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February 2, 2006

18 Min Read
E-Weekly News Briefs,  January 30 - February 3

Lear losses topped $1 bn in 2005

One of the few Tier One automotive suppliers in the U.S. to generate a profit in 2004, Lear Corp. (Southfield, MI), joined its counterparts, two of which declared bankruptcy, in posting negative figures in 2005. Lear lost $1.18 billion for the year on net sales of $17.1 billion, and $596.6 million for the fourth quarter on net sales of $4.3 billion.

The company cited reduced production linked to North American automotive platforms, as well as higher raw material and energy prices, as leading factors in the decline. In 2004, Lear had full-year pretax income of $550.2 million on net sales of $17.0 billion. A large portion of the fourth quarter loss, $351.3 million, related to charges from Lear''s preliminary agreement with automotive investor Wilbur Ross to divest its interior segment into a joint venture that is reportedly targeting other assets from distressed automotive suppliers, including bankrupt Collins & Aikman''s interior division.

German athletes ride smooth waters with plastics support

This year, the German resin producing industry will again be the main sponsor of the world''s most successful canoeists. Olaf Heukrodt, president of the German Canoeing Assn. and Kurt Stepping, managing director of PlasticsEurope Deutschland (Frankfurt), the German division of the European polymer producers association, agreed at the recent BOOT trade show in Düsseldorf to continue sponsoring the canoe-slalom and canoe-racing teams.

Heukrodt lauded the continuing support of the plastics industry, which has lead to a six-year relationship. He said despite athletic successes in the past, it is never easy for sportsmen and women to find sponsors. PlasticsEurope Deutschland has concentrated its sponsorship on water sports as Team Kunststoff for sailing, rowing, canoeing, and kayaking. The athletes garnered five gold, six silver, and one bronze medal during the Olympic games in Athens during 2004.

Polyurethanes'' supply increasing in China

Global polyurethane suppliers Huntsman and BASF are partnering with a trio of Chinese companies to build a 400,000-tonnes/yr MDI plant in China by 2010, targeting that country''s expanding consumption of PUR. Shanghai Hua Yi, Sinopec Shanghai Gao Qiao Petrochemical Corp., and Shanghai Chloro-Alkali Chemical Co. Ltd. are the Chinese members of the venture, which already has an integrated isocyanate complex under construction at the Shanghai Chemical Industry Park in Caojing.

Scheduled to be online by the middle of this year, the $1 billion complex will have a 240,000-tonne/yr crude MDI capacity. MDI or diphenylmethane diisocyanate is a precursor in the manufacture of urethanes.

According to IAL Consultants (London), Chinese production of PUR has exploded from humble beginnings, leaping from 7000 tonnes in 1982 to 2.68 million tonnes in 2004, which represents 25% of global production. IAL predicts that production will reach almost 4 million tonnes by 2009, with the majority in eastern China (1.3 million tonnes) and the average annual growth rate in the country hitting 7.8%.

As of 2004, IAL reports that MMDI (monomeric MDI) production was 188,559 tonnes, with PMDI (polymeric MDI or isocyanates) production at 305,892 tonnes. Fully 32% of PUR production in China goes towards elastomers, followed by coatings (24%), and flexible foam (22%).

Haldia opts to increase PE, PP output

India''s Haldia Petrochemicals (Kolkata) has signed expansion agreements with polyolefins supplier and technology licensor Basell to increase the capacity of Haldia''s polyethylene plant using Basell''s Spherilene process and Haldia''s polypropylene plant using Basell''s Spheripol process. Both plants are located in Haldia, India.

According to Haldia, the Spherilene process LLDPE/HDPE plant will be expanded from 225,000 tonnes/yr to 368,000 tonnes/yr, while output of the Spheripol process PP plant will be increased from 211,000 tonnes/yr to 320,000 tonnes/yr. Completion of the projects is scheduled for mid-2007.

Survey profiles China''s 50 masterbatch leaders

The masterbatch market in China is one of the fastest growing and most dynamic in the world with demand growth in excess of 20% per year over the past ten years, according to a new report by Applied Market Information (AMI; Bristol, England). The report predicts continued growth at greater than 15% per year.

