First Look: Industry News & Analysis 2995

Sold: New owner takes over for major extruder brands

Some of the biggest names in profile and pipe extrusion—Battenfeld, American Maplan and Cincinnati Extrusion—were sold by parent SMS GmbH (Düsseldorf, Germany) to a European investment group, Triton, with headquarters in Stockholm. The price of the sale was not disclosed.

SMS wants to focus on its core business of metallurgical machinery. SMS last October sold its injection molding manufacturing business to Adcurum, a financial investor based in Munich. Still part of SMS is Battenfeld Gloucester (Gloucester, MA), a leading manufacturer of blown and cast film extrusion and converting equipment.

Triton acquired Battenfeld Extrusionstechnik GmbH and SMS Extrusion Kempen GmbH, both in Germany; American Maplan Corp. and Cincinnati Extrusion Inc. in the U.S.; Cincinnati Extrusion GmbH in Vienna, Austria; and Battenfeld Extrusion Systems Ltd. and Cincinnati Extrusion Ltd. in China. Together these employ about 1000 and achieve sales of some €200 million. Wolfgang Studener, president of Battenfeld Extrusiontechnik (Bad Oeynhausen, Germany), said first meetings with the new ownership portend a good opportunity for the extruder manufacturer’s future growth.

SMS spokesman Thomas Isajiw says Triton may continue to use the brand names associated with the machines. Pepyn Dinandt, who last October joined SMS as a member of the SMS board, responsible for the firm’s plastics technology business, remains with SMS. SMS’s Isajiw would not comment on any plans for sale of the Battenfeld Gloucester business.

In Brief

Hilex to close CA plant

After absorbing fellow bagmaker Vanguard Plastics in 2005, creating the world’s largest bag company, and launching a new facility in Idaho, Hilex Poly Co. LLC (Hartsville, SC) announced it would close its Rancho Cucamonga, CA plant, affecting 120 employees. The Vanguard acquisition gave Hilex Poly a combined 12 manufacturing plants and in excess of $650 million in annual sales.

ExxonMobil invests

ExxonMobil Chemical (Houston) opened a new Polymers Automotive Applications Center in Kawasaki, Japan, to support marketing there of its plastics portfolio, including Santoprene specialty elastomers, polypropylene compounds, and other materials.

The supplier also plans a multimillion-dollar investment at its LaGrange, GA operation to increase production of specialty oriented polypropylene (OPP) films.

EU imposes duties

The European Union (EU) has imposed anti-dumping duties on PET (polyethylene terephthalate) imports from India, Indonesia, Malaysia, the Republic of Korea, Thailand, and Taiwan. The duties are applicable for five years.

Cereplast’s big plans

Biobased plastics supplier Cereplast Inc. (Hawthorne, CA) is in the middle of an expansion, growing from the 8000 ft2 it occupied at its start to more than 50,000 ft² today. Total plant capacity is 55 million lb/yr, but Frederic Scheer, CEO of Cereplast, says within five years, his goal is to have company-wide capacity at 1 billion lb, through JVs and acquisitions. Key to expansion is diversification in feedstocks, drawing from four starch sources, instead of corn alone.

In play: Husky considering offers…

Bolton, Ontario-based Husky Injection Molding Systems, the publicly traded manufacturer of hot runners, injection molding machinery, and PET preform molds, saw its share price jump more than 20% in early March to a 52-week high after the firm announced it had hired Citigroup Global Markets as a financial adviser to entertain bids for a partial or full sale of the firm. This follows a decision by founder, chairman and major (44% stake) shareholder Robert Schad, 77, to consider selling his holding. AIM Funds Management, the second-largest shareholder, owns less than 15%.

Husky in early March reported that for the first six months of FY07, sales increased 11% to $451.5 million from $407.5 million in the prior year. Husky also announced 85 jobs would be cut at its Bolton headquarters.

…as Bayer offers Hennecke

Plastics and chemicals supplier Bayer (Leverkusen, Germany) seeks a strategic partner for its Hennecke subsidiary, one of the global leaders in polyurethane machinery and processing equipment.

Bayer acquired Hennecke (Sankt Augustine, Germany) in 1975. Hennecke GmbH employs about 400 in Germany, with another 150 employees at Hennecke subsidiaries in Asia (Japan and China) and in Pittsburgh, PA. Bayer press spokesman Frank Rothbarth says Hennecke’s sales and profits “grew noticeably” from 2005 to 2006.

Upon request Bayer provided a statement, dated January 30, 2007, offering background on the planned divestment. In the statement, Bayer states it seeks an owner for Hennecke that can offer it growth opportunities. The new owner is expected to continue Bayer’s close relationship with Hennecke.

The news of Hennecke’s impending sale comes after an 18-month period in which one of its leading competitors, Krauss-Maffei Plastics Machinery (Munich, Germany), has invested heavily in its PUR processing machinery business, acquiring toolmakers and opening a new sales, service, and testing facility in the U.S.

