First Look: Industry News & Analysis 21705

GE Plastics up for grabs

During a January 19 conference call for investors, Jeffrey Immelt, CEO of global conglomerate GE, settled speculation by saying the company is considering divestment options for its plastics operations. The business counts itself as a global leader in supply of engineering thermoplastics and, via its LNP subsidiary, compounds. The business includes six plastics plants, one each in Brazil, China, Japan, the Netherlands, the U.S. and Thailand.

Citigroup Investment, in a report issued on-line in December, stated “the disappointing performance of GE Plastics increases the likelihood that it will be sold,” and speculated that BASF and Dow were potential strategic investors, or that the business could be sold to a financial investor.

“Disappointing performance” is relative, of course; the plastics business unit is profitable, but not as profitable as GE’s other units.

Another potential strategic investor may be Saudi Basic Industries Corp. (Sabic), which in 2003 acquired DSM’s polyolefins business. Sabic has to now no footprint in engineering thermoplastics; both Dow and BASF are established suppliers of these materials. GE Plastics is closely identified with the firm’s Lexan polycarbonate but also is a leading supplier of ABS, ASA, and other materials, blends and compounds. India’s Reliance Industries, like GE a conglomerate but with only PP, PE and PVC supply in its plastics business unit, may also be interested. Sabic officials did not return messages; Reliance officials say they will not comment on the matter.

Brückner acquires Kiefel

Brückner Group (Siegsdorf, Germany) has acquired Kiefel AG (Freilassing, Germany) for an undisclosed sum. Brückner claims world leadership in film stretching equipment and is a leading cast-film extruder manufacturer.

Kiefel’s facility in Freilassing is a top manufacturer of thermoforming and plastics joining machinery while its Worms facility is a leading manufacturer of blown-film extruders and, through its Swiss Wintech subsidiary, winders. Kiefel Extrusion now also makes smaller monoaxial film stretching lines.

Kiefel employs about 650 and had about €120 million in revenues last year. The Brückner Group has roughly 600 employees and annual turnover of about €200 million. Kiefel’s former owner, JM GmbH & Co., retains its film extrusion businesses, Renolit AG and RKW AG, which combined for more than €1.5 billion in turnover last year.

Brückner spokesman Karlheinz Weinmann says his firm had been seeking an acquisition within the plastics processing machinery sector for some time. Brückner already holds a 50%-60% share of the very cyclical market for biaxial stretching machinery, he notes, and wanted a more stable business to round out its portfolio. Kiefel—located near Brückner and also active in the film and sheet market—fit well, he says.

Edgar Gandelheidt, CEO at Kiefel Extrusion, and Thomas Halletz, managing director for Kiefel’s thermoforming machine operations, have both been requested to continue on in their respective positions.

In Brief

Husqvarna buys Gardena

Swedish garden equipment manufacturer Husqvarna (Stockholm) acquired German garden tool and irrigation products processor Gardena for ?730 million. Gardena’s Heuchlingen facility houses 120 injection molding machines sized from 15 to 2000 tonnes.

Progressive Components, Stiack to partner

Mold components supplier Progressive Components (Wauconda, IL) has appointed Stiack Engineering Pvt. Ltd. (Mumbai) as its new ‘channel partner’ for India. Mark Malloy, sales and marketing manager at Progressive, says the firm always has sold directly into India. Anil Kilach, chairman of Stiack, spent 24 years with D-M-E before forming Stiack. He is one of the founding members of India’s Tool & Gauge Manufacturers Assn. (TAGMA).

AMBA offers insight

The American Mold Builders Assn. (AMBA; Medinah, IL) has made available a 10-year comparison of business conditions of the mold-manufacturing industry. Moldmakers know it’s been a rollercoaster ride; proof is in the detailed graphs on the AMBA’s website at www.amba.org.

Trex moves into Lowe’s

Moving beyond the professional contractor distribution channel it used in the first 10 years of its existence, wood/plastic composite decking and railing extruder Trex Co. (Winchester, VA) has reached an agreement with big-box retailer Lowe’s to sell Trex’s products in its stores.

D-M-E now in Shenzhen

D-M-E Co. (Madison Heights, MI), a subsidiary of Milacron Inc. (Cincinnati, OH), has opened its first Chinese subsidiary in Shenzhen, offering distribution, quality assurance, and warehousing logistics.

O-I mulls divesting plastics packaging

Glass and plastics packaging processor Owens-Illinois Inc. (Toledo, OH) has retained Goldman, Sachs & Co. as a financial advisor as the processor considers divestment of its plastics operations. For the 12 months ending September 30, 2006, O-I Plastics had revenues of approximately $770 million, only about 11% of the firm’s total revenues.

