Wellman Inc., fresh off its planned acquisition of Akzo Nobel NV's PET resin business, on June 5 announced plans to expand PET production in North America and Europe. The combined projects would double Wellman's PET resin and polyester fiber capacity by the year 2000.
The Shrewsbury, N.J.-based company announced that it will build a production facility in North America with an initial capacity of 600 million pounds of resin and fiber per year.
The plant will be on-line in late 1998.
The company plans to eventually expand capacity at the new facility to about 1.8 billion pounds of resin and fiber annually.
Jill Rea, investor relations manager for Wellman, said the 600 million pound-per-year facility is estimated to cost $400 million to $500 million, and that the company is considering several locations in North America.
``Our combined capacity now is about 1.1 billion pounds'' annually, Rea said.
``These expansions will make it possible to have over 2 billion pounds by the year 2000,'' she said.
Wellman is the fifth-largest PET resin supplier in the United States, with capacity of about 100 million pounds per year, Rea said. The company ranks second among polyester fiber producers, with capacity of about 1 billion pounds per year, she said.
In Europe, Wellman in May announced plans to buy Akzo Nobel's PET resin business, based in Emmen, the Netherlands. With that acquisition, Wellman will have European PET resin production capacity of 175 million pounds per year.
By the year 2000, Wellman plans to have European PET capacity of 400 million to 500 million pounds per year, according to Rea.
Wellman operates a polyester fiber plant in Mullah, Ireland, which has about 155 million pounds per year of capacity, and a PET bottle recycling facility in Spijk, the Netherlands, which processes about 35 million pounds of post-consumer PET per year, Rea said.
PET demand in Europe is expected to grow at a 12-14 percent rate this year, with continued growth to the end of the century, according to some analysts, with slightly smaller growth rates in North America.
In a statement accompanying the announcement, Thomas M. Duff, Wellman's president and chief executive officer, said he expects increased demand and growth in PET markets to absorb most of the increased volume.
``These expansions represent a part of Wellman's corporate strategy, which calls for more than doubling the company's combined PET resin and polyester fiber capacity by the year 2000,'' he said. ``When these elements of our strategy are put in place, we will have achieved a healthy balance between fibers and resins.''
That view was supported by analysts, who predict continued growth in the material worldwide, and who saw the Wellman announcement as keeping pace with growth.
``With these expansions, they are growing in a growing market,'' said Paul Raman, an industry analyst with S.G. Warburg & Co. in New York.
``At the current rate, producers might need about 700 million pounds per year just to accommodate growth. Wellman is interested in the access to the resin market, since it is a higher-value market, and these announcements focus on getting that access,'' he said.