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Articles from 2004 In September


Hot runner system targets market niches

Among the new additions and enhancements to Mold-Masters' range of hot runners will be the launch of the Multi program, solutions for multicolor and multimaterial applications. For large auto parts, the Flex-Series product line has been upgraded with technologies said to improve design flexibility, shorten lead times, and simplify solutions for longer nozzles. Several new valve gating technologies will also be introduced, allowing, for example, inmold micro-adjustment of the valve-pin position. The V-Guide valve guidance system will be introduced. Several new gating options will be added to the Femto-Lite slim nozzle line, and there will be several new specialty gating options, including side gating in ultrahigh-cavitation applications as well as hot-tip systems said to provide for optimal color change. Mold-Masters, Georgetown, ON, Canada.

Good strategy, good implementation

It''s not just about creating a strategic plan. It''s about actually using it to guide your actions.

Know thyself. This venerable bit of Greek wisdom, as many a maxim before and hence, preaches recognition of one''s essence. The importance of deep internal focus remains relevant today in bringing strategy and direction to every action. Which raises the question of whether anyone is heeding this advice.

Research by Plante & Moran that is corroborated by their annual North American Plastics Industry Survey shows that companies that use strategy derived from careful self-analysis to guide their actions are capturing a disproportionate share of the economic rebound. Yet few are actually doing so.

Most plastics processors are caught in the day-to-day challenges of running their businesses. Intense global competition, a willingness to increase volume by cutting prices, and rapid knowledge transfer are quickly turning products and processes that were once value-adds into commodities. The result: lower profits and less customer loyalty. However, some have embraced adaptability, agility, and flexibility as competitive tools. But being agile does not mean forsaking strategy for tactics. In fact, the most successful contract manufacturers are using strategy to create, maintain and sustain a competitive advantage.

Step one: Create a differentiation your customers will pay for

It''s essential to begin by knowing the business environment you''re competing in and re-evaluating your business model to find a niche that you can exploit. This means not only understanding your core competency, but where you''re successful and why. You might be a commodity molder making "shoot and ship" products, a custom molder with unique processing skills, a customer-intimate molder focused on value-added services, or a proprietary product manufacturer. But those identifiers are less important than the ability to know your value and organize your business around it.

It''s your core competency that should drive your customer-selection criteria and service offerings. But your assessments have to be based on real knowledge of where and why you make money, how you can maintain profits long-term, and how your products and services compare to the competition''s. This way, your business strategy will be designed around a differentiation that your organization can support and that customers will value. And this means a willingness to pay a price that enables you to make money!

Step two: Model your business to support your strategy

Business strategy that starts and ends in the executive suites will never truly drive your business.

Rather, your entire company should be organized around the business model that your strategy specifies. A focus on operational excellence requires different competencies than one that focuses on either customer intimacy or unique process capabilities. And, while many contract manufacturers are seduced by the higher margins associated with proprietary products, Plante & Moran''s benchmarking surveys conclude that important skill sets in product marketing and distribution are absent in most processing operations. In the end, the product line is often unsupported, or these costs offset the higher per-unit margins. The lesson: Success requires a business model supported by the competencies that the focus warrants.

To leverage your unique value, design the organization-from the shop floor to your customer services function-to support your business strategy. Determine how each category provides value to your customers. Research indicates productivity trumps cost containment; this means headcount levels, not hourly wages, have the greatest impact on your profitability.

Step three: Manage your growth

Much has been written about the need to grow. The grow-or-die mentality presumes that to generate an acceptable ROI, business investments have to be leveraged across a larger base of business. Bottom line: You cannot grow your company to profitability. Complexity accompanies growth. And the importance of a strategic plan, or roadmap, for managing these complexities cannot be underestimated. If debt and fixed overhead expenses are not managed properly, then cash flow, not strategy, will drive your business.

Armed with a strategic plan, you can identify the investment needed, whether it''s in equipment, systems or talent, to support your business model. This will help ensure you invest in high-potential activities. Too many companies invest in equipment that is underutilized or employ talented people on low-potential activities. The lesson: Use processes, not people, to deal with problems. Use people to create and take advantage of opportunities.

Step four: Tell your story, because no one else will

Designing a strategy to create a business model that differentiates you from the competition is a tremendous foundation upon which to build a strategic marketing communications plan. Invest in marketing communications as a critical domain of business, and don''t rely on chance or word-of-mouth to tell your story. Create a powerful brand and use it to build your reputation in the marketplace and to get in front of your target audiences. Doing so will accelerate your ability to create, maintain, and sustain a competitive advantage.

In the end, if you don''t tell your story, no one else will.

Designing the best business model

Which is most profitable, a shoot-and-ship, unique-process, customer-intimate, or proprietary-product molder? Answer: All of the above. But only when they know their value and organize their businesses around it. Some things to consider:

  • Commodity manufacturers Some shoot-and-ship molders are very profitable. Why? Operational efficiency is a core competency. To succeed in commodity molding, work hard to avoid the complexities that lead to manufacturing inefficiency. Simplify your operation and wean yourself off low-volume jobs.

  • Unique-process manufacturers Custom manufacturers with unique processing skills have a temporary advantage over both the customer and the competition. The downside? There is only a finite period of time before a unique process becomes mainstream. The molder with this value proposition must be prepared to continually reinvest in new process capabilities and pursue expertise in the science of molding.

  • Customer-intimate manufacturers These processors are tied to the hip of the customer. This strategy favors those with strong manufacturing engineering skills, value-added services, and the ability to intimately integrate with the customer. Long-term success depends on continued investment in process and skills that not only meet, but also anticipate customers'' changing needs.

  • Proprietary-product manufacturers Contrary to popular belief, these molders are not necessarily more profitable. On the contrary, the additional marketing and distribution competencies needed to support proprietary products are expensive. They''re considered by many proprietary manufacturers to be a core, not ancillary, competence. Most successful proprietary manufacturers don''t even consider themselves manufacturers. They are market-driven first, and manufacturing-driven second.

    Jeff Mengel ([email protected]) is a partner with Plante & Moran, a professional services firm offering fully integrated business advisory services. Mengel leads the firm''s Plastics Industry Practice with more than 25 years of industry-specific experience. Plante Moran serves more than 140 plastics industry clients with services that include operational and strategic planning, due diligence, inventory control, scheduling, forecasting and costing, as well as tax and financial consulting. Mengel is located in Chicago, IL.

  • Is stretch-blown PP packaging finally for real?

    Some suppliers say it is, and hope to position clarified PP as a less costly alternative to PET when carton or HDPE packaging is upgraded.

    Two-stage stretch blowmolding of polypropylene (PP) has long been touted as the next big thing for packaging blowmolders. PP recently has been coextrusion blowmolded with barrier materials for a number of applications where it replaced PET, glass, or metal (June 2004 MP/MPI). But for the very high-volume, two-stage stretch blowmolding (SBM) applications now almost exclusively in PET, the promise of PP''s lower cost has been offset by much slower cycle times and the need to modify existing PET equipment to process it. Now, say some material suppliers, that problem may be solved.

    Michael Rousset, marketing manager at additives supplier Milliken (Spartanburg, SC; Gent, Belgium), says slow processing is a result of PP''s higher thermal capacity compared to PET, necessitating more time to get heat into the material. But he says advances in the firm''s Hyperform nucleating agents have made PP a viable competitor.

    Dialing it in

    Tests run on a Sidel SBM machine-the most common in the industry-attained outputs of 1500 bottles/hr per cavity, comparable to PET rates. Bottle clarity rivals that of PET bottles except in the injection molded neck, which is still whitish in color. Preforms can be molded at rates similar to PET ones, he says, and he anticipates no problems filling large-cavity preform molds should such high-volume applications appear.

    Limitations still exist, and until now only simple bottle designs have been proven. "We''ve not been able to achieve [these outputs] with flat oval designs yet," admits Rousset. Milliken expects to have samples of the first commercial stretch blowmolded PP bottles made using its nucleator for this month''s K show.

    Commercial since early this year, but first publicized during a press event in mid-June, is a stretch blowmolded bottle for denatured alcohol and other solvents made using the new RF926MO PP grade from polyolefins supplier Borealis (Lyngby, Denmark). Solvents supplier GSG (Gussago, Italy) captively processes the bottles using a preform designed and made by Otto Hofstetter AG (Uznach, Switzerland) and an SBM unit from Smiform (San Giovanni Bianco, Italy). The bottles can be 30% lighter than the HDPE ones they replaced, without sacrificing mechanical properties.

    Other potential end users and their bottle suppliers are now testing the material, says André van Uffelt, Borealis VP for molding. At the firm''s press event he showed sample bottles with necks that were nearly transparent. He notes, "It''s still slightly translucent, but we''ve realized a big step change." Uffelt says the Borealis material contains a nucleation package but didn''t name the supplier.

    Setting expectations

    Because of PET''s better barrier properties, it is unlikely PP will replace it in applications such as carbonated water or soft drink packaging. But Rousset and Uffelt believe PP can capture some of the dish detergent or household cleanser packaging markets, ones that have been transitioning from extrusion-blow high-density polyethylene to PET. PP also makes sense for hot-filled applications as its heat stability far exceeds that of PET.

    Still, not all are convinced that PP''s day has come. At Husky Injection Molding Systems, the world''s largest manufacturer of PET preform molds, Dave Cook, president of the firm''s European operations, says, "In spite of all the interest in PP, it has not really made any inroads into the market. The molding of the preforms is not difficult but the stretch blowmolding is."

    It''s just possible, though, that developments such as those from Milliken and Borealis are about to force a new reckoning of PP in the market.

    Matthew Defosse [email protected]

    Contact information

    Borealis   www.borealisgroup.com
    Milliken   www.milliken.com

    John Hayes and Michael Vaughn are cashing in Ball Corp.'s PET bet

    10 years ago, at the behest of customers, and after gauging the market''s potential, aluminum and one-time glass stalwart Ball Corp. (Broomfield, CO) lunged headfirst into the PET container market.

