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Articles from 2004 In August


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 NEWS

Industry 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 Brief

Russian 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.

The ABCs of household appliances

The data you should be tracking, how to interpret it, and where to find it to keep on top of the appliance industry. This is the sixth in a series of reports designed to help you understand how to make use of the wealth of economic data available for practical business planning.

>From the general to the specific, here''s a rundown of how you can keep yourself abreast of all the factors influencing this market''s behavior.

Evaluating the current market

Processors for the appliance market will want to watch these principal industry indicators when assessing the health of this market: appliance manufacturers'' shipments, orders, and inventories.

  • By comparing current shipment levels over extended periods, we can gauge the current health of the industry and identify market cycles.

  • The volume of new orders is indicative of current levels of sales. If the volume of new orders significantly exceeds sales, then retail and wholesalers are building inventories.

  • Manufacturers'' inventory levels generally indicate the current degree of confidence manufacturers have in the consumer market over the next financial quarter. Continually low inventories generally imply uncertainty or low confidence in future sales, while rising inventories are generally indicative of the opposite.

  • By looking at both inventory levels and industry shipments, we can determine the inventory-to-shipment ratio. This ratio, at times, can help predict the likely volume of new orders. For example, if shipments are consistently up while inventories remain persistently low, we can reasonably expect a jump in new orders within the near future; high inventories and low sales will indicate a likely contraction.

  • The exception to the inventory-to-shipments rule would be when inventory control dramatically increases within a given industry. Enhanced manufacturing/inventory productivity, through reforms like just-in-time inventory management practices, allow producers to greatly diminish the need for large inventories while maintaining normal production levels. As such, any projection based on inventory-to-shipment ratios must first take into consideration any significant change in inventory productivity.

    Looking down the road

    Of course shipments, orders, and inventory data can only tell us the current health of the market, or help us make limited projections concerning the likely changes in inventory levels. When trying to develop more forward-looking projections, processors will also need to factor in a number of general economic indicators, and data on the housing market in particular.

    Obviously, like most non-essential consumer markets, the appliance industry will always fare better when consumers have more disposable income in their pockets. This means that any of the general economic indicators used to predict the direction of the economy such as employment figures, income levels or per capita GDP, consumer confidence and price indexes, personal debt, inflation, housing and construction figures, and so forth, will help processors better gauge the how the appliance market will perform down the road.

    Using housing data to make projections

    Most plastics processors who supply the appliance industry already understand that housing is the most significant engine of growth. However, plastics manufacturers servicing this sector often ask how exactly they should interpret housing data. In other words, when and to what extent will a specific change in the housing market affect appliance sales?

    For those of you with similar questions, here are a couple of facts and general rules of thumb to keep in mind:

  • According to the National Assn. of Home Builders (NAHB), the average new homebuyer spends $2079 on appliances within the first year of home ownership.

  • The same study showed that buyers of existing homes spend, on average, $3766 more on furnishings and similar home amenities than non-moving homeowners.

  • As a result of the time it takes to secure financing, build infrastructure, satisfy building and zoning regulations, conduct the bidding process, finish construction, and sell the finished home, the housing market is traditionally slow to respond to improvements in the economy. However, the flip-side of this slow response time is that even after an initial bump in the economy, ongoing housing projects will continue to spur sales. As long as the building market does not experience the consolidation witnessed in other corporate sectors, industry response times are not likely to improve.

  • As the recent recession demonstrated, an economic slowdown does not necessarily guarantee lower housing activity; other market stimulants like historically low mortgage rates can compensate for general economic contractions.

  • Low mortgage rates not only encourage housing sales, but also allow existing homeowners to lower their personal expenses and increase disposable income by refinancing existing mortgages.

  • The increasing property values across the Northeast and the Midwest of the United States help build equity in homes, a process that allows homeowners to more easily finance their home improvements and appliance purchases through home equity loans. Ultralow interest rates also help to make second mortgages an attractive way to finance large purchases.

  • The total amount spent on kitchen remodeling jumped 58% between 1993 and 2002.

  • The major appliance market will generally feel the effects of new home starts nine months after they are begun and within two months after housing resales.

    Don''t forget to look for trends

    Trends within the appliance and housing sectors can have important implications for appliance manufactures and their suppliers. Here are just a couple of important trends that processors will want to keep an eye on:

  • While previously homeowners tended to purchase household appliances out of necessity—waiting until their appliances had worn out before replacing them—in recent years there has been a growing trend for designer appliances, which has shortened the appliance lifecycle. The increased demand for designer products has helped produce a somewhat stronger correlation between sales of existing homes and new appliance sales. This trend is particularly apparent in the refrigerator industry. Where once only specialist firms like Sub-Zero supplied this niche, demand has now grown to such an extent that market leaders like Whirlpool and General Electric have entered the ring.

  • Similar to the trend in designer refrigerators, new technology has helped shorten the life expectancy for appliances. Although the market for interactive appliances that allow the user to program specific functions is now limited to a small market of wealthy or tech-crazy consumers, as this technology becomes more affordable it will likely help encourage faster replacement times.

  • Technological innovations have also propelled niche markets for energy efficient appliances, a sector that should benefit from recent soaring energy prices.

  • New fads or products can also have a significant impact on the market. Take, for example, the power toothbrush, which has been one of the fastest-growing segments of the personal care appliance market. In one study, conducted by Information Resources Inc., sales for power toothbrushes grew by 3.6% through most of 2003, compared to a 7.3% drop in manual toothbrush sales. Processors can get a fair idea of these booming markets by simply visiting local retailers and discount outlets and taking note of which products are winning shelf space.

  • Ironically, as the average size of the American family diminishes, the average American home is getting larger, and bigger homes mean more appliances. According to U.S. Census Bureau data presented by the NAHB, in 2003 the average size of a U.S. home was 2320 sq ft, up from 1660 sq ft in 1973; and the number of homes larger than 2400 sq ft has jumped 27% since 1970. The increasing number of second refrigerators is a good example of how this trend plays out.

  • From 1970 through 2000, the percentage of single-person/other non-family homeowners in the U.S. grew from 18.8% to 31.2%, while the percentage of married couple homeowners has fallen from 70.6% to 52.8%; single-parent homeowners have also grown in number during this period. Projections through 2020 indicate that this pattern will continue. Such a demographic trend raises the demand for appliances—individual homeowners consume approximately the same amount of appliances as do married couples.

  • The growing number of home offices has also helped boost sales of individual office appliances that were previously shared among several workers at one location. In a 2002 NAHB Builders Practices Survey, 25% of new homes were being constructed with home offices.

    Growing overseas markets

    According to a February report conducted by Datamonitor Industry Market Research, it has been the quickly developing economies of Eastern Europe and Asia-Pacific that have helped to sustain growth in the global household appliance market, even as the more developed markets have faltered during the latest economic slowdown. The dramatic growth projected for countries like India and especially China should continue to propel the international appliance market as more consumers in these two enormous markets buy homes and spend their newly acquired incomes.

    To better service this growing market, an increasing number of manufacturers have begun to expand their operations overseas. Plastics processors that supply these manufacturers will likewise feel the increased pressure to follow their customers abroad.

    To help keep abreast of trade developing markets for U.S. appliances, we recommend that processors begin by tracking the general U.S. appliance trade at either the U.S. International Trade Commission''s Dataweb site or the Office of Trade and Economic Analysis'' TradeStats Express site. Once processors have identified growing export markets, they can obtain additional information on specific economies by reading the latest Country Commercial Guide produced by the U.S. & Foreign Commercial Service and Dept. of State.

    Where to look

    There are several sites that you will want to familiarize yourself with when searching for reliable data on the appliance market or its primary engines.

    Everything from vital economic indicators to more specific information on manufacturing and industry, monetary statistics, economic policy, employment, housing and construction, and trade, can all be found at STAT-USA''s State of the Nation index at www.stat-usa.gov. STAT-USA is run by the Dept. of Commerce''s Economic and Statistics Administration and compiles and crunches data collected by numerous government agencies and U.S. industries.

    Information on appliance shipments, manufacturers'' inventories, and orders can also be found at STAT-USA. However, more specific information can be found in the research commissioned by the Assn. of Home Appliance Manufacturers, or Appliance Manufacturer magazine. Look for it online at www.aham.org and www.ammagazine.com, respectively.

    Of course, the Repton Group also publishes periodic projections for the appliance market. These forecasts can be found in Modern Plastics.

    For housing data that examines more specific issues than the basic market indicators—including housing starts, building permits, new construction, sales, and mortgage information—again look at STAT-USA. For even more specific information, including consumer preferences surveys and housing figures and trends, readers will want to explore the information available at the National Assn. of Home Builders'' website at www.nahb.org.

    Finally, specific appliance trade data can easily be obtained at either the U.S. International Trade Commission''s (USITC) Dataweb site or the Office of Trade and Economic Analysis'' (OTEA) TradeStats Express site, which can be found online at dataweb.usitc.gov and at tse.export.gov, respectively.

    Agostino von Hassell [email protected], and Mark Bella [email protected], of the Repton Group LLC (New York)

    Data sources

    Appliance Manufacturer   www.ammagazine.com
    Assn. of Home Appliance Manufacturers   www.aham.org
    National Assn. of Home Builders   www.nahb.org
    OTEA TradeStats Express   tse.export.gov
    USITC Dataweb   dataweb.usitc.gov
    STAT-USA   www.stat-usa.gov
  • Creating a processor identity

    In today''s highly competitive environment, processors who want to stand out must develop and promote an identity that customers understand and value.

    For many plastics manufacturers, success or failure is based on the overall state of the economy. When times are good, production levels are up. When times are tough, plants sit idle. Today, even those manufacturers who are doing well aren''t comfortable projecting what the future holds. For nearly everyone, "business as usual" has a nostalgic ring.

    But there are those who are winning in today''s complex business environment. They''re doing so by redefining their value propositions and identifying target markets.

    Unlike many injection molders who struggle to pinpoint their unique value proposition—and fear that putting a stake in the ground may limit their market possibilities—Donnelly Custom Manufacturing (Alexandria, MN) has found a focus. It is clear about wanting to set market standards for "How Short Run Is Done." The company''s positioning builds on its business directive—to be the best short-run plastics manufacturer in the industry.

