Logistics firm Plantgistix remains on track for expansion and has a new president as well.
A major new resin bagging line will be in place in late May or early June at the firm’s new 330,000-square-foot resin packaging plant in Baytown, Texas, CEO and founder Marc Levine said in a recent phone interview. The line will be able to move resin from hopper cars into bags in less than 90 minutes, he explained.
The Houston-based company provides in-plant and off-plant services, including maintenance and warehousing, to plastic resin makers. The new plant and Plantgistix’s existing Houston facility will give the firm almost 1 million square feet of space.
The project represents a $3.5 million investment for the firm. It’s located in the AmeriPort Industrial Park and will support Plantgistix’s off-plant contract packaging services. It also will provide railcar storage and switching services for the firm’s customers through a partnership with Rail Logix, a privately owned rail yard operator.
The firm’s new president is Sam Diaz, who joined Plantgistix in 2011 and most recently served as chief operating officer. In a news release, company officials said that Diaz “has been instrumental in the growth the company has experienced over the last several years.”
“Sam has been key to our company’s growth, as the Houston area has experienced explosive growth from an industry standpoint,” Levine said in the release. “I’m honored both personally and professionally to have Sam at my side serving as president as we continue our growth trajectory.”
Diaz added in the release that, under Levine’s leadership, Plantgistix “has built the strongest team in the industry that lives by our core values everyday — accountability, courage, caring, problem solving, teamwork and dedication.
“These values are the foundation of our success now and for the exciting future that lies ahead of us,” he said.
Growth at Plantgistix and other logistics firms is in response to major ethylene and PE capacity expansions currently underway on the Gulf Coast. Most of this new production will be exported globally, and the nearby Port of Houston has a 75 percent share of the nation’s waterborne exports of PE resin.
Levine said that the new capacity is a big opportunity for the industry, but that it also represents some potential challenges. More than six billion pounds of new PE capacity is scheduled to come online this year, in the form of major projects from Dow Chemical, ExxonMobil Chemical, Chevron Phillips Chemical and others.
“You always expect some delays, but the concern would be if there are substantial delays,” he added. “I don’t know if there’s going to be overcapacity [for PE] or not. The big question is when will producers be opening up the new plants and moving product.
“The whole supply chain has questions. We don’t know what we don’t know.”
Transportation issues also could arise, according to Levine. He said he thinks trucking-related issues can be worked out, but he added that availability of shipping containers and ocean vessels could be a challenge.
Continued production from existing PE resin plants also has to be considered. In spite of the deluge of new material, no PE maker has announced plans to close older lines.
“In December, we already had so much resin coming from existing U.S. plants to be exported that the railroads hit their limit,” Levine said. “They couldn’t take as many cars as the resin producers wanted them to, and the supply chain became clogged.”
He added that another likely outcome for the PE resin market — based on low domestic growth and massive amounts of new production — is lower selling prices. The new capacity will increase North America’s PE production potential by 20 percent or more in a market where domestic consumption is growing in the low single digits.
“I don’t know how there can’t be lower prices,” Levine said. “All of that resin can’t stay in the U.S. The resin makers have to keep these new plants running one way or another. And once they produce the resin, they have to find an outlet to keep it moving.”
China and the rest of Asia are “the major destination” for PE that will be exported from the U.S., according to Levine. Latin America “is number two, but it’s dwarfed by China.”
Recent comments from market analyst Phil Karig might put Levine’s mind at ease. Karig — managing director of the Mathelin Bay Associates LLC consulting firm in St. Louis — said in a recent email that the U.S. PE industry’s shale gas-driven ethylene cost advantage “means that if and when there is substantial global PE resin overcapacity, PE makers in other higher-cost regions such as Europe will suffer before U.S. based exporters do.”
On the political side, Levine said he’s concerned about the impact of the new U.S. administration blocking imports or imposing tariffs. “It seems logical for other countries to do the same,” he explained. “We could be shooting ourselves in the foot.”
Too much new PE also could mean that Plantgistix and other firms are bringing on new equipment before it’s needed. “We could have lower process, but also a lower need for services,” Levine said.
Other materials investments
In addition to Plantgistix, others investing in the region include Ravago Americas, which has purchased approximately 200 acres in Houston. The Orlando-based firm plans to build a materials center there that will be able to handle more than 2 billion pounds per year.
Belgium-based Katoen Natie is working with railroad leader Union Pacific Corp. on a new Dallas-to-dock shipping service, along with plans to build a major resin shipping center in Dallas which is scheduled for completion in the third quarter.
Rail giant BNSF Railway Co. and Texas-based firms Hillwood Development Co. LLC and Packwell Inc. are working on a resin shipping center in Fort Worth. That project is expected to come online during the fourth quarter.
Any potential overcapacity in PE bagging and logistics services “is a whole different matter,” Karig added. “Services are always less susceptible to foreign competition than manufactured products such as resins are,” he said. “But the barriers to entry in the bagging business are an order of magnitude less than the barriers to entering into or expanding in the PE business.”
“It doesn’t cost billions of dollars to build bagging lines,” Karig added. “And lead times for getting bagging lines up and running are not the five or so years it can take to bring a PE plant from conception to startup.”
On the positive side, Levine said that lower PE prices could lead to increased domestic production of finished PE goods. On-shoring also is bringing some manufacturing work back to the United States, he added, partly because of lower energy costs.
“My degree of optimism hasn’t changed in the last year or so,” Levine said. “These [PE] plants are mostly completed, and the resin companies are going to turn them on.”
Plantgistix — formerly United DC — has been working with resin makers for seven decades. The firm was one of the first in the U.S. to provide contract packaging to the plastics industry. Its history dates back to the early days of the U.S. plastics industry, when brothers Harry and Louis Levine founded injection molder Commonwealth Plastics in Leominster, Mass., in the 1930s.
The Levine family then over the years founded several companies, including UnitedTrans, United Warehouse and United DC, offering contract packaging and trucking services for resin makers across the United States. Those combined firms — operating as UnitedCompanies — were renamed as Plantgistix in 2013. The firm handles more than 2 billion pounds of resin every year.