    Speaking from Ball''s newly expanded PET R&D facility that opens its doors this month, Michael Vaughn, vp technology for Ball''s Plastic Containers Operations, recalls those early PET days as a hair-altering experience.

    "Four plants in two years; we spent $300 million and hired 600-that''s why my hair''s white," Vaughn jokes.

    "What we didn''t realize was the pain and agony required [to enter the PET market]," remembers John Hayes, VP corporate strategy, marketing, and development. "In the late ''90s, we made the decision that, `Let''s stop. Let''s get our house in order, and let''s focus on getting these plants up and running before we start looking at some of this value-added technology.''" Hayes says that process lasted through 2001, but the self-examination helped make Ball low-cost in the PET bottling industry, and it has given the company the scale needed to tap new markets.

    Consolidating its R&D operations into one facility after closing down a Smyrna, GA operation, Ball''s new center employs 60, has a 3-D printer for 24-hour turnaround on bottle concepts, and, as part of a 30,000-sq-ft expansion, features a multilayer preform molding machine and stretch blowmolding unit.

    "Coming into 2001, we weren''t having a lot of fun in this business," Hayes says, "because we were on the lowest end of the commodity side of the business." To tap markets with better margins, Vaughn divided opportunities into three areas: existing product enhancements; new-to-Ball; and new-to-market. "100% of what we were doing in that 2001 timeframe was existing product enhancements. There wasn''t really any new technology we were developing."

    Due to the highly proprietary nature of the PET container industry-where every dimension of the panels that deflect vacuum at fill on heat-set bottles, for example, is patented-Ball expended most of its resources, searching for ways around territory already staked out.

    "In 2001, we didn''t really have any proprietary, patented technology that a lot of others did," Hayes says, "so we had to spend more time, effort, and energy than we''d ever like to admit trying to get around those patents."

    Now, with items like a panel-less hot-fill bottle designed in house, the development tables have turned. Ball has 70 patents in hand, and it spends less time on existing product enhancements and more on greater profit centers within products that are new to it or to market.

    "I''m fond of telling people that if you took the number of patents that are just on this base," Vaughn says pointing to the panel-less hot-fill bottle, "it would sit about this high," holding his hand a foot above the table. "Today about 70% of what we work on is either new to us or new to market."

    Working on the leading edge of the marketplace means Ball faces compressed lead times as beverage heavyweights like Coke and Pepsi battle to beat each other to the marketplace with the latest eye-catching container. In addition to the 3-D printer, Ball brought unit tooling for the rapid production of aluminum prototype molds in house, and it uses finite element analysis software to dry-run processes before steel is cut.

    "What I tell folks is, `If you give me an actual design that you''ve signed off on Monday morning, I''ll send you bottles Friday afternoon,''" Vaughn says.

    Moving forward, Ball remains focused on higher-margin areas, targeting multilayer barrier applications in alcohol, flavored beverages, and beer. Its long-standing presence in aluminum cans gives Ball an edge with many customers as they consider switching to PET.

    "The theory is that kids today, soon to be 21 or already 21, have grown up in a plastic world so glass versus plastic-it isn''t as relevant." To look at the evolving marketplace in another context, Vaughn offers a different analogy.

    "Can you imagine being a glass salesman, going into a company, and trying to convince them to convert out of plastics to glass?" Vaughn asks. "It''s a one-way street. I''ve been a salesman; I wouldn''t want to do that."

    Tony Deligio [email protected]

    E-Update Industry News

    Plastics in the Magic Kingdom

    Given that previous generations of inquisitive kids might have been turned on to plastics by Epcot displays like the "House of the Future," which highlighted their benefits in a tangential manner, the current generation of youth can enjoy a focused plastic exhibit that its sponsors, like GE Advanced Materials (GEAM; Pittsfield, MA), hope has a similar effect.

    "GE has a desire to encourage young people to be fascinated and intellectually curious about how things work in the world around them," Terry Dunn, marketing communications leader GEAM, explained. "Specifically material science, because we have some of the world''s most innovative material scientists working for GE, and they all started as youngsters being curious about how the world around them worked."

    Officially opened on October 1 as part of the Innoventions attraction at Disney World''s (Orlando, FL) Epcot Center, the Fantastic Plastic Works exhibit is slated for a three-year run, with anchor sponsors GEAM, DuPont (Wilmington, DE), the Society of the Plastics Industry, and various other plastics contributors.

    The exhibit is divided into three major portions, including an educational segment where a professor appears on touch-screen monitors, encourages visitors to create materials on the basis of desired properties, and then shows them real-world materials that fit the description.

    Next, visitors can create virtual robots out of various materials, and then use interactive rubber floor mats to run the robots through a race. Depending on the materials selected, the robots will have different capabilities.

    Finally, injection molding machines running family molds create robot subassemblies that kids can put together and take away from the exhibit. Each robot is imprinted with a URL, where further plastics design information is located.

    "GE has a long history with Disney and the Imagineers," Dunn said, "So we know what the experience is like. We believed this would be a tremendous opportunity for us to show support for our industry."

    Big move in IBC market

    German industrial packaging processor Mauser-Werke, in Brühl, is merging with Italian competitor Mamor, based in Milan. Mamor is No. 2 in the intermediate bulk container (IBC) field, according to Mauser, which makes it attractive given that Mauser-long a leader in industrial metal and plastics packaging-got off to a relatively late start in the fast-growing plastics IBC market.

    Mauser also makes its own extrusion blowmolding machinery. Mamor has processing facilities in Italy, Germany, France, and the U.S., and annual sales of about €100 million last year.

    A May 2004 report by AMI (Bristol, England) identified Schütz Werke, Mauser, and Mamor as the leading European processor of industrial plastics packaging. Schütz has a dominant position in the IBC sector accounting for more than 20% of production, while Mauser and Mamor are the leading drum manufacturers, both with a market share of around 18%, according to the report. AMI predicted then that overcapacity at processors would lead to consolidation or restructuring.

    Processor hot on new pallet

    Novo Foam Products LLC (Findlay, OH) displayed its new Air Ride Pallet at the SPE Thermoforming Conference (Sept. 18-21), and is using the Air Ride Pallet as a conduit to launch its innovative new composite materials manufacturing process. The company spent almost two years developing the technology used in the manufacture of the pallet.

    Novo Foam recognized the global need for a durable, multi-use, lightweight plastic pallet and developed a patent pending process to deliver the right product to market. The manufacturing technology employs existing twin-sheet thermoforming equipment but uses a unique process to create a strong, lightweight composite structure.

    "When we completed our first prototype pallets, we realized that we had created more than a great pallet," said Tom Bohan, managing partner of Novo Foam. "We had created a composite I-beam structural panel (The I Panel) in a single process without using adhesives."

    Novo Foam has identified products in the appliance, automotive, construction, defense, healthcare, marine, and packaging industries that will benefit from the properties of The I Panel. The company is actively pursuing licensing and joint development opportunities with manufacturers specializing in each targeted industry.

    Nova to open Asian Operating Center in Shanghai

    NOVA Chemicals Corp. (Pittsburgh, PA) will establish an Asian Operating Center in Shanghai, China by early next year. The supplier of styrenics, PE, and other materials already has a sales office in Tokyo, plus some personnel in Singapore and Beijing.

    The new office is Nova''s fourth operating center and includes sales, marketing, and business development personnel. It will be headed by Chris Hogan, director of NOVA Chemicals Asia. Other operating centers are in the United States, Canada, and Europe.

    SymaLITE takes home composites award

    The SymaLITE composites processing technology developed by Quadrant Plastic Composites (QPC; Lenzburg, Switzerland) was awarded the ''Best Application of the Year'' award by the AVK-TV: Reinforced Plastics Assn.-Technical Federation, at its recent international conference in Baden-Baden, Germany.

    German automotive parts processor Seeber, in Mannheim, uses the technology to make underbody shields for the BMW 1 and 3-Series vehicles. The technology is a very low-pressure compression molding variation that allows for use of sensitive decorative materials with no adhesive, and forming of parts with multiple thicknesses (December 2003 MP/MPI).

    Ahhhh, the sweet smell of closures

    NutriSystem, a supplier of weight-management and dietary products based in Hosham, PA, is the first commercial user of ScentSational Technologies'' encapsulated-aroma release technology, which gives packaging a specified odor. NutriSystem is adding the aromas to caps for its Aquaescents water bottles; the natural fruit flavor in a cap migrates into the water.

    Most NutriSystems users are people trying to lose weight; adding a scent to water gives drinkers the feeling of being hydrated and helps suppress appetites, taking advantage of the link between taste and smell but without introducing sweeteners or other calorie-adding products to the water. Initial flavors are berry, peach, and lemon.

    ScentSational says NutriSystems, other consumer products firms, and plastics packaging processors-including Crown Cork & Seal, Portola Packaging, and Charter Films-are about to commercialize other products using scented packaging.

    Flavors are added as masterbatch to polypropylene compounds for the 53-mm caps. These are molded by an unidentified processor; keep your eyes peeled for the sweet-smelling molding site with the slim employees.

    Sumitomo bumping acrylics capacity in Korea

    By July, Sumitomo Chemical Co.''s South Korean affiliate, LG MMA Corp., expects commercial supply to begin at its new 40,000-tonne/yr acrylic resin plant. LG MMA already operates a 50,000-tonnes/yr acrylic resin plant producing commodity grades in South Korea; a surge in demand for optical grades in recent years, particularly for use in LCD light guide panels, prompted the move to establish a production presence for high-end grades.

    Through de-bottlenecking, in 2003 Sumitomo Chemical increased its annual acrylic production capacity in Japan from 30,000 tonnes to 45,000 tonnes, and this year boosted its capacity in Singapore from 35,000 tonnes to 50,000 tonnes. With LG MMA''s new plant in South Korea, Sumitomo Chemical will have a combined annual optical-grade acrylic production capacity of 135,000 tonnes.

    Also in acrylics, Mitsubishi Rayon Co. has started construction of its 70,000-tonnes/year MMA monomer plant in Huizhou, China. The plant is scheduled to be completed in April 2006.