    According to Ron Kirscht, president of Donnelly Custom Manufacturing, it''s a deceptively simple directive with tremendous complexities. "Short run is inherently about complexity. By its very nature, it introduces a broad range of tooling, materials, and presses. Our average mold generates less than $10,000 in annual sales. At $22 million total, we have more than 2600 active molds, use more than 600 different materials, and run 30 injection molding machines. When you consider all the variations, it''s a complex equation."

    So, why would a company choose a strategy that''s difficult to execute and eliminates the long runs that most molders covet? The short answer: To gain a competitive advantage. The longer answer: To provide a greater value to customers than they can get anywhere else, one that requires specialized expertise; to attract employees who are committed to embrace, rather than resist, change; to reach a level of customer intimacy that is difficult to achieve; and to develop an organization that is aligned behind a common goal.

    "You can''t be all things to all people," Kirscht explains. "To succeed in short-run manufacturing requires focus. You need to understand the interrelationships between engineering, operations, and customer service so you can launch tools quickly, be experts in mold changeovers on the shop floor, and seamlessly convert customer orders into shipments."

    Donnelly''s go-to-market strategy is to become the single-source short-run supplier to leading OEMs that serve niche markets and have a heavy demand for a multitude of plastics components. The model requires customer intimacy and a deep understanding of each customer''s business. "Customer intimacy is key to our success. To serve customer organizations more fully, we have to develop manufacturing solutions that are tailored to a company''s specific and unique needs. Over time, you become an integral part of your customer''s organization," Kirscht says.

    This was not always the case. Founded in 1984 by Stan Donnelly, the company''s focus has always been on providing its OEM customers with value-added engineering and highly customized manufacturing and customer support services. But in 1992, Donnelly was a short-run manufacturer with 250 customers and $6.5 million in sales. The number of customers made it impossible to invest the time needed to know and serve each company well. A decision was made to shed 75% of the customer base (representing 25% of annual sales), even though it was profitable work, to develop customers who could ultimately provide a minimum of $200,000 each in annual sales. Today Donnelly''s revenue exceeds $22 million and the company serves only 40 direct customers.

    According to Kirscht, identifying and building a unique value proposition may not be easy, but it''s been instrumental to Donnelly''s success.

    "For Donnelly, narrowing our focus has actually expanded our value. Limiting yourself really frees you. When you openly and honestly define yourself to the marketplace, your business makes more sense. You can speak with one voice and truly focus on becoming a ''best-in-class'' service provider in your chosen market discipline."

    For Donnelly, it''s a strategy that''s paying off. The company is growing and has plans to add new manufacturing capacity. Recently, Donnelly received supplier awards of excellence from two of its customers: Scotsman Ice Systems, one of the world''s leading ice machine companies; and Fargo Electronics, the world''s leading developer, manufacturer and supplier of personalized ID card systems and printers. Kirscht concludes, "To set the stage for dependability, prosperity, and success, you need to correctly position yourself."

    By Mary Scheibel ([email protected]), principal, Scheibel Halaska Inc. (Milwaukee, WI), an integrated, strategic marketing communications firm.

    Contact information

    Donnelly Custom Mfg.   www.donnmfg.com
    Scheibel Halaska Inc.   www.insidesh.com

    Strategic marketing: An untapped opportunity

    Plastics manufacturers who are winning in today''s complex business environment are doing so by redefining their value propositions and executing plans to communicate those benefits to existing and potential customers. Mary Scheibel, principal of Scheibel Halaska (Milwaukee, WI), has worked with plastics manufacturers from OEMs to toolmakers and contract manufacturers. She identifies five key steps to getting started on a strategic marketing initiative. The goal is to not only react to marketplace changes, but to ultimately anticipate those changes to stay ahead of the curve—and the competition.

    1. Be strategic.

    Start with a business strategy. Know your value proposition and know who in the marketplace will value what you offer. A good strategic plan should articulate a go-to-market strategy that includes an understanding of what your customers currently value, marketplace trends, target markets, unique products or process and manufacturing capabilities, distribution channels, and revenue/profitability goals.

    2. Create a brand.

    Your brand is your promise. It''s what you want people to think about when they think about your company. We all recognize the value of consumer brands. Yet few business-to-business contract manufacturers are creating brands of their own. Your markets are crowded with competitors making similar claims using similar language. Among other things, this abundance of "me too" players and messages devalues your products and services and perpetuates price-based competition. Branding shortens your sales cycle and decreases the cost of sales by creating a friendly predisposition to your company ahead of sales calls. It helps customers and prospects understand why they should pay a premium for what your company has to offer.

    3. Integrate internal and external communications.

    Great brands are created inside organizations by employees who fulfill on the company''s brand promise every business day. Strategic thinking can''t be left in the boardroom. The role of brand-based marketing communications is to explicitly declare your commitment. This makes it critical to invest in communications that educate and mobilize employees. People accept your brand story or not based on the experience they have encountering your people, processes, products, and services.

    4. Execute creatively.

    Great creative packs more than just stopping power. Great creative captivates people and influences their actions. While strategic thinking is critical, it falls short of the goal unless strategic thinking is integrated with creative execution. Contract manufacturers are notorious for communications that simply describe their services and feature poor quality photographs of building fronts and manufacturing equipment that could be anywhere. Creative that does not differentiate your company damages the integrity of your brand and diminishes the value of your investment.

    5. Get professional help.

    While most manufacturers wouldn''t dream of having anyone less than an expert toolmaker design a tool, most rely on insiders to design their marketing programs. The reality is that strategic marketing simply isn''t a core competency in most companies. Plus, it''s hard to see the front of the house from inside the house. By bringing in outside counsel, you bring in new ideas and perspectives that aren''t weighted by power, position, or authority in the company.

    An investment in strategic marketing often represents a significant change, one that may not be easy. The key is to use strategic marketing as a competitive advantage. In a market where competition is intense and margins are slim, it can make the difference between success and failure.

    Isolator' promises more precise mold movement

    Originally designed to boost the productivity of molding machines for optical media, a development out of the Netherlands may have implications for many other markets.

    Processors of optical media—and soon other applications—may benefit from an "isolator," developed by a subsidiary of Dutch moldmaker Axxicon, to ensure platen parallelism on optical media injection molding. The isolator, a completely mechanical device, is said to help molders improve precision and reduce the need for adjustments to mold and machine during processing.

    The first commercially available injection equipment outfitted with the isolator was launched in May at the Media Tech show in Frankfurt, Germany. Japanese manufacturer Toyo Machinery & Metal Co. (Hyogo) has an exclusive license to include the system on machines for optical media processing. Toyo and FTE unveiled a prototype machine at the Media Tech show in Las Vegas in June 2003 (June 2003 MP/MPI).

    FTE (Nuenen, Netherlands) is dedicated to design and engineering of "next-generation mass production solutions," with most of its work exclusive to Axxicon, explains Arie Brouwer, FTE general manager. The Discbox machines from Toyo have vertical clamp units with the top half of the mold fixed and only the bottom half moving; FTE''s isolator is affixed to the moving half. With use of the isolator, high-precision products can be molded. Because the moving half can make movements in both angular and horizontal directions, very accurate parallelism and centering of the two mold faces can be achieved. Advantages are also realized in space savings: a standard injection molding unit for optical media, with horizontal clamp, occupies about 3.5 by 1m compared to the 1.5 by .75m required for the Toyo unit, he says. The Discbox is an all-electric machine and mold heating is integrated into the machine platform rather than controlled by a standalone unit, again saving floorspace while also simplifying an operator''s work.

    For DVD processing, cycle times are less than 2.5 seconds, says Brouwer. Toyo is working to reach even faster cycles, comparable with the fastest horizontal machines, but with the Discbox requiring about one-third-less clamp force. This reduction is possible as the isolator removes much of the friction between a mold and a machine''s tiebars. "We call it isolator because it isolates the mold from the tiebars and, hence, the machine environment," Brouwer says. Because of the isolator, molders no longer need be concerned with adjusting a machine''s tiebars to account for conditions external to the mold, such as processing facility temperature or humidity.

    The disc market is high volume, but dominated by a relatively few processors. Axxicon officials say they plan to optimize the isolator technology for other types of injection molding machinery. "We are already considering requests for other types of applications including mobile phones and medical parts molding," two areas where Axxicon molds already see great use, notes Brouwer.

    Matthew Defosse [email protected]

    Contact information

    FTE b.v.   www.ftengineering.com
    Toyo Machinery & Metal Co.   www.toyo-mm.com

    New mold improves disc molding

    Axxicon has sold more than 600 of its ST molds for DVD molding since the molds entered commercial use in 2002. Now the moldmaker has introduced a new version called SF for processing digital video discs (DVDs) as well as recordable compact discs (CD-Rs). The mold is similar to the ST, but includes a stamper on the fixed side of the mold. This facilitates simplified handling for systems integrators and makes the molds suitable for a wider range of injection molding machinery, giving Axxicon access to a broader customer base.

    "Our ST molds fit on a wide variety of (injection molding) machines," says Maurice Smits, Axxicon sales manager,. "Our competitors'' molds generally are limited to use on one or two machine types." There are few competitors; Smits estimates that fewer than 10 moldmakers serve the optical disc market. The market has kept Axxicon busy, he says: "Last year [2003] we installed over 500 optical disc molds."

    Electric injection molding: Europeans fall into line

    Hydraulic machines will still out-number electrics at this year''s K, but it may be the last time.

    Now could be the moment when all-electric machines finally begin to sell in appreciable numbers in Europe, the final bastion of the high-performance hydraulic machine. European molders are increasingly having to concentrate on high-tech and specialist applications for which electric machines, with their extreme precision and repeatability, are best adapted.

    The medical sector, strong in Europe, requires parts to be made in cleanrooms, and electric machines are, overall, the safest option. The energy-saving potential of electrics is an important factor (even if a recent survey by Demag Plastics Group (DPG) indicates energy consumption has fallen down the list of criteria by which processors judge machines). Price differentials between hydraulics and electrics are eroding.