O-I Plastics has two divisions, HealthCare Packaging and Closure & Specialty Products, with facilities in the U.S., Mexico, Brazil, Hungary, and Singapore.

Owens-Illinois sold 31 bottle blowmolding operations to Graham Packaging (York, PA) for $1.2 billion in 2004.

Possible changes for plastics futures

The London Metal Exchange (LME) plans to double the volume of its business in the next three to five years by expanding into ferrous metals and over-the-counter (OTC) trading. Conspicuously absent was mention of LME’s plastics futures market, launched in May 2005 and including polypropylene (PP) and linear low-density polyethylene (LLDPE). But Adam Robinson, LME spokesman, say the exchange is planning plastics-related announcements soon including the possibility of regional contracts and further changes with its prompt-date structure, which would allow some spot trading.

POM pulled up by medical

Strong 20%/yr demand growth for polyacetal (POM) from medical parts processors could push total global demand for this material well above the current 600,000 tonnes/yr. According to a recent report on global POM use prepared by Eldib Engineering & Research (EER), a consultancy in Berkeley Heights, NJ, demand for the material is surging even as the supplier base remains limited to Dupont, Ticona, and Mitsubishi Gas Chemical, and their joint venture partners.

Polyacetal often sees use replacing metals or thermoset plastics in applications across a range of industries. POM offers lubricity, a broad range of mechanical characteristics, is durable, and has a low coefficient of friction against metals, ceramics, and plastics. EER identifies healthcare applications, such as drug delivery devices, as the fastest growing market for the material with a 20%/yr demand growth rate. More on the report at www.eldib.com.

New moldmaker opens doors

Prolink Molds Inc., a designer and manufacturer of multiple-cavity injection molds plus its range of hot runners, recently opened for business in a 14,000-ft2 facility in Oakville, ON. Marketing manager Bruno Gomes says the firm is eyeing processors of cosmetics, caps and closures, medical, pharmaceutical, consumer products, and thin-wall products as potential customers.

Prolink president Manuel Gomes was longtime president at Canadian moldmaker Profine Molds, a firm he founded in 1994 but which was closed last August. Bruno Gomes, Manuel’s son, says Prolink is focused on markets similar to those Profine served, but with the sort of global sourcing and collaboration strategy that he says is needed in manufacturing.

SPI names expanded NPE 2009 board

Randy Pearson, president of the extrusion unit of screw and barrel manufacturer Xaloy, and John Effmann, director of sales and marketing for extruder manufacturer Entek, will oversee an expanded board for the Society of the Plastics Industry (SPI) trademark event, NPE 2009, scheduled for June 22-26, 2009 at McCormick Place in Chicago.

Also serving on the NPE board are Tim Stojka, Fast Heat CEO; Brian Bishop, Demag Plastics Group president; Larry Doyle, VP marketing at The Conair Group; Todd Bennett, president of injection molder United Southern Industries; and Vincent Witherup, VP of Conair.

Myers Industries buys ITML

Diversified manufacturer Myers Industries Inc. (Akron, OH) acquired ITML Horticultural Products Inc. (ITML; ON, Canada), a processor of plastic containers and related products for professional floriculture/horticulture grower markets in North America, for $110.1million.

ITML has six facilities located in Canada and the U.S. with captive injection molding, blowmolding, and thermoforming operations.

New facility for Welex

Extruder manufacturer Welex (Blue Bell, PA) is shifting manufacturing/assembly of its machines to a new facility in Greenville, NC, that is expected to be online this month. The corporate office and key management and engineering personnel will stay in Bluebell. Welex’s longtime president Frank Nissel says demand forced the firm to seek more appropriate manufacturing space.

Silgan captures Cousins-Currie

Rigid-packaging supplier Silgan Holdings Inc. (Stamford, CT) has acquired large-ware blowmolder Cousins-Currie Ltd. (Woodbridge, ON) for Canadian $48.3 million. Silgan added the firm to build on its Canadian business, which includes four operations, two each in Ontario and Quebec. Cousins-Currie had $48.4 million in 2005 sales.

Silgan has acquired 21 businesses since its inception in 1987, giving it a presence in metal, plastic, and composite containers and closures

Macchi goes gearless

Extrusion equipment maker Macchi (Venegono Inf., Italy) is sourcing gearless torque motors for its processing machinery, based on the AC Synchro-brand motors from German electronics giant Siemens. These will be used on as much of its primary and downstream equipment as possible, says company president Alessandro Macchi. Gearless motors tend to be more expensive than those including gearboxes but promise to be more energy efficient, quieter, and easier to maintain.

Norstar licences to M-Plast India

Rotational mold manufacturer Norstar International LLC (Princeton, NJ) licensed its tooling technology to rotomolding machine manufacturer M-Plast India Ltd. (Noida, India), which plans to move into a new mold-casting and manufacturing site in greater Noida this year.