In related news, Bayer combined its global polyurethane (PUR) systems business under the umbrella brand of BaySystems in a move that affects both existing product brands and its network of PUR systems houses. “By separating our PUR activities into a raw materials and a systems business, we can provide customers with more individual attention and deliver the levels of service they want,” says Peter Vanacker, head of the PUR business unit at the company.

Alpha buys Quality, and other M&A action

Alpha Packaging expanded its reach into the market for blowmolded personal care, pharmaceutical, and nutritional supplement containers with the acquisition of Quality Container (Ypsilanti, MI). Quality Container operates a 100,000-ft² manufacturing facility where it makes about 250 styles of bottles; the firm reported sales of $18 million in 2006.

Alpha, which blowmolds high-density polyethylene and polyethylene terephthalate, has annual sales of $65 million and employs 250 among four U.S. sites. Alpha in 2006 tripled the size of its Pennsylvania plant while opening a new 120,000-ft² manufacturing and stocking facility in Florida in January of this year. Key management, including Alpha COO Dan Creston, will reportedly stay on to oversee the Alpha facility, which employs 144.

In other processor M&A news:

• Consolidated Container Co. (CCC; Atlanta) acquired blowmolding firm Whitmire Container, including its manufacturing facilities in Sherman, TX and Blue Mountain, MS.

• Sartorius purchased Toha Plast (both Göttingen, Germany). Toha Plast develops and processes plastics components for the medical and biotechnology markets.

• Klöckner-Pentaplast (Montabaur, Germany) sold its flexible film division, which includes plants in Germany and Finland, to processor Wipak for an undisclosed sum.

• Tinicum Capital Partners II LP acquired a majority share of Plano Molding Co. (Plano, IL) from chairman and CEO Peter Henning, who will retain some ownership and his leadership position. Plano supplies proprietary storage products, including the Plano brand tackle box.

Perlos exits processing in Finland

Bitterly stung by low-cost competition, Finnish cellular phone parts molder Perlos announced last week it would stop plastics processing in Finland, resulting in the loss of some 1132 jobs and the closing of its two facilities in North Karelia by this autumn. About 200 head office staff will stay employed in Finland. Perlos in January announced the start of a restructuring program that it said could cost about 4000 employees their jobs.

Perlos indicated that it is negotiating with several parties about the sale of certain operations including the manufacture of injection molds and assembly lines (Perlos builds its own assembly equipment). A maximum of about 130 people work in these operations. Perlos is also attempting to attract other firms to its production operations in Finland.

Perlos last year shuttered a large facility near Fort Worth, TX, shifting work done there to a facility in Mexico.

Incoe adds Chinese manufacturing base

Hot runner manufacturer Incoe Corp. (Troy, MI) says its newest manufacturing facility, Incoe Hot Runners (Shanghai) Co. Ltd., which opened in December 2006, is now fully equipped to support the demand for the China market. The Shanghai manufacturing facility is an addition to existing offices in Shanghai, Hong Kong, and Dongguan.

“Incoe’s newest facility will improve time to market for our products in the region and follows Incoe’s philosophy of meeting customer needs by manufacturing our systems within a major market segment,” says John Blundy, VP Business Development.

The facility will primarily serve the China market but will be able to assist the firm’s Singapore manufacturing capacity, which serves ASEAN region customers as well as those in Japan, Taiwan, Australia, India, and Korea.

Heitec in hot pursuit of Asian hot runner market

Hot runner manufacturer Heitec (Burgwald, Germany) opened a subsidiary in Hong Kong, Heitec A/P Ltd., in a move by the firm to better service customers throughout Asia, and in light of the expected continued growth of the moldmaking sector there. Agents helping sell Heitec’s hot runners in Asia include Everfinest Engineering Co. Ltd. in China; Brains Corp. in Japan; and Morgan Working House in Taiwan.

Spare parts will be kept in the region, and starting this month one of the firm’s German application engineers will live and work in Hong Kong.

Toyota plans plastics processing, auto assembly in Mississippi

On the strength of record sales, Toyota continues to invest in automotive manufacturing and assembly in the American South, announcing plans for a $1.3 billion plant on a 1700-acre site in Blue Springs, MS that will begin production in 2010, building 150,000 vehicles annually and employing 2000 directly. As opposed to some OEM competitors, Toyota is still vertically integrated, going as far as creating and processing its own resins, including a proprietary thermoplastic polyolefin (TPO), and including injection molders and other processors in an onsite manufacturing campus.

Auxiliaries form alliance

Plastics auxiliary equipment manufacturers Novatec Inc. (Baltimore, MD) and Advantage Engineering Inc. (Greenwood, IN) agreed to form the Auxiliary Systems Group (ASG) for the engineering and development of complete integrated plastics auxiliary equipment systems. The headquarters for the alliance is in Baltimore.

The alliance will compete with large single-source auxiliary machinery manufacturers such as AEC and Conair.

Advantage and Novatec continue to operate independently. Novatec manufactures resin drying, blending, and pneumatic conveying systems and also distributes blenders made by Maguire (Aston, PA). Advantage manufactures heat transfer and temperature control components and systems.

The alliance may also eventually include manufacturers of other types of auxiliary equipment such as granulators and robots/automation.