AMI''s research revealed that in volume terms the largest masterbatch supplier in China is Cabot Plastics, which has a long established black masterbatch plant in Hong Kong and supplies product throughout Asia. In value terms the leading producer is Ngai Hing Hong, which is the country''s leading color masterbatch producer and also manufactures significant volumes of white masterbatch. These products attract a higher premium than black masterbatch. Ngai Hing Hong has the widest network of facilities in China with seven facilities.

The leading white masterbatch producer is Meilian Chemical (Guangdong), which mainly supplies blowmolders, while Guangdong Hengchang Chemical Industry has the largest output of additive masterbatch.

Unlike plastics processing, masterbatch production in China is very concentrated with just a few leading players. The fifty companies profiled in the AMI report accounted for nearly three-quarters of production for 2005. There are probably several hundred other companies in China manufacturing masterbatch products but most of these are very small scale, unsophisticated operators, according to AMI.

Another feature of the masterbatch industry in China is that most facilities, even those belonging to major international groups, are serving relatively local markets. Logistical difficulties as well as local regulations result in little long distance masterbatch supply in China. This helps to explain why some producers are developing networks of more than one facility in order to serve the total market. Clariant, Ngai Hing Hong, and PolyOne offer examples of this strategy.

Rexam buys Chinese beauty packaging firm

Rexam PLC (London), the global consumer packaging group and the world''s leading beverage can maker, will boost its Chinese cosmetic packaging presence with the $74 million acquisition of FangXin Ltd., which manufactures compacts, pumps, and lipstick and mascara cases. Over the last four years, FangXin reportedly had an annual compound growth rate of 30%, and in 2005 it posted sales of $33 million. The transaction is expected to complete within the first quarter of 2006.

Rexam has been present manufacturing in China since 1998 and will have nine plastic packaging facilities there serving the beauty industry following the acquisition as well as one beverage can plant.

Netstal''s 2005: slight sales drop offset by higher profits

A slowdown in the optical media market largely accounted for the drop in sales at Swiss injection molding machine manufacturer Netstal (Naefels) during its 2005 fiscal year, but profitability improved a bit.

Netstal reports FY05 net sales of CHF 314.8million ($245.8 million), a drop of almost CHF 42 million. But profitability increased, marginally, to CHF 25.1million (FY04: CHF 24.4 million). The firm''s sales are 66% in Europe/Middle East, 13% Asia, and the remainder in the Americas.

Netstal''s fiscal year runs from Oct.1 -Sep. 30. The company is part of the Mannesmann Plastics Machinery group of companies, which includes Berstorff, Billion, Krauss-Maffei, and Demag Plastics Group. Among trends cited by Netstal are increased sales of high-cavity PET preform systems; solid sales of its Elion electrically powered machines introduced in 2004; and the slowdown in sales of machines for optical media molding. The firm says the current year is difficult to forecast but remains "cautiously optimistic for 2006 in spite of these uncertain market prospects."

Revenue growth at IQMS is more than OK

Enterprise resource planning (ERP) software supplier IQMS (Paso Robles, CA), which sells software especially to plastics processors and other repeat manufacturing companies, capped off a three-year sales increase tear in 2005, posting a 25% revenue gain last year after boosting revenue by 20% in 2004 and 15% in 2003. Revenues from licenses increased 30% in 2005, and fully a quarter of the 2005 growth came from processors overseas.

"IQMS has achieved double-digit growth for the last eight years, and now boasts extended relationships with 98% of its existing customer base," said Randy Flamm, president and founder of IQMS, in a statement. He formed the company in 1989.

Gerd Liebig now at Engel

Austrian injection molding machine manufacturer Engel (Schwertberg) officially announced that Gerd Liebig, former chief strategic marketing officer at Demag Plastics Group, has been employed by Engel as head of group marketing since Jan.1. Liebig left DPG late last year after working there 15 years.

