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October 1, 2004

17 Min Read
Amcor PET closures stir customer's ire

Amcor PET Packaging announced two plant closures, a bottle blowmolding facility in Tucson, AZ, and another bottle molding plant in Merrimack, NH. Amcor PET Packaging, based in Manchester, MI, told analysts in a conference call earlier this year that the company planned to close three to five plants in the U.S. and Canada and consolidate operations. The closings are a result of excess manufacturing capacity in the Northeast and Southwest regions of the U.S., according to information released by the company.

This restructuring of excess capacity was necessary to offset cost increases in its bottling business and erosions that have squeezed margins. Both plants are slated for closure by the end of 2004. "The exact timing is dependent on meeting our customers'' requirements, preferably through supply from one of our other plants," said William J. Long, president of Amcor PET Packaging. The Tucson facility employs 76 people; the Merrimack site employs 100.

One news report in a Tucson business journal noted that the company had recently completed a multimillion-dollar upgrade of that plant''s equipment. The Tucson operation, which has been in operation since 1996 when CNC Container Corp. (Tumwater, WA) established the 150,000-sq-ft facility, serves two major bottlers in the area: Kalil Bottling and Pepsi.

George Kalil, president of Kalil Bottling, one of the largest bottlers in the Southwest with plants in Phoenix and Tucson, says he doesn''t know for sure yet what the impact of Amcor''s decision to close the Tucson facility will have on his company''s business.

"They announced they are closing and said they will take care of our bottle needs until April," Kalil said in a telephone interview from his Tucson office. Kalil notes that Amcor, an Australian company, came into the U.S. several years ago and bought up about one-third of the PET bottle manufacturing industry. "Now they''re putting the squeeze on us," he adds.

Additionally, Kalil says he''s at a loss to explain why Amcor would close a facility that was at capacity while citing an "overcapacity" situation as a reason for the closure. "I know at least one person, maybe two, that tried to buy the plant, but they won''t sell. The problem is it sounds like flat-out they won''t make bottles, and won''t sell the plant even though they have a 12-year lease, so we''re at a total loss as to why they got themselves in this mess."

Kalil will be forced to ship bottles in from bottle makers in either Los Angeles or Dallas, something George Kalil says is a problem because "shipping 2-liter bottles is shipping air, warm air at that, which makes the bottles shrink."

There is some speculation among customers that Amcor needs to get out from under fixed-priced contracts in a time of volatility in resin pricing. Closing plants to create a shortage is one way to get higher prices for commodity products. "They''re going to create a shortage, no doubt about it," emphasizes Kalil. However, he adds that he doubts that they have any contracts that don''t allow for adjustments for increases in raw material costs.

"I think they think they can put their machinery someplace else in the world and make more money," Kalil states. "This is the mystery of the century."

Salads still tempting

Indeed, Finnish consumer products packaging processor Huhtamaki (Espoo) says Europeans are eating more take-away salads than ever before, as more singles try to improve their diets while also saving time spent preparing meals. To better serve foodservice operators keen to add salads to their menus, the processor has introduced its Twister Bowl, with a twist-locking lid mechanism similar to that used on jars and bottles.

The Twister Bowl includes a black polystyrene bowl and transparent amorphous PET lid. The patented spill-proof closure means consumers will have more chance to enjoy their salad without dropped lettuce and dripping dressing ending up on their shoes.

Thermoformer commercializing PPS processing

Magee Plastics Co. (Warrendale, PA) has developed commercially feasible processes for pressure-forming and vacuum-forming polyphenylene sulfide (PPS) sheet. Magee worked with sheet extruder Ensinger/PennFibre and engineering thermoplastics supplier Ticona.

The sheets used involved neat, glass-filled, and impact-improved Fortron PPS thermoformable grades. PPS offers high strength-to-weight ratios and continuous service temperatures up to 232ºC, depending on composition. Magee Plastics'' first commercial thermoformed PPS products were elements for a defense-related application. The processor reckons other potential applications include interior panels in airplanes and trains, chemical tank liners, and other large-surface-area components that need high chemical, heat, and flame resistance.

Schnipke Southwest adds presses

Schnipke Engraving Co., a custom injection molding firm and supplier for medical equipment OEMs, is adding five new Ferromatik Milacron K-Tec injection molding machines to its Tucson, AZ facility. The machines, three 80-ton and two 40-ton presses, are to be delivered between December 2004 and July 2005. Once installed, the processor will have 14 Ferromatik machines at the facility.

The facility already has a Motan materials handling system suitable for 36 injection molding machines, a number the processor hopes to eventually hit.

Surfing for plastics yet?