    No surprise then that by K 2004, there will be only two major injection machine makers in the world (Boy and Husky) not offering an all-electric machine. Even "bargain-basement" Chen Hsong and Haitian have them.

    The show will see Swiss company Netstal (Naefels) launch the Elion (for sale in late Q1 2005). DPG has had second thoughts about ballscrew drives and has decided to market in Europe machines originally designed by Van Dorn Demag for the U.S.; at the same time, smaller, direct-drive machines it makes in Germany will be marketed in the U.S. (see First Look, August 2004, MP/MPI). Arburg (Lossburg, Germany) is extending its Alldrive range.

    Sandretto (Turin), which built prototypes for a key customer several years ago, is now going commercial. BMB (Brescia), known for its high-speed machines, is introducing a range of electrics in the 1600- to 3500-kN range based on its KW toggle clamp system. Two motors drive the clamp and two inline motors do injection and plasticating. MIR (Brescia), which showed a prototype at K 2001, will finally go into production with the e-power in 2005. Negri-Bossi (Milan) will show two electrics plus its first two-platen machine, an 18,000-kN Bi-Power with hydraulic clamp and electric injection. Sister company, Oima, by contrast, will do high-speed molding of closures on a Px machine that has hydraulic injection but an electric clamp. Plastic Metal (Gambellara), which showed a prototype Elettryka at Plast in Milan last year, is also now in production.

    There will be other new developments from more established suppliers including Battenfeld, Bodini, and Ferromatik Milacron (for more, see K 2004 Machinery Preview).

    Counting the costs

    Says Michael Koch, managing director of Ferromatik Milacron in Malterdingen, Germany: "We have spent the last 12 years gathering extensive experience in this field...The slightly higher initial investment associated with fully electric machines is usually recouped by lower operating costs within the first year.

    "Our experience shows, however, that in many cases the investment cost hurdle no longer exists. Equally specified fully hydraulic machines would have to be equipped with parallel functions in all axes and be outfitted with costly hydraulic technology in order to duplicate the features of the electrically driven Elektra Evolution machine." FM introduced the Evolution at K 2001 as a more cost-effective version of the original Elektra, which it then dubbed the Classic, and which the Evolution significantly out-sells.

    Some electrics will almost definitely be more expensive though. Already offering arguably the best and highest-priced hydraulic injection molding machine in the world in the SynErgy, Netstal has set itself some hard tasks in developing the Elion electric machine, which debuts at K 2004—not least of which will be how much to sell it for. It will be available in four sizes, 500, 800, 1200, and 1750 kN, and all but the largest will be running at K 2004, when pricing will be announced.

    The company has gone its own way in developing drive systems on the injection and clamp units.

    The former uses a form of rack-and-pinion system, while a novel solution has been found for translating the rotary movements of the motors into the linear movements of the clamp, which uses a form of toggle.

    The mold compartment is free of oil. The clamp unit uses a completely enclosed lubrication system; the linear guides are oil-free. Company CEO Bernhard Merki says machines (hopefully not Netstals) can leak as much as 200 liters of lubrication oil in a year. "Oil is expensive, and processors pay a lot [to have it disposed of]," he says.

    The machine has a maximum injection speed of 450 mm/sec, and there are various drive options available to provide, for example, both high speed and high torque. This top speed is not remarkable, and well below that advertised for many other machines intended for packaging applications. But Thomas Robers, general manager for marketing, sales, and application technology, notes that the Elion is not a packaging machine. "In the 500- to 1750-kN range, we don''t see typical packaging applications." He also points out that the acceleration of the machine is such that the top speed is reached very quickly.

    Field trials with eight machines were only due to start in August. Merki says various elements of the machine have already undergone intensive internal testing —"the clamp has been running solid for 18 months, we are sure that mechanically everything will be OK"—but the entire assembly now has to face the rigors of constant customer use.

    Merki is, however, conscious of the fact that Netstal lost, however temporarily, market share in the optical disc market because of the delay in bringing out its e-Jet all-electric machine, which went on sale in May 2003, long after Japanese rivals Sumitomo and Toyo brought out theirs. But he says important lessons have been learned, both technical and commercial. He says it was important that when the e-Jet went on sale it worked flawlessly, continuously. This is critical in the disc market, where users treat injection machines as a ''black box'' and have much less idea of how to fix them than do more conventional injection molders.

    Precision in molding small parts fast

    Engel will be presenting two production cells based on tiebarless E-Motion machines with servoelectric drives. The first demonstrates how its highly innovative X-Melt "expansion injection molding" process, which depends on the compressibility of plastics melts and the precision in screw positioning of electric machines, can now be applied to multi-cavity molds. Cavities are filled in fractions of a second through the abrupt, explosion-like expansion of the precompressed melt when the nozzle is opened. Typical shot weights range from .1 to 40g; typical wall and section thicknesses range from .1 to .8 mm; and flow-length/wall-thickness ratios can be as as high as 400:1.

    A 2000-kN model will make battery casings for a mobile telephone on a four-cavity hot-runner mold. Synchronous opening of all four hot runner nozzles is achieved by a plate across the back of the nozzles (a system codeveloped with Mold-Masters Inc., Georgetown, ON).

    The technology can also be used for complex microprecision parts, an application Engel says could not have been realized with a conventional machine. Melt compressed under a pressure of 2000 bar will expand around 10% when the pressure is released, but the screw has to be held exactly in position after compression to stop it shooting forward when the needle valve nozzle opens, overfeeding the mold. Only electromechanical drives meet this requirement.

    In a bid to expand electric-drive technology into more mainstream areas, Engel is also introducing larger versions with toggles and tiebars (the E-Motion T)—they go up to 3500 kN—as well as a tiebarless machine with electric drives on the injection unit only (the slightly misleadingly named Victory Electric). Engel introduced the Victory Electric in May with clamp forces ranging from 600 to 1200 kN. Versions with 1300 and 1500 kN will be ready by October.

    Japanese looking closer at Europe

    Japanese producers of injection machines have never managed to gain more than a very modest share of the European market. The picture is unlikely to change much, but they may be able to sell more electric machines than they have hydraulics. That is one reason why, in April, Mitsubishi Heavy Industries appointed Mitsui Machine Tool Europe (MMTE; Neuss, Germany) as its agent for machines initially in the 3500- and 4500-kN category. They will complement the smaller Fanucs that MMTE already markets. MMTE says the background to the agreement is not just the reviving economic situation in Europe, "but also the recognition that the European market is now ready for growth in the all-electric...sector, not least in the medium-clamping-force range." It will target automotive, food, and pharmaceutical in particular, where it says the 20% or so difference in price compared with hydraulic machines is more than offset by higher performance and increased productivity.

    Whither Husky in the electric world?

    Husky says that since many of its Hylectric machines are used in applications demanding high injection rates and pressures "we don''t yet see that an all-electric machine can practically meet our customers'' needs. The use of all-electric is even more challenging with larger machines, and many of our traditional high-performance applications, such as thinwall packaging and closures, are now moving into machines as large as 10,000 kN.

    "On the Hylectric machine, we first electrified the screw drive based on the fact that many applications only make intermittent use of plasticating. Plasticating is typically the most energy-intensive function on any machine, and thus potentially the largest waster of energy if not managed properly. The electric screw drive has led to energy reductions for many applications when the screw drive can be ''turned off.''"

    The company says it will continue to monitor drive technology and "apply the technology which provides the best payback to our customers while maintaining the performance that they demand."

    Peter Mapleston [email protected]

    Contact information

    Arburg   www.arburg.com
    BMB   www.bmb-spa.com
    DPG   www.dpg.com
    Engel   www.engel.at
    Ferromatik Milacron   www.ferromatik.com
    Husky   www.husky.ca
    MIR   www.mirpresse.it
    Mitsubishi   www.mhi.co.jp/sanki/injection/injec_e/
    Negri-Bossi   www.negribossi.com
    Netstal   www.netstal.com
    Oima   www.oima.com
    Plastic Metal   www.plasticmetal.it
    Sandretto   www.sandretto.it

    The problems and promise of the North African market

    When assessing most North African markets, two principle benefits spring to mind: the region''s abundant oil and natural gas resources, and its location undergirding the enormous European market.

    Off-setting these two positive attributes, however, is the mounting concern over religious and politically inspired terrorism. When deciding on whether or not to invest in this region, plastics processors will need to carefully weigh these conflicting factors.

    The lure of cheap oil and gas

    For plastics processors, the region''s oil and natural gas resources hold dual significance: as an energy source and a primary resin feedstock. In the past, cheap natural gas reserves within industrial markets like North America mitigated the importance of this natural asset.

    However, now that old reserves are drying up and the voracious consumption patterns of newly emerging industrial giants like China and India are sucking up much of the world''s supply, energy and resin prices in many manufacturing markets have begun to rise—a trend we expect to continue for some time.

    The significance of feedstock prices was highlighted in a June 16, 2004 newsletter from Petroleum Argus Inc., wherein Shell Chemicals, one of Europe''s largest plastics makers, estimated that for each $1/bl increase in the price of oil, the company faces a $25-million impact on its operating profits. Around 80% of Europe''s plastics producers use oil as their primary feedstock; the majority of the remaining 20% use natural gas; these figures are generally reversed in the U.S.

    If prices for energy continue to climb as we expect, many plastics manufacturers might take a more serious interest in shifting production to markets within energy-rich regions like North Africa and the Middle East, regardless of increased threats from terrorism.

    Morocco

    Morocco''s position 10 miles from Europe, a moderate climate, developed infrastructure, and increasingly open market have been attracting investors for many years.

    The Moroccan government has worked hard to encourage this trend. Beginning in 1992 with its privatization program, the government has since continued to reduce its role in the economy and created a more open and transparent system. As part of this effort, the government has recently streamlined its customs department.

    Other improvements include the creation of new regional investment centers, the country''s first commercial courts, and a sweeping labor code, passed in July 2003, which gives modern protections to both employee and employer.

    Morocco now has comprehensive Free Trade Agreements with both the EU and the U.S., as well as the Maghreb Arab Union, Saudi Arabia, Jordan, Tunisia, and Egypt. These agreements grant foreign manufacturers operating in Morocco duty-free access to all these important markets.