    Mitsubishi Rayon already produces acrylic resin molding compound in Nantong, China, at a 40,000-tonnes/year facility, and in the second quarter of 2005 plans to start 20,000-tonnes/yr acrylic sheet plant.

    Remember this shape: CRG Industries introduces Veriflex

    Cornerstone Research Group Inc. (CRG; Dayton, OH) has commercialized its patented Veriflex Shape Memory Polymer Resin. Veriflex is a two-part shape memory polymer resin system that retains the shape in which it was cured. Once heated above its activation temperature, Veriflex changes from a rigid polymer to a very elastic state.

    In this elastic state, Veriflex can be twisted, pulled, bent, and stretched, reaching up to 200% elongation. When cooled, the polymer hardens and maintains its deformed configuration until heated above activation temperature again, at which point it returns to its memorized shape. This process can be repeated indefinitely without loss of the memory shape.

    CRG plans to market the material to a number of markets and for plastics processes including thermoforming. Veriflex is available for purchase as a two-part uncured resin system from November 2004.

    The FACTS of process control

    Factory Automation Control Technical Services Inc. (FACTS; Cuyahoga Falls, OH) introduced its newest process control and information solutions for thermoformers and extruders, including FACTS Total Thermoformer Control (TTC), and FACTS Total Line Control 2001FS (TLC) for extrusion applications, at the SPE''s thermoforming conference in September.

    FACTS TTC is designed specifically for integrated and centralized control of the entire thermoforming process. The system can be configured for new thermoforming machinery or to replace and upgrade existing thermoformer control systems. The system is suitable for roll-fed or cut-sheet thermoforming applications.

    The TLC 2001FS for extrusion control is designed specifically for integrated and centralized control of the entire extrusion process, and incorporates a high-resolution color touchscreen for operator command input plus data and graphics display.

    Both systems offer over 160 unique product codes, configurable system design (no programming required), real-time trend plots of all process variables, real time SQC charts, product and process analysis, and support for upper-level functions such as job scheduling, job tracking, production tracking reports, and networking to interface to customer MRP and MIS systems.

    Largest coex blowmolder?

    That''s the claim that machine maker and processor Rikutec (Altenkirchen, Germany) is making for a co-extrusion blowmolding unit it installed recently at the Syracuse, NY facility of Fralo-Plastech. Rikutec specializes in very large blowmolding machinery.

    The new unit includes a coextrusion accumulator head with a volume of 400 liters, for processing of hollow bodies with a volumetric capacity of up to 10,000 liters, and up to four layers. The four extruders feeding the head plasticize up to 2000 kg/hr of material.

    BASF''s adds staff at its TPU business

    TPU supplier BASF has added three employees to key customer support roles in its Elastollan thermoplastic polyurethane (TPU) business in North America. The business is headquartered in Wyandotte, MI.

    New are Rabeh H. Elleithy, senior TPU technical service representative; Mahmoud Ghamen has been appointed senior TPU technical service representative; and Mitch A. Willis has been appointed market development specialist.

    All have strong industry backgrounds. Prior to this position, Elleithy worked at PolyOne (Avon Lake, OH) in the Advanced R&D Engineering-Polymer Diagnostics business unit. Ghamen was previously employed by Solvay Engineered Polymers (Mansfield, TX). Willis worked for Performance Polymers Inc. (Leominster, MA) as a senior application engineer.

    PET drinks-bottle processor in new markets

    U.K.-based PET, PVC, and PP bottle blowmolder Audus Noble (Blyth, Northumberland, England) is using the Emballage packaging exhibition in Paris in November to publicize its entry into the toiletries and cosmetics markets with the launch of a brand-new range of products. However, the firm says it is already supplying some customers in Europe.

    The company already supplies a range of packaging products to the personal care market. It is probably best known for its blowmoldings, though it also has an extensive injection molded packaging range. This new range of products is the company''s first entry into the toiletries and cosmetics industry.

    The blowmolder says it has acquired considerable new kit, including new tooling, for thick-walled transparent jars specifically for the toiletries and cosmetic markets. The processor offers customers decorating such as silkscreen printing and hot-foil blocking.

    First Licensee for oriented wood-plastic composite process

    PSA Composites Inc. has entered a licensing agreement with Green Forest Engineered Products LLC of Montana to manufacture and sell specific products for the lumber market using PSAC''s wood-plastic composite technology. PSAC (Guelph, ON) and Green Forest will work together on other potential joint applications and contract manufacturing opportunities.

    "This agreement is significant to PSAC as it is the first commercial-scale production of our oriented wood-plastic composite material," explains Frank Maine, PSAC founder, chairman and chief technology officer, in a statement.

    PSAC''s technology produces a low-density, oriented extruded profile with superior strength and stiffness, plus lower weight than traditional wood-plastic composites.

    Green Forest''s first products will be 1 x 4-inch boards used for door trim and sills.

    Linpac in search of new boss

    David Williams, chief executive of the Linpac Group (Birmingham, England), quit in late September. No replacement had been named by press time.

    Williams is a long-time industry veteran and also has served as president of the European Plastics Converters processors association for three terms. He will remain EuPC president.

    MP understands from a Linpac employee that the decision to leave was very unexpected. Williams was with the firm for about 30 years and saw its growth as a major power in the plastics packaging industry as a thermoformer and films extruder. The firm also molds parts for the automotive and other industries; it recently sold the last of its corrugated paper business to focus on plastics.

    Williams'' departure followed extremely diverging views between him and Montagu Private Equity, the firm that acquired Linpac last year, according to the employee, who wishes to remain anonymous.

    Akzo offloads specialty resins business to Atofina

    Specialty resins producer Cray Valley (known as Cook Composites & Polymers in the U.S.), part of the Total Group (Paris), has bought the ultraviolet/electron-beam resins business of Akzo Nobel (Arnhem, Netherlands) for an undisclosed sum. Sales last year were €27 million. The purchase includes production facilities in Eccles, England and New Brunswick, NJ. UV/electron-beam resins are acrylated monomer and oligomers, and are used in plastics and wood coatings as well as the opto-electronics segments.

    Carbon compounds new to Premix

    Compounder Premix Thermoplastics Inc. (Milton, WI) has added a full line of carbon fiber-reinforced compounds to the company''s Pre-Elec product portfolio. These are available with fiber loadings up to 60% carbon fiber in nylon 6 and 66, and PPS, and up to 40% in other matrix materials including PP, ABS, PC, POM, and PSUL. Carbon fibers increase a compound''s flexural modulus (rigidity) and tensile strength, lower the shrinkage, and increase electrical conductivity.

    Names in the News

    Patrick Masterson has been appointed managing director of acrylic producer and sheet processor Barlo Plastics (Beel, Belgium). He replaces Andre de Smet who is leaving the company after six years.

    New managing director of extrusion equipment producer SML Maschinengesellschaft (Lenzing, Austria) is Karl Stöger, formerly head of the company''s Asian marketing operations. He replaces Bruno Haider who is retiring.

    Gregor Bommel has been tapped to head the cyclic olefin copolymer business of Ticona (Kelsterbach, Germany). He was previously sales director for the division.

    In Brief...

    Dow Corning Corp.''s Japanese joint venture with Toray Industries Inc., Dow Corning Toray Silicone Co. (DCTS), has acquired the silicone division of Nippon Unicar Co. DCTS will offer the same or equivalent silicone products now sold by NUC after the completion of the sale.

    Bayer MaterialScience (Leverkusen, Germany) held an official ceremony in China to celebrate its already-announced plans to invest $200 million to construct two Chinese plants to produce methane diisocyanate (MDI) used to make polyurethane and a 30,000-tonnes/yr-capacity plant to make the precursor hexamethylene diisocyanate used for polyurethane-based coating materials. The MDI plant should have a capacity of 80,000 tonnes/yr. Both, located near Shanghai, are scheduled to come onstream in 2006.

    Roof over many heads

    More than €24 million is being invested in processing operations to manufacture polyester-based roofing membranes at JSC Mogilevhimvolokno in Belarus, the first such facility to serve White Russia, Russia, and other CIS countries. Planned capacity is 39 million sq m, or 7600 tonnes/yr.

    Great Lakes with new capacity

    Supplier Great Lakes Chemical (Indianapolis, IN) has started production in Asia of its phenolic antioxidant additive used for polyurethane (PUR) and polyolefin (PO) applications. The company says growing demand in the Far East made the addition necessary.

    International expansion

    More and more plastics manufacturers are choosing to follow their customers and avail themselves of lower production costs overseas. On paper, it can seem like no-brainer. But simply making the decision is no guarantee of success. Modern Plastics takes a closer look at some of the processors and suppliers making a go of it.

    A tale of two countries: Manufacturing in Mexico and China (Part 1)

    Conventional wisdom says that you go to either Mexico or China for low-cost manufacturing, but a little analysis says otherwise. There are good reasons to locate in both places; it all depends on what you''re making and where your markets are.

    Do you have to choose between manufacturing in Mexico or manufacturing in China? Perhaps not. It''s obvious by the growth of manufacturing in both countries that many companies are choosing not to choose. Mexico''s manufacturing industry is gradually returning to pre-U.S. recession strength as companies take a renewed interest in Mexico''s proximity to U.S. markets.

    Sergio Ornelas, editor of the magazine Mexico Now (Juarez), notes that it''s not really "Mexico vs. China" but "Mexico and China" for many manufacturers. "You have to look at the benefits of each," he says.

    Strengths and weaknesses

    Mexico''s manufacturing has suffered losses over the past five years. "We''ve been a big loser in consumer electronics," Ornelas says, citing some 200 manufacturing plants lost to China, 80 plants lost to other parts of Asia, 40 plants relocated to Eastern Europe, and 70 plants that moved back to the U.S.

    However, Mexico isn''t shrugging its shoulders at Asian competition. "The attitude of the Mexican government is changing with relation to foreign direct investment [FDI]," Ornelas states, "which has helped Mexico gain some new businesses."

    Mexico''s advantages include a much better infrastructure than China''s, macro stability of the country, a working culture with plenty of management talent, and geographic proximity to North American markets. Critical to the establishment of manufacturing businesses is the fact that Mexico recognizes democracy and intellectual property rights.