EDI acquires Liberty

Extrusion Dies Industries LLC (EDI; Chippewa Falls, WI), a leading manufacturer of flat dies for sheet, film, extrusion coating, slot die coating, and palletizing, has acquired Liberty Coating Equipment, a manufacturer of slot die coating systems. “The acquisition of Liberty Coating Equipment enables EDI to expand its reach in a number of slot die markets, particularly those requiring very thin or optically clear coatings,” said Christopher Curtin, EDI’s executive vice president of sales and marketing. EDI will market Liberty’s dies globally.

EDI will move all manufacturing from Liberty’s plant in Sussex, WI to EDI headquarters in Chippewa Falls.

Delphi out with interiors

Following the lead of fellow Tier One Lear (Southfield, MI), which agreed to be purchased by Carl Icahn’s American Real Estate Partners LP for approximately $5.3 billion, Delphi (Troy, MI) is closer to jettisoning its interiors business, signing a nonbinding term sheet with The Renco Group Inc. Also included in the deal is Delphi’s closure business, which features door modules and latch systems. Delphi reports that the unit has manufacturing in the U.S., Mexico, Austria, Germany, China, and Korea, from which it generates annual revenue of $1.3 billion.

Renco is a privately held diversified investment holdings company.

New name, facility for UPG

Contract manufacturer United Plastics Group Inc. (Oak Brook, IL) has launched a new name—UPG—and a new plant in Tijuana, Mexico. UPG Tijuana is the company’s third Mexican facility, and it covers 62,000 ft2, including a Class 100,000 cleanroom, with 32 injection molding machines ranging in tonnage from 35 to 720. Six of the presses operate in a cleanroom portion of the plant.

Chuck Hoar, UPG VP, said the company had considered Tecate, but settled on Tijuana due to access to major highways and nearby skilled labor, via San Diego. “A lot of OEMs are reexamining that region as a prime place to do outsource manufacturing,” Hoar answered via e-mail to submitted questions.

UPG opened a second facility in Monterrey, Mexico last year with 27 molding machines ranging from 28 to 500 tons. Hoar said the machines for the new Tijuana plant were sourced from within UPG.

Through acquisitions, UPG has been in Mexico for more than 20 years, and Hoar said it expects the double-digit growth it has experienced to continue. “Another reason for the growth in this region is that Asian production can be difficult logistically,” Hoar said, “and the cost of shipping and customs, coupled with demand and increasing lead times in Asia, makes Mexico an attractive location. OEMs are looking at ‘total landed cost’ versus part price.”

UPG has 11 facilities in four countries, including the U.S., China, and England, in addition to Mexico. According to Hoovers.com, the privately held UPG has annual sales of $128 million and 1700 employees.

GE suspends PC JV in China

GE Plastics and PetroChina Co. Ltd. jointly decided to walk away from a polycarbonate (PC) production project in China. The deal, which was announced in June 2006, would have added China to PC-producing locales for GE in the U.S., Europe, and Japan. The dissolution of the deal was initially reported by Chemweek Business Daily.

The joint decision was made “due to significant changes in the economics of the PC markets, which make it difficult for the project make an acceptable economic return,” responded GE’s Brian Gladden, VP and GM of Lexan resin and global product companies, to e-mailed questions. “Returns in the polycarbonate market have significantly contracted due to high raw-material prices and excess capacity.”

Gladden said that GE is continuing with previously announced PC compounding expansions in China. He said there is no tentative plan for when the project might be restarted, adding that China’s PC capacity should double over the next two years. Bayer MaterialScience (Leverkusen, Germany) plans to start a Makrolon-brand PC plant in Caojing, Shanghai, with an anticipated capacity of 200,000 tonnes/yr.

Arburg augments North American support

With a new technical center set to open in Irvine, CA this August and another ready to begin operations in Chicago this spring, injection molding machine manufacturer Arburg (Lossburg, Germany) had its commitment to the North American market, as well as an all-electric Allrounder 420A 1000-400, on display at the recent Plastec West exhibition (Feb. 13-15; Anaheim Convention Center; see November 2006 First Look for initial report on the Arburg tech centers).

“We see a real good future in North America for our product portfolio and our structure,” Arburg Inc. (Newington, CT) President Friedrich Kanz said at his firm’s Plastec booth. “North America is a very competitive market, but we’re confident.”

Kanz said that although the North American market for injection molding machines has shrunk significantly since 2000, Arburg’s share of the market has grown. The company expected about 200 North American processors at its annual Technology Days event in late March, up from around 150 last year, according to Kanz.

Six Sigma training via the Internet

One of the original developers of Six Sigma process excellence methodology at Motorola, Mikel Harry, is now offering Internet-based Six Sigma training priced to appeal to small-to-medium sized enterprises, such as most plastics processors, who have been unable to afford the costly training.

Licensed MindPro reseller Hermann Plank is a name well known in plastics processing circles; he has worked with injection molding machinery manufacturer Milacron, at processor The Tech Group, and at moldmaker Gram Technology. For more information or for an online demonstration, see the website http://www.tecnokal.com/MindPro/