Lear forecasts flat road in ’07

Officials at Tier One supplier Lear (Southfield, MI) forecast a largely flat 2007 to automotive investors during the Jan. 10-12 Detroit Auto Show but were optimistic about future opportunities in Asia; in crossover sport utility vehicles; and in junction boxes with surface-mount connectors—a market they estimate at $2 billion-plus. In addition, the Wilbur Ross’s International Automotive Components group’s agreement to acquire a controlling stake in Lear’s interiors business is expected to close in the first quarter.

Robert Rossiter, Lear chairman and CEO, said his firm forecast that 2006 North American vehicle production of 15.3 million would remain flat in 2007, with production at the Big Three likely to drop 2% this year. In Europe, Lear sees 1% growth in 2007 over the 19 million vehicles produced in 2006, but its top-five customers are forecast to be flat.

Lear officials told investors that 75% of its backlog is Asian based or for Asian OEMs. “Those relationships take time to build and over the last four to five years, we’ve really concentrated our efforts,” Rossiter said. “We think that we’re well positioned with customers like Hyundai and Toyota as they increase capacity in North America—that we have an opportunity to grow with them.”

Lear is targeting 25% annual growth of revenue in Asia and with Asian manufacturers. In 2002, consolidated and nonconsolidated Asian revenue was $800 million. That figure is forecast to reach $3.1 billion in 2007.

Another tactic in Lear’s re-emergence strategy is to transition manufacturing to low-cost countries, which is evident in its completed and planned expansions. The company has opened or will open 22 facilities in 2006 and 2007, bringing on 2 million ft2 of production space. Of that, only two operations are planned for developed countries, with one facility in Tennessee and one in England, but six slated for India and seven for China. As of today, company officials said 30% of its sourcing is from low-cost countries, but the goal is to push that figure to 45%.

Upcoming awards: calling all PVC processors

The gala awards event hosted at the tri-annual K show in Düsseldorf, Germany, has become a tradition at PVC supplier SolVin (Brussels), the 75/25 joint venture of Solvay and BASF. The firm now is taking applications for this year’s awards.

Candidates may include almost any firm or individual with a link to PVC, including processors, students, academic institutions, designers and OEMs. Only products or developments under development or commercially available from January 2005 will be considered.

An independent jury will choose five winners. SolVin will reward the three most innovative projects by a Gold SolVin Award of ?50,000, a Silver SolVin Award of ?25,000, a Bronze SolVin Award of ?10,000 and will also award two special prices of ?7500 in the category of Recycling and Design.

Application forms should be completed in English and returned before April 30, 2007. For more information check www.solvinpvc.com.

China vitalizes vinyl

As it does in many markets, northeast Asia, and China in particular, is driving the chlor-alkali market, and therefore polyvinyl chloride (PVC). From 2001 to 2006, chlor-alkali capacity in northeast Asia grew by 7 million tonnes while the rest of the world’s capacity contracted by 1 million tonnes, according to the 2007 World Chlor-Alkali Analysis by petrochemical consultants Chemical Market Associates Inc. (CMAI; Houston).

Over the next five years, CMAI is forecasting that 9 million tonnes of capacity will be added globally, with nearly 90% of that slated for northeast Asia and China.

According to CMAI PVC analyst Rick Smith, 24% of chlorine consumed in Northeast Asia was for PVC production, and in 2007 it is forecast to increase to 30%, growing to 31.5% by 2011. Globally in 2001, 28.5% of chlorine went to PVC, and that number is forecast to grow to 31% this year and 33% by 2011.

Brown Machine, Epco merged within Pacific Press Technologies

Thermoforming machine manufacturer Brown Machine (Beaverton, MI) and sister firm Epco Machinery (Fremont, OH), which services, repairs, and refurbishes plastics processing machinery, were merged into Pacific Press Technologies (Mount Carmel, IL), a manufacturer of metal fabrication machinery. All three belong to Madison Capital Partners (Chicago, IL).

Pacific Production Technologies also manufactures a range of compression molding machines for processing of thermoset plastics. Jim Robbins, VP marketing at Brown, says the merger brings almost no change to Brown or Epco. “We’ve the same management group, same CEO of all three, no real change,” he says. Mike Stein already was CEO of the three firms.

With the merger there may be some opportunity for synergies in administration and manufacturing, says Robbins, who adds Brown had a bang-up 2006, especially its fourth quarter. The firm sees solid demand for both cut-sheet and inline thermoformers.