    Mexico is also not without problems, which include a lack of domestically educated engineers and scientists; a government gridlocked with respect to energy and fiscal policies; a budget deficit; and bureaucracy/paperwork webs.

    "Mexico is its own worst enemy," says Ornelas. "Mexico is not competitive against China-we''re competing against ourselves. But, we have an election coming up and we hope that changes."

    China''s strengths, Ornelas points out, include the government''s ability to strategize, plan, and execute that plan; strong reforms and WTO access giving that country the "lion''s share" of FDI; it''s an export powerhouse; and it has a plentiful workforce, with plans to relocate 150 million people from the rural countryside to work in the cities.

    China''s risks are as great as its strengths, says Ornelas, including an undervalued currency, a banking system reeling from bad loans, lack of political reform within the Communist dictatorship, and chronic intellectual property theft. For these reasons and more "China is overhyped," says Ornelas.

    Wages in Mexico are at about $2.20 to $2.40/hr fully burdened for production workers. Wages in China are about $1.00/hr fully burdened. Companies seeking low-cost manufacturing find it difficult to resist that small but significant disparity in the two wage rates.

    However, warns Randall Sherman, CEO of New Venture Research Corp. (Nevada City, CA), labor is only one component of the China equation. "You need to look at the total cost of manufacturing to get an idea of where you need to be," he says. Inventory costs, for example, can offset savings on labor if you consider that products or parts spend six to eight weeks on a boat tying up money. New Venture Research is a business market research firm for high-tech electronics industries.

    Moreover, intellectual property theft is still a major problem. "What technology do you take there?" asks Sherman. "They don''t consider copying intellectual property wrong. You could use a `Trojan Horse'' strategy."

    Nick Criss, senior director industrial services-Mexico for Cushman & Wakefield, agrees that the number-one problem with doing business in China is theft of intellectual property. "Companies send new products to Mexico because they can''t trust China," Criss says.

    After a product becomes mature and the price begins dropping, it often gets sent to China for manufacturing because the impact of IP theft is much less at that point in the product''s lifecycle.

    Also, although China has one-tenth the labor cost of the U.S., quality standards are not as high. "It''s improving," notes Sherman. "They''re finally starting to measure things. There continues to be a lot of hand assembly of products in China because people are cheap."

    Mexico has a labor rate one-fifth that of the U.S., but has good technical skills among its workforce, and quality is excellent. "They understand U.S. quality criteria, ISO 9000, QS, etc.," says Sherman. "Reliability is good, and Mexico is politically more attractive with a long history of doing business with U.S. companies."

    Sherman and Criss agree that it takes a lot of capital to establish and maintain a plant in China. "Technology transfer is easier to Mexico," Criss adds. "They''re much less developed in China, but they''ll get the hang of it soon."

    Sherman points out that honesty in China is a problem, though. "Many companies have had bad experiences with Chinese suppliers promising things [volumes, quality, on-time delivery, parts, etc.] that they can''t deliver," he says. "Sometimes companies have found out that an actual brick-and-mortar counterpart didn''t exist-just a lot of subcontract companies doing various stages of the product."

    Productivity is also a big consideration. Criss sites a study conducted by General Electric (GE), which showed that in a productivity comparison in Mexico, one U.S. worker equals one Mexican worker. In China, one U.S. worker equals two Chinese workers. "China puts people on jobs rather than equipment because people are cheaper," Criss notes.

    To compete with China''s wage rates, Mexico has the interior and the deep southern region of Yucatan to help offset the higher wages of the northern border region, says Criss. For example, wages in Yucatan are about 45% of wages on the border.

    There will also be differences in the type of work each country attracts as these regions evolve. "Mexico will see more high-tech, customized, low-volume, high-dollar work," says Criss. "Mexico will get proprietary technology because companies won''t have to worry about IP theft, new products where companies have to control the price point, and products where logistics is critical to the market."

    Criss says that in the long run "China will be the platform for Asia, and Mexico will be the platform for North America." Again, the GE study reveals some significant differences for manufacturers. Transportation is a major factor for inventory considerations. Shipping from Mexico requires one to two days'' shipping at a cost of $.02 to $.05/lb. Shipping from China requires 20 to 50 days, at a cost of $.05 to $.12/lb.

    China will see commodity products after they''ve become mature and not sensitive to IP theft, price-driven products, and products where logistics considerations are not a critical factor. "If it''s a big product, production may never go to China," says Criss. "This is the way GE looks at rolling out new products."

    Both Criss and Sherman cited an overcapacity in manufacturing in China as something that could negatively impact that economy, one more reason for OEMs to be cautious when considering locating a plant there. "This whole thing with China could implode, as we''re seeing an oversupply of manufacturing in China, which could cause a collapse and everyone suffers," says Sherman. CG

    A tale of two countries: Manufacturing in Mexico and China (Part 2)

    Here''s the perspective of one company that manufactures in both locations, as well as in the U.S.

    For companies that want to leverage the differences between Mexico and China and compete globally, manufacturing in both countries is seen as a primary solution. For Dial Tool Inc. (Chicago, IL), a custom injection molder, moldmaker, and stamping house, juggling work in these three very different locations is a daunting task. Doreen Michelini, VP global operations for Dial, spends a lot of time in the air keeping up with the company''s plants in Chihuahua, Mexico and a joint venture plant in Donguan, Guangdong Province, China.

    Michelini points out that the differences between Mexico and China are significant when it comes to doing business. One of the major considerations is the travel time and expense. Flying from Chicago to Mexico takes four to six hours and costs $700 to $900; Chicago to Hong Kong is 16 to 21 hours travel time,and costs $600 to $1200.

    On the ground, the primary difference between the three facilities is wages. In Mexico, Dial pays wages and benefits of $2.30/hr; employees work five days but get paid for seven. In China, Dial pays wages and benefits of $.82/hr, which is down from $.98, Michelini notes. "We built a new facility and negotiated the wages of the workers with the local town," says Michelini, "and because there are lots of available workers, we are now paying a lower wage."

    There are management issues to consider, too. "You have to have a higher manager-to-worker ratio in China," says Michelini, for example. "One manager per 10 employees, versus one manager for every 50 employees in Mexico."

    Michelini advises companies to put their money into good management. In Mexico, a good manager earns about $60,000/yr. In China, a good manager costs about $10,000/yr-or less. Yet in China, nine out of 10 managers have a degree from a U.S. institution of higher education.

    Another cost to consider is housing. Dial provides dormitory housing for its Chinese workers, as well as food and medical care. "Medical care can get a bit expensive," notes Michelini. She explained how one employee needed an appendectomy, but the local hospital wouldn''t perform the surgery until the company brought over $2500 in cash. And because the workers do not leave the facility each evening like U.S. and Mexican employees do, Dial also provides recreational facilities and other programs, such as English classes or training programs, to occupy workers in during off hours.

    Dial has a short employee probation time in China of two to four weeks, whereas in Mexico it''s generally longer, more like America''s 90 to 180 days.

    Language isn''t a huge barrier in either country. Most people in China speak English, Michelini says. "The Chinese know that they can gain a big advantage work-wise if they learn to speak and read English," she says. "The Mexican workers don''t feel the pressure to gain that same advantage." However, most Mexican plant managers do speak English.

    The vast time difference between China and Chicago is a bit of a problemMichelini notes. China is 14-plus hours ahead of the U.S., "so while you''re sleeping, China is working," she says. "You may field calls from China at 2 a.m. if there''s a problem. And there''s no such thing as weekends or holidays, except the Chinese New Year."

    In Mexico there''s only one to two hours'' time difference, making it easier to handle problems during the business day. In addition, the government dictates a specific number of holidays, many of which are similar to holidays in the U.S.

    Another major difference that can make manufacturing in China difficult is the utilities. "We have to turn off our power one day per week, and that day changes according to demands on the local grid," explains Michelini. "It''s difficult to adjust the manufacturing schedule. Electricity is not expensive, but it''s not reliable, either. You can also count on lots of Internet interruptions."

    Conversely in Mexico, Michelini says, "The phone and electricity are expensive, but reliable."

    Shipping is obviously a huge consideration, whether from Mexico or China. Air freight runs about $1.30/lb per 1000 lb from Chihuahua to Chicago. From China to Chicago, air freight runs about $.52/lb per 1000 lb. "It''s cheaper because there are a lot more air shipments coming from China than from Mexico," says Michelini.

    To bring parts by truck from Mexico costs about $.20/lb and takes four to five days. To ship from China via ocean freighter costs about $.15/lb-"but this is going up," notes Michelini-and takes four to five weeks. "Safety stock is always a consideration when looking at cost comparisons between the U.S., Mexico, and China. If you''re shipping from China you have to keep a large inventory on the shelf, so you need to calculate that into your costs. Manufacturing in Mexico means that your inventory costs are substantially less-about one-fourth in my case study."

    Broker fees in Mexico are the biggest complaint Michelini has about manufacturing in that country; they average about $75 per shipment. In China, broker fees run about $20 per shipment.

    Startup costs are low in Mexico, says Michelini, and the average time required to get a startup running is six to eight weeks with the shelter programs. Obviously that can be longer if a company decides to build a facility in an industrial park. In China, startup is very expensive and can range from $150,000 to $1 million; it can take up to one year for a startup to be operational, even with a JV facility, depending on the industry you''re in, explains Michelini.

    When it comes to environmental and worker safety issues, Michelini says that Mexico has similar laws as the U.S., "or even more stringent regulations for environmental and worker protection," she notes. China, on the other hand, claims to have regulations, "but there''s no real effort on the part of the government with regard to health and safety or environmental issues."

    In the end, says Michelini, a processor has to do his homework and make sure he understands where and what the costs to manufacture are. She says a company only saves money on labor if the product demands high labor interaction. "Unless you touch it a lot, there''s no real savings in going to China," she says.

    "Inventory and supply source is a critical issue," she adds. "Safety stock in inventory can be costly."

