First Look: Industry News & Analysis 21873

B&C market sees major mergers

Some of the larger suppliers and processors in the building and construction market have recently gotten even larger. First, the previously announced, planned joint venture agreement between building goods suppliers Owens Corning (Toledo, OH) and Saint-Gobain (Paris, France) has been overtaken by the signing of a definitive agreement under which Owens Corning will acquire Saint-Gobain’s reinforcement and composites business for $640 million. The acquisition builds on Owens Corning’s position as a market leader in glass reinforcements and composites, and came just weeks after OC agreed to sell its Norandex/Reynolds distribution business, which includes three facilities for extrusion of siding, for $371 million to Saint-Gobain. Saint-Gobain will consolidate the three siding extrusion facilities within its own existing production facilities.

The more recent transaction is expected to close this year but remains subject to regulatory approval. Saint-Gobain’s reinforcement and composites business has 12 plants for glass-fiber reinforcements, six for fabrics, and two produce both reinforcements and fabrics. The acquisition, net of the planned divestitures, increases Owens Corning’s installed glass-fiber manufacturing capacity by 500,000 tons, bringing the company’s combined installed capacity to 1.3 million tons annually.

In other B&C news, composite construction material supplier Fiber Composites LLC (New London, NC) acquired Louisiana Pacific’s (LP) Meridian, ID manufacturing and distribution site, including the WeatherBest brand name, with the deal expected to close in next month. Fiber Composites says this acquisition makes it the second-largest manufacturer of wood/plastic composite (WPC) decking and railing, behind Trex (Winchester, VA), with the highly fragmented U.S. industry still including more than 30 manufacturers. As part of the company’s growth strategy, Fiber Composites has committed to regional production facilities, but since its inception in 1997, all manufacturing took place in North Carolina. The LP site is located on 18 acres in southwestern Idaho, including a 175,000-ft² manufacturing plant.

Fiber Composites markets Fiberon decking, railing, and fencing composites made of highly refined wood flour and a formula of virgin resin, versus the recyclate used by some. The product comes in four colors with an embossed, deep-wood-grain texture. Fiber Composites estimated that total decking demand will grow 3-5%/yr, with WPC decking demand at 30-40%.

Middle Eastern, Asian futures begin

The London Metal Exchange, which started futures contract sales for plastics in 2005 with polypropylene and linear low-density polyethylene, will be joined soon by the Dubai Gold & Commodities Exchange (DGCX; Dubai, U.A.E.), which says it plans to launch a portfolio of four plastics future contracts to allow price hedging starting this month.

The DGCX says “the launch is seen as key to meeting the demand for an efficient and transparent pricing system specific to the plastics sector in the Middle East, and will highlight the GCC’s central role in the global plastics and petrochemical industry,” says David Rutledge, CEO of DGCX. Development of the DGCX’s plastics contracts is coordinated by the plastics division at Dubai Multi Commodities Center (DMCC). The service will concentrate on plastics contracts in the Middle Easter, North Africa, and Asia. Covered will be low density, high density and linear low density polyethylene, and polypropylene.

For each grade there will be three regional contracts: Northeast Asia (Korea), Southeast Asia (both Singapore and Malaysia) and the Middle East, which will be centered in Dubai. The DGCX says it is looking at including other regions for deliveries in the future.

In Brief

Soliant ropes Wrangler

Thermoplastic paint-film supplier Soliant (Lancaster, SC) has landed another platform for its product—the front and rear bumpers for the 2008 Jeep Wrangler Sahara. The program, for the two- and four-door models, will be for roughly 50,000 parts per year. Soliant reports that its Fluorex paint film has been applied on 40 million parts over the past five years.

Petkim interest sold

The Turkish government, seeking a buyer for plastics supplier Petrokimya Holding, known as Petkim, since 2003, now plans to sell 51% of the state-owned company to a Kazakhstan-Russian consortium called Transcentral Asia Petrochemical for an estimated $2.05 billion.