    The country remains generally stable, and the government has shown a commitment to root out terrorists and incorporate itself in the larger regional and global community. Plastics processors should note that plastics were one of this market''s leading imports in 2003.

    Algeria

    Although many of the bureaucratic inefficiencies and protectionist policies associated with its formerly centralized economy still exist, investors should know that the Algerian government continues to take significant measures to reduce tariffs and privatize state assets so as to come into greater compliance with international standards. This process corresponds to its ongoing negotiations for WTO accession and its 2001 association Agreement with the EU.

    Although Algeria''s abundant energy reserves still account for the lion''s share of its GDP and foreign investment, other areas are attracting significant foreign investment. And government efforts to ensure foreign investors the same legislative rights as domestic companies have helped its effort to lure outside investors.

    Like Morocco, Algeria has had its share of problems with Islamic terrorism, but also like Morocco the government has been able to limit the impact of these groups and, as a result, political violence has had only a minimal impact in the capital and other industrial areas. However, investors should be aware that elsewhere political violence continues to have a more tangible impact.

    Tunisia

    The Tunisian government has successfully implemented a series of IMF economic reforms over the last 18 years. These changes, along with its long track record of political stability and key geographical location, have all helped the Tunisian economy sustain significant growth from 1986 through 2002.

    This environment has helped lay the groundwork for Tunisia''s membership in the Arab Maghreb Union and its association agreement with the EU, which aims to eliminate tariffs by 2008. These same policies have also helped to lift most import restrictions—now only around 3% of imported goods need prior authorization.

    However, despite serious improvements, Tunisia still maintains significantly high tariffs on many imports, which in some circumstances exceed 200%. In addition to these duties, certain luxury durable goods can also face consumption taxes that at times almost reach 700%, as well as an often customary 18% VAT.

    The Tunisian economy has not suffered from the natural resource curse plaguing many other developing states, and its manufacturing sector accounted for more than 80% of its exports in 2002. Both Tunisia''s extensive natural gas reserves and its developed manufacturing base should offer plastics processors a significant investment enticement.

    The country remains one of the most politically and economically stable countries in the region, maintaining close relations with both the EU and US.

    Egypt

    Egypt has a huge consumer market of 70 million people, making it the largest single Arab market. The country also enjoys substantial income from its oil and gas reserves and relatively low levels of foreign debt.

    Complementing these positive attributes have been the government''s efforts to open Egypt''s markets to foreign trade and investment and relinquish some of its control over the economy. Law 8 of 1997, which is designed to target specific economic sectors and areas of the country, allows 100% foreign ownership, and guarantees the rights to remit income earned in Egypt and to repatriate capital. Another positive move came in early 2003 when it decided to float its currency on the international market.

    Equally important has been its participation in regional trade agreements like its association agreement with the EU, or its membership in the Arab Common Market and the Common Market for Eastern and Southern Africa (COMESA). In January 2003, Egypt also took the first step towards establishing a free trade area that will encompass itself, Tunisia, Jordan, and Morocco.

    On the other hand, Egypt still presents investors with several serious challenges. To begin, critics have complained that the government''s privatization program is proceeding at an excruciatingly slow pace. More important for exporters, import tariffs remain discouragingly high, and customs and ports procedures are incredibly cumbersome.

    Finally, many international lending institutions are becoming increasingly concerned with the country''s ballooning budget deficit, a problem that was recently exacerbated by government attempts to maintain artificially low prices on many of the country''s staples.

    Libya

    Libya is only now emerging from over a decade of international isolation as a result of its government''s ties to global terrorism. However, there have been no credible reports of Libyan involvement in terrorism since 1994, and all initial indications are that the Libyan government is seriously committed to reentering the global community of nations.

    Libya''s principle steps toward international redemption came: a) in 2003 when it finally fulfilled the last of the UN requirements related to the Pan Am 103 bombing over Lockerbie, Scotland; and b) in December of 2003 when it shocked the world by admitting to its ongoing nuclear weapons program and agreeing to allow the international community to monitor its dismantling.

    Doubts about the government''s continued ties with Islamic terrorists were largely put to rest in the late 1980s, when Moammar Gadhafi began to actively pursue an anti-Islamic fundamentalist policy at home. However, political instability still plagues the Gadhafi regime.

    We expect the U.S. to eventually lift most of its current sanctions, including the amended 2001 Iran and Libya Sanctions Act (ILSA), which seeks to penalize non-U.S. companies which invest more than $20 million in Libya''s oil and gas sector in any one year.

    On the economic front, the initial signs are good. Libya has applied for WTO membership, has begun to lower some of its protectionist subsidies and price controls, and has announced further plans for privatization of state assets.

    When Libya does finish its reinsertion into international markets, investors can look forward to abundant oil and gas resources, and access to the small (only around 5.6 million) but affluent consumer market.

    Plastics processors will be particularly interested in Libya''s growing petrochemical industries, which has shown significant growth over the last few years. These industries should greatly benefit from ongoing regional free trade deals as well as the expected investment from European firms now that restrictions have been lifted.

    Agostino von Hassell [email protected], and Mark Bella [email protected], of the Repton Group LLC (New York).

    Chinaplas 2004: Birth of the next big show

    As manufacturers head to China''s growing and lucrative markets, it should come as no surprise that plastics tradeshows there are also booming. Chinaplas 2004, held in late June in Shanghai, is proof. With 55,000 attendees, it was bustling, busy, and energetic. MP was there, and this is what we found.

    If you went to Chinaplas looking for new machinery, you were likely disappointed. With the K show on the horizon, most suppliers kept their new products at home in preparation for the event in Dusseldorf next month. If you went, however, in hopes of seeing the state of the art in processing technology, it was all there. Most of the talk at the show, however, revolved around the Chinese market and its growth potential. That is, it''s growing, but how fast? And can it be sustained?

    China''s recent efforts to curtail credit to ease economic growth from almost 10% annually to a more sustainable 7%—thereby preventing a hard landing—appear to be working. Overall growth in factory output slowed to an annualized rate of 17.5% in May, compared with 19.1% in April, for example, while fixed-asset investment grew 18.3% in May from a year earlier, compared to a 34.7% gain in April.

    Nevertheless, observers see no slowdown in foreign direct investment, much of it ultimately export-oriented, as China further augments its status as the world''s workshop.

    "The government wants to eliminate undesirable investment by small, inefficient companies that rely on bank loans, such as in cement and steel, but they are still courting high-tech multinationals," says K.C. Kwok, regional chief economist for Standard Chartered Bank. "It''s a cleansing process that will see inefficient investment weeded out, some companies go belly up, and the removal of bottlenecks, but it will do China a lot of long-term good."

    While investment in China has been growing at unsustainable rates, a lot is investment that should never have happened, explains Kwok. "China produces 40% of global cement output, but 80% of this is low grade and not suitable for use in skyscrapers and bridges." Kwok emphasizes the urgent need for investment in infrastructure to ensure continued growth in China. "There''s a nationwide power shortage, factories are working four to five days a week, and ports and highways are congested."

    Case in point: a recent Monday visit by Modern Plastics to processor Jetcrown Industrial in Dongguan, South China, found half the injection machines shut down. "We have to cut operations by 50% for 10 to 20 hours on Mondays and Thursdays, but this issue will be rectified come September when we install two more generators," says marketing director S.Y. Tang.

    (Another case in point: Air conditioning at Chinaplas was minimized to conserve energy. In fact, the temperature in the halls was not allowed below 26°C. Think hot, humid, and sweaty.)

    The definition of big

    Numbers associated with China are almost always massive. It is home to an estimated 1.3 billion people and more than 100 cities claiming a population of at least 1 million. Its urban population is already close to 340 million. It is also home to the world''s largest injection molding machine supplier, Haitian Machinery Co., based in Ningbo. Company general manager Jianfeng Zhang says the firm plans to manufacture a total of 17,000 machines at its 13 plants in China this year.

    Much of the increase in recent years has derived from production of small machines. Traditionally, Haitian has focused on medium and large units—it claims a 60% share in the large-machine (5,000 kN-plus) market—but estimates 2004 small-machine production will reach 7200 units.

    Zhang says Haitian exports 30% of output now versus 15% three years ago. It has operations in Italy and Turkey for minor modification on European-spec machines and is considering a similar operation in Brazil. Haitian is developing a large two-platen machine.

    Haitian and Chen Hsong have a combined share of 30% of the $1-billion Mainland market for injection machines according to Stephen Chung, group chief strategy officer at Chen Hsong. With low per-machine average cost due to the predominance of locally produced machines, that translates to a market somewhere between 60,000 and 80,000 machines annually.

    Chen Hsong officially opened its new plant for large machines in Shenzhen in August, but due to strong demand for small machines, it has not been able to ramp up production. "As a group, we are producing 40 to 50 per month compared with our target of 80," says Chung. "Production of small machines has spilled over to our large-machine plant."

    West looks east

    Considering the low production costs, market scale and potential, Western machinery suppliers increasingly view a production base in China as a strategic advantage in both accessing the local market and supplying equipment globally. The likes of Battenfeld, Demag, Husky, and Reifenhauser, for example, are among those with Mainland production bases, while Engel plans production of large machines in Shanghai to complement smaller units made in South Korea. Japanese firms such as Toshiba and Mitsubishi are also building machines in China for local and overseas markets.

    Toshiba has manufactured all-electric machines in Shanghai since April 2002, and this year will produce 350 machines, up from 180 in 2003, according to Masaki Konishi, VP of Shanghai Toshiba Machine Co. Toshiba''s locally-produced machines are 20% to 25% cheaper than those made in Japan, but standard injection speed is lower—150 vs. 200 mm/sec. Toshiba already exports machines from China to Southeast Asia, Japan, Europe, and the U.S. It plans to boost production to 500 units by 2006, and build larger (4500- and 5000-kN) machines.

    Mitsubishi outsources production of injection, clamp, and panel units for 3500- to 8500-kN hydraulic machines to Hangzhou Kanon Machinery Co. (Zhejiang Province). The sub-assemblies are shipped back to Japan for final assembly with core parts such as screws and controllers made in Japan. Current capacity is 200 sets. Production started in May last year. Eventually, Mitsubishi plans local production in China, including all-electric machines.

