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Notables: 10 Waves of the future

It''s a risky business tracking trends: Where one man sees an emerging opportunity, another sees a fad. Only time tells who''s right and who''s wrong. MPW''s editors stick their necks out with a look at the mega-trends shaping the plastics industry today.

Nanocomposites are the next Big Thing

According to a 2004 report from Business Communications Company (Norwalk, CT), the total worldwide market for polymer nanocomposites reached 11,100 tonnes, valued at $90.8 million in 2003, while growth of 18.4% per annum forecast through to 2008 would more than double the size of the market in five years.

Confronted with issues such as high cost, longer product development cycles, and potential safety issues, it''s still uncertain as to how fast the nanocomposites market will actually expand. But judging from the amount of work going on globally at numerous firms, the materials look set to play a key role in the future of plastics processing.

Carl Hagstrom, COO of Hybrid Plastics in Hattiesburg, MS, says forecasts tend to be too optimistic in the short term, but underestimate long-term prospects. He notes that a lot of work is going on behind the scenes. "Companies don''t want to advertise the fact [that they''re working with nanocomposites] as they want to gain a competitive advantage."

A lot of Hybrid Plastics'' customers apparently fall into that category. The firm was spun off from the Air Force Research Laboratory to commercialize polyhedral oligomeric silsesquioxane (POSS), a molecule possessing an inorganic silicon and oxygen cage structure with an organic carbon group on each corner. Addition of these "nanostructured chemicals" imparts performance improvements such as flame retardance, barrier properties, impact strength, and toughness, among others. "Nanoadditives are not a drop-in replacement," cautions Hagstrom. "A lot of technical support is required to make sure things work right." In October 2004, Hybrid Plastics started supplying POSS masterbatches. Sales doubled in that year; in 2006, the firm plans to double capacity.

Firms are working to apply nanocomposites to auto applications where they would enable all-important weight saving. GE Advanced Materials (Pittsfield, MA) is in the process of commercializing stiff, but ductile, and paintable nanocomposites for body exterior components, while Dow Chemical, based in Midland, MI, has developed a reactive extrusion process to produce nanocomposites based on organoclays and cyclic butylene terephthalate (CBT) supplied by Cyclics.

In already commercial applications, GM employs polypropylene-based nanocomposites developed by Basell USA (Elkton, MD) and Southern Clay Products (Princeton, NJ) in the open cargo bed of the 2005 Hummer H2 SUT to save weight and ensure dimensional stability under harsh conditions. In all, GM uses about 300 tonnes of nanocomposites annually, spread over several vehicle models.

Further, Süd-Chemie AG (Moosburg, Germany) and Putsch Kunststoffe GmbH (Nuremberg, German), have developed ELAN XP nanocomposite grades based on PP/PS blends for automotive interiors. PP and PS are not normally compatible but Süd-Chemie''s Nanofil mineral filler produces compounds with high scratch resistance, a uniformly matte surface, and pleasant tactile properties.

"ELAN XP behaves basically like PP with the shrinkage of ABS or mineral-filled PP," says CEO Peter Putsch. Compounds are supplied precolored, whereas ABS needs to be painted because it''s glossy. Among the first parts to be mass-produced in Elan XP is a footwell heater vent for various Volkswagen and Audi models. "We are in the final color-matching state of the trim of the Audi A4 Cabrio seat and the A6 Limousine," says Putsch.

In a paper due to be presented at the Nanocomposites 2005 conference in San Francisco in late August, Dr. Suresh Shah, senior technical fellow, Delphi Corp. (Troy, MI), noted that while nanocomposites are indeed promising, and although their cost has fallen, they are still costly. "The automotive industry is under significant cost pressure and the industry has to work with partners to reduce overall system costs," he noted.

Applications are also emerging in the electronics sector. Japanese firms Mitsui Chemicals (Tokyo) and Takiron (Osaka) have both introduced conductive sheet products incorporating carbon nanotubes (CNTs). Takiron''s, debuted in May, is a transparent formable sheet product available in a variety of resin types; target applications includw cleanroom partition and semiconductor production equipment. Mitsui''s is based on MCI thermoplastic polyimide and target applications are automotive parts, aviation engine parts, and the processing jigs for semiconductor manufacturing. SM

Shareholder value is overtaking innovation

Plastics consultant Patrick Ellis (Mercurey, France) calls it "the most important issue facing [processors] at present." As profitability in the polymer-making sector suffers, owners have sought cost savings by firing technical and sales staff as well as cutting back on the number of resin grades they produce.