Processors supplied by BASF certainly are, with about 60% of its styrenics and performance polymers sold via the Internet, according to the firm. The German plastics and chemicals supplier says e-commerce sales in the first half of 2004 were approximately _2.65 billion, or 17% of its total sales (excluding its oil and gas business, as BASF does not sell these via e-commerce), and a 70% increase compared with the same period of 2003.

BASF started e-sales in 2001. According to the supplier, the whole world is logging on to buy materials. The biggest jumps compared to the first half of 2003 were in Asia (+460%) and South America (+320%), but even Europe (+46%) and North America (+27%), where e-purchasing is well-established, saw healthy gains.

Selenis completes Aussapol buy

Selenis completed its acquisition of PET supplier Aussapol SpA from Italy''s Radici group. (The acquisition was first reported in MP''s e-newsletter last month.) Aussapol SpA with headquarters in S. Giorgio di Nogaro (Italy), has capacity of 160,000 tonnes/yr at its two plants there. Portugal''s Selenis brings its total PET capacity to 30,000 tonnes with the purchase.

With the sale, the Radici Group exits the PET market and will focus on engineering plastics, especially nylons, and fibers. Selenis'' parent company, the Imatosgil group, also owns Spanish PET supplier Catalana de Polimeros.

Molder aligns BUs with market demands

Injection molder and contract manufacturer The Tech Group (Scottsdale, AZ) has created two distinct business units, one each for healthcare and consumer products. Recent demand growth from the former has caused the molder to further separate healthcare into three focused divisions: drug delivery, diagnostics, and hospital products.

The Healthcare Business Unit will be led by Tom Podesta, who has recently served as VP sales and marketing for North America. The Consumer Products Business Unit will focus on beauty care, household disposables, and office products; it will be led by Mike Treadaway, who has served as VP operations for North America since 2001. The Tech Group has worldwide annual sales of more than $150 million, with 14 facilities throughout the Americas, Europe, and Asia.

Extrusion show to debut in Frankfurt

A handful of German trade show organizers seem to have simultaneously concluded the industry needs shows targeting the extrusion market. First out of the gate was Demat, the company that organizes the annual EuroMold moldmaking and software exhibition (this year scheduled for Dec. 1-4 in Frankfurt). Demat''s first Extruda-billed as an extrusion information exchange without running equipment-is scheduled for Feb. 23-25, 2005 in Frankfurt, just four months after K 2004 ends.

"There are plenty of plastics shows around the world, but none solely targeting extrusion," says Dieter Apprich, director of new products at Demat (Frankfurt). He justifies the new show by stating that many small- to medium-sized manufacturers of extrusion equipment and components are either lost in large shows like the K or are unable to secure booth space at these large shows.

"Extruma fulfills the need for a technically oriented and cost-efficient trade fair," says Apprich. Booth space is limited to a maximum of 50 sq m; minimum stand size is 9 sq m. Stand rental fees range from _145 to _160/sq m. The organizer is targeting 150 exhibitors with 3000 show visitors for the first year.

Apprich admits scheduling a show so soon after K could lead to complications. The new show does not have the support of the German Machinery and Plant Manufacturers'' Assn. (VDMA, Frankfurt). Bernd Knörr, VDMA executive director, says, "The market will have to decide if another plastics fair is necessary. We believe the K is the ideal venue for promoting international interest and sales in German processing equipment."

Soon after Demat announced its Extruda, rival expo organizer P.E. Schall (Frickenhausen, Germany) said a separate hall is being allocated for extrusion equipment makers at the next Fakuma show from Oct. 18 to 22, 2005 in Friedrichshafen, Germany. Traditionally, Fakuma has been dominated by injection molding equipment makers.

A few weeks later another hat entered the ring with expo organizer fairXperts (Neuffen, Germany) saying it will organize its own extrusion show, ZtRUSA, June 14-16 in Nuremberg. Show organizers say it will include more than plastics extrusion and expect an international platform due to Nuremberg''s proximity to central and eastern Europe. In fact, Nuremberg is only about a one-and-a-half-hour drive south of Frankfurt, and the latter has a major airport, so which show has better odds of drawing a more international crowd is debatable.

Dow taking steps

Polymer producer Dow Chemical (Midland, MI) has become at 50% joint partner in a petrochemical joint venture in Oman, with the government of Oman and the Oman Oil Co. (OOC) each taking a 25% share. Located in Sohar Industrial Port Area, the complex will comprise feedstock production facilities, a gas cracker, and three worldscale polyethylene production units. The Oman government wants the venture to commit to helping develop Oman''s domestics plastics processing industry.

Dow is quite closed-mouthed about the project and will only say that it views worldscale plants as having a capacity of 300,000 tonnes/yr or more. Dow spokesman R. Matt Davis also declined to divulge what grades of PE would be produced.