    Currently, Mitsubishi sees Southern China as a healthy market for large machines due to investment by Japanese car firms. Honda and Nissan are already there and Toyota plans a major investment. Mitsubishi set up a technical center in Guangzhou in August.

    A pioneer in the manufacture of processing equipment in China is granulator maker Zerma Machinery & Recycling Technology, which relocated its headquarters, R&D, and production from Germany to Shanghai in 1999. "It was a brave decision but we had no other choice as our competition were moving to Southern and Eastern Europe," says North America sales director Max Paeslack. "We went one step further and came straight to China." Zerma expanded its plant from 16,000 to 20,000 sq m in June and targets production of 3000 units, including shredders, granulators, and pulverizers this year, 80% of which are for export.

    For those without local manufacturing operations, China is still proving the most attractive market. Japan shipped 9704 injection presses to Greater China (the Mainland, Hong Kong, and Taiwan) in 2003, of which about 70% were new units. Shipments in the first two months of 2004 to the mainland, meanwhile, were up almost 38% to 1126 units.

    At Chinaplas, Sumitomo exhibited its latest all-electric—the SE130D, with an injection rate of 800 mm/sec. With its booming telecom industry, China is ready for such high-tech ware according to Yuk Kiang Lau, senior engineer at Sumitomo. The machine on show was sold to Jichuan Precision Communication Device in Tianjin to mold mobile phone battery casings.

    For its part, JSW recently delivered a 4500-kN twin-screw sandwich molding machine to Canon''s operations in Suzhou to mold business machine panels from PC/ABS with a 25% core of regrind. Akitoshi Tamura, manager of overseas sales at JSW, says, "Canon is adopting common global environmental standards in China as well, which means recycling 100% of runners."

    Fanuc, meanwhile, says China''s power shortage is prompting more processors to consider all-electric machines. "Peak electricity tariffs can be four times as expensive as off-peak rates so even without a shortage, all-electrics make a lot of sense in China," says Susumu Itoh, director of local subsidiary Fanuc Robomachine (Shenzhen) Ltd. He predicts bright prospects for all-electrics once Hong Kong and Taiwanese processors in China switch away from hydraulic machines in numbers.

    Machine suppliers from Hong Kong and Taiwan, meanwhile, are beefing up their manufacturing presence in China. Hong Kong''s Elite Precision Machinery, for example, is doubling its production capacity to 400 machines/month through addition of a new plant in Dongguan that joins existing operations in Shenzhen and Saozhang. Start-up is scheduled for October.

    Elite is also planning to tie up with Germany''s Ettlinger (Konigsbrunn) to manufacture micromolding machines based on German designs in China. "The cooperation will eventually be expanded to include large low-pressure machines," according to Ettlinger general manager Roderich Ettlinger.

    The major Europe- and U.S.-based machinery suppliers are in various stages of actual and potential expansion into China. Demag, as is well known, is producing machines in Ningbo in a joint venture with Haitian. Demag-Haitian hopes to sell about 700 machines into China in 2005, with another 300 coming to the country from Germany. Milacron announced in April that it has established a joint manufacturing agreement with Jiangnan Mould Technology Co. Ltd. (Jiangyin) to produce medium- and high-tonnage machines under the Milacron brand name.

    Battenfeld Chen Extrusion Systems, a JV of Battenfeld and Chen Hsong, has been building extrusion systems (pipe and profile, sheet, and blown film) in China since 1997 and recently moved into a new facility in Foshon, Guangdong that doubles plant capacity, says Jian Peng, general manager. Similarly, Reifenhauser announced at Chinaplas the opening of a new production facility in Suzhou. It will make relatively low-cost, three-layer, 1700-mm-wide blown film lines, with core components sourced from Germany and all others made locally. Reifenhauser plans to build six lines in the first year and 16 to 20 in the second. If the business is successful, it will add 2300-mm-wide lines.

    Arburg and Netstal are both in the process of converting sales offices in China into full-fledged subsidiaries that provide sales and technical support. Neither, however, has plans to do actual production in China. Krauss-Maffei already has a subsidiary in China and is actively considering joint venture manufacturing. The biggest challenge, says Guido Radig, head of corporate communications marketing, is finding a Chinese or Taiwanese supplier who can provide the needed manufacturing support without compromising the integrity of K-M''s processing technology. In any case, Radig says any K-M machines made in China would likely be sold under a different brand name. K-M currently sells about 500 extruders and 500 injection machines into China annually.

    Coperion (Stuttgart) released more details of its strategy for the recently acquired Chinese compounding extruder supplier Keya (May 2004 MP). Now known as Coperion Keya, the firm will continue to offer its entry level TE Series twin-screw machines (300 rpm), while the performance of its HTE Series (600 rpm) will be upgraded using Coperion technology.

    The jointly-developed STS (standard twin screw) Series compounders (600 to 900 rpm but higher torques than the HTE due to use of European gearboxes) will be marketed globally to fill a niche between other made-in-China machines and those manufactured by Coperion in Germany, which operate at up to 1200 rpm. Alf Hofstetter, president of Singapore-based Coperion Pte. Ltd., says, "The target is to sell 100 STS machines this year out of the 400 manufactured at Coperion Keya."

    Materials plans

    China has traditionally depended on imports for two-thirds of its engineering thermoplastic compound requirements, but with its ever-increasing significance as a global production base and more product development work being conducted locally, the need for local sources is growing.

    Multinational suppliers appear up to the challenge. PolyOne, for example, will complete a 12,000-tonnes/yr compounding facility in Shenzhen, Guangdong Province, in Q1 2005. The firm also operates in Shanghai and Suzhou.

    DuPont, meanwhile, recently added two lines for reinforced nylon 66 at Shenzhen. A further expansion is planned by the first half of 2005. On the resin supply side, its polyacetal plant JV with Asahi Kasei will start up in Q3 2004. Capacity is 25,000 tonnes/yr.

    In polycarbonate, Teijin says it will start shipping from its 50,000-tonnes/yr plant in Jiaxing in Q4 2005. Another 50,000 tonnes/yr of capacity will be in place by October 2006. Bayer, meanwhile, plans to start up its 100,000-tonnes/yr PC plant in Shanghai in early 2006. A 40,000-tonnes/yr compounding facility is to be completed in Q4 of 2005.

    PC supplier Samyang Corp. (Seoul) says it will set up a 12,000-tonnes/yr compounding plant in Qingpu, near Shanghai, by January 2005, and boost capacity to 50,000 tonnes/yr in three years. K.D. Feddersen & Co. (Hamburg), meanwhile, plans a 3000-tonnes/yr plant in Suzhou to make nylon 6 and 66 compounds.

    A. Schulman Inc.''s compounding facility in Dongguan, meanwhile, is also nearing completion. The company plans to start production in the fall of 2004. Initial annual capacity will be approximately 35 million lb. This facility will serve China''s film and packaging markets. The firm also recently announced a second line for this facility. It is targeted to start production in 2006 and will produce engineered compounds for automotive and consumer product applications. With all these activities, observers estimate two-thirds of ETP compounds will be produced locally by 2008.

    The owner of the biggest stand at Chinaplas was GE Advanced Materials, which introduced several new products for the China market including stainless-steel-filled compounds for EMI shielding, materials for gear packages, resins for solar applications, mobile phone materials, Lexan sheeting for roofing, and a new line of color choices in the Visualfx series. Called China Palette, the colors are intended to show a connection with Chinese culture and history.

    Stephen Moore [email protected], and Jeff Sloan [email protected]

    High-flow POPs designed for polymer modification

    RESINS/COMPOUNDS

    Two polyolefin plastomers (POPs) produced by a single-site catalyst combine high flow and low crystallinity. Affinity GA 1900 and 1950 are used in blends or compounded with other polymers to improve the flow of, for example, styrene ethylene butylenes styrene (SEBS) or thermoplastic vulcanites without significantly reducing impact resistance or toughness. Unlike waxes or oils, these two grades do not impart problems of brittleness or migration in the end product, says Selim Yalvac, development leader at the producer. Addition levels range from 5% to 30%.

    Although other plastomers are on the market such as ExxonMobil''s Exact or Voridian''s Mxten CV family, Yalvac says no other material offers the same characteristics as these Affinity solution process-produced grades. They can be used as a masterbatch carrier with loading capabilities of up to 60% and have low melting points of 68ºC to 70ºC. They are effective because of their low viscosity (8.2 and 17 Pa.s) in dispersing hard-to-load and heat-sensitive additives such as perfumes, crosslinking and blowing agents, aluminum trihydrate, or some organic pigments. Yalvac says as carriers they are compatible with all polyolefins, styrenics, nylons, and PET, as well as thermoplastic epoxy.

    Although these two GA grades can''t replace maleic anhydride as a basic component in tie layers for multilayer films, they do provide some adhesion enhancing qualities to improve bonding between polyethylene and polypropylene, says Yalvac. They can also be used as a carrier in powder injection molding for metal or ceramic processing as they are high loading, easily processed, and clean burning. Dow Chemical, Midland, MI, USA; +1 713-978-3296; www.dowaffinityga.com

    ADDITIVES

    Hard-to-color PVC applications benefit from special material

    Micranyl NQ-F is a range of pigment preparations based on a heavy-metal-free carrier for PVC applications. Available in microgranular, free-flowing form, the carrier is based on a plasticizer that contains no phthalates. It offers good color strength and reproducibility. It promotes good color consistency and is rapidly incorporated into the melt. Pigments are insensitive to agglomeration by high shear during dry blending in high-speed mixers. The microgranules allow cleaning times and material losses to be cut by up to 50%. Ciba Specialty Chemicals, Basel, Switzerland; +41 61 6364444; www.cibasc.com

    RESINS/COMPOUNDS

    S/B makes thin, clear films for stretch-hood applications

    Styroflex styrene/butadiene thermoplastic elastomer combines high resilience and toughness, optical clarity and processing stability, as well as gas and water-vapour transmission. Second-generation Styroflex 2G 66 produces extremely thin film for such applications as stretch wrap while retaining key properties. It contains very few gels, enabling films as thin as 10 µm to have good tear properties. Film clings closely to the packaged goods without tearing on sharp edges. Styroflex marketer Robert Huber says the film is superior to polyethylene film thanks to its great elasticity and resilience. For instance, when stretched to 500% of its original length, a special polyethylene (PE) will at best recover to only 400%; Styrolux film, however, recovers to 100% or double its original length when the tension is released. Size and weight of the wrapper can be halved.