Robert Dunne, VP sales at rotomolder Meese Orbitron Dunne (MOD; Saddle Brook, NJ), points to the elimination of all rotational molding grades produced by Mobil when the company merged with Exxon to produce ExxonMobil (Houston, TX). The new company only provided its Exxon grades for these applications, which it felt were comparable. Not so, says Dunne who says his company experienced differences in stiffness, melt flow, and other physical properties, that caused processing problems.

When Jeffrey M. Lipton, CEO of Nova Chemical (Calgary, AB), announced a new polystyrene venture between BP and Nova, called Nova Innovene, late last year. The plan announced then was to limit the number of PS grades available to processors. The venture starts operations in this month.

Analyst Ellis says this consolidation is expected to continue as petrochemical giants exit the plastics field for more lucrative sectors. New owners are often financial institutions, which have the cash to buy but are interested in a short-term investment. Basell (Hoofddorp, Netherlands) has gone to a financial consortium and both Innovene (ex-BP, London) and Total (ex-Atofina, Paris) are on the block with expected buyers from the investment market.

"Frequently, financial institutions know nothing about the culture of the industry into which they buy. What counts is the bottom line. How to increase this? First, reduce grade offerings, particularly specialties which are paradoxically more expensive to make and market, and are not always profitable," says Ellis. "The notion of a universal grade [to cover those materials no longer offered] is nonsense, but if the `owner'' of the company says so, grades are chopped."

Grade changes cost a lot of money and often a polymer maker will create up to 100 tonnes of transition material that can only be sold at knock-down prices. Therefore, resin companies are becoming more interested in dedicated lines to produce as few grades as possible. This leaves room for masterbatchers such as Polytechs (Cany Barville, France) and Polyplast Müller (Straelen, Germany), which Ellis says go a long way to help processors achieve their targets. MOD''s Dunne points to an Ohio compounder, McCann Plastics (North Canton), which aided MOD in finding alternatives when it was left without Mobil grades.

Another question processors face is this: Where will new polymers and grades come from in the future? Walter Robb, retired senior VP of GE Plastics, says, "In the future we won''t see new polymers developed. Management of companies has lost patience. New polymers can take up to a 10-year cycle to develop. Companies are not as willing to take the risk today."

Previously, new polymer developments were often a matter of chance, such as the discovery of the polyolefin isotactic polybutene-1 (PB-1) by a then 23-year-old researcher, Giorgio Mazzanti. But those times appear to be gone. "The glory days of polyolefins are over. Quantum leaps in technology today are unlikely," says Hans-Robert Schmidt, senior VP at Basell Deutschland (Wesseling, Germany).

The situation could provide a boon to firms like polyMaterials AG (Kaufbeuren, Germany), an independent research company that works on consignment for polymer producers in Europe and the U.S., says Jürgen Stebani, a managing director.

"Polymer makers are cutting R&D budgets [to improve] profitability and they are unwilling to finance research of technical grades since they don''t see short-term paybacks," Stebani says. "If this trend continues-and I believe it will-processors could be faced with fewer options and grades in the future." RC

International growth need not create internal strife

In his current role as president of Bianor, with design operations in the Netherlands and injection molding facilities in Poland and Germany, Martin Woggon says one rule he learned early in his career still holds true: "More big projects fail due to lack of communication than to lack of money."

A clear trend: The world is getting much smaller each day. Not physically, of course, but in the sense that a processor may be on the phone this morning with colleagues in Japan, trade e-mails later with a potential partner in South Africa, and then fly out in the evening to his firm''s new site near Krakow. Being sensitive to how one handles communications between people of different cultures and backgrounds is critical to business success.

Saly Camacho, an executive coach and one of the founders of SalyWan & Assoc. (Barcelona, Spain), calls it "transculturality"-the ability to manage different cultures within a single organization. "We live online anymore, with everything happening everywhere simultaneously. Networking [with colleagues, or potential ones, around the world] is getting even more important," she says.