    Everything Dial produces in Asia stays in Asia except the tooling, which is sometimes shipped back to the U.S. to run in Chicago or Mexico.

    To determine the best place to produce a customer''s product, Dial looks at all three cost models before deciding on the optimum location to peform the work. "Unless there is a lot of manual labor (assembly, packaging), Chicago can be very competitive with China pricing," says Michelini. "Dial Tool has a long history of exporting product from our U.S. facilities, but as our customers migrated outside the U.S., it was natural for us to follow them to better service their needs." CG

    Site selection by-the-numbers can save trouble down the road

    International expansion usually starts with picking a spot to set up shop, one of the most important decisions a business owner may face. Why then rely on a few variables and gut feeling when facts are what you need?

    For processors expanding into the European Union countries, a new service can help them pinpoint the exact region they should settle in. For those moving into Germany, it can even find the exact town or city. During site selection, says Henner Lüttich, principal of Hünxe, Germany-based Contor GmbH, the business consultancy that developed the service, "too many firms only look at 10 or so cities in a country, when in fact the search must be all-inclusive." He says that during his years working as a consultant brought in to clean up bankrupt firms, he noted that, although it rarely was the final nail in a firm''s coffin, poor site selection often was one of the most powerful contributing factors in its demise.

    The problem, says Lüttich, is we humans just are not clever enough to handle all of the variables that should be brought into a site selection equation. If a person were to consider just 10 locations and compare each with all the others, that''s 45 comparisons (n(n-1)/2, if you want to do the math); make it 100 locations and there are 4950 comparisons to juggle. Lüttich''s firm has collected extensive data on employment figures, wages, infrastructure, real estate prices and the like for 1500 regions in the EU; for Germany he can offer an even more focused analysis as the system churns through data on about 14,000 German cities and towns.

    "If a business considers only 15 spots in the EU-and most don''t go that far even-then they have only a 1% chance of finding the right spot," he says. "In these cases, site selection becomes more like a lottery than a mathematical process." Fifteen would be a solid improvement, according to a study released by Cologne''s Office for Empirical Studies on Social Economics, which reports that most business owners consider only two locations, and none surveyed said they looked at more than six.

    Firms using the Contor system answer detailed questions on 12 standard criteria. Breaking down the 12 basic categories into sub-categories protects against giving too much weight to a single variable and allows a firm to be more specific. For example, is simply the level of unemployed laborers important, or is the firm eager to know only of unemployed laborers who have manufacturing plant experience? For site selection within the EU, a few hundred variables can be compared. In Germany, where Contor has more detailed data, the system encompasses more than 1000 variables.

    If the system does not include a variable that is important to a customer, then Contor will find the necessary data and integrate it into the search, Lüttich says. Updating the system is no small task. "I spend the first three months of each year renewing my data," he says, collecting it from government agencies, non-governmental organizations, the United Nations, the European Union, and other sources. "I use facts. Too many firms go with guesses or gut feelings," he adds.

    Lüttich says that to his knowledge Contor is the only firm offering use of a computer-run mathematical algorithm encompassing so much site selection criteria. "And I don''t see how it would be practical to do it otherwise," he says. Recognizing that some firms can afford more than others for such a search, he offers two services, one more detailed and involving a good bit of his own time to interview a firm''s managers, and another that involves only the customer answering some basic questions. The more detailed service can cost from about _10,000 upwards, depending on how much work must be done. MD

    A Chinese joint venture that cuts both ways

    Processors from Germany and Singapore come together in Shanghai

    Six years ago German processor Kunststoff Helmbrechts AG (KH) found itself in a position not unfamiliar to suppliers of precision parts to the telecommunications industry: Customers were moving to China to cut costs and it was under pressure to do the same. The demand was for local content and low price, with no compromise in quality.

    The company is no newcomer to the international stage. Founded in 1958, many of its customers (it also serves medical, automotive, and other markets) are world brands. But as a typical medium-sized company with 400 employees, it had never produced outside its home town of Helmbrechts.

    Speaking at the Injection Molding 2004 conference organized by the German plastics engineers society (VDI-K) in Baden-Baden, company director Axel Zuleeg detailed what KH did between then and late last year, when it went into series production in Souzhou (just outside Shanghai) at Unikun Co. Ltd., the company it co-owns with Singaporean processor Uniplas Enterprises Pte Ltd.

    KH began its research into setting up in China in 1998, soon after a mobile phone customer made it clear that only this would keep it on the preferred-supplier list. The first visit to that customer''s partners in China took place in 2001 and KH began getting feedback from potential partners of its own. This was followed later in the year with in-depth discussions at K 2001, where the company had its own stand.

    Early in 2002 KH reached its first agreements with Uniplas. While KH has strengths in production of housings and in decorating, Uniplas specializes in cleanroom production of displays.

    The companies agreed to test the water with a joint venture (JV) trading company, making use of both production operations giving KH its first base in China, and Uniplas its first in Europe.

    The agreement was that existing customers of the respective companies would be off-limits to the other, while new customers would be joint property. If all went well, a production JV would follow. Unikun Trading got its business license in August 2002. A month later, after tying up a major supply deal, the two companies agreed on phase two.

    Unikun Tooling was established in Suzhou in March (it produced its first mold in October 2002); Unikum Plastics followed in July. KH has a strong moldmaking department in Germany. Business licenses for both JV production operations were applied for together, but Zuleeg says Chinese authorities, looking to attract more high-tech companies, favor tooling more than plastics. In fact, the JV partners spent months deliberating whether to use the word "Industries" rather than "Plastics" in the company name. Obtaining the license so quickly came as a surprise.

    Just a few months on, and everything appears to be going according to plan. Not only has the company satisfied its mobile phone customer, but the JV is picking up new business, especially in the automotive sector. Deals are being done with existing customers back in Germany on the basis that business will start with KH, and then shift to Unikum. And when the business shifts, so will price calculations, from German to Chinese, Zuleeg says. "Since production at Unikum is calculated on a dollar basis, the weak dollar is currently a strong selling point," he notes.

    Multinational toolmakers take Western technologies to the Far East

    Expansion into new markets can be risky, especially in a market like China where customs, standards, and perceived quality can be very different. Yet that does not seem to have stopped two moldmakers who say they have found success there.

    Injection moldmaker VEM-Ltd. (Hong Kong; Redondo Beach, CA; and Buchenbach, Germany), a German-American procurer and distributor of Chinese-made molds for medical, automotive, and consumer electronic housings, has seen business double since January, says Marc Weinmann, managing director.

    VEM is no newcomer to the market and has five years experience working in China with domestic partners. It has not always been smooth sailing, admits Weinmann. The company opened its own 1000-sq-m moldmaking plant in Dongguang, China in August to free itself from the whims of its moldmaking partners (March 2004 MP/MPI).

    Next door, the company built a 1200-sq-m injection molding shop with six injection machines from Hong Kong manufacturer Elite Precision Machinery, equipped with European controls and clamp forces of 710 to 3200 kN. It''s a one-stop shop for customers who want molds and contract molding.

    Some of the latest projects the company has acquired require both moldbuilding and injection work in one package. For Procter & Gamble''s Max Factor division, VEM is molding cosmetics display sales points; for an unidentified North American company it is producing theft-deterrent devices for shopping centers; and for Osram it is making ceiling lighting systems, which includes mold design, toolbuilding, injection, packaging in blister packs, and shipment.

    Surprisingly. VEM''s injection shop is fully automated with Chinese-made robots and conveyor units, replacing cheap labor. Weinmann says the company chose this route as a matter of quality and consistency. Plus, he says, "the company wants to offer customers the same production possibilities as in Europe or the U.S."

    A change he is seeing is that the company''s reputation for quality has interested domestic injection molders who export and must provide Western quality. "In the next three years we expect 30% of our turnover to come from local customers," he says. So convinced is he that the Chinese market is turning toward quality molds, VEM opened a sales office in Shanghai last month.

    Another mold procurer, Trinity Technology (Ansfelden, Austria), says its move into China has been very successful. In the last six months the company has sold more than 120 profile extrusion tools to Turkey alone and has supplied 9000 extrusion dies worldwide, says Trinity Managing Director Arnold Kern.

    The company has a capacity of 1500 dies/yr, although Kern says it is producing 1200 today at a shop that boasts 60 Swiss-built EDM machines. The company has eight European-built extrusion lines at the plant to conduct customer die trials before delivery. It is opening a similar center in Beijing with three lines so that customers can more easily fly in and out for tests rather than travel to its more remote facility in Tongling City, China.

    Trinity''s partner in China is Tongling Trinity Technology, of the Sanjia Group. This group''s moldmaking operation, Tongling Sanjia Mould Co., has been at the center of a piracy suit filed by four Austrian profile extrusion toolmakers (July 2004 MP/MPI) charging it and another Chinese firm, China Jari Tooling, with making copycat molds.

    Kern says Trinity does not copy the plans of others and that the ISO 9001:2000 certified shop only uses top-quality European-made tool steel for its dies. He says die design is done in Austria before being sent for production in China. Tools can be up to 40% cheaper than comparable European-made extrusion dies. "Tool delivery is now four months and the goal is to cut it in half," says Kern.

    Expansion in a different direction is planned by Chinese processor Dalian Shide (Dalian), which announced at China Expo 2004 in London that it wants to expand window profiles sales to Europe starting in 2008. The firm also is targeting a possible extrusion operation acquisition there. It recently opened a European headquarters to coordinate sales in Frankfurt, Germany. RC

    A different kind of JV

    Western companies looking at China are always faced with the question: Do we go it alone to protect our property, or do we tap into local knowledge resource via a joint venture? Unikun is unusual in that it is a joint venture, but since both partners are from outside China, it is considered a WFOE (wholly-owned foreign enterprise). This worked well for KH because Uniplas already had operations of its own in China, while Singapore-the "Switzerland of Asia"-is an ideal halfway house between Europe and China. The CEO of Uniplas studied in the U.S.; his coordinator for Europe studied in Germany.