    Stretch-hood technology is an increasingly attractive alternative to shrink-wrap and stretch-winding techniques for packaging pallets (May 2004 MP/MPI). The use of low-elasticity tubular film usually limits the packer to one size of pallet for any given tube diameter, Huber says, but a single diameter of Styrolux wrap can package various sizes, saving the packer on inventory and changeover time. It can also be used to increase toughness in PE film either by coextruding the two materials or using Styroflex as an additive.

    "By finely distributing nano-sized particles of Styroflex in the polyethylene matrix, the puncture resistance of PE film can be increased by up to 60% with negligible loss in stiffness," he says. Addition rates as low as 3% should be sufficient. BASF AG, Ludwigshafen, Germany; +49 621 600; www.basf.de/plastics

    Low gel mLLDPE grades target lamination, packaging applications

    Processors of laminate, multilayer, and surface-protection films can make webs with two metallocene catalyst grades of linear low density polyethylene (mLLDPE), which have strong tear resistance, good sealability, high transparency and gloss, as well as easy processability. Exceed 1018LC and LE grades are said to provide zero levels of large gels and very low levels of small gels. They are said to have a consistent coefficient of friction and block less during processing. ExxonMobil Chemical, Houston, TX, USA; +1 281-870-6607; www.exxonmobil.com

    High toughness/stiffness PS grade offers good heat resistance

    Very-high-impact polystyrene Edistir R850E reportedly retains good mechanical properties when mixed with high percentages of general-purpose PS or post-production scrap. The material is said to improve wall thickness distribution in thermoforming sheet used in the production of lids, yogurt cups, tumblers, flatware, and similar applications.

    It is also suitable for injection molding of tough medium-walled articles that feature complex shapes. It reportedly also offers good heat resistance, stiffness, and overall toughness. Polimeri Europa SpA, San Donato Milanese, Milan, Italy; +39 02 52032305; www.polimerieuropa.com

    Loudspeakers, alarm systems benefit from nylon''s elasticity

    A single-material solution fulfills requirements for an acoustic membrane in automotive sound entertainment systems that previously relied on a thermoset matrix. Latamid 66H2G/20, a nylon 66 compound, confers the right elasticity to the membrane. It also has good chemical and heat resistance properties typically required by under-the-hood applications. In a recent loudspeaker application it permitted optimization of the .2-mm minimal thickness of the vibrating surface, which is molded in one part into the speaker housing. LATI Industria Termoplstici SpA, Vedano Olona (VA), Italy; www.lati.com

    ELASTOMERS

    Material targets medical, vehicle applications

    An alloy thermoplastic silicon elastomer, Geniomer, provides properties not previously found in either thermoplastics or silicons. This hybrid material can be used in a wide range of applications from a processing aid to innovative medical technology. This polydimethylsiloxan urea copolymer combines elasticity with durability and heat, as well as cold resistance. The transparent material is said to be easily processed; can be coated, painted, or lacquered; and provides good shear resistance. As an additive to polypropylene it improves processability. Wacker-Chemie GmbH, Munich; Germany +49 89 62791601 www.wacker.com

    ADDITIVES

    Dispersing agent works fast to color in PO melt

    Tegomer P141 polyolefin wax containing polyacrylates targets difficult-to-color thin-film applications. Compared to traditional dispersing waxes, P141 can be used in lower concentrates to achieve the same or better affects. It has little or no influence on the mechanical properties of the end product, will not migrate, and has good wetting characteristics. Besides polyolefins, the material can be used as a dispersing agent for some engineering polymers. Degussa-Goldschmidt, Essen, Germany; +49 201 1731654; www.Goldschmidt.com

    Drab sealants take on new look with special colorants

    Holcolex A, a series of waterborne pigment pastes, is designed to color acrylic sealants. It has high pigment loading, good dispersion, and is rheologically controlled. Also being introduced at K 2004 is Holcosil NS, which was developed for coloring unplasticized silicone sealants. This pigment-paste family, based on hydroxyl-silicone, cures with the silicone sealant resulting in a non-staining system. Its good viscosity makes automatic dosing possible. Besides standard colors it is also available in natural stone effects. Holland Colours, Apeldoorn, Netherlands; www.hollandcolours.com

    Organic, low-phenol stabilizers target flexible PVC, fittings

    An organic-based stabilizer system, OBS, can be used as a lead replacement in pipes, fittings, and many flexible PVC applications such as floor coverings and automotive interiors. OBS, first introduced in Europe, is now offered worldwide. Also being shown at the fair is a new line of low-phenol to phenol-free liquid mixed-metal stabilizers. These are designed to eliminate or reduce phenol content in such applications as vinyl wall and floor coverings and furniture. The material stabilizes without any loss of its stabilizer performance. These products are based on either calcium zinc or barium zinc. Crompton Vinyl Additives Europe, Lampertheim, Germany; www.cromptoncorp.com

    Lead-free heat stabilizers especially tailored for wire, cable market

    Making its debut at the show are three grades of Therm-Chek calcium-zinc heat stabilizers made specifically for processors of wire and cable in Europe. These mixed-metal-based formulations are also globally available. Grade 7206P is a powder, suitable for energy and telecommunications, primarily insulation and jacketing. For compounders, 7209P provides low moisture absorption. Grade 7710P is for 125ºC automotive insulation and has moisture-absorption properties similar to lead, but superior to most competitive calcium zinc stabilizers. Ferro (Belgium) SPRL, Louvain-la-Neuve, Belgium; www.ferro.com

    Materials provide property improvements

    Improved surface lubrication for PET bottle preforms is offered in a new additive family from Corda. The reduction of friction leads to a lower incidence of scratch and scuff marks as well as better handling of blowmolded containers during processing. It has minimal effect on PET color and clarity. Also new is an expansion of the Incroslip family of low-taste, low-odor slip agents for closures. The new grades allow both slip and organoleptic stability to be selected according to individual applications.

    Improved surface finish while helping to increase cycle times are the benefits of the IncroMold range of internal mold release agents. This food-contact-approved processing aid is formulated for injection molding of a wide variety of polymers. Corda Chemicals Europe, Goole, England; www.corda.com/Europe

    Mineral fillers help modify applications

    Omyalene calcium carbonate concentrates, in a polyolefin carrier, are designed for use in nonpressure polyolefin pipes and thermoforming sheets to substitute for polystyrene. They give improved productivity, enhanced mechanical properties, and are FDA and BgVV food-contact compliant. The company''s Omyafilm 753OM calcium carbonate is designated for the breathable film market. The coated material has tailored, uniform particle size. It allows film downgauging while maintaining high water-vapor-transmission rate and good moisture-pressure resistance. Omya GmbH, Cologne, Germany; www.omya.com

    Pigments offer new life to entice purchasers

    Artic is an infrared reflecting pigment that allows PVC window-profile manufacturers to follow market trends in dark green, brown, or black without fear of problems from heat distortion and warpage. StarLight special-effect pigments help eliminate flow lines. There is no graying-out in colors. It also achieves its effect at low loadings. Shepherd Color Co., Cincinnati, OH, USA; www.sheperdcolor.com

    Positive ID for resins of tomorrow

    Rare-earth-doped compounds could provide a foolproof way of identifying counterfeit plastics, aiding recycling, and thwarting food fraud.

    AJapanese consortium administered by Plagenom Co. (Osaka) is working on the development of an identification system based on doping resins with rare-earth, metal-based substances. The firm says that one day it may facilitate protection of intellectual property rights by embedding invisible identification into plastic pellets and the products subsequently made from them.

    The concept is to tag resins with unique combinations of rare-earth metal compounds that generate a characteristic signature detectable via x-ray fluorescence spectroscopy. The metals include terbium, neodymium, and europium. They are added at levels counted in parts per million, and do not affect the properties of the host material.

    Theoretically the technology will work with any type of resin in any color. Research is still in the preliminary phase, and the developers are working to synthesize a range of doping compounds (metal complexes) with the required heat stability and fluorescent intensity for use in all types of resins and colored compounds. Initial indications are favorable.

    Plagenom president Shinya Fukui says the long-term target of the project is to build a library of doping compounds that, when used in combination, would generate up to 10 billion unique signatures. "Our plan is to establish an independent body that would administer a centralized database of doping compounds with confidential compositions and assign them on a global basis," he adds. The doping compounds would be supplied as masterbatches from designated compounders with auditing and security measures put in place to ensure they would not fall into the wrong hands.

    Custom-built x-ray fluorescence spectrometers would be rented to adopters of the system, who would also pay an upfront licensing fee and charges for database administration. "Our objective is to keep the system as affordable as possible," says Fukui. The consortium says that, including masterbatch costs, the identification system would probably add several cents per kilogram to resin cost if adopted on a commercial basis.

    While resin suppliers might employ the doping system to track lots or identify grades, value would also be derived from manufacturers of branded goods, ID cards, and smart cards, for example, who could readily distinguish between legitimate and counterfeit goods. It could also be employed by end users to ensure plastics processors are employing the grades specified and to identify when and where parts were made and their contents. "Content identification would lead to easier recycling," notes Fukui.

    Another innovative application is in food packaging. In Japan, beef, apples, melons, tomatoes, mushrooms, and other types of produce from certain localities can command high prices. Some tomatoes, for example, sell for $3 each, while certain melons sell for $100. Furthermore, an increase in exports of low-cost produce from China gives local farmers and market gardeners more reason to differentiate their products. "Growers and farmers could employ doped packaging to ensure lesser produce was not passed off as a premium product," says Fukui. This of course means the doping compounds would have to be FDA-certified.

    Plagenom is a wholly owned subsidiary of consortium member and compounder Hexa Chemical Co. (Osaka). The other members are Osaka University, Nara Institute of Science and Technology, the Osaka Technology Licensing Organization, and Microsignal Corp. (Kyoto). Microsignal Corp. is charged with developing spectrometers for the consortium. At a recent conference in Tokyo, a portable, hand-held detector was unveiled.