Differences emerge even within a country; Camacho notes that in Seville, Spain, most deals are based on, "Do I like you or not?", with decisions often reached and deals sealed at cafes or bars. The same cannot be said of Barcelona, Camacho notes.

Woggon recalls a project in which his firm was asked to help "a large Dutch OEM" shift its white goods manufacturing from Portugal to Poland; his firm molded parts for the OEM. The project involved Bianor buying 27 injection molds from moldmakers in China, Portugal, Germany, and elsewhere. "Our Polish engineers thought they would have the lead in this project, but I gave it to our Dutch engineers because they knew the OEM better, knew the language [of the OEM], and so forth." His Polish staff felt slighted, and their resentment showed in the way they worked with their Dutch colleagues, making a difficult project even more so.

Woggon shares lessons he learned from the project. "Don''t underestimate people''s resistance to change, and the distrust of people not involved in the project." He realizes now he should have taken more time to explain his decision to the Polish employees. He adds, "Mix nationalities in a project only if the firm already has a multinational structure. A big project is not the time to learn about multinational relationships." Now, he says, he always defines a project''s leader up front, and makes certain that all members of his team know that project management trumps a company''s hierarchy. And, he says, he instructs each project leader to keep his messages succinct. "We don''t need Shakespeare in project management, we need newspaper reporters," able to clearly make a point, often in English, which may be a second language for both parties.

Woggon also strives to mix not only nationalities, but also employees of different ages so as to couple the enthusiasm of youth with older employees'' experience. "In projects, coordinate the dynamic drive of youth with the experience of more senior employees," he says. Camacho adds that managers should bring together detail people with global thinkers, while mixing and matching between cultures.

Business is built on relationships, and relationships are built on trust. A plastics processor whose horizon extends beyond the county line needs to be able to move in different cultures comfortably and, even more important, make persons from those other cultures be comfortable in his presence. Advice from Camacho for managers is "leave their comfort zone" when integrating a new acquisition or partner into a firm''s culture. "The challenge is to find and maintain the balance between centralization and decentralization." Leaders, she says, should know and respect other cultures, but should avoid trying to mimic them to appease new employees "who will see through this immediately."

Camacho adds that managers handling different cultures must deal ethically with one and all. "A win-win negotiation style works best, everywhere," she says. "And if you want to make changes at a new acquisition, then you need to lead the change. Don''t make punctuality a topic unless you are always punctual." MD

Semiconductor packaging for thermoplastics?

Materials suppliers and molders may be on the verge of opening access to a trillion-plus-dollar per annum market now dominated by thermoset epoxy.

The market is semiconductor packaging-also known as encapsulation-and it could become a huge market for injection molders. Encapsulation protects semiconductors and serves as the bridge between electrical devices and a product''s printed circuit board (PCB). The semiconductor industry is worth more than a trillion U.S. dollars per year (not a misprint), according to Ken Gilleo, principal at consultancy EF-Trends (Warwick, RI) and a former senior scientist at thermoset epoxy supplier Cookson Semiconductors. Every semiconductor needs protection in the form of encapsulation-the chips are embedded in the encapsulating material-and Gilleo says the time is ripe for thermoplastics to supplant epoxy for encapsulation.

No one contacted for this article is ready to sound thermoset epoxy''s death knell in this application yet; in fact, none know of any current commercial applications using thermoplastics in this application. Epoxies offer a few major advantages. Because of their low viscosity at relatively low temperatures, the electronics to be embedded are not damaged during transfer molding with epoxies, to date the typical process used for encapsulating semiconductors.

Epoxy simply flows over the microchips, embedding them. In contrast, standard or even high-performance thermoplastic engineering plastics are too viscous even at moderate temperatures. The mechanical stress created as these viscous materials are forced under pressure over electronic features might damage them. And maybe most important, encapsulation with epoxies is a proven and entrenched technology for this huge industry; changing that will require some convincing evidence of economic benefit.

However, the thermoplastic molding industry is much larger than the epoxy processing one-Gilleo estimates it''s 30 times as large in the U.S. alone-and while epoxy processors able to encapsulate microchips to form a small group, there are thousands of injection molders around the world able to process high-end materials for complex parts.