In the newly created function at Engel, Liebig will coordinate and control the marketing activities of all Engel companies from his base at the parent factory in Schwertberg, says the firm. This will include further consolidation and harmonization of global product-management activities.

Topas officially in new hands

The new owners of the Topas-brand of (cyclic olefin polymers) COCs are now officially in business. Celanese Corp., parent company of engineering thermoplastics supplier Ticona, sold that firm''s Topas business last year to Daicel Chemical Industries Ltd. and Polyplastics Co. Ltd. These own, respectively, 55% and 45% shares. Polyplastics had marketed Topas in Asia for Ticona.

Topas Advanced Polymers (TAP), the name of the venture formed, has offices in Frankfurt, Germany, and Florence, KY, and includes Ticona''s entire COC business, including employees, production, and R&D facilities. Managing directors for TAP are Gregor Bommel and Hitoshi Hayashi.

COCs see use in applications requiring good optical properties, thermal resistance, and dimensional stability. These include optical components, medical devices, packaging, and others. TAP''s assets in Germany include a 30,000-tonne/yr plant, a research and development facility, and inventory. The plant, located in Oberhausen, is the largest in the world for the production of COCs.

Temperature control maker Single changes hands

German temperature control manufacturer Single Temperiertechnik GmbH (Hochdorf) has been acquired by Looser Holding AG (Arbon, Switzerland), a family-owned business group with holdings in mid-sized firms in the paint and coatings industry and in the construction market. Single''s equipment sees use in a number of industries but the plastics processing industry is its top market.

Looser plans to hold onto Single for the long term and increase its international presence, according to a company press release. Single''s temperature controllers see use in cooling of injection molds and thermoform tooling. Single was sold by two financial investors, Germany''s Halder Beteiligungsberatung GmbH and its French co-investor Finadvance. During the five years these two owned Single Temperiertechnik, its sales grew by double-digits each year, and its employee headcount rose from 80 to 100.

Single''s management team of Karlheinz Gruber and Frank Spork remain at the firm. Single''s 2004 sales were €24 million.

Pharma packaging venture formed

Süd-Chemie Performance Packaging, a business unit of specialty chemicals supplier Süd-Chemie AG (Munich, Germany), is expanding its position in the European pharmaceutical packaging market through Süd-Chemie Schweiz SA, a joint venture with Swiss holding company PQH Holding (Fribourg).

PQH transfers to the venture the pharmaceutical and medical business segments of Plaspaq SA (Broc, Switzerland) an injection molder owned by PQH.

Süd-Chemie Schweiz SA, registered in Broc is 51% owned by Süd-Chemie and 49% by PQH Holding. Plaspaq will maintain and continue to develop independently its molding business for the food and technical parts markets.

P.-A. Gapany, general manager at Plaspaq, will direct operations of the new venture too. Süd-Chemie Performance Packaging has manufacturing facilities in the United States, Europe, Asia, and Australia for its products, which include desiccants, packaged absorbents, absorbent polymers, humidity indicators, and other customized packaging products. Plaspaq injection molds PE, PP, and PS for pharmaceutical packaging.

New Thai packaging and printing event

Joining the existing AsiaPACK and AsiaPRINT trade fairs, the Thai Printing Assn. and the Thai Packaging Assn., in cooperation with Messe Düsseldorf Asia, will jointly organize a new combined show, Pack Print International (April 26-29, 2007; Bangkok, Thailand). The event will occupy 161,000 sq ft at the Bangkok International and Trade Exhibition Centre and aims for an international versus national appeal.

New challenges set for Irish molding sector

The latest data regarding injection molders located in Ireland reveal molders there must fight for business following the recent departure of a number of high-profile customers from the island to cheaper production sites in Eastern Europe or China. In Applied Market Information''s (AMI) latest database on Irish injection molders, the highly successful sector during the 1990s has seen a decline in processor numbers from 154 in 2002 to 115 today as well as a contraction in the volume of plastics processed.

Despite these difficult signs, AMI analysts say the Irish sector is making a recovery, largely thanks to a boom in the medical and healthcare sectors. More than 200 Irish-based healthcare companies are sourcing about half of their needs from domestic molders.

