No slowdown in packaging M&A action

Graham buys o-i operation

Hot summer days in the Northern hemisphere have not slowed the pace of consolidation within the plastics packaging industry. At $1.2 billion, the largest was the late-July purchase of the blowmolded plastic container operations of Owens-Illinois (O-I; Toledo, OH) by Graham Packaging Co. (York, PA), a portfolio company of The Blackstone Group. O-I will focus on its leadership in glass containers, though it also retains significant plastics processing capacity for closures, medical parts, and other non-beverage packaging applications. Graham expects to close the deal in Q4 2004, adding 31 O-I plants to the 57 it already has in North and South America and Europe. Of these 31, 24 are in North America, making that the most obvious place for any consolidation. Graham''s strategy favors facilities built in or adjacent to customers'' plants.

In other acquisition news, First Atlantic Capital Ltd. (New York, NY) increased its exposure to the plastic packaging business when it purchased bottle blowmolder and cap producer Captive Plastics Inc. (Piscataway, NJ), for an undisclosed amount. Captive and its seven U.S. facilities will join Berry Plastics (Evansville, IN), a leader in closures and thermoformed packaging, in Atlantic''s portfolio. Captive has facilities in Iowa, Kentucky, Indiana, Arizona, and California.

Further south and in flexible packaging, Bemis Co. Inc. (Minneapolis, MN) announced that, together with its Mexican joint venture partner, a Monterey holding company, it completed the purchase of certain flexible packaging assets of Masterpak S.A. de C.V., including a converting facility in Tultitlan, Mexico. These assets produce flexible packaging for dry foods, personal care products, pharmaceuticals, and confectionery and bakery products. Recently reported annual sales related to the assets in question were approximately $35 million. Bemis owns 51% of the acquired business. Specific terms were not disclosed. Jeffrey Curler, president and CEO of Bemis, said that the acquisition will "provide an opportunity to expand our current film technology into the Mexican packaging market." Curler also indicated that the new flexible packaging business will focus on supplying the packaging needs of Mexican food and consumer goods markets. Bemis and its Mexican partner operate two other JVs in Mexico: Bolsas Bemis, a paper packaging facility, and MACtac Mexico, a pressure-sensitive materials facility.

More deals are likely to come, predict the experts at Thomas Blaige & Co. LLC, the Chicago-based financial advisory firm specializing in plastics processing and packaging M&A. In its "Plastics Deal Briefing 2003," the firm notes that "the incredible stress" brought about by resin cost increases, foreign competition, and tighter credit terms has created a "Darwinistic environment...in which only the fittest will survive."

Toray sees demand for thick PET film

Toray Industries plans to invest more than $130 million during the next two years to boost production of thick-gauge PET film in Asia. The move is in response to increasing demand for optical film employed in various flat-panel displays. Demand growth rates of more than 20% are forecast

The expansion, which involves modifying equipment currently making thin-gage PET film for use in videotape and installation of new lines, will boost thick-film capacity in the area by 60%.

Lines will be converted at its South Korean joint venture, Toray Saehan Inc., and its Malaysian subsidiary, Penfibre Sdn. Berhad, while a new 15,000-tonnes/yr line will also start up at Penfibre in 2006. Existing equipment will also be converted in Japan. Overall, thick-gage supply capacity will rise from 70,000 tonnes/yr to 110,000 tonnes/yr. Global PET film capacity at Toray will rise from 310,000 tonnes/yr to 330,000 tonnes/year.

Molecular-level ''Velcro''

DuPont Structural Bonding is a new technology said to allow strong bonding of almost any dissimilar plastics, using any process which brings the two surfaces together in the molten state. "In the past, it was difficult to get good bonding between plastics which are not chemically similar," says Nandakumar Rao, DuPont Performance Materials technology director.

"For example, when overmolding or welding different polymers, the choice of the two materials is limited and the strength of the join is often poor." He says that in hard/soft overmolding, choices of elastomer are often limited to one or two hardness levels, and poor bond strength can lead to delamination between the two components.

The new technology overcomes these limitations. Plus, it can be applied not only to overmolding, but any type of welding. Rao says it makes use of a specially developed micro-porous tie layer, which results in strong physical anchoring between the two materials. He says the layer is a non-woven material "a bit like Velcro at the molecular level."

Early application developments include soft-touch components made by overmolding, and the welding of polyacetal components to the surface of polyethylene fuel tanks.