    Contact information

    Cushman & Wakefield   www.cushwake.com
    New Venture Research   www.newventureresearch.com

    Processor's smart idea differentiates commodity product

    The design principles of standard U.S. domestic water heaters haven''t changed substantially over the last century-meaning that a plastics-intensive version easily stands out.

    Water heaters in North American households today look much as they always have, says Barry Jackson, director of engineering at Water Heater Innovations (WHI) in Eagan, MN. The units started out in cast iron, later were made of copper and stainless steel, and today are mainly steel tanks with enamel linings.

    The market is saturated, driven mainly by price and speed of delivery. Water heaters have become a commodity product selling at the same price as 20 years ago. Despite the fact that these market signs don''t exactly point toward success, WHI has been able to come up with a unique processing idea to successfully carve out a profitable niche.

    Better mousetrap

    Water heaters are "mostly a replacement business. More than 8 million water heaters are sold a year [in the U.S.] with only two million new housing starts," points out Jackson. "Average life of a tank is seven years and normal failure mode is tank leakage due to material corrosion."

    WHI set its goal to make a long-life water heater that would be a simple replacement of standard units. Jackson says catalog retailer Sears (Hoffman Estates, IL) was an instigator in the project, seeing a market for itself comprised of frustrated homeowners tired of constantly replace metal water heaters. But the processing learning curve was not easy, Jackson admits.

    The company tried an existing technology used by a water softener producer that developed a filament-wound, blowmolded ABS tank. Prototypes for water heating showed that within two weeks, small sediment nodules formed in the water, resulting from the ABS tank. "The first major lesson we learned was that there is a world of difference between hot and cold water exposure," Jackson says.

    Looking for suitable materials for tank liners, WHI determined that polybutene-1 could offer a solution since the polyolefin has good chemical resistance. WHI''s polymer supplier, Shell (now Basell; Wilmington, DE), developed a specialty grade which could be blowmolded. Jackson says the polymer proved so chemical resistant that the company is able to offer a lifetime warranty, whereas competitors generally provide one of just three to 12 years.

    WHI came up with various models of tank capacities up to 105 gal (398 liters). The tank is processed on a Davis-Standard SE435 machine, which has an accumulator head that can produce parisons that weigh up to 35 lb (16 kg). The tank is fiber-wound with glass fiber to provide burst protection, uses polyurethane foam for heat insulation, and is surrounded by a blowmolded high-density polyethylene jacket.

    The units, which have been blowmolded for 18 years, are half the weight of steel and resist damage during shipping and installation. Jackson says a competitor that tried to rotomold an undisclosed polymer into a water tank met with little success and has since withdrawn the product from the market. "We''ve built up a wealth of proprietary technology over the years which has helped lead to our success," he says.

    By taking a commodity product and refining it, Water Heater Innovations has been able to achieve good growth through its Marathon home water heater line, he says. The first industrial unit, based on the same technology, was introduced at the beginning of this year. The company has also expanded the product line with two new 15- and 20-gal (57- and 76-liter) units as point-of-use water heaters for limited-space locations or where small amounts of hot water are needed, such as in office restrooms or cabins.

    Robert Colvin [email protected]

    Contact information

    Basell North America Inc.   www.basell.com
    Water Heater Innovations Inc.   www.marathonheaters.com

    Middle East: Promise or just problems?

    How attractive is the Middle East for plastics processing? On one hand, you have the region''s vast reserves of cheap oil and natural gas, which have given birth to a growing number of petrochemical plants. This process is transforming the region into one of the world''s petrochemical epicenters. On the other, there are the obvious stability and security concerns.

    The Middle East''s growing importance as more than a raw material source is only expected to accelerate, as was recently predicted in a March 2004 report by the European Chemical Council (CEFIC), which said that Middle East petrochemical capacity would likely more than double its current ethylene production levels by 2010.

    In the past, cheap natural gas stocks within many industrial markets like North America mitigated the importance of the Middle East''s large gas reserves and ensured relatively low resin prices. However, now that reserves in these markets are beginning to wane and the voracious consumption of newly emerging industrial giants like China and India are shrinking global supplies, energy and resin prices in many plastics manufacturing markets have begun to rise.

    Yet, the turmoil endemic to the region makes it less than attractive for foreign firms to set up shop, faced as they are with a daily risk of bombings, shootings, kidnappings, and the like. In recent years terrorist attacks have negatively affected the economies of Morocco, Tunisia, Yemen, Saudi Arabia, Syria, Turkey, and others. Iraq is anything but a rose garden.

    However, if prices for oil, gas, and resins continue to climb and stay high (as expected), plastics manufacturers might be forced to take a more serious interest in moving manufacturing to energy-rich regions like Middle East and North Africa, regardless of the risks.

    Saudi Arabia

    The Saudi market tempts plastics manufacturers with abundant reserves of cheap natural gas and its well-developed petrochemical and plastics industries. Added allure is found in the nation''s long history of political and economic stability, its large and relatively affluent population, a developed infrastructure, and efficient banking institutions.

    These have made the Saudi petrochemical market a highly sought-after investment. In May 2004, Sumitomo Chemical and Saudi Arabia''s national oil company, Saudi Armco, signed a preliminary agreement to create one of the world''s largest petrochemical complexes at Rabigh on the Red Sea coast. The complex will include several downstream units dedicated to polyethylene and low-density polyethylene.

    Investing in the Saudi market, however, has its drawbacks: a lack of reliable economic data, restrictive labor laws, incredibly burdensome visa procedures, an overbearing cultural atmosphere alienating to many non-Muslims, prevalent corruption, and business laws that still largely favor Saudi nationals.

    While these problems are not expected to disappear overnight, foreign observers are holding out hope that as Saudi Arabia moves toward accession into the WTO, and as it further develops its regional free-trading regimes like the Gulf Cooperation Council (GCC), which includes the gulf states of Oman, United Arab Emirates, Kuwait, Qatar, and Bahrain, the business climate for foreign investors will improve. Already, following the enactment of a new foreign direct investment law in April 2000 and the creation of the Saudi Arabian General Investment Authority (SAGIA), investment-friendly legislation has been passed and import tariffs have been lowered.

    Exporters will want to note that the Saudi government continues to protect a few infant industries like plastic pipes, with a 20% duty, and that Saudi customs valuation procedures are not currently WTO-compliant.

    Kuwait

    While most investors probably had never heard of Kuwait prior to Iraq''s invasion in the early 1990s, those within the energy industry, along with other world-wise investors, have long enjoyed the rewards of this small but affluent market of around 20 million.

    The massive revenues generated by Kuwait''s huge share of the world''s oil reserves (around 10%), along with generous revenues from foreign investments (estimated $60 billion to more than $90 billion), makes this small economy an attractive destination for U.S. consumer products. This is compounded by the consistently low duties applied to foreign imports (generally less than 5%), and liberal government policies on foreign investment, which promise the possibility of 10-year tax holidays and 100% foreign ownership in certain sectors.

    One of the most exciting Kuwaiti growth sectors is petrochemicals. Equate, a multibillion-dollar petrochemical complex in the Shuaiba Industrial Area, is one of the most obvious examples. Developed as a joint venture between America''s Union Carbide Corp. (now part of Dow Chemicals), the Kuwaiti government-owned Petrochemical Industries Co., and Boubiyan (a private group of Kuwaiti investors), Equate has dramatically increased the availability of cheap petrochemical products like ethylene, polyethylene, and ethylene glycol.

    Yemen

    Throughout much of the 1990s, security concerns (Civil War in 1994), the kidnapping of foreigners, a festering border dispute with Saudi Arabia, and ongoing political and tribal conflicts all helped to keep investors away from Yemen. Further complicating things, Yemen also struggled with debilitating inflation and currency problems as well as underdeveloped infrastructure. As a result, even the economy''s primary engine, the energy industry, did not reach its full potential.

    However, the country''s recent moves toward democratic governance, its settlement of decades-old border disputes, and its aggressive moves to curb kidnappings and Islamic terrorism-a problem that has put Yemen under international scrutiny following the 2000 bombing of the USS Cole and the 2002 attack on the French oil tanker M/V Limburg-have all helped to attract foreign investment.

    The fundamental economic situation has also improved since the ''90s. Beginning in 1995, when the country first agreed to follow IMF and World Bank recommendations, the country has managed to significantly reduce inflation, stabilize its currency, and eliminate many of its foreign trade barriers and discouraging tariff levels. Other major advances have been made in privatizing most public sector enterprises and establishing Free Trade Zones (FTZ).

    Even Yemen''s infrastructure has been improved by the development of Aden Container Terminal (ACT) in 1999, the construction of an associated industrial and warehousing estate called Aden Distripark (ADP), and the renovated Aden international airport. Plastics producers will want to take note of a proposed liquefied natural gas (LNG) project, which looks to exploit the country''s proven 17 trillion cu ft of natural gas reserves.

    Oman

    Most of Oman''s international importance comes from its key geographical position, which leaves it in control of the sea lanes in and out of the Persian Gulf at the Strait of Hormuz.

    The economy of this sparsely populated country of about 2.5 million remains overwhelmingly dependent on its modest oil exports, which account for the lion''s share of revenues. Oman''s dwindling oil reserves make this reliance unsustainable and has motivated the government to support a more diversified economy.

    One strategy in this quest has been the development of the nation''s extensive natural gas reserves. LNG production and exports have been an increasingly important part of the national economy, as has the expanding number of downstream gas-based industries.

    Oman''s liberal economic policies are another reflection of its determination to more fully develop its economy. The benefits of this open environment include no foreign exchange or capital flow restrictions, extensive tax holidays for relocating industries, national tax status for joint ventures with 30% domestic ownership, and as part of Oman''s WTO accession in October of 2000, the country has adopted WTO laws concerning investments, taxes, and intellectual property rights.

    Processors will be interested to note that the government is actively promoting infrastructure development. Examples include a $250 million industrial port in the northern city of Sohar, the Salalah Container and Transshipment Port, a Free Trade Zone in Salalah, and numerous industrial parks throughout Oman available to foreign manufacturers.