In addition, epoxy''s disadvantages are serious, and are even turning into legal issues. At GE Advanced Materials (Bergen op Zoom, Netherlands), Otto de Bont, product market leader of the supplier''s LNP compounding subsidiary, says GEAM and LNP are working to develop injection molded PCBs, microchips, and encapsulation. The epoxies now used often require halogenated or brominated flame retardants, materials that are being regulated out of practically every market, he notes. To Gilleo, this issue is also one of the driving factors behind thermoplastics'' opportunity. Epoxies also offer less gas and moisture resistance than many thermoplastics.

Experts at plastics supplier BASF (Ludwigshafen, Germany) are betting that their newly developed high-flow grades Ultradur High Speed polybutylene terephthalate (PBT) and Ultramid high-flow polyamide (PA) could get the supplier into this market. "The advantage would be that one processing step could be saved since encapsulation and housing (for instance, a laptop''s outer housing) were then made of the same material," says BASF.

Sample molding in progress

Molder Matrix Inc. (East Providence, RI) is one of the leaders in developmental work of microchip encapsulation; the firm has worked closely with Gilleo. Dennis Jones, engineering manager at Matrix, says to date his firm has worked primarily with liquid crystal polymers (LCPs) for this application, because some grades are able to withstand soldering temperatures greater than 300ºC and also offer better moisture barrier properties than epoxies.

At Matrix, research involves insert molding of ball grid arrays into LCP moldings. These tiny balls of copper, or other conductive metals, could serve as the connection between chip and motherboard; the balls would be soldered to the motherboard. Jones says initial samples have passed some gross leak testing (for hermetic seals) and now samples are being shipped for fine testing. He says several large OEMs have reviewed Matrix''s concept for chip encapsulation and have expressed interest; some have even considered developing a custom designed concept.

One of the major advantages of the concept is the assembly could be electronically tested as packaged before singulating, Jones explains; some lead frame designs require separation of metal leads to break continuity before electrical testing. Matrix completed a single-cavity development tool this spring and has an agreement with Speedline Technologies (Franklin, MA) to test parts as Matrix manufactures enough samples. Much of the work on chip encapsulation with thermoplastics is ongoing at injection molders in New England, including at Matrix competitor Quantum Leap Packaging (Wilmington, MA), which says it can mold hermetic plastic packages of LCP that meet performance requirements for packaging semiconductors.

At engineering thermoplastics supplier Ticona, a company spokesman, after conferring with product managers, says the firm has conducted tests with its Vectra LCP for chip encapsulation. "We''ve worked on it, and it works (for this application,)" says Henning Kuell. Though no commercial projects are running, he says the supplier is in pilot projects with a few molders and OEMs. Compounder RTP Co. (Winona, MN) already offers eight encapsulation compound grades that it says are suitable for packaging resistors, integrated circuits, capacitors, and fiberoptic connectors. These compounds can be laser marked with characters, numerals, or other graphics.

Chip encapsulation a notable trend? Perhaps not yet-but maybe it''s something even better for entrepreneurial processors: a trend to be. MD

Come for material-usage reduction, stay for a more competitive process

Prolonged high resin prices have forced processors to look at gas- and water-assist technologies as a means to hollow out part sections, reducing the amount of material used.

Business is booming for technology supplier Bauer Plastics Technology Group (Clinton Township, MI), according to Paul Dier, sales and technical specialist, but clients who are initially sold on using less material end up buying in wholeheartedly for ancillary benefits.

"Currently, we''re probably doing about 30% to 40% more business than we had previously," Dier says. "It''s unbelievable the amount of interest that has been transpiring because of the cost of resin and global competition." Dier says much of that rise can be attributed to the technology''s ability to create a more efficient process by reducing cycle times on average from 10% to 15%, and often halving the size of the machine needed to mold a part. All of this is in addition to reducing resin usage by anywhere from 10% to as much as 40%, which Bauer accomplished in an automotive roof rack.

Bauer offers customers several gas-assist technologies. In external gas molding, gas is injected from the core side, forcing a part against the cavity to improve surface finish. Alternatively, gas can be introduced via a pin to specific areas so that it replaces resin, hollowing out thicker sections, improving surface finish, and creating a part that is often stronger and lighter. Bauer is currently making a push into water-assist technologies-where water is used to force out resin and cool parts from the inside out-as well as gas-assist for extrusion applications.