SPI Machinery Div. marks 50th

The Society of the Plastics Industry’s (SPI; Washington DC) Machinery, Molders, and Moldmakers division will hold its annual meeting May 6-8 in Tucson, AZ at the Marriott Starr Pass Resort and Spa. The event will also mark the 50th anniversary of the Machinery division, and in addition to presentations by SPI President and CEO Bill Carteaux, economist Bill Wood, and New Mexico State University professor and commodities expert Lowell Catlett, former NFL quarterback Terry Bradshaw, now a broadcaster, will also present.

In related news, SPI announced that it has hired Terry Peters as the executive director of the Machinery and Moldmakers Division. New to plastics, Peters has a lengthy association résumé, most recently serving as the executive director of the National Assn. of Exclusive Buyer Agents. Walt Bishop, now VP of trade shows for SPI, formerly held the position.

[ On the record ]

“Mold manufacturing will always be a business of highs and lows, ups and downs, and owners must learn to ride these waves, cope with the challenges of this business, and always be looking for ways to do business better, more efficiently, and cost effectively.”

Jeanette Bradley, executive director of the AMBA (American Mold Builders Association).

“The discussions we had before where you built in cost reductions up front to be rewarded business—we’re seeing less of that.”

Robert Rossiter, chairman and CEO of Tier One automotive supplier Lear (Southfield, MI), on changes in contract negotiations with automotive OEMs.

Names in the News

Guy Moilliet is the new managing director for injection molding machine maker Ferromatik Milacron (Malterdingen, Germany), a subsidiary of Milacron Inc. (Cincinnati, OH). Karlheinz Bourdon, president global injection molding machinery for Milacron, had filled in as MD at Ferromatik since the departure in November 2004 of Michael Koch. Moilliet comes to F-M from a Swiss manufacturing consultant.

After a decade handling the firm’s marketing through his own agency, Kim James has joined former client Vecoplan LLC (High Point, NC) to serve as marketing communications director. He will oversee marketing in North, Central and South America for the company’s complete product line. Vecoplan is a leader in size reduction equipment including shredders, material handling machinery, separation equipment, and complete waste reduction systems.

Norman E. Alexander, who started Ampacet Corp. (Tarrytown, NY) in 1937 and built it into one of the industry’s most respected suppliers of colorant and additive masterbatches with revenues exceeding $650 million, passed away on December 26, 2006 at the age of 92. His family will continue running the company.

Novatec Inc. (Baltimore, MD), a manufacturer of resin drying, blending, and pneumatic conveying systems, continues to strengthen its staffing with three recent additions. The firm has its sights set on doubling revenues by 2009.

New to Novatec are Sally Hards as product support manager, working to coordinate product development across the firm; Jorge Otero as regional VP for sales in Central and South America; and Joe Fitzgerald as VP for extrusion and international development. Hards’ background includes a four-year stint at Conair; Otero has 28 years of sales and technical experience, most recently 16 years with auxiliaries competitor The Conair Group (Pittsburgh, PA); Fitzgerald comes to the firm with 20 years’ industry experience with AEC Inc., then for both AEC and Sterling Inc.

After leading commercial efforts for two years, Peter Termyn has been appointed to president and CEO of Parkinson Technologies (Woonsocket, RI), a designer and manufacturer of large-scale web-handling, winding, and plastics processing equipment. The firm’s divisions include Marshall and Williams, manufacturer of tenter frame systems for film orientation, and Key Filters, a manufacturer of continuous and manual screen changers. Ernest Abrahamson remains Parkinson’s owner and now serves as chairman.

Reinhard Proske remains in his position as chairman of the German plastics processors association (GKV, Frankfurt) after being re-elected to the post. The GKV’s new managing director is Michael Rathje.

Bill Choquette, east coast regional sales manager for injection molding training and process-monitoring supplier RJG Inc. (Traverse City, MI), has retired after nearly six years with the company. Choquette’s history in plastics goes back more than 30 years, starting in 1969 at Control Process Inc. with RJG founder Rod Groleau. Following his work at Control Process, Choquette moved on to D-M-E (Grand Rapids, MI).

In additional RJG personnel moves, Bob Reese has been named as the company’s regional sales manager for the south central U.S. Reese will work from Fort Worth, TX. RJG has also hired Chris Salazar as a consultant/trainer, focused on bilingual training in the southwestern U.S.

Custom molder and contract manufacturer Mack Molding (Arlington, VT) has hired Leslie Downer as program manager in its sales and engineering department. She comes to Mack from Whatman Inc. (Sanford, Maine), a supplier of medical filtration devices, where she was quality assurance operations manager.

Terrance (Terry) Gillian of Paladin Sales joins KECO Engineered Coatings (KECO) as sales and marketing representative for the rotational molding industry. Gillian has been involved in rotomolding for almost 30 years and in 2005 was the 25th inductee into the Rotational Molding Hall of Fame.