Billion in Germany

Injection molding machine maker Billion (Lyon, France) has opened an office in Offenburg, Germany, aiming to realize about 10% of its sales in Germany; total 2006 sales were €32.8 million. Olivier Crave, sales manager for Billion, will also direct the new office.

Milestone delivery

Arburg’s Herbert Kraibühler (l) offers Hirschmann Automotive’s Volker Buth a plaque commemorating the delivery this summer to the Austrian automotive sensors/connectors molder of its 100th Arburg Allrounder.

Sweet news for polyethylene

Dow Chemical (Midland, MI) has sweetened its polyethylene (PE) offerings after signing an agreement with Crystalsev, one of Brazil’s largest ethanol producers, to produce PE from sugar cane. Dow, the world’s largest PE producer, is using the move to polish its environmental image, applying a renewable resource as a raw material and claiming the “production process will significantly reduce [the] carbon footprint.”

Under terms of the agreement, the companies will design and build a 350,000-tonnes/yr capacity solution PE plant set to open in 2011 using ethanol derived from sugar cane rather than naphtha or natural gas liquids to manufacture Dowlex-brand grades.

No location for the facility has been announced, but the companies say a number of potential sites are being considered that will not result in destruction of rain forest.

Earlier this summer, Brazilian petrochemical firm Braskem announced the creation of a biobased high-density polyethylene (HDPE), applying sugar-cane ethanol as a feedstock. Targeting commercial production by 2009, Braskem has invested $5 million and built a pilot unit at Braskem’s Technology and Innovation Center that’s already producing unspecified amounts of the material. Braskem’s goal is industrial-scale production with a potential annual capacity of 200,000 tonnes.

SolVin adds to PVC capacity

Vinyl joint venture SolVin (Brussels, Belgium), owned 75% by Solvay and 25% by BASF, has decided to expand its Jemeppe, Belgium PVC plant to meet increased demand in the market. Pending regulatory clearance, annual capacity will be lifted to 475,000 tonnes by 2009, up from 400,000 tonnes/yr today. SolVin claims that global vinyl growth exceeds 6%/yr and that in Eastern Europe and China it is running at 15%/yr.

SolVin closed its Ludwigshafen, Germany plant in 2006. The joint venture has operations in France, Germany, Spain and the Benelux countries and a total annual production capacity of 1.3 million tons of PVC, with nearly 2000 employees. The Solvay group is one of the world’s leading PVC suppliers, ranking second in Europe and third globally. In addition to SolVin in Europe, the Group’s activities in polyvinyl chloride (PVC) include its affiliates Vinythai in Thailand and Solvay Indupa in Argentina and Brazil.

China Array opens shop in Wuhan

China Array Plastics (Pittsfield, MA) has opened a new 15,000-ft² injection molding site in Wuhan at the Zhuankou Industrial park to serve growing Chinese demand for parts processed from engineering thermoplastics including polysulfone (PSU), polyetherimide (PEI), and polyetheretherketone (PEEK). The company’s target is high-end parts within niche markets of the medical, electronics, fluid handling, and aerospace sectors. The company moved into the new facility in 2006.

The company offers former GE Plastics employees as application engineers and is intent on exploiting what it perceives as a dearth of local companies molding advanced thermoplastics versus commodity resins. Wuhan, which is the capital of Hubei province, is located on the Yangtze River and is roughly equidistant from major Chinese markets of Beijing, Shanghai, and Hong Kong. China Array operates as a wholly owned foreign enterprise.

The company offers moldmaking, including prototype tools.

Medical device market offers processors high returns

The global medical technology market appears to be worth €184 billion today and growing according to estimates by the European medical technology industry association, Eucomed (Brussels, Belgium). While the North American market takes the largest share with more than 43% of the total, the European sector has 30%, and Japan alone almost 20%, Eucomed says. Medical-device manufacturers in Germany, which number more than 1200, have been able to achieve 9% year-on-year sales growth thanks to hot demand in export markets.

GW Plastics expands China site

Less than a year after opening a moldmaking and processing/assembly facility in Dongguan, China, contract molder GW Plastics (Bethel, VT) reports it has tripled the facility’s size. GW has invested $1,700,000 on its operations in China. The current expansion increases the facility’s size to more than 40,000 ft² (3700m²).