A good deal of the increased North American business is coming from the automotive sector (the technology is applied in components like the aforementioned roof rack, as well as seating, bumper reinforcements, fascia, and even connectors), where the mechanical properties of the glass-filled nylons used are required, but the added weight isn''t. North American OEMs may be late to the party, according to Dier, who says two of Bauer''s biggest customers are shops that supply Japanese OEMs.

"Automotive is now starting to knock on our doors," Dier says. "Domestic manufacturers have been much more reluctant than the foreign automakers, but I think that mindset has changed now because of the pressure being put on them, especially by the Japanese."

In other markets, like electronics, gas-assist allows molders to get into larger parts, like big-screen television frames, without large presses. Given the surface area, Dier says many frames would require an injection molding machine as large as 3000 to 4000 tons, but he''s seen customers make them on 1500-ton machines, creating parts with no warpage.

Conceptualizing the benefits can be difficult, so Bauer works with a third party to provide customers with a gas-assist Moldflow simulation, opening designer''s eyes to the technology''s benefits. "Designers tend to have to rethink things," Dier says. "They can''t grasp the fact that lower pressures, reducing the amount of gates, and these kinds of things can be done. They really have to put on a new thinking cap, and once they do, it''s like a domino effect. They start rethinking a lot of the other projects they''ve been working on." TD

Global supply chain management

Management of the supply chain is critical to efficiencies and profitability for everyone involved in the manufacturing process, but the globalization of the factory floor is making managing the supply chain challenging. Obviously, the optimum strategy is having suppliers as close to the OEM as possible.

Having the OEM''s product manufactured within the end-use or consumer market is also ideal. Long-distance supply chain management is what makes manufacturing in places like China or Southeast Asia tricky. It''s a long pipeline.

Steve DeHoff, a consultant at Stress Engineering Services LLC (Mason, OH), notes that the inventory pipeline can make or break a company''s bottom line. Some of the problems that exist in long inventory pipelines include delayed shipping, long shipping times, and money tied up in inventory. OEMs are then forced to rent airplanes for $250,000 to $500,000 per trip to fly product to market two to three times per month because the inventory pipeline is too long and the supplier can''t keep it filled. "Who''s adding this cost into the decision to outsource to China?" DeHoff asks.

Even after putting a plant in China, companies can''t scale up fast enough-the critical path is real estate. "We throw away 30% of what''s made on the products keeping the inventory pipeline filled," says DeHoff. "Companies'' cash flow is tied up buying the pipeline."

A study commissioned by the National Institute of Standards and Technology (NIST) and conducted by RTI Intl. (Research Triangle Park, NC), shows that inadequacies in managing inventory, scheduling, and accounting information cost the automotive and electronics industries a combined total of almost $9 billion annually. Almost all of these costs could be eliminated with optimally integrated systems for exchanging information throughout supply chains, the study concluded.

Kevin O''Marah, VP research for AMR Research (Boston, MA), says that "the efficiency of the supply chain remains limited by this oversight [management of consumer demand], as current metrics of supply chain performance indicate."

Some of those metrics include:

  • Median time-to-market for a new product in consumer packaged goods: 27.5 months

  • Median days of supply on hand for a semiconductor: 190 days

  • Median error rate for industrial electronic equipment suppliers: 26%

    A report from Deloitte Consulting, "Growing the Global Corporation," released in June, notes that "despite enormous investments over the last decade," a majority of the U.S. manufacturers the consulting firm studied continue to struggle to build an optimal global network. "Less than 5% of companies say they have a strong advantage in their overall supply chain cost structure, and less than 2% of companies have undertaken significant initiatives to optimize their supply chain network."

    Yet, says the report, being able to optimize the supply chain network can pay big dividends. "As we have found," the report concludes, "the few companies that are able to leverage their global investment-in networks, sourcing, manufacturing, R&D, distribution, marketing, sales, and service operations, as well as the flows of goods, services, and finances that link them-are able to sustain profit levels far ahead of their competitors with higher growth and returns on asset and invested capital."

    A report released in May 2005, "The Agile Supply Chain: Three High-Value Process Transformation Projects That Can Deliver Significant Business Benefits," from Manufacturing Insights, a research consultancy headquartered in Framingham, MA, notes that it is imperative for managers to implement supply chain process capability that is both agile and efficient.

