injection molding machinery business last year announced, and this year completed, closure of its large-machine facility in Meinerzhagen, Germany, leaving the Kottingbrun site as its sole machine manufacturing location. Thomas Probst, president of Adcuram, said, “We’re here to help Battenfeld get back to its original strength and importance in the industry.” Adcuram hopes to have Battenfeld reach 5% EBITDA, a figure he says would put in within the branch’s normal range, within the next 2-3 years. Decisions are being made now on whether to re-expand the firm’s machine range to include ones with clamp-force greater than 650 tonnes, and whether to launch a range of electrically powered machines.

Arburg bulks up

Injection molding machine maker Arburg (Lossburg, Germany) introduced four new machines at the Fakuma trade show in southern Germany in late October, all larger versions within established ranges.

Those four models include the 720 S Golden Edition machine, a 300-tonne addition to the Golden range of ’value-for-money’ hydraulic machines launched by the firm early this year. Also new is the Allrounder 920 S, a 500-tonne-clamp-force unit and Arburg’s largest press to date. Internal distance between the tiebars is 920 mm, but the machine’s width and external mold clamp dimensions essentially parallel those of the Allrounder 820 S, said Herbert Kraibühler, director of technology at Arburg.

The Allrounder 520 U, offers 520-mm internal distance between tiebars and available in clamp forces of 130, 150 and 160 tonnes; the Allrounder 275 V vertical machine is for insert molding.

According to Michael Hehl, speaker of the board at the family-owned firm, if the fourth quarter of this year progresses as planned, the firm will hit or beat the circa ?300 million in revenue from 2000, its best year to date.

DPG to build electric presses in China

Officials at injection molding machine maker Demag Plastics Group (DPG; Schwaig, Germany) say the firm will build not only its Dragon hydraulic presses but also its IntElect all-electric molding machines at the company’s new 8900m2 facility in Ningbo, China, scheduled to open next June. Stephan Greif, DPG’s VP China, will manage the facility.

Initially, machines made there are intended for domestic and nearby markets but Klaus Erkes, DPG president and CEO, says eventually the machines will be exported to North America to help DPG better compete there with imports from other Asian manufacturers.

[ On the record ]

“Everyday in the U.S. alone, we average 600 main breaks. The cost of such a breach may well amount to more than $80,000. The problem is worldwide and effects rich and poor countries alike. Members of our industry...have a responsibility to act as stewards by advocating the use of sustainable plastic pipes,” Bob Walker, Uni-Bell PVC Pipe Assn. (Dallas, TX).

“Optimizing these properties required a molder willing to experiment…These high-end materials can cost between $10 and $20 per pound, and many molders are reluctant to invest the time and run the potential financial risks involved in learning how to process them effectively,” Steve Richardson, applications engineer for the conductive plastics program at circuit board OEM XTech (Randolph, MA).

“The driving force in today''s packaging merger and acquisition marketplace is private equity,” William J. Hornell, managing director of Mesirow Financial in Chicago.

“With technology from yesterday [a processor] won’t be able to maintain his competitive edge to gain new, or even keep his present, customers,” Jürgen Vutz, managing director, Windmöller & Hölscher (Lengerich, Germany).

“I’m convinced that in the next two to three years, we’ll have a range of all-electric machines that can compete on a cost basis with the Japanese competition,” Peter Neumann, CEO of molding machine maker Engel (Schwertberg, Austria).