Investments have included CAD workstations and assorted metalworking machinery for moldmaking as well as construction of a class 100,000 (Class 8) clean-room molding and assembly area. The facility also houses tiebarless and electric molding machines, from Engel and Fanuc Roboshot, to mold parts for its customers in the automotive, healthcare, telecommunications, and office machine markets.

GW Plastics’ other facilities are in Bethel, VT; Royalton, VT; San Antonio, TX; Tucson, AZ; and Queretaro, Mexico.

Palram opens new site

A new processing facility in Kutztown, PA, for Palram, the largest manufacturer of corrugated polycarbonate products in the world and the third largest global consumer of polycarbonate, has created 50 new manufacturing jobs, bringing the total number of employees at the location to 210.

Palram opened its facility in Kutztown in 2001. The new 92,000-ft² facility will house equipment to extrude PVC corrugated, flat and foamed sheet. The facility also will process Palight Trimboard, a PVC-based alternative to wood.

Husky/Gammaflux supplier deal ceases with Altanium purchase

Husky Injection Molding System’s (Bolton, ON) acquisition the Altanium line of hot runner temperature controllers as part of the $7 million Moldflow Manufacturing Solution’s deal not only brings that business in house for Husky, but ends a long-standing relationship with Gammaflux LP (Sterling, VA), which had supplied thousands of hot runner temperature controllers to Husky, which in turn were “private-labeled”. The supplier relationship, which had lasted for more than 20 years and often included service as well as manufacturing, will cease, but Gammaflux says it is ready and willing to support the Husky/Gammaflux LEC and TTC temperature controllers still in the field. The company also said in a release that Husky users now can purchase directly from Gammaflux.

All-composite Humvee rolled out

Redesigning the vehicles to utilize composites in initial construction versus in-the-field retrofits with composite elements, TPI Composites Inc. (Warren, RI) and Armor Holdings Inc. (Jacksonville, FL) unveiled a new lightweight all-composite HMMWV (High Mobility Multipurpose Wheeled Vehicle, or Humvee). The culmination of an 18-month R&D program with the U.S. Army and AM General, the Humvee’s manufacturer, the result was a vehicle that is 900 lb lighter than its steel and aluminum counterpart, with those weight savings allowing the vehicles to haul additional armor or equipment.

In 2005, TPI created a composite replacement hood for the Humvee to help reduce overall weight. The vehicle has a payload capacity of around 2500 lb, much of which can be taken up by steel up-armor kits that weigh roughly 1200 to 1500 lb (see MPW’s May 2005 World Tour for initial report).

The companies also used the event to announce a long-term agreement where TPI’s process technology will be licensed to Armor Holdings. TPI, which has facilities in Springfield, OH; Juarez, Mexico; and Taicang, China, also produces composite structures for wind energy and transportation applications, in addition to military vehicles. Armor Holdings manufactures products for military, law-enforcement, and personnel safety markets.

Through its subsidiary, TPI Technology, TPI Composites owns the patented SCRIMP technology (Seemann Composites Resin Infusion Molding Process)—a vacuum-assisted resin transfer molding process that uses a vacuum to pull liquid resin into a dry lay-up. This reportedly results in lighter, stronger, and more reliable composite structures.

Reports break down machinery market

A trio of plastics machinery reports contrasts the North American and global plastics machinery markets, with injection molding machinery forecast to remain the largest segment in global sales, reaching $8.6 billion by 2009. In North America, however, extrusion led the way in Q1 2007 with 46% growth, as injection molding shipments actually dropped 21% compared to 2006. The three reports—Plastics Processing Machinery: A Global Strategic Business Report, by Global Industry Analysts Inc. (San Jose, CA); the First Quarter Society of the Plastics Industry (SPI; Washington, DC) Committee on Equipment Statistics report; and the Plastics and Rubber Machinery Assn. of the German Engineering Federation’s (VDMA) 2007 forecast—display the widening divergence between the global plastics machinery market and North America.