    Stephen Moore [email protected]

    Contact information

    Hexa Chemical   www.hexa-chem.co.jp
    Microsignal   www.microsignal.co.jp
    Nara Institute of Science and Technology   www.naist.jp
    Osaka University   www.osaka-u.ac.jp
    Plagenom   www.plagenom.co.jp

    E-Update Industry News

    Temperature, resin prices rise over summer

    Upward pressure in resin pricing remained a potent force in North America through the summer, but now as producers raise prices they add export demand, rising shipping costs, and growing energy costs to the familiar chorus of rising feedstock prices as justification for higher prices. (Please see Materials Pricing feature in the September issue of Modern Plastics). Resin producers have stopped absorbing added costs, and in late July several announced more price increases, covering materials from acrylics and urethanes to engineering plastics like nylon and styrenic copolymers like ABS and SAN.

    BASF announced price increases on standard nylons ($.15/lb), specialty nylons ($.15/lb), and recycled nylon ($.15/lb). The company also plans $.10/lb hikes on PBT and post-consumer PET. "We must manage our business to offset the difficult environment of the North American plastics industry, which continues to experience unprecedented escalating raw material, shipping, and energy costs," said Susanne Mueller, BASF director of sales for engineering plastics in a statement.

    BASF also announced hikes in MDI products in the U.S., Canada, and Mexico because of benzene prices, which have more than doubled since the beginning of the year. MDI has always presented thin margins to producers, who, because of this, never encouraged capacity expansions. "Existing plants are now sold out on a regional and global basis," explained Lawrence Berkowski, director of BASF''s urethane chemicals in North America in a release. "However, there has not been sufficient reinvestment in MDI capacities over the last several years because of unsatisfactory returns."

    Acrylics manufacturer Cyro raised prices-for the third time in a 100-day stretch during the summer-on acrylic polymers and impact grades by $.08/lb due to raw material costs and U.S. and global demand, which is beyond the company''s current capacity. The company said the weak dollar versus the Euro is exacerbating demand for U.S.-made materials. Acetone, the key feedstock for acrylics, remains at historic highs.

    Compounder PolyOne said in a financial statement of Q2 earnings that raw material and additive costs continue to hurt margins, and that in Q3 2004, when combined with lower sales, could reduce operating income by $3 to $5 million.

    There doesn''t appear to be any relief in sight with natural gas and crude oil pricing remaining volatile; in August, prices topped the $50/barrel mark for the first time. Benzene rose 35% in the final weeks of July, doubling since the start of the summer to more than $4/gallon.

    Shipping might see some relief, with the port of Los Angeles, the nation''s busiest, adding 3000 workers following an agreement between shipping companies and union leaders, according to the Associated Press. Record traffic and a labor shortage had contributed to longer waits and greater costs for delivery. The AP report said normally, three to four ships each day are stalled from entry into the port, but since the beginning of July the average had been 14 to 15 ships.

    GEAM Joins Chinese Institute to Create Smart Buildings

    GE Advanced Materials announced at Chinaplas 2004 that it has entered into an agreement with the Shanghai Research Institute of Building Sciences (SRIBS) to develop two ecologically friendly and energy efficient buildings, defining a new standard for next generation "smart" buildings. Under the management of the Ministry of Science and Technology (MOST), and with the support of the Shanghai Municipal Government, the design and construction of the smart buildings will be led by SRIBS, and conceptualized together with GE Advanced Materials. GE will supply the project with specialty materials.

    Among the two smart buildings is an 1,800-sq-m office structure that was targeted for completion in August this year. Construction of a 600-sq-m residential apartment project will commence this September.

    LEXAN polycarbonate Solar Control IR sheet, which represents the next generation of heat-management glazing, will be introduced in the smart buildings. These solar control-sheet products significantly reduce solar transmission while offering high levels of light transmission, helping reduce energy costs for cooling and lighting buildings.

    The LEXAN Solar Control IR sheet materials are transparent with a green tint, which blocks near infrared heat but lets in high levels of light. Proprietary resin additives are used to manage heat instead of expensive and fragile coatings, which can be damaged during handling and installation. Because the GE additive technology is inherent to the polymer, solar control is virtually permanent and provides UV protection to both sides of the sheet.

    Distributor Laird gets new owner

    Laird Group PLC sold its U.S. plastics-distribution unit (Laird Plastics Division) to a unit of closely held Blackfriars Corp. of Delaware for $65 million (€52.8 million), and bought Centurion Wireless Technologies, a closely held maker of cellular antennae in Lincoln, Nebraska for $114.9 million (€63.2 million) plus 14.3 million new Laird shares to be issued to Centurion''s shareholders. The deal is part of a strategy by Laird, a U.K. electronics materials and technologies company, to concentrate on high-growth technology markets.

    Crompton chief says Davis-Standard doesn''t fit

    Robert Wood, chairman of Crompton Corp. (Middlebury, CT), says he would be surprised to see extrusion and blowmolding equipment maker Davis-Standard (Pawcatuck, CT) remain part of the total company in 18 to 24 months. Responding to a questions from Bob Koort, an analyst from Goldman Sachs, following the release of Crompton''s second-quarter financial results, Wood says the idea of combining an equipment maker together with raw materials producers "doesn''t seem to translate very well into practice. That business frankly just doesn''t fit long term with us based on the dynamics in that industry and the cyclical nature of the business."

    Wood admitted that Davis-Standard had improved its orders backlog within the last quarter compared to a year ago, but that doesn''t appear enough to convince him or the company to keep Davis-Standard long term since turnover dropped from more than $310 million in 2000 to less than half that in 2003. A Crompton spokesperson, however, told Modern Plastics that Davis-Standard is not currently up for sale.

    SPI trade report: U.S. processors losing domestic market share

    The Society of the Plastics Industry (SPI) released its latest report, "U.S. Plastics Industry Trade Through 2003: Global Business Trends, Partners and Hot Products," compiled for SPI by Probe Economics Inc., and it shows a massive $20.2-billion trade deficit in contained plastics products in 2003.

    The report, unique to SPI, contains data collected on the import and export of plastics that are contained in other products, such as automobiles, appliances, medical devices, computers, and phones. Data from the report also indicates that plastics consumption is not growing as fast as it once had. This is gauged through "apparent consumption" (the measure of domestic resin shipments, plus imports, minus exports), which was $41.15 billion in 2003. This measure does not take into consideration the resin that comes into the U.S. already processed and contained in other products ("true consumption"), which was a notable $50.4 billion in the same time frame, nearly 22% higher than "apparent consumption" figures. The higher growth rate of "true consumption" indicates that U.S. resin and plastics products producers are losing share in their domestic market.

    The full report can be purchased from SPI at a cost of $390 for members and $780 for nonmembers. Contact SPI at www.plasticsindustry.org.

    Shell, BASF mull offloading polyolefin joint venture

    Oil, gas, and chemicals producer Shell (London) and chemicals manufacturer BASF (Ludwigshafen, Germany) have announced plans to "review strategic options regarding (polyolefins joint venture) Basell." Both companies hold a 50% share in Basell (Hoofddorp, Netherlands). Formed in 2000 by joining the polyolefin businesses of Shell and BASF, Basell is the world''s largest producer of polypropylene and Europe''s largest producer of polyethylene, according to business analyst Hoover''s. Basell''s parent companies are also weighing a public offering of the company, which had sales of $5.8 billion in 2001. German news reports claim that Saudi Arabian supplier Sabic is in the lead to purchase Basell.

    In related news, Basell has started producing metallocene-based polypropylene (mPP) at a 200,000-tonnes/yr-capacity plant in Bayport, TX. Previously it had exported mPP to North America from Europe.

    Protective packaging processor adds some punch

    ProtecPac has acquired the assets of GW Worldwide Protective Packaging Corp., a three-year-old business based in Brampton, ON. ProtecPac is headquartered in Lachine, Quebec.

    The two firms have similar product lines. Jan Willem Wieringa, general manager, ProtecPac, says the addition will help his firm expand in North America''s protective packaging market. Products include air cushioning, mailers, laminations, and film conversion. The new capacity will also be used to allow ProtecPac to enter the polyethylene bubble mailer market, a new product for the firm.

    In addition to the Brampton facility, ProtecPac has two manufacturing facilities in the Montreal area. The firm is a division of Montreal-based IndusPac, a plastics and paper packaging manufacturer with 18 facilities in North America.

    Self-adhesive film converter expanding in U.S.

    French converter Novacell (Deville les Rouen) this summer has opened three service centers in North America for its expanding customer base there, says the firm. It entered the market with its purchase in 2000 of the surface protection division of U.S. firm Ivex in 2000, then renamed Ivex Novacel and since May 1 called Novacel Inc.

    Protective films are used to protect semi- or finished goods from scratches and dirt during assembly, handling, storage, and transport. The films also are used to protect the screens of electronic devices and appliances such as cell phones, laptops, CD players, and PDAs. The three service centers are in Bellwood, IL, Palmer, MA, and Dallas, TX.

    Ubertini tops at distributor Bamberger

    Lawrence Ubertini, formerly president and COO at independent thermoplastics distributor Bamberger Polymers (Jericho, NY), has been named the firm''s CEO. He has been with the firm since 1973 and played a leading role in the company''s 1993 management buyout. According to the company, he intends to improve the existing business while also seeking new growth opportunities in the plastics industry.

    Swiss concentrates supplier opens U.S. site

    Sukano Products Ltd., a privately owned Swiss manufacturer of plastic additives, opened its first facility in the U.S. in August in Duncan, SC. Sukano Polymers Corp. will manufacture masterbatches and compounds primarily for extruded film and sheet, blown film, and injection molded polyester and copolyester applications. The supplier previously imported to the U.S.

    Key products are functional additives for PET and PETG as well as products for polycarbonate and polypropylene. Included in the product line are white color concentrates, matting agents, mold release masterbatches, UV absorbers, optical brighteners, and clarifying agents.

    In Europe, Sukano''s range includes slip/antiblock, antistatic, matting agents, UV-inhibitor/UV-absorber, impact modifiers, mold release agents, and nucleating masterbatches; flame retardants; and compounds.