Due to a high level of inward foreign investment, about two thirds of Ireland''s injection molders are now owned by foreign companies, and the majority of production is exported. Nearly 50% of injection molding output is done "in-house" compared to an average of 25% for the rest of Europe. Eighty percent of local molders process engineering thermoplastics, led by nylon and ABS, although the most commonly processed material remains polypropylene, which accounts for one third of the 56,000 tonnes of plastics processed last year.

MAPI sees good things for manufacturing in Q1 2006

Prospects for growth in the U.S. manufacturing sector in 2006 seem bright, according to the quarterly Manufacturers Alliance/MAPI survey on the Business Outlook. The December 2005 composite index of 74 shows a solid increase from 66 in the September 2005 survey, and is the highest in five quarters since hitting 75 in September of 2004. The survey reflects the views on current and future business conditions of 51 senior financial executives representing a broad range of manufacturing industries.

A composite business index above 50 indicates that overall manufacturing is expected to increase over the next three months. Eight of the 10 factors measured by the quarterly survey were higher, including the profit margin index (jumping from 60 in September to 74 in December), prospective shipments (improved from 79 to 90), investment index (from 70 to 79), export orders index, orders index, and backlog orders index. The capacity utilization index, based on the percentage of firms operating above 85% of capacity, slipped from 48.3 in September to 42.0 in December, while the percentage of firms operating at less than 75% of capacity rose from 5.0% to 8.0%. The research and development index also decreased slightly.

"This quarter''s survey results reveal broad optimism for manufacturing," said Don Norman, Manufacturers Alliance/MAPI economist. "Despite oft-mentioned concerns about higher energy and commodity costs, and a slowing of the housing and auto sectors, the manufacturing sector appears to be on solid footing and poised for a year of expansion."

Sartomer opens Japanese division

Specialty chemicals company Sartomer (Exton, PA), part of the Total Group (Paris), is opening a division, Sartomer Asia, in Tokyo. The new office serves formulators and chemists throughout the country with technical and sales support. Heading this office is Masaru Fukuda.

New work cell stacks, packs, and boosts quality

Packaging processor Erie Plastics (Erie, PA) has installed a fully-automated work cell for a stacking and packaging system that includes high-speed lid stacking from two injection presses while a robot tapes the bottoms of cartons, fills them with stacked lids, and closes carton tops. "Through this technology, we have significantly streamlined lid production, which translates into both improved quality for high-volume products and customers cost savings," says P.C. Hoop Roche, CEO and chairman.

Larger Wire to be uncoiled in 2006

With four months still remaining before the Wire 2006 exhibition (Düsseldorf, Germany), organizers say visitors can expect larger stands than at previous shows and perhaps more exhibitors. So far 959 exhibitors from 48 countries have booked 50,000 sq m of exhibition space, which already exceeds the total space sold for Wire 2004 by 2500 sq m. The show, from April 24-28, coincides with pipe expo Tube 2006 at the same location.

Orbita-Cast casts new film star

Film processor Orbita-Cast (Weißandt Gölzau, Germany) has ordered a cast-film line for stretch wrap from Austrian extrusion machine producer SLM Maschinengesellschaft (Lenzing). The 5-layer unit will produce films in thicknesses from 12-50 µm and in a width of 4000 mm. Maximum production speed is said to be 650 m/min. This will let Orbita increase its production output by 18,000 tonnes/yr.

11th hour insolvency pardon for Schwarzataler

Bankrupt plastics recycler Schwarzataler Kunststoffe (Eisfeld, Germany) has found a white knight in the nick of time in Römhilder Unternehmensgruppe Eliog-Kelivtherm, which plans to restart production with a number of the company''s original 125 staff. Court appointed insolvency administrator, Hanns Pöllmann, from the law offices Kanzlei RA Hanns Pöllmann (Munich, Germany), which specializes in such cases, says the rescue operation "comes at five minutes to twelve", just before Schwarzataler Kunststoffe assets would have been sold piece-meal.