Global Industry Analysts forecast that the worldwide plastics machinery market will grow 3.8% annually on average and exceed $16.5 billion by 2009, led by Asia Pacific, which will ride 6% average demand growth rates to $5.9 billion by 2009. The report also pegs Russia, India, and Brazil as growth areas. Following injection molding, extrusion machinery is forecast to expand at a rate of 4.2% and top $3.4 billion by 2010.

SPI reported that U.S. manufacturers and importers of plastics machinery and equipment shipped $219 million worth of product in the first quarter, down 11% from the $245 million shipped in Q1 2006. As mentioned earlier, extrusion unit shipments were up 46% compared to a year ago, and 6% higher than Q4 2006.

In June, the 185-member Plastics and Rubber Machinery Assn. of the German Engineering Federation (VDMA) forecast that machinery output by the country’s plastic and rubber machinery manufacturers would be up 3-4% in 2007. VDMA reported that Germany accounted for 24.9% of the ?19.6 billion of machinery output in 2006, which was up from €18.6 billion in 2005. China (13.7%), Italy (12.4%), the U.S. (9.3%), and Japan (8.8%), rounded out the top five producers of plastics and rubber machinery in 2006.

Germany’s machinery output in 2006 was up 5.5% compared to 2005, reaching €4.9 billion. The VDMA said that the U.S. remains Germany’s most important export target, accounting for 12.2% of shipments, followed by China (8.9%), Russia (6.1%), France (4.8%), and Turkey (4.1%).

TRW adds Slovakian molding, loses bid for VDO

Automotive supplier TRW (Livonia, MI) will add a plant in Bytca, Slovakia to mold interior and cockpit components with staff forecast at 200 and operations slated to begin in 2008. TRW subsidiary TRW Automotive Slovakia s.r.o. will locate the 6000m² operation 20 km from Zilina. In addition to molding machines, painting and printing could be added at a later stage. In August of last year, TRW subsidiary Roadster Automotive BV acquired the Slovakian electric motor production business of Dana Corp., Dana Emerson Actuator Systems (DEAS), giving the company a presence in Slovakia. TRW, which had 2006 sales of $13.1 billion, has operations in 28 countries.

With backing from private equity owner Blackstone Group, TRW also lost a bidding war with Continental AG (Frankfurt, Germany) for German industrial conglomerate Siemens’ automotive parts business, VDO. Offers, which were expected to exceed $13.8 billion, were submitted July 20. The winning bid, from fellow German firm Continental, was $15.64 billion (?11.4 billion). According to a press release, the combination of Continental and VDO would create the fifth-largest auto part supplier in the world on the basis of sales.

Mondi acquires Unterland

Mondi Group’s packaging unit has acquired Austrian flexible packaging firm Unterland Flexible Packaging with regulatory approval expected before the end of the third quarter. Unterland extrudes polyethylene and polypropylene films near Kufstein, Austria from a single facility. Mondi’s existing flexible business is composed of release liners, extrusion coatings, film, and consumer bags.

[ On the record ]

“For us, REACh is an opportunity; since all producers and importers must register, there is no ‘free ride.’” Maurizio Butti, CEO of additives supplier Songwan Intl., on the REACh (Registration, Evaluation, Authorization and Restriction of Chemicals), who estimates his firm has spent about €6 million to register its products.

“We now actually welcome REACh, as we think it will level the playing field.” Anne Noonan, president of plastic additives at supplier Chemtura, on the same legislation.

“I don’t think much of biodegradability, but I’m very positive on (plastics based on) renewable materials.” Jos Goessens, president of DSM Engineered Plastics, on the future of bioplastics.

“Anyone who is competent in math has had to raise prices.” Ulrich Reifenhäuser, president of the extruder manufacturing firm of the same name, on raw materials’ cost and the effect on machine pricing.

“You need to be hungry for knowledge…and the people who aren’t are the people who won’t be at the K fair.” Roeland Polet, VP at thermoplastics supplier Ticona, on the relevance of next month’s K show.