    United Arab Emirates

    Any review of U.A.E. must start with the enormous amount of proven oil reserves this small country possesses-roughly 10% of the world''s total. In 2002, oil accounted for almost 20% of GDP, around half of all export earnings, and 90% of government revenue.

    Because of this uneven reliance on a vast, but ultimately nonrenewable resource, the U.A.E. has also invested heavily in the development of alternative industries and has become one of the Middle East''s principal business centers and a global shipping hub. The port at Dubai is the third-busiest in the world.

    This drive to diversify has also inspired a business-friendly environment, exemplified by the absence of corporate taxes and minimal import duties. Each of the seven emirates have one or more free-trade zones, many designed to attract specific industries, and the government has developed the physical and technological infrastructure necessary to accommodate foreign businesses and manufacturers.

    It is also important that foreign investors or exporters understand the difficulties of this lucrative market. For example, U.A.E.''s legal system makes a clear distinction between the foreigner and the local. Businesses are strongly urged to retain local legal counsel for any and all transactions and to thoroughly investigate prospective clients, partners, and major contractors before initiating any deal.

    Qatar

    Despite its size, Qatar has substantial oil resources and one of the world''s largest natural gas reserves, with more than 900 trillion cu ft of proven reserves in its North Field. Qatar was quick to capitalize these immense stores, establishing two LNG facilities in the mid ''90s that are expected to make this tiny nation the world''s largest LNG exporter by 2010.

    Like other energy-rich Persian Gulf economies, Qatar is trying to expand its economy into nonenergy fields. The government has extended foreign industry''s tax holidays; subsidized energy, soft loans, and favorable land leases; and allows 100% foreign ownership and special customs exceptions.

    Iran

    Iran is one of the world''s largest oil-producing countries. It shares the world''s largest gas field with its neighbor Qatar; it has the largest consumer market in the Middle East, a large and educated business community, and is now becoming a global petrochemical powerhouse. It a force that plastics manufacturers will overlook at their own peril.

    While many of the restrictions imposed by the religious leaders of Iran can hinder business relations, business still gets done in Iran and the country''s post-revolution middle class has helped facilitate deals with many foreign firms.

    Like many of its energy-rich neighbors, the level of petrochemical investment is impressive: In February, Japan''s Mitsui Engineering & Shipbuilding Co. won the bid for the engineering, procurement, and construction of an HDPE plant at the Ilam petrochemical facility.

    Aside from the benefits of a booming domestic resins market, local processors should also benefit from proposed legislation that would retire all automobiles more than 20 years old. Iran''s growing auto industry, which produces more than 700,000 autos a year, is one of the top plastics consumers in the country.

    Despite significant trade and investment restrictions many processors (especially American) face when attempting to establish business relations in Iran, the opportunities make it worthwhile to at least consider future investment.

    The chance that the international community will finally crack down on Iran''s nuclear programs is a major risk factor for all who invest here.

    Iraq

    Until the ultimate degree and duration of the current turmoil becomes more certain, we will not speculate on Iraq''s immediate prospects. When relative calm is restored in Iraq, both its energy resources and educated labor force should help ensure bright prospects for plastics manufacturers.

    Syria

    Syria has its opportunities, but manufacturers looking for promising labor markets might find easier and more profitable ones in other areas of the Middle East.

    The obstacles include a heavy-industry sector that remains largely in the public sector; an economy hurt by diminished trade with Iraq and the unpredictable fluctuations of oil prices; damaging government interference with exchange rates; high protective import tariffs; and a largely ineffective banking system.

    Additional barriers exist for U.S. businesses due to strict U.S. export controls, ongoing sanctions, and tax deterrents, consequences of its status in Washington, DC as a state sponsor of terrorism.

    Many of these economic difficulties are improving, as have many of Syria''s political relations. On the economic front, the government instituted an amended version of Investment Law No. 10 in April 2000, which has significantly opened many areas of the economy to the private sector.

    Jordan

    Jordan has made great strides over the last several years to open its economy to private businesses, both foreign and domestic. Signs of this openness are seen in its accession to the WTO in 2000, and its more recent 2001 Free Trade Agreement with the U.S.

    Processors looking to establish a manufacturing presence in the Middle East can take advantage of Jordan''s many Free Trade Zones, industrial estates, numerous international trade agreements (including its membership in the Pan-Arab Accord), its association agreement with the EU, and the aforementioned FTA with the U.S., as well as its large and well-educated manufacturing labor force.

    Israel

    Israel has one of the most educated labor forces and developed infrastructures in the region. While the central government has been criticized for playing too active a role in the economy, this involvement is subsiding as privatization programs sell off public holdings in major banks, airlines, and power sector industries.

    Another manifestation of this diminished involvement should be a gradual cutback in state taxes, which should increase the power of the consumer market and help boost consumption. Foreign investors looking to establish a manufacturing presence, or exporters looking for markets, can be assured of the same legal treatment as local investors, and benefits from numerous incentive programs.

    Manufacturers operating out of Israel can reap the benefits of its well-developed high-tech industries and its prime location at the doorstep of Europe, Africa, and the Middle East.

    Turkey

    The market in Turkey offers investors several key features: duty-free access to the EU, a consumer population of more than 68 million, a low EU common external tariff of around 5%, and a key shipping location between Europe, Central Asia, the Middle East, and Africa. While all these pluses have a great pull on foreign capital, the Turkish market does have some downsides.

    The government, although much improved, still controls many aspects of the economy. However, more important for processors, the government''s red tape and clouded processes have caused significant headaches for foreign investors.

    Processors who invest should take full advantage of Turkey''s existing plastics industries. While this may entail local competition for some manufacturers, the existing plastics infrastructure offers others good opportunity for joint ventures and buyouts.

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

    Compound kills SARS, possibly other viruses

    RESINS/COMPOUNDS

    Compound kills SARS, possibly other viruses

    A patent-pending thermoset compound, which processes like a phenolic resin, is the first tested and proved to kill the debilitating disease, SARS. According to the producer it also kills a wide variety of other bacteria, yeasts, and molds on contact. During K 2004, the supplier will feature the material in potential applications such as toilet seats, door handles, baby changing tables, and public phones. Earlier this year the supplier presented test results done on the material at a building and construction conference in China. Testing was conducted by independent laboratories in Italy and China, with testing done using molded parts.

    The new material is part of the supplier''s Polygiene range for products that require highly hygienic surfaces. The anti-SARS compound is nontoxic and does not release any volatile organic compounds, says Luigi Mocchie, managing director at Perstorp Compounds. The company introduced Polygiene antibacterial grades in 2001 and has since seen demand increase 400%.

    The material is also being tested now to determine its effectivenss against other viruses including methicillin-resistant staphylococcus aureus (MRSA), bird flu, and pseudomonas. The anti-SARS compound can be processed by either injection or compression molding, says Mocchia, and a part''s surface is permanently hygienically clean. There is no need for sterilization. The active substance is evenly distributed throughout the compound and human transmission of the virus is killed in less than two hours.

    Perstorp will not identify the anti-viral agent other than to say it "builds upon the inherent antimicrobial and anti-viral properties of the amino base resins and enhances this by use of a second-generation antiseptic additive." First commercial use is in a Milan hotel which is having bathroom fixtures molded. The material is available globally and processors need make no adjustment to their equipment to process the material. Perstorp Compounds AB, Perstorp, Sweden; +46 435 38364; www.perstorpcompounds.com

    Moldable CF compound said to outperform competition

    Billed as the highlight of this supplier''s K 2004 stand, Vyntec is targeted at metal replacement and marketed to processors for automotive pump parts, high-performance pistons and bearings, shielding, and other applications where high temperature resistance is critical. The manufacturer says this is the first commercialized short carbon fiber (CF) phenolic compound on the market and says it is less costly than CF-reinforced polyetheretherketone (PEEK). The first processor of the material is said to be an unidentified vehicle parts producer.

    Albert Cardon, senior research scientist at Vyncolit, says the material beats carbon fiber reinforced PEEK in flexural strength and E-modulus, and exhibits lower swelling at constant temperatures of 150°C. He says the easy-flowing compound does not require high injection pressure to successfully fill molds. Nor does the extruder temperature need to be abnormally high to process it. Carbon fiber loading is application specific and can be up to 60%. Density is from 1.35 to 1.55 g/cu cm. Vyncolit NV, Gent, Belgium; +32 9265 2141; www.vyncolit.com

    PPS chosen for turbocharger pipes

    Ticona and German blowmolding machinery manufacturer SIG Kautex (Bonn) developed Fortron 1115L0, a special glass-fiber-reinforced polyphenylene sulfide (PPS) blowmolding grade, plus the technology to make auto engine turbocharger air pipes in a single operation. Ticona believes this material will replace a complex design consisting of aluminum pipes and fluoroelastomer tubes. The supplier says there is a considerable cost-benefit improvement, as well as application advantages.

    The pipes go on the "hot" side of the charge-air section, between the turbocharger outlet and the intercooler, where pressures reach 2 bar and temperatures rise to 205°C. Ticona says Fortron PPS has the heat resistance required for use in the charge-air system. It is a stable polymer, which also exhibits permeation behavior and chemical resistance. Because of its high melt strength and viscosity, it can be processed using blowmolding (or in this case, 3-D suction blowmolding, which enables production of parts with complicated geometries while creating little flash). A flexible coupling connection is integral to the pipe. The part shown here is made by Solvay Automotive. Ticona, Kelsterbach, Germany; +49 69 30516299; www.ticona.com

    PEEK used in semiconductor equipment

    Singaporean semiconductor equipment and systems manufacturer AEM-Evertech Holdings Ltd. says it is reaping the benefits from switching its material design from 40% glass-fiber-filled PPS to polyetheretherketone (PEEK). Since the first quarter 2003, the company has been using PEEK to make holder parts for its range of chemical plating machines, which are sold mainly into semiconductor component and IC companies in China.

    The holders form an integral part of the plating machines, as they physically carry the semiconductor lead frames or connectors within the customers'' precise and controlled plating environments. As such, the selected material needs to be smooth and nonporous to avoid surface deposition of microparticles, which could form an undesirable conductive path.