DuPont Teijin invests in vacuum line

Films processor DuPont Teijin Films UK (Wilton, England) has taken delivery of a multipurpose OptiLab vacuum coater supplied by General Vacuum Equipment (Heywood, England). The unit is a bi-directional, roll-to-toll vacuum coater and can run a range of coatings including medium frequency AC plasma pre-treatment on films from 12-250 µm thickness.

For BASF employees and family, it''s a small world after all

Plastics supplier BASF (Ludwigshafen, Germany) has started an international exchange program for its employees'' children during the coming vacation period. This year, 100 teens, ages 14-19, will take part in "BASF Global Family", which allows them to spend time with another employee''s family abroad. BASF is financing and organizing the exchange.

Names in the news

Kathleen Bader, president and CEO of PLA degradable polymer producer NatureWorks, a business unit of Cargill (Minnetonka, MN), has retired and is being replaced by Dennis McGrew, former VP and chief marketing officer at the company. Bader, formerly president of the styrenics and engineering polymers groups at Dow Chemical, was NatureWorks chairperson from 2004 to this year.

Mold components supplier Progressive Components (Wauconda, IL) has added Innocente Fabbro to its Canadian sales team. Fabbro will assume responsibilities as Canadian Sales Manager and report to Cy McGrath, Progressive''s General Manager in Canada.

Jens Bleher is the new managing director of TRUMPF Laser- und Systemtechnik GmbH (Ditzingen, Germany). Martin Benzinger, Bleher''s predecessor, is now the firm''s VP and executive VP for East Asia. Previously Bleher was managing director of the company''s laser-marking systems division in Switzerland, which is now headed by Eckhard Meiners.

RadTech, the association of ultra violet and e-beam curing technology, has appointed new board members. They are Mike Idacavage of Cytech Surface Specialties; Petra L''Abbe, PPG industries; Howard Ragin, Craig Adhesives & Coatings; Mark Tilley, DSM Venturing; Maureen Waite, Sartomer; Joel Johnson, Wright-Patterson Air Force Base; and John Stansfield, Accelerated Curing. Tom Dunn, Printpack, was reconfirmed for his second two-year term.

Continued solid demand for flexible packaging

Demand for converted flexible packaging is projected to increase more than 4% annually to $14.4 billion by 2009, according to The Freedonia Group Inc., a Cleveland-based industrial market research firm. Growth will be attributable to cost, performance, and source-reduction advantages over most rigid packaging formats.

Heightened barrier requirements in many markets will drive increased demand for value-added materials to enhance shelf life or product protection. Pouches will present the best opportunities, with demand expected to rise 6.6% per annum to $5.8 billion in 2009. Advances will be propelled by rapid expansion for stand-up pouches, often at the expense of rigid containers.

Flat pouches will see healthy gains as a result of improved barrier structures and the addition of convenience features such as resealable zippers. Food markets are expected to increase 4.3% per year through 2009, while nonfood markets are projected to climb 3.7% per year to $4.5 billion in 2009, with the fastest growth anticipated in pharmaceutical and medical markets.

Weekly futures activity from the LME

Futures trading of linear low-density polyethylene (LLDPE) and polypropylene (PP) on the London Metal Exchange (LME) for the week of Jan. 23-27 saw a low price for LLDPE of $1255/tonne set on Wednesday, Jan. 25 for February buyers. LLDPE''s high of $1315/tonne came on Monday, Jan. 23, Thursday, Jan. 26, and Friday, Jan. 27 for April sellers.

For PP, a low price of $1160/tonne was reached on Tuesday, Jan. 24, and Wednesday, Jan. 25 for February buyers. The high of $1220/tonne came on Thursday, Jan. 25, and Friday, Jan. 26 for April sellers.

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In additional LME news, the Exchange announced that it would begin publishing stock levels and resin movements into and out of its warehouses for PP and LLDPE. Market participants can now check the level of resins by different warehouse locations as well as grades, with three PP grades being traded and one grade for LLDPE.

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