    "Today''s more optimistic markets and business conditions add complexity and challenge the supply chain to support new global markets, increased customer initiatives, more frequent new product initiatives, and topline revenue growth, while sustaining efficiency gains."

    Three high-value, horizontal transformation projects are identified for integrating the needs for more efficiency, flexibility, and responsiveness in overall supply network process capabilities:

  • Network-wide collaboration and analytics: Evaluate the alignment of all global supply processes to actual demand, whenever possible (e.g. shift focus to a left-to-right, pull-oriented supply chain driven by actual customer demand).

  • Align and balance supply with demand: Place high emphasis on incorporating demand, supply, logistics, and product design network partners in all aspects of network collaboration and joint performance management.

  • Sense and respond: Invest in the ability to more quickly sense unexpected events with the ability to globally adapt and respond to them.

    "In many manufacturing industry settings, the supply chain has become more extended and globally dispersed," says Bob Ferrari, program director, supply chain strategies, Manufacturing Insights. "This extension of the supply chain network, either as a response to reducing overall costs as a means for supporting broader markets or services, adds new dimensions of control, uncertainty and potential complexity. The combined need for implementing both an agile and an efficient supply chain process capability is no longer an option. It is the competitive imperative." CG

    Outsourcing trends: More or less?

    Depending on which study you read, companies are outsourcing more or they are outsourcing less. One thing becomes clear, however, when reading all these studies: Outsourcing isn''t all that it''s cracked up to be.

    Many companies are doing what Lance Travis, VP research for AMR Research Inc., calls "fragmented outsourcing," in which companies will choose which functions they want to outsource-either onshore or offshore, depending upon which jobs require closer oversight.

    "Instead of handing the keys to an entire operation over to somebody, [companies] will cherry-pick specific business tasks or specific functions and outsource those," comments Travis. "As a result, they''ll have partnerships with multiple service providers."

    Another report, however, shows that many of the world''s largest organizations that were quick to participate in information technology and business process outsourcing are bringing operations back in-house and exploring alternatives. Deloitte Consulting''s recent study, "Calling For a Change in the Outsourcing Market," shows that 70% of participants have had significant negative experiences with outsourcing.

    "Ironically, dissatisfaction in areas that traditional outsourcing was expected to improve, such as costs and complexity, was found to be the primary reason behind participants'' negative responses," notes the report.

    One in four participants in the Deloitte Consulting study, "have brought functions back in-house after realizing that they could be addressed more successfully and/or at a lower cost internally, while 44% did not see cost savings materializing as a result of outsourcing."

    The Deloitte study noted there are fundamental differences between product outsourcing and the outsourcing of service functions, such as design.

    Ken Landis, a senior strategy principal at Deloitte, notes that "outsourcing vendors and companies may have conflicting objectives, putting at risk clients'' desire for innovation, cost savings, and quality. Moreover, the structural advantages envisioned do not always translate into cheaper, better, or faster services.

    "As a result," Landis concludes, "larger companies are scrutinizing new outsourcing deals more closely, renegotiating existing agreements, and bringing functions back in-house with increasing frequency."

    AMR''s Travis notes that many companies aren''t prepared when they go into an outsourcing relationship. "What happens in an outsourcing relationship is you''re taking work that was being done in-house and you have to now transfer that work to a third party, which means you have to transfer the knowledge associated with the way you were doing that work," says Travis.

    According to the Deloitte study, participants originally began outsourcing for a variety of reasons, including cost savings, ease of execution, flexibility, and lack of in-house capability. Rather than simplifying operations, however, many companies have found that outsourcing activities can introduce unexpected complexity, add cost and friction into the value chain, and require more senior management attention and deeper management skills than anticipated.

    Travis adds that it often takes several months or a year to realize the expected savings of outsourcing. Also, there''s a potential for backlash from those affected by the outsourcing that might result in either deliberate or even subconscious subversion of the process. "They may create negative expectations, or they don''t fully support the outsourcer," Travis states. "Often the management teams lack the strength or maturity to deal with some of those problems." CG

    Lightweighting carries weight in automotive

    TAGS: Injection Molding Compounding Materials Business Extrusion: Film & Sheet

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