Sigma Stretch Film has taken up residence in Atlantis Plastics Inc.'s former custom film plant in Tulsa, Okla.
Atlantis, which also has two PE stretch film facilities in Tulsa, announced in mid-January that it had sold its custom film plant there to an unidentified group of investors. At the time, Sigma Stretch's involvement was not disclosed.
By year's end Sigma Stretch plans to be producing 35 million pounds of cast and blown polyethylene stretch film at the Tulsa facility. Sigma Stretch, based in Lyndhurst, N.J., leases the plant from A.I.A. Associates, the private investment group that bought it from Atlantis.
Neither Sigma Stretch nor its parent, Sigma Plastics Group, would disclose the names of the investors in A.I.A.
A. Richard Hurwitz, Atlantis' vice president of corporate communications, said the news comes as no surprise to his firm.
``We knew they weren't going to open up a grocery store,'' he said by telephone Jan. 20. ``We just presumed that they would be doing that.''
A.I.A. has signed Sigma Stretch to a long-term lease for the 57,500-square-foot plant, which will receive one cast and one blown film line next month, according to Bob Nocek, Sigma Stretch president. Once the roof is raised, the mezzanines and towers built and both film lines tweaked, the plant will be operational — probably six or seven months down the road, he said.
Eventually the outfit will employ about 50. At its peak, Atlantis' custom film operation there employed 50-75.
For Sigma Stretch — with operations in Lyndhurst; Shelbyville, Ky.; and Rancho Cucamonga, Calif. — the Southwest location filled a regional need, Nocek said. The company had been looking for a spot between St. Louis and Santa Fe, N.M., when the Tulsa building became available, he said.
Since December 1993, when Sigma shipped its first order from its first plant in Lyndhurst, the firm has established itself as a major player in the U.S. stretch film market. Now with annual capacity for 120 million pounds, the company plans to double that before the year is out.
In addition to setting up shop in Tulsa, those plans involve installing a stretch film operation in Cowansville, Quebec, and boosting capacity at Shelbyville, Nocek said. When capacity for all 240 million pounds is in place, Sigma Stretch will have a total of eight blown and six cast film lines at five plants.
Expediting the firm's growth is a network of sister firms, all operating under the Sigma Plastics umbrella, Nocek said. In Kentucky, California and Quebec, Sigma Stretch shares space, infrastructure and overhead with other Sigma Plastics units — a setup that, in terms of launching new operations, is ``quicker than going with grass-roots'' plants, he said.
``One of the reasons we could [grow] so quickly is because we build focused, dedicated factories within existing infrastructures,'' Nocek said.
He added that the Tulsa facility was attractive for just that reason: ``All the things that take a long time and a lot of money to put into place,'' such as switching gear and chillers, were already there. As for whether Sigma Plastics will drop a second operation into the Tulsa site, Nocek said, that is a possibility.
``That's the cost-effective way to run it,'' he said.
Although the North American stretch film market is highly competitive, and currently capacity exceeds demand by 20-25 percent, the prognosis for growth is still good — about 8-10 percent a year, said Hurwitz.
Both Hurwitz and Nocek agree that the biggest part of that growth will come from further penetration of the pallet wrap market. Hurwitz put penetration of that market at 65-70 percent, while Nocek said it could be anywhere from 40-70 percent. Either way, pallet wrap is gaining uses, both executives say.
``Re-palletizing has added a whole new layer of product,'' Nocek said. ``The same product could be stretch wrapped three times before it ever reaches its final retail point.''
A roundup of stretch film players involves ``the usual suspects,'' Nocek noted. Hurwitz placed Atlantis third in the lineup, after Tenneco Packaging — which entered stretch film in 1995 with the purchase of Mobil's Plastics Division — and AEP Industries Inc. of South Hackensack, N.J. — which expanded its stretch film market last year when it bought Borden's global packaging business.
Also at the top are Sigma Stretch and Huntsman Packaging Corp., ``especially with the purchase [by Huntsman] of Deerfield [Plastics Co.],'' Nocek said.
Also count among the list of players ITW Mima, which recently bought Chapparal Films Inc.; newcomer Intertape Polymer Group; yet to come, Armin Plastics, which claims it is entering stretch film this year; and a host of smaller stretch film producers, whose life span, according to Nocek, may be cut short if the flurry of stretch film activity that has characterized the past two years continues.
If the near past augurs what is in store for the near future, expect more consolidation in the stretch film market: ``Mice get trampled by elephants,'' he said.
Hurwitz said Atlantis probably will keep to the domestic market, about which it is bullish. But Sigma Stretch, armed with its new capacity, also will target stretch film markets in the Far East, where capacity is always strained, and Europe, where PE resin prices are higher, Nocek said.
He said his company's capacity for cast vs. blown film is 2:1, a ratio that reflects market needs.
Its Lyndhurst-based parent, Sigma Plastics, did about $380 million in film sales in its fiscal year ended April 30. Nocek would not break out sales for Sigma Stretch.
Another Sigma Plastics unit, blown PE film maker Delta Plastics Corp., recently purchased majority interest in Essex Plastics Inc. of Pompano Beach, Fla. Sigma Stretch is Sigma's only stretch film unit.