Construction is to start next year and could take three to four years to complete. The main market for the output is expected to be Asia, but Middle Eastern and European markets could also be served.

Dow already has a joint venture in Kuwait, called Equate, that it inherited from Union Carbide, producing polyethylene. Davis says that the new Oman setup would complement, rather than compete with, Equate sales in the Far East.

Russian supplier wants domestic PC plant

Polycarbonate (PC) is in demand in Russia but must be imported. That may change as OAO Kazanorgsintez (KOS) of Kazan in the Russian Federation''s Republic of Tartarstan, has acquired a license from Asahi Kasei Chemicals Corp. (Tokyo) for Asahi''s PC production technology. KOS is the second licensee of the Asahi Kasei non-phosgene PC technology, following Chimei-Asahi Corp., a joint venture with Chi Mei Corp. of Taiwan.

The new plant in Kazan is scheduled for startup in November 2007 with an annual capacity of 65,000 tonnes. In related news, Chi Mei has increased its share of the Chimei-Asahi Corp. JV to 90%, and has announced plans to add a second production line with startup scheduled for 2006.

IT market wants more TPX, ASAP

Mitsui Chemicals Inc. (Tokyo) plans to raise capacity for its TPX methylpentene resin by 5000 tonnes/year due to strong demand from the IT and electronics sectors, among other applications. Construction at the firm''s Iwakuni-Ohtake Works in western Japan should be complete by July 2005, with TPX capacity then hitting 13,000 tonnes/year.

Mitsui says TPX trumps other polyolefins in terms of heat resistance; its melting point is 230°C. It also offers clarity, chemical resistance, and mold release properties. Clarity and chemical resistance make it an option for food and cosmetic containers and wrapping films.

Berry boosting capacity

An extension of the financing program run by the Port of Indiana has freed $11 million for Berry Plastics to plan an expansion of its headquarters facility in Evansville, IN. The new space will be used for additional thermoforming lines for drinking cups and packaging. Berry, long a prominent injection molder of packaging, added thermoforming in 2001. With its acquisition last year of Landis Plastics, it became one of the largest packaging processors in the U.S.

Last year Goldman Sachs Capital Partners and JP Morgan Partners acquired Berry.

Gram Technology to U.S.

Danish injection molding technology firm Gram Technology (Birkerod) this summer established its first U.S. office in Scottsdale, AZ after scoring licensing agreements for its inmold assembly and multicomponent molding technology with leading U.S. contract manufacturers The Tech Group (also Scottsdale) and Nypro (Clinton, MA). Other U.S. processors working with Gram include Juno Inc.

Gram''s technology for inmold assembly, painting, and other tasks is based on its Spin Stack technology. Overmolding stack molds have three platens and two daylights. One material is injected into each daylight. The central platen rotates around one or more vertical axes between shots, which eliminates the use of turntables and features rotating segments inside the tools.

This contrasts with traditional over-molding systems where the preform transfer is effected by rotating a complete mold half, or part of the ejector-side mold half, around a horizontal axis. Overmolding stacks double the number of cavities for a given mold size, and shorten cycle times (see December 1999 MP/MPI)

Jes Gram, president and namesake of the firm, contends that any multicomponent application can be molded more cost effectively in Spin Stack, which has been established in Europe for about seven years. "Spin Stack is definitely one way to keep manufacturing in the United States," reports Gram.

Voridian unveils new PET process

PET supplier Voridian, a division of Eastman Chemical Co. (Kingsport, TN), announced it will build a $100-million, 350,000-tonne/yr PET plant at its existing site in Columbia, SC, featuring new IntegRex polymerization technology developed by Voridian. At a press conference held in New York in September, officials said the technology is a breakthrough that will let them make PET at a lower cost, primarily by eliminating the solid-stating step in the conversion of paraxylene (PX) to PET.

Dr. Greg Nelson, VP technology, says that solid-stating is responsible for 15% of the PX-to-PET conversion cost. IntegRex enables a PET plant of half the standard existing footprint to produce twice the polymer. Savings are therefore also expected to be realized in reduced equipment use, energy costs, and labor. Voridian is building a semiworks plant in Q4 2004 for pre-startup customer qualifications, and expects, in the end, to file for more than 100 patents.

Thomas Stevens, group VP, polymers business group at Voridian, said of IntegRex: "It''s a big deal. Improved cost position, capital, and conversion technology is truly, truly a big deal."

In BriefK-M pipe deal

Extrusion equipment manufacturer Krauss-Maffei Kunststofftechnik (Munich, Germany) has signed a cooperation agreement to produce continuous steel-reinforced plastic pipe with Plastream, a division of Rib Loc (Adelaide, Australia). The pipes, for non-pressure drainage systems, have diameters of 200 to 2500 mm.

