Industry Watch 6539

Engel eyes Asian prize
ENGEL HAS OPENED A machine manufacturing plant in Pyungtaek, South Korea in the hopes of capitalizing on the burgeoning Asian molding market. The plant, Engel's first Asian production facility, will manufacture 100 Engel Victory tiebarless machines for the Far East market by March 2002. For the fiscal year 2002 to 2003, Engel hopes to double that figure. The facility will initially act only as an assembly plant, piecing together primary subassemblies shipped from Engel's Austrian fabrication facilities, but eventually the site will tackle the total manufacturing of machines. The facility is 50 miles south of Seoul and will serve as the sales and service center for all of Asia. Engel estimates that half of its machines will be sold in Korea, with the other half sold throughout the rest of the Far East. The plant is currently producing 450-, 740-, 1200-, and 1500-metric-ton presses from the company's Victory Series machine line. 

Sweet home, Alabama
HONDA MOTOR CO. became the latest car manufacturer to treat itself to some southern hospitality by opening a production plant in Alabama. Honda's newest plant, which began production on Nov. 14, joins fellow automotive manufacturers Mercedes-Benz, International Engine, and Toyota as car companies with production facilities in the southern state. Alabama is also the leading candidate for Hyundai's first U.S. plant. 

Steve Sewell, vp of marketing and business information for the Economic Development Partnership of Alabama, actively recruits investors to Alabama, and he says the influx of car producers has swelled the tide of suppliers and other incoming companies. 

"We're experiencing tre-mendous growth in the automotive industry," Sewell says. "Both from existing companies, and companies that are locating here to be close to automakers in this region." 

Arkay Plastics, Delphi Packard, Johnson Controls, Kumi, and Hunjan have all built Alabama facilities in recent years to serve the growing number of automotive OEMs. 

The $440 million Honda plant, 40 miles east of Birmingham in Lincoln, AL, will be dedicated to the production of Honda's Odyssey minivan. Honda's Ontario facility previously produced 180,000 Odysseys annually for the North American market, but that plant will now shift to SUV production. For the first year Honda's goal is to have the new Alabama plant produce 150,000 minivans. 

The region has emerged as a bastion of car manufacturing and has been dubbed the new automotive corridor. Where automotive OEMs go, molders will follow to take advantage of southern-style industry. 

"We feel like Alabama offers some considerable advantages to an automaker and to automotive suppliers because of our geographic location in that corridor," Sewell says, "and because of the availability of labor, and the cost of operating a business."

Husky responds to dismal machinery market with job cuts
THE INDUSTRY-WIDE slowdown, which has frozen capital spending and created abysmal machine sales figures, caught up to equipment manufacturer Husky Injection Molding Systems. The Canadian machine builder announced that it will cut 300 jobs after posting a $17.3 million loss for its fiscal third quarter. The loss equates to 15 cents per share and is nearly double the $9.6 million loss it posted for the same quarter in 2000. 

Husky had already cut 200 jobs in 2001 in a restructuring move, and including these latest reductions, Husky's workforce shrank from 3000 to 2500 in 2001. Initially the cuts will cost Husky a pretax special charge of $7.8 million, but for the fiscal year 2003 the company says the move will save it $12 million. 

Early numbers for the current quarter show incremental improvements in orders, but Husky warns the road to real and sustained recovery is still some distance off. 

"While these are all encouraging signs that optimism is returning," Husky said in a statement, "it is difficult to predict how quickly global markets will recover, and we expect that soft market conditions are likely to persist well into the calendar year 2002."

Infinite folds moldmaker Osley & Whitney
CALLING THE BUSINESS its "largest impediment to profitability," Infinite Group Inc. shuttered 51-year-old Massachusetts moldmaker Osley & Whitney. Infinite had spent months seeking potential investors, partnerships, or buyers for the struggling moldmaker, but after Osley & Whitney ran in the red for several consecutive quarters, Infinite says it had no choice but to shut down the plant, leaving its 40 employees jobless. Infinite will now focus on its photonics business and leave behind the foreign competition, struggling marketplace, and fleeing customers that it says inevitably doomed Osley & Whitney.

McKechnie changes name, ownership, philosophy
ONCE existing only as an offshoot of a massive British conglomerate, McKechnie Plastic Components can now grow as an independent business. In a deal finalized on Nov. 7, the McKechnie Group, a plastics and metal multinational based in England, sold the Minneapolis-based molder to Spell Capital Partners LLC, a private equity and buyout firm. Spell then changed the name of the molder to Midwest Plastic Components, but that isn't the biggest distinction to be made, according to Brian Evenson, president of the newly named entity. 

"The biggest difference is that now we really become a central, core business to grow," Evenson explains, "as opposed to a small division within a $1 billion U.K. business." 

This fundamental shift will eventually stimulate other changes within the company, according to Evenson, especially in terms of what business it seeks and its future growth.

Short Shots
Singulus Technologies AG (Frankfurt, Germany), a supplier of CDs and DVDs, has acquired Emould (Würsulen, Germany), a manufacturer of injection molding equipment for CD and DVD replication. 

K-Tron International Inc. (Pitman, NJ) has expanded its own material conveying system business with the acquisition of Pneumatic Conveying Systems Ltd. (Stockport, England). 

Bayer AG (U.S. headquarters Pittsburgh, PA) has announced it will separate its polymers business into an independent entity. The new polymer company will be one of the world's largest with sales in excess of 11 billion euros. 

Eastman Chemical Co. (Kingsport, TN) says the economy has forced it to retain its PET business instead of spinning it off into a publicly held company. 

Dura Automotive Systems (Rochester Hills, MI) announced it will divest its plastics business for $41 million. The unit employs 750 among three plants.