New Chinese closure facility targets Japan

With an anticipated output of 800 million closures/yr to be exported to Japanese beverage producers, a new plastics closures plant has been opened by Alcoa''s (Pittsburgh, PA) Closure Systems International in Hangzhou, China. The 8125-sq-m (87,425-sq-ft) plant began production in mid-July of linerless closures for aseptically and hot-filled bottles. The plant employs 110 and has two initial lines, with room to expand to eight. The closures are made via Alcoa''s patented compression molding process.

AUTOMOTIVE INDUSTRY NEWSIndustry is ripe for a revolution

Members of the respected Autopolis group of consultants say the global automotive industry is in need of a radical overhaul. In a book due to be published this month, Time for a Model Change: Re-engineering the Global Automotive Industry, Graeme Maxton and John Wormald say that the industry, which accounts for almost 11% of the GDP of the developed world and one job in nine, "is in a dreadful state and few of those working in it understand their predicament properly."

Many major carmakers destroy value today, and only make money selling mortgages or overpriced spare parts, they say. "They have also become hopelessly wasteful of resources, churning out an ever-greater number of models which bewilder consumers and make no economic sense...they shovel their costs onto their suppliers and their dealers—financially weakening these other businesses as a result."

If the situation does not change then much of industry faces what the authors call a "Graceless Degradation" in the next 10 years, with relationships becoming ever more fraught and the financial performance of the sector even worse than today. Many jobs will be lost. But they say there is a way out, and advocate a wholesale redefinition of roles and relationships. The industry needs to redirect resources away from sterile competition and obsessive branding back to true technological and product innovation.

New multilayer structure for low-permeability fuel tanks

French materials supplier Atofina (Paris) joined forces with fuel-systems manufacturer TI Automotive (Warren, MI and with a research facility in Rastatt, Germany) in 2003 to present a new multilayer structure specially for the manufacture of fuel tanks, fulfilling the stringent Partial Zero Emission Vehicle (PZEV) Californian regulations. This six-layer structure comprises Finathene HMWHDPE/regrind/Orevac polyolefin-maleic anhydride tie layer/ Soarnol EVOH/Orevac/Orgalloy nylon/polyolefin alloy. The structure has very low permeability, due in part to the use of two barrier layers: EVOH for the core layer and PA/PO for the inner layer. Plus, the Orgalloy forms a continuous barrier, even at the weld pinch-off area; in structures with a single, buried barrier layer, there is a discontinuity at this point.

Using this structure, TI Automotive patented Permblok AS6, the very first plastic fuel tank to comply with the PZEV regulation. The tank is being fitted to a vehicle expected to launch in 2004.

Key bought out

Edward Ewing and his Ewing Management Group are expected to close this month on the purchase of the remaining stock of the Key Automotive Group, which includes injection molder Key Plastics LLC. Key Plastics employs 4500 and operates 21 molding plants, three technical centers, and two tooling facilities, processing for the automotive and light truck markets.

The CTK agency reports Key Plastics is building a facility in Dolny Kubin, Slovakia. Some of the 350-employee-site''s output is reportedly headed for French carmaker PSA, also building a plant in Slovakia. Key may also supply the new Kia plant in Slovakia; it already supplies Kia in North America.

Benzene price hikes have plastics suppliers talking tough

With no end in sight to plastics raw material price increases, BASF issued a warning in early August that it will turn business away for styrene-based and nylon thermoplastics if it cannot pass on the increases to customers (see related article on pricing) The price of benzene in Europe has more than doubled since the beginning of 2004 and in August was at a record high.

"BASF will have to continue to raise the prices...because of the continuously increasing price of benzene," the company reported in a statement. "If it is not possible to achieve these prices in the market and thus pass on the enormous increase in the cost of benzene to customers, then the Styrenics and Performance Polymers divisions will turn down business if necessary."

The company quotes Wilfried Haensel, head of the styrenic polymers European regional business unit, and Tilman Krauch, head of the polyamide and intermediates global business unit, as saying, "We have only partially passed on the increases in the price of raw materials, especially benzene, in recent months to our plastics customers."

At a pre-K 2004 press conference in June, BASF''s executive director responsible for plastics, oil, and gas, John Feldmann, said the total cost of raw materials used in BASF plastics increased by €160 million in the first half of 2004, compared to the first half of 2003. He noted that benzene prices move independently of oil prices.

The message from Dow, another major benzene user, is similar. It announced increases of €150/tonne on polystyrenes for July 1, and again for Aug. 1. Increases in PC prices were set for Aug. 1 (€300/tonne), and Sept. 1 (€100/tonne).