    Using PEEK, the company has achieved good holder part quality, better plating efficiency, and longer part life, as well as realizing an overall cost advantage over alternative materials. In addition, it has contributed to improved machine reliability, lower machine maintenance, and reduced downtime. The firm has also overcome problems associated with outgassing and particle generation experienced with PPS. Victrex Plc, Cleveleys, England; +44 1253 897701; www.victrex.com

    BASF launches heat-, flame-resistant nylons

    BASF has developed a high-temperature-resistant nylon 66 that it believes is fit to take on higher priced "high-temperature" semi-crystalline nylons (HTNs) like nylon 46 and polyphthalamide in automotive underhood applications where temperatures can get as high as 200°C. Its price will be between regular nylon 66 and these HTNs, but closer to the former.

    Properties are achieved in Ultramid A3WG10 HS Black 20560 through a stabilizer package and a 50% glass loading. Mechanical properties after 1000 hours of heat aging at 190°C are comparable to those of HTNs (graph), says Ultramid marketer Jochen Engelmann. Customer trials report good surface finish, despite its high glass content. Processing conditions are the same as for a regular nylon 66 compound, with no need for the high melt- and mold temperatures typical of HTNs. "The material is extraordinarily easy to vibration-weld, with the weld strength remaining excellent even after heat aging," Engelmann adds.

    Another new grade, Ultramid B3U HF, is a high-flow, unreinforced nylon 6 with a halogen-free flame retardant, suitable for thinwalled housings of electrical equipment that require a UL94 V-0 rating. It reportedly retains such typical nylon properties as impact strength, good surface finish, and environmental stress-cracking resistance.

    Another halogen-free FR nylon 6 for circuit breakers is Ultramid B3UM4. A low-cost mineral filler provides cost savings while keeping losses in mechanical performance to a minimum. Grade A3UG5 is a flame-retardant and reinforced nylon 66 that contains no halogen or red phosphorous. A pale flame-retardant additive (details are confidential) makes it possible to formulate V-0 compounds that are freely colorable. High stiffness and impact strength are cited, as well as low density compared with halogenated compounds. BASF AG, Ludwigshafen, Germany; +49 621 600; www.basf.de/plastics

    Elastomer grade provides good bounce to sports shoes

    A new Pebax grade polyether-block-amide elastomer combines good performance with transparency and color pigmentation for good visual effects on sports and leisure items. Designed for sports-shoe soles and components, the material is easy to process and its low density helps reduce weight without detracting from mechanical properties. Atofina developed this material as a foam in cooperation with Alveo. Atofina, Paris, France; +33 1 49008080; www.atofina.com; Alveo AG, Luzern, Switzerland; +41 41 2289292; www.alveo.com

    Clearer, tougher SBS helps add value

    Styrolux 3G 33 is an addition to the third generation of styrene/butadiene/styrene block copolymers (SBS) BASF introduced three years ago. Injection grade Styrolux 3G 33 is characterized by even better clarity than the initial extrusion grade, 3G 55, and includes a very good combination of toughness and stiffness. Marketer Daniel Wagner highlights its compatibility with general-purpose polystyrene (PS), which results in only a slight increase in haze when the two are mixed.

    Compared to existing injection grade Styrolux 656 C, which has similar stiffness, 3G 33 is significantly more ductile and resistant to impact. Cycle times can be reduced owing to good melt flow and easy demolding. Features such as integral hinges and snap-fits are possible. Target applications include office equipment, toys and household, housing covers, as well as cosmetics packaging. It has been proven in blends for extrusion applications, notably thick thermoformable sheet. BASF sees 3G 33 competing with other transparent materials-PET, PVC, acrylics-in segments such as clear tableware where until recently SBS was not appropriate. BASF AG, Ludwigshafen, Germany; +49 621 600; www.basf.de/plastics

    ADDITIVES

    Nucleating concentrate permits introduction during processing

    A new grade of Hyperform, HI5-5, a concentrated form of its existing nucleating agent family, allows polypropylene (PP) processors to determine the optimal approach in using high-speed nucleation to boost productivity and enhance product quality. Previously the material needed to be added to PP at the polymer manufacturers'' level. With this grade, injection molders and extruders of opaque PP are able to dose during production. This new grade compliments the existing HPN-68L high-speed nucleator, which is also available in concentrate form. Both grades allow productivity improvements of up to 25% compared to non-nucleated PP. Milliken, Spartanburg, SC, USA; www.millikenchemical.com

    Color concentrate FDA approved

    Covering both short-term food-contact applictions like straws, cups, and spoons, as well as prolonged food-contact in packaging and storage containers, a recent FDA decision clears Chromicolor color concentrates for use in food-contact applications.

    Chromicolor''s manufacturer, Matsui International, says the decision validates the concentrate for use by processors who might have resisted undertaking safety evaluation tests on their own.

    Meeting all FDA-applicable food-additive reulations, Chromicolor PP Conc BW color conentrates can be used with polypropylene packaging for aqueous, acidic, low-alcohol, and dry foods as well as PP containers handling fatty and high-alcohol foods. Matsui International Inc., Gardena, CA, USA; +1-310-767-7812; www.matsui-color.com

    REFERENCE WORKS

    Plasticizers handbook gives worthwhile information

    A recently published "Handbook of Plasticizers," edited by George Wypych, provides a wealth of information on additives to make plastics applications flexible. The book includes historical data, classifications and definitions by plasticizer type, ways to insure plasticizer quality, and theories about compatibility. Quite helpful for processors is the section on processing methods, which targets specifics for particular markets. Besides the book ($295), a separate CD (also $295) is available with what the publisher says is the world''s most comprehensive database on plasticizers. ChemTec Publishing, Toronto, ON, Canada; +1-416 265-2603; www.chemtec.org

    Joining the global community

    One U.S. moldmaker is bypassing the China connection, and skipping straight to the other market of the future by partnering with a firm in India to sharpen its competitive edge.

    The moldmaking industry has, like manufacturing in general, had its ups and downs over the past few years (mostly down). As company owners seek new ways to meet the challenges of global competition, some are choosing to join the global community. Ron Pleasant, president of a family of companies under the banner of Team PPI, has discovered India in his quest to build business and help his OEM customers reduce the costs involved with mold design and build.

    Team PPI, which consists of Modular Mold Systems; a proprietary moldmaker, Round Mate inserts; NeoMold, the company''s molding division; and Pleasant Precision, a custom moldmaking division, now has a partner in India. Four years ago, a company in Punè, India, began pursuing Pleasant through a mutual partnership with a good customer of Team PPI''s that the company had served for many years.

    Mutual benefits

    "We had joint collaborations in India with this customer," explains Pleasant. "As India is a developing country, one of their goals is to develop areas in which they lack the expertise. Their education and training systems are very good, but from the moldmaking standpoint they are limited."

    Moldmaking, says Pleasant, involves a complex system of training and hands-on experience. "You can be trained all day long in how to run a machine to make a component, but when it comes to actually building a mold, it''s difficult without the hands-on guidance of another experienced moldmaker," he states. "That strong need to build an infrastructure with experience in moldmaking is the reason we were invited to participate four years ago."

    Pleasant traveled to Punè to meet with the owners of Filtrum Tools and Components for nine days, learning the culture and getting to know the family, whose business consists of metal stamping and fabrication, some injection molding, and moldmaking as well. The company has about 130 employees and does about $5 million in sales annually.

    Their products are made for customers in the Indian market, and they do not export at this point, except for the CAD drawings Filtrum''s design team creates. Pleasant anticipates that Filtrum will become Team PPI''s manufacturing arm for the metal stampings and fabricated products to serve his customers in the U.S.

    "We certainly intend to grow this relationship and capabilities, and identify projects that we feel we can leverage with our Indian connection to be competitive, and be able to import products down the road," says Pleasant, whose company is now a 50% owner of Filtrum. As part of the agreement, Pleasant will train Filtrum''s mold design and moldmaking employees on how molds are built in the U.S.

    "We want to completely develop their design group to design in solids exactly the same way we do, using the same standards we do," says Pleasant. "Then we can ask them to design a mold for us that we can build in our shop, with the confidence they will be able to build that same mold in their shop."

    The practical side

    One of the first steps was getting Filtrum up to par using Pro/E CAD/CAM design software, which allows for seamless communication between the two firms.

    "We take advantage of the time difference of 10-and-a-half hours in front of us," Pleasant explains, "So we can keep them rolling on concepts and jobs they''re designing for us. While we''re out they''re in-it''s an international night shift, so to speak."

    Team PPI is importing some mold designs from Filtrum, and Pleasant says that within two to three years he anticipates PPI will import as much as 30% to 40% of the company''s mold designs.

    The next step for Team PPI is to bring two people from Filtrum to train and learn at Team PPI''s Kenton, OH facility. The first two employees were scheduled to arrive at the end of August. They will learn about Team PPI''s Rush technology for building molds in extremely shortened lead times, and about the company''s mold design techniques. These employees will then return to India and nurture those capabilities at Filtrum. Pleasant will then bring in another team for six months.

    "We''ll soon be able to blend our work efforts and our shop rates so we can reduce our cost to build molds in the U.S.," says Pleasant.

    Design is about 10% to 25% of the total cost of the moldbuild, Pleasant notes. "With a blended rate between Team PPI and Filtrum, we''re hoping to reduce our standard design cost by 20%," he adds.

    Another advantage to the partnership is the ability to offer other kinds of engineering services, such as mold flow and mold cooling analysis. "Those are programs that are structured and user-friendly, requiring minimal skill level to operate. "We can have those services done in India with little involvement on our part, offering a savings to our customers of about 40%."

    Even more significant to customers are lead times. "With the type of customers that are staying Stateside, we have to be faster," says Pleasant. "It''s not always about price, it''s mostly about being quicker. We can keep things perpetually moving much better with a shop on the other side of the moon. We can grow or shrink our design group as needed and eliminate bottlenecks."

    Pleasant plans to begin building a tool shop in India and move some of his equipment to the new facility. "The tool shop will be under construction and in place within a year from now," Pleasant says.

    Clare Goldsberry [email protected]