Reifenhäuser readies for shale gas boost

By Don Loepp
Editor

Published: April 11, 2013 5:03 pm ET
Updated: April 12, 2013 2:06 pm ET

Image By: Plastics News Editor Don Loepp Clockwise from top left: Ulrich Reifenhäuser, Steve DeSpain, Dave Larson and Jim Snell.

Related to this story

Topics Machinery, K 2013
Companies & Associations Reifenhauser Inc.

ORLANDO, FLA. — It may be a K show year, but that's not stopping a major German machinery company from making 2013 all about North America.

Part of the reason is the shale gas boom and its looming impact on the global polyethylene market.

Troisdorf, Germany-based Reifenhäuser GmbH & Co. Maschinenfabrik, a major manufacturer of extrusion equipment, is pursuing a USA-first attitude this year. The company is moving its North American headquarters to Wichita, Kan. — the home of Westland Corp., a screw maker the German company bought in December.

Reifenhäuser also is sponsoring a series of free, one-day flexible-packaging seminars in June across the U.S., to talk to customers about key trends in the market.

Managing Director Ulrich Reifenhäuser said the company sees great growth prospects in the North American flexible packaging market, in large part because of shale gas.

"This fiscal year [in North America] is very, very strong, the best in 15 years. Last year we had a focus on China; it was our China year. This year is for the U.S.," Reifenhäuser said at a news conference in Orlando.

"What we see is our customers are looking at new investments. They are fed up with Chinese plastic goods coming here. They want to make products themselves," he said.

The real impact of shale gas on the PE market is a few years away. Ethane from natural gas can be used to make PE feedstocks, and new natural gas discoveries have led to a surge in PE expansion announcements. But most of the new capacity, an estimated 11 billion pounds, will come online in the next five years.

Reifenhäuser said his flexible-packaging customers already are preparing to take advantage of the boom.

On the film extrusion side of the market, the first companies to add capacity may be those that make sacks used to transport resin, said Steve DeSpain, vice president of sales and general manager of Reifenhauser Inc., the company's North American unit. Resin industry analysts expect North America to boost PE exports significantly as new capacity becomes available. Much of that resin will be transported around the world in PE sacks.

"We're already seeing customers looking well enough ahead, and more are going to be doing so," DeSpain said. "We see near-term growth, but also long-term. We see the flexible packaging industry growing.

Reifenhäuser added: "When we talk to customers, the willingness to invest is there. They grasp the possibilities offered by this shale gas."

Longer term, he expects growth in food packaging, where Reifenhäuser offers 7- and 9-layer lines that offer benefits over commodity films.

Another important part of Reifenhäuser Group's emphasis on North America this year is the fresh acquisition of Westland, which is now called Reiloy Westland Corp. Reifenhäuser's Reiloy Metall unit makes screws and barrels in Germany.

Buying a U.S. company was a big step for Reifenhäuser, which until now has done all of its manufacturing in Germany. The family-owned company was founded in 1911 and got into plastics after World War II.

"It's a strong step. It's a first step," Reifenhäuser said of the Westland deal. "It symbolizes how we want to participate and react to this [U.S.] market, which is still the largest global market."

Reifenhäuser talked about how the company recovered from the 2008-09 recession, when sales dropped to about 100 million euros — just 30 percent of the 2007-08 level. But the company managed to keep its expertise, thanks to a German government program that allowed employees to work short schedules and still collect partial unemployment benefits. As a result, Reifenhäuser has seen sales recover sharply, to about 450 million euros. But much of that growth is outside Europe — with the exception of a few markets like Poland and Russia, much of Europe remains in a recession.

But as growth returned to Germany and export markets outside Europe, lead times for equipment got too long. The Westland acquisition helps on that front, since now Reifenhäuser has a North American base where it can manufacture screws and barrels. The next step will be to improve service and aftermarket support, DeSpain said.

"If we're going to grow the business in North America … we have to improve our sales, service and aftermarket support," DeSpain said.

The company is making some concrete changes. Reifenhäuser now is stocking more spare parts in North America; it has developed a proprietary web-based tool that customers can use to find the right parts and order them online; and it hired Jim Snell as project manager, who will serve as a technical expert to Reifenhäuser customers.

The next step will be to move the North American operations — Reifenhauser Inc. — to Wichita, from Danvers, Mass. Reifenhäuser said it makes sense to base the regional operations where the company is making screws and barrels.

Workers in Danvers have been offered positions with the company, and in the meantime they have committed to staying on through the end of the year. The Danvers operation will close in September.

Wichita, meanwhile, will be adding equipment and personnel. The plant currently employs about 50, but it should be up to 60 within a year, said Dave Larson, president of Reiloy Westland. The plant also has $1 million in new equipment on order.

"The announcement of this acquisition, it's been so much more than I expected," Larson said. "We see growth in North America. We see a lot of opportunities coming back from Asia. We think that there's a lot of very positive things happening in North America with the plastics industry. I know there are still a lot of people saying negative things, but we're not seeing it," he said.

The company's flexible packaging seminars, which will be invitation-only events, will take place June 25 in Grapevine, Texas, near Dallas; June 26 in Atlanta; June 27 in Rosemont, Ill., near Chicago; and June 28 in Mississauga, Ontario, near Toronto. The seminars will include speakers from other suppliers, in addition to Reifenhäuser, highlighting machinery and material developments in flexible packaging.

K show preview

Despite all the talk about North America, Reifenhäuser did not ignore the K show completely. After all, he also serves as chairman of the VDMA Plastics and Rubber Machinery Association, the German trade group that serves a key role at the Düsseldorf, Germany, trade show.

Reifenhäuser Group will run seven machines at the show, which will take place Oct. 16-23. The lines will represent the company's whole range of extrusion technology, Reifenhäuser said.


Comments

Reifenhäuser readies for shale gas boost

By Don Loepp
Editor

Published: April 11, 2013 5:03 pm ET
Updated: April 12, 2013 2:06 pm ET

Post Your Comments


Back to story


More stories

Image

Munson Machinery expanding assembly, testing operations

July 22, 2014 2:02 pm ET

Munson Machinery Co. Inc. is expanding its headquarters factory by about one-third in Utica, N.Y., where the company makes mixing, blending and size-...    More

Image

Windmöller & Hölscher looking to continued growth in China

July 21, 2014 3:40 pm ET

With 2013 global sales of 600 million euros, China has grown into an important export market for Windmöller & Hölscher KG, second only to the United...    More

Image

Thermoforming Technology Group adds Lyle Industries to its portfolio

July 18, 2014 2:48 pm ET

Thermoforming Technology Group LLC has expanded its thermoforming equipment presence with the acquisition of Lyle Industries Inc.    More

Image

Infiltrator goes very large scale for injection press

July 18, 2014 1:45 pm ET

Infiltrator Systems Inc. has designed and built a mammoth injection press, with 6,000 tons of clamping force, to mold septic tank halves measuring 15 ...    More

Image

Milacron names Gallagher COO

July 17, 2014 1:41 pm ET

U.S. machinery maker Milacron LLC has named John J. Gallagher III as Chief Operating Officer for its Melt Delivery & Control Systems, Fluid Technologi...    More

Market Reports

Injection Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Plastics Recycling Market Review & Outlook 2014

This special report from Plastics News examines the North American plastics recycling industry and provides insight into indicators that impact market viability, including Resin pricing trends for virgin and recycled market material and historical Resin production trends for post- consumer and industrial waste.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events