Grant Fischer, value center manager for engineering thermoplastics at Dow in Europe had this to say: "This year we have seen a historically unprecedented rise in all our feedstock costs. Any earlier efforts to restore our margins during the first part of this year have been nullified by [price increases in benzene]. The extreme price levels for benzene and its derivatives, combined with continued high energy costs, leave us no option.

"Unless we act quickly and decisively to recover our costs and rebuild margins, our ability to meet our customers'' needs long-term will be jeopardized."

In BriefRussian ETP demand up

Russian demand for engineering thermoplastics (ETPs) is growing by an estimated 15%/yr, says masterbatcher Polyplastic-Technopol, based in Moscow. Driving the market are the automotive, electrical/electronics, furniture, and appliance markets as well as metal and thermoset substitution, says Mikhail Katsevman, marketing and R&D director at the company. His company has nameplate capacity of 25,000 tonnes/yr from its eight compounding lines.

Samsung cleaning up

Korea''s Samsung Electronics plans to eliminate the use of PVC packaging, brominated flame retardants, organo-tin compounds, and phthalates in its products by the beginning of next year. Beryllium and chlorinated flame retardants are scheduled to go by the beginning of 2006.

EUC drops label change

A controversial proposal by the European Commission to require goods produced in the European Union to include a "Made in EU" rather than "Made in [country name]" label was withdrawn in July. Equipment producers and plastics processors blasted the idea. The German processors association, GKV (Frankfurt), campaigned hard to retain the "Made in Germany" label.

DTR purchased

DTR Software Intl. (Jacksonville, FL), one of the leading suppliers of enterprise resource planning software specific to plastics processors, has been acquired by Made2Manage Systems (Indianapolis, IN), which supplies enterprise software and services for small and midsize (SME) manufacturers. DTR''s The Manufacturing Manager software will be re-branded as a Made2Manage Systems product.

Thixomolding key to ultra-personal computer

The OQO model 01 ultra-personal computer (UPC) is a fully functional WindowsXP computer with 1GHz processor, 20GB hard drive, 256 MB of RAM, color transflective display, and integrated wireless, as well as Fire Wire and USB ports. There, the similarities with conventional computers spouting similar performance end. The UPC is just 4.9 inches long, 3.4 inches wide, and .9 inches thin, and it weighs in at only 14 oz.

When designers of the UPC set specifications for its housing, they wanted .4- to .6-mm wall thickness and a zero draft angle, something only thixotropically molded magnesium alloy could deliver, according to Kevin Pang, executive director at Malaysian processor AB Technology, Johor. "They also specified a lead time of only three weeks for tooling with numerous slides." AB Technology was able to fabricate the three tools for the UPC and deliver parts within the time frame. Particularly challenging was molding in the racks for the rack-and-pinion mechanism that slides the keyboard out from under the LCD screen.

SME''s comprehensive part-cost estimator

The Society of Manufacturing Engineers (SME; Dearborn, MI) has a new spreadsheet tool called the Injection Molded Part Cost Estimator to help processors evaluate variables not always considered in determining total part costs. Designed by SME''s Injection Molding Technical Group, it is said to simplify internal decision-making operations and project a comprehensive estimate of overall cost.

Major categories of process variables incorporated into the calculator include: part volume, part information, material, tooling equipment and maintenance, production, secondary operations and associated costs, and direct labor. The Estimator is free to SME members, and $24 for others. The SME has an online store at www.sme.org.

The walls are alive with the sound of music

A system for incorporating surround-sound into walls, ceilings, and floors will, according to the manufacturer, let you "listen to Handel''s Water Music playing from the bathroom tiles while you take a shower," or feel dinosaur footsteps shake the house while you watch "Jurassic Park" on your home theater system. It was developed by polyurethane processor Puren GmbH (uberlingen, Germany), in cooperation with electronics company Siemens AG (Munich) and Bayer MaterialScience AG (Leverkusen).

The principle of generating sound using a vibrating surface rather than through speakers is based on a Siemens patent. A soundboard, 7-mm thick made in polyurethane using Bayer''s Desmophen and Desmodur raw materials, is made to vibrate by a sound generator mounted on its reverse side. This soundboard accurately reproduces the original sound, even when covered with plaster, carpet or tiles, thanks to Siemens'' digital technology. The result is claimed to be stunning sound quality that is not restricted to a small area (the "sweet spot") as with standard speakers. This is possible because the vibrating surfaces have emission angles almost twice the width of those of standard speakers. None of this comes cheap, of course. Starting price for the purSonic system is around €8000.