Kuraray ups U.S. EVOH

Kuraray (Osaka) plans to double output of ethylene vinyl alcohol (EVOH) copolymer at its Pasadena, TX facility to 47,000 tonnes/yr. The company, which operates in the U.S. as EVAL Co. of America, says the $150-million expansion should come onstream in 2006. EVOH demand, especially for barrier packaging applications, is growing at 10%/yr, says Kuraray.

Japan-China nylon JV

Toyobo, based in Osaka, and the Shanghai Zidong Group have set up a joint venture to manufacture nylon film. Shanghai Zidong Chemical Materials Co., owned 51% by Toyobo, will start operation with a single 6000-tonnes/yr line at the end of 2005. Demand for nylon film is growing at 20%/yr in China. Sales of around $30 million are targeted in the first year of operation.

Uponor focuses in-home

Uponor (Espoo, Finland) has sold U.S. subsidiary Uponor Aldyl Co. to PE pipe processor PW Poly Corp. (Hastings, NE). PW Poly paid $15 million for the Uponor business, best known as an extruder of gas pipe and pipe fittings supplying U.S. utilities. Last year it had sales of more than $40 million. It has two plants in Oklahoma.

Uponor has decided to exit pipe extrusion to focus on production of underfloor heating systems and plastic tap-water systems.

Bioplastics sitting pretty as oil prices climb...

Looking on the bright side of climbing oil prices are members of IBAW, the International Biodegradable Polymers Assn. & Working Groups, based in Berlin, Germany. Best estimate by the group is that biopolymers'' use hit about 40,000 tonnes in 2003, double that of 2001. Its members include 32 companies in the plastics and chemical industries plus academic institutions.

The consumption figures for biodegradable plastics remain miniscule in comparison to the millions of tonnes of polystyrene or PVC consumed each year, but the IBWA notes that most plastics take a few decades before they enter truly mass-market consumption.

Starches, cellulose, and plant oils continue to be the top renewable materials used in these plastics, even as less oil-based-but-biodegradable materials are used.

Harald Käb, chairman at the IBWA, says the plastics and chemicals industries are showing an increasing interest in biodegradable materials. Bioplastics already see use in a number of applications including agricultural films, packaging chips, carry bags, and mulch bags, in addition to packaging for fruit and vegetables.

...though a calmer tiger could sink those prices

A report issued by Cambridge Energy Research Assoc. (CERA) says a global chain of events could eventually drive high oil prices back down to earth. For processors, the benefits could include less costly plastics and lower energy bills.

The report cites China''s "blistering economic growth, and its surge effect on demand for energy (along with most other commodities)," for pulling "international energy markets onto the tiger''s back," referring to a Chinese proverb that says, "When riding a tiger, it can be difficult to get off." Authors of the report state that China accounted for 40% of the total growth in world oil demand from 2000 to 2004, and is now the world''s second-largest oil market.

They also note that the Beijing government wants to slow the tempo to a more sustainable growth. If it succeeds, CERA predicts Chinese annual energy demand growth would slow to about 7% for oil; it was 13% in the first half of 2004. This demand drop, coupled with increased oil production, could create a supply/demand imbalance that favors the supply side in global oil markets.

Spartech bulks up

Spartech Corp. (St. Louis, MO) agreed Sept. 1 to acquire substantially all of the assets of three divisions of VPI LLC of Sheboygan, WI for approximately $83.5 million.

The acquisition includes the Sheet Products Div., a two-plant custom sheet-extrusion division that serves the graphic arts, medical packaging, and specialty retail markets; the Contract Manufacturing Div., a single plant that provides non-carpet flooring and sound-barrier products to the transportation industry; and the Film and Converting Div., also a single-plant operation, which calenders, prints, and laminates products for distribution to various markets.

Spartech has three divisions-custom sheet, color and specialty, and molded and profile-and annual sales of more than $1 billion. According to Spartech Chairman, President, and CEO Bradley Buechler, sales at the three acquired divisions were about $110 million, with the plants running at less than 65% utilization rate. Spartech gains access to markets it does not serve or in which it is not yet a major player, and also offers unused capacity for volume expansion.

Diet fad trims earnings

Popularity in North America of the low-carbohydrate Atkins Diet has so changed consumers'' spending patterns that packaging processors are starting to feel the pinch. Bunzl (London), a leading global supplier of outsourced plastics food packaging to supermarkets and restaurants, placed the blame for recent subpar U.S. results on the diet craze.

Globally, the firm reported a 10% sales increase in the first half of 2004, but just a 3% rise in the U.S. The company claims U.S. sales suffered because supermarkets have yet to adequately respond to changes in eating habits as consumers increasingly avoid carbohydrates such as pasta, bread, and rice.

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