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Prolamina's 3rd plant ready to roll

By: Dan Hockensmith

July 27, 2011

LAKE FOREST, ILL. (July 27, 12:50 p.m. ET) — Under the tutelage of Pliant Corp.’s former CEO, Prolamina Inc.’s new plant in Neenah, Wis., is about ready to begin production of flexible packaging for food and medical products.

The plant, formerly used by Kimberly-Clark Corp. to make diapers, has been retrofitted with a Black Clawson extrusion laminator that in-line laminates paper, foil and film. The line has two laminating heads, each able to deliver three layers of polymers.

The plant has the capacity to make $125 million worth of goods annually and will house an F&K 10-color printing press and a high-speed winder with a built-in laser system to produce easy-tear, perforated, vented and easy-open features on packaging. The site is served by rail and has close highway access.

“We looked at 22 sites in four states. We liked [Neenah] because it could grow with us,” said Harold Bevis, Prolamina’s chairman and CEO, during a tour of the 250,000-square-foot facility. Lake Forest-based Prolamina is leasing the plant, which is part of Kimberly-Clark’s empty 700,000-square-foot Neenah complex.

Prolamina is the largest tenant in the building, and has right of refusal over future leases, Bevis said.

The facility, which will begin production Aug. 18, represents a $25 million investment for Prolamina, the company Bevis formed in his Lake Forest home a week after Berry Plastics Corp. of Evansville, Ind., bought Pliant out of bankruptcy in December 2009.

The company, originally called Packaging Solutions Holdings Inc., partnered in the summer of 2010 with private equity firm Wellspring Capital Management LLC of New York, acquiring extrusion laminator and printer Jen-Coat of Westfield, Mass., in August 2010, and Montreal-based adhesive laminator, pouch maker and printer Excel Pac in March 2011. The new company in May changed its name to Prolamina Inc.

“We have a North American focus, so I wanted a name that was easy to pronounce in English, Spanish and French,” Bevis said of the moniker developed by a New York naming firm.

Together with Excel Pac and Jen-Coat, the Neenah plant will give Prolamina three plants and a combined 700,000 square feet of manufacturing space. Bevis said he has another acquisition in the works this year, but would not give details.

“We think our company can be $2 billion in sales. Our business wants to be a big business. Fundamentally, we’re trying to create a competitor to the former Alcan [Packaging and] Bemis [Co. Inc.].

“At the end of the day, we intend to be a vertically integrated converter for food and medical products,” Bevis said.

Prolamina’s business plan calls for it to be a leader in extrusion laminated roll stock, adhesive laminated roll stock and pouches, and coated and laminated non-wovens. The Neenah site will back up the Quebec and Massachusetts plants in manufacturing packaging for tobacco products, cheese, produce, snack foods, non-fluid contact medical products, pet food and pouches.

The Neenah site also will have a testing and development laboratory, but film production is not, at least initially, in Prolamina’s interest, Bevis said.

“To be honest, I’m not really looking to make film: been there, done that. What I am looking forward to is working with some of my former clients to buy film,” he said. Bevis has a non-compete clause in his Pliant contract that essentially prohibits him from manufacturing film until 2012, he said.

For the rest of 2011 and into 2012, Prolamina’s focus in Neenah will be on staffing the factory with 35 salaried and 125 hourly employees, working out the floor configuration for three extrusion laminator stations and ensuring the plant meets high-end food- and medical-packaging standards, including ISO, American Institute of Baking and Safe Quality Food Institute.

“I could have stayed in film production and gone into PET or [oriented polypropylene] or other types of film that Pliant didn’t make,” Bevis said. “But I just feel that film making is very close to the resin sellers, so [film manufacturers are] the most exposed to volatility. There are great suppliers of film all vying for attention. If you’re a film buyer, you can negotiate without having scale.

“I also thought [film production] was a step removed from the customer. I truly believe that if you can delight a customer, you can make money. Commercially, I want to be the guy selling the high-quality finished product to the customer,” he added.

Scale matters at Prolamina. Bevis and his executive team are looking to buy smaller converters that get blocked from big packaging contracts because of their size, but that have good procurement synergies, nimble customer response and pay attention to detail.

“My goal [with Excel Pac and Jen-Coat] was to buy very well-run companies that had great management teams and not replace them, not go through a head-reduction mode, but to bring an elevated agenda to the sum of those parts,” Bevis said. “We need forming webs. We need some companies that do that and want to be part of a bigger story.”

Producing lid stock and labels and thermoforming packaging also are part of the long-term vision for Prolamina.

Bevis has identified 90 converters who were film customers when he owned Pliant. Those converters could be potential acquisitions for Prolamina, he said.

Also, he said, the Pliant-Berry connection works for Prolamina in a number of ways.

Berry is one of Prolamina’s key film suppliers.

“When Berry stepped up and really, really, really wanted Pliant and outbid everybody, I thought that was a great place for [Pliant] to be,” Bevis said.

Lessons learned

 After putting Pliant into Chapter 11 bankruptcy in 2006 and 2009 — for which he was criticized by some film manufacturers — Bevis said he learned a couple of lessons that can be transferred directly to his current business:

First, to pay attention to core competencies, after having to spend millions of dollars cutting costs, scaling back plants and investing in new equipment to rationalize Pliant’s operations. Secondly, not to get overleveraged while raising funding for a new business.

“As I was meeting private equity groups [to get backing for Prolamina], that was my No. 1 thing that I wanted to know — were they conservative on capitalization. I have a view on that because I understand the volatility that happens in the packaging industry, primarily due to resin [pricing] popping around,” Bevis said.

Wellspring manages more than $3 billion in private equity capital. Its portfolio companies include air-gun maker Crosman Corp.; Checkers Drive-In Restaurants Inc., parent company of the Checkers and Rally’s restaurant chains; and ChemAid Laboratories Inc., a leading contract manufacturer of specialty hair, skin and bath and body products

Prolamina’s first good-sized trade show booth display will be at Pack Expo 2011, which is Sept. 26-28 in Las Vegas.