    Injection machine makers opening European technical centers

    Husky Injection Molding Systems officially opened its Copenhagen Technical Center in July. The facility will support service and sales needs in Denmark, Finland, Norway, and Sweden. Copenhagen is Husky''s 20th such center worldwide and sixth in Europe. The centers provide such services as parts and service support, machine and hot runner training, mold trials, and systems integration. About half of the 900-sq-m facility is dedicated to a machine hall. Demonstration machines are scheduled to be installed in October.

    Meanwhile, Engel plans to open its second automation center outside its Austrian home territory next year. It credits the first, which opened in Hagen, Germany at the end of 2002, with helping it reach record sales in the country last year, which were up 30% on 2002, giving it a 20% share of the market. Now it is turning its attention to Italy, and says the concept will be implemented step by step in other important European markets. The center is likely to be co-located with its existing sales and service operation in Milan. Like Hagen, it will operate as an extended assembly facility of Engel''s Austrian automation technology center in Dietach, combining core components from Dietach, such as linear robots, tray servers, and conveyor belts, with locally manufactured components to make complex automation systems.

    Rocker panel transition underway

    Nylon supplier Rhodia Engineering Thermoplastics (Lyon, France) says molded nylon engine rocker panels are quickly finding a home under the hoods of cars made in North America and Japan, having already gained acceptance in Europe. The supplier this summer commercialized its Technyl A218 MZ15 V25 grade specifically for the application.

    "We''ve the first applications in Japan already," where aluminum is the standard material, says Jean-Claude Steinmetz, president of Rhodia''s nylon business. "And in the U.S., we are seeing swift changes at OEMs from aluminum or BMC (bulk molding compounds) to thermoplastics. Globalization of car platforms is driving this, as is the strength of European Tier One suppliers [bringing their expertise in molding these to other regions]."

    New PP capacity for Mexican supplier

    Indelpro S.A. de C.V., the leading Mexican polypropylene supplier, will build a new 350,000-tons/yr-capacity plant, with operations to begin during the third quarter of 2006. Indelpro is a subsidiary of Alpek S.A. de C.V. (the petrochemical unit of ALFA and the largest producer of petrochemicals in Mexico) and Basell (the world''s largest producer of polypropylene and a leading supplier of polyethylene and catalysts).

    The new plant, which will be one of the largest in the Americas, would give Indelpro a combined capacity of 570,000 tons/yr. The current site would then be one of the largest polypropylene complexes in North America.

    Californians turn to Web to recycle bags

    The American Plastics Council has teamed with Moore Recycling Assocs. (Sonoma, CA) to tap into California''s market of largely discarded plastic bags and films through the creation of a website for consumers, businesses, and local government. Designed to help recover retail bags, stretch wrap, and shrink wrap, plasticbagrecycling.org allows visitors to create a list of grocery stores, recycling centers, and transfer stations in their local area.

    An environmental group, Earth Resources Foundation (Costa Mesa, CA), is calling for a $.25 tax on the sale of plastics bags within the state to eliminate waste and litter.

    DSM investigates melamine production in China

    In conjunction with the China National Offshore Oil Corp. Chemical Ltd. (CNOOCC), DSM Melamine is studying the feasibility of a 120,000-tonne melamine plant on Hainan Island, China. The $100-million investment for the thermoset melamine facility would be split 70/30, with DSM taking on the larger portion.

    A decision won''t be made until Q1 2005, but if pursued, a capacity of 120,000 tonnes would make it the largest melamine plant in the world according to DSM (Sittard, Netherlands), which manufactures the material on three continents and claims a 25% stake in the global melamine market. CNOOCC is state-owned and produced the equivalent of 33.36 million tons of oil and natural gas in 2003.

    Sekisui in China Medical JV

    Sekisui Chemical (Osaka, Japan) has established a joint venture with medical device company China CYTS Trank Technology (Beijing) to manufacture and sell PVC vacuum tubes for blood sample collection in China. Sales operations were to begin in earnest by early September.

    The 2003 China market for blood collection tubes is estimated at 200 million annually, and half of those are currently glass and nondisposable. With the SARS outbreak of 2003, authorities are recommending a switch to disposable plastic tubes. The joint venture, Beijing Sekisui Trank Medical Technology Co., targets sales of 200 million tubes in 2008.

    Big pipe project

    Battenfeld Extrusiontechnik (Bad Oeynhausen, Germany) has installed a 1600-mm-diameter polyethylene pipe extrusion line to produce water and sewage pipe at Zhejiang Zhongyuan Fengye Pipe Co (Zhuji, China). The new line, with its 150-mm extruder, has a throughput of 1500 kg/h.

    Distributor increases French presence

    Nearly doubling the company''s size, European polymer distributor Distrupol strengthened its position in the French marketplace by absorbing the facilities and staff of SABIC-owned Aimé Vistalli SA. Vistalli''s presence in Oyonnax, near France''s so-called "plastics valley," will give Distrupol a strong position in the south of the country according to the company''s David Jukes. SABIC''s (Riyadh, Saudi Arabia) Dutch subsidiary had decided to divest Vistalli, providing the opening for Distrupol.

    RFID continues to snowball

    News from the world of radio frequency identification (RFID) systems continues. Though still in its infancy, with a few large retailers insisting that suppliers include RFID tags on pallets, large cases, and other industrial packaging, the technology is expected to eventually extend well backward into the supply chain, affecting processors.

    In recent RFID news, one of the leaders in RFID systems, Matrics Inc. (Rockville, MD), was acquired by Symbol Technologies Inc. (Holtsville, NY) for $230 million in cash. The acquisition gives Symbol, which makes barcode scanning and retail tracking systems, access to RFID systems that it can integrate with its current technology.

    RFID systems use small tags containing electronic chips to allow stores to track goods via sensors.

    UCB films division trades hands

    A group led by the former managing director of Hays Chemical Distribution and Candover Partners is acquiring the films business of Belgium-based UCB Group for ¤320 million. The acquisition is expected to be completed this month.

    The new owners intend to name the firm Surface Specialties UCB. It had about ¤360 million annual turnover last year as UCB Films. Specialties include BOPP and cellulose films at processing sites in Australia, Belgium, the U.K., and the U.S.

    Dow taking further steps in Middle East production

    Polymer producer Dow Chemical (Midland, MI) has become at 50% joint partner in a petrochemical joint venture in Oman; the Omani government and Oman Oil Company (OOC) will each take 25%. Located in Sohar Industrial Port Area, the new company will construct a complex including feedstock production, gas cracker, and three world-scale polyethylene production units. One of the aims of the Omani government was to commit the joint venture to develop "downstream industries in Oman that will convert polyethylene to end-products in Oman, thus enhancing the level of job creation that will result from the complex."

    Dow will not reveal the exact capacity of the plants other than to say that it views world-scale 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, or what catalyst system would be used. Construction is scheduled to start next year and could take three to four years to complete, Davis says. The main market for the output is expected to be Asia, but Middle Eastern and European markets could also be served.

    "This project is another step in achieving Dow''s strategy of having cost-competitive feedstock," says Andrew Liveris, president and COO of Dow.

    Dow already has a joint venture in Kuwait-Equate, which it inherited from Union Carbide when Dow merged with that company-producing polyethylene for the Asian and Middle Eastern markets. Davis says the new Omani setup would augment rather than compete with Equate sales in the Fast East.

    Review of low-environmental-impact polymers

    Two workers at the Warwick Manufacturing Group, part of the University of Warwick in England, have put together a 360-page overview of the manufacture and uses of polymers that come from renewable resources and/or are biodegradable. It is aimed at those wanting to use biodegradable materials, and may also be useful to designers, specifiers, and waste managers.

    Topics covered include: synthesis of polymers from sustainable resources; chemistry and biology of polymer degradation; polymer properties; natural fibers as fillers/reinforcements; manufacturing technologies; the economics and market potential; and ecodesign. "Low Environmental Impact Polymers," edited by Nick Tucker and Mark Johnson, costs €152 and is available from the Rapra Technology website at www.rapra.net/bookstore.

    New TiO2 plant planned

    A plant in Eastern Kazakhstan, part of the former USSR, plans to launch titanium dioxide production later this year. The Ust-Kamennogorsk company has just completed construction of its first furnace for processing the material and the second unit is under construction. In the past, the bulk of TiO2 was imported from non-CIS countries. The move is seen as a way to reduce reliance on imports.

    Lasers used to boost crystalline HDPE

    Researchers at the University of Florence (Italy) and the European Laboratory for Non-linear Spectroscopy say they have found a way to use laser light and pressure as a catalyst to produce high-density crystalline polyethylene. The system, described in Nature Materials magazine, is said to be cost effective and could be scaled up to commercial production.

    Radici Group exits PET supply

    The Italian firm will concentrate on engineering plastics, especially nylons, and fibers. It sold its Aussapol PET business to Portuguese firm Selenis, which is already in the sector. Aussapol includes two plants in S. Giorgio de Nogaro with 145,000 tonnes/yr capacity. Selenis had 70,000 tonnes/yr capacity prior to its purchase.

    Passing of the reigns at Tinius Olsen

    C. Robert Tait, III is now president of the testing machines manufacturer, based in Horsham, PA. He also continues as a member of the board of directors. He succeeds his own father, Robert Tait, Jr., who steps down after 32 years in Tinius Olsen senior management, and 46 years with the company. He will likewise continue serving on the board. C. Robert Tait, III represents the fifth generation of the founder''s family to run the company.

    Compostable cups get concert debut

    At a series of music concerts in Belgium in August, Belgian brewer Alken-Maes Breweries served some 1.5 million beers in thermoformed compostable cups made from NatureWorks polylactic acid (PLA), supplied by Cargill Dow LLC (Minnetonka, MN). Finnish packaging processor Huhtamaki (Espoo) supplies the cups.

    "We view NatureWorks PLA as a more practical and economical solution for reducing the amount of waste generated at festivals," says An Steylemans, a spokesperson for the brewery. Huhtamaki expects demand for PLA packaging to increase and this autumn will launch its environmentally friendly BioWare range of packaging.