At the same time Compagnie Plastic Omnium SA was pulling its West Coast production of blow molded trash carts, it began firing up another blow molding plant in the Southeast to make plastic parts for auto-makers. Plastic Omnium subsidiary Zarn Inc. closed the doors of its Madera, Calif., plant June 6, according to Melvin Paterline, Zarn vice president of sales.
Zarn will move capacity from the 30,000-square-foot plant to Reidsville, N.C., where it also blow molds the plastic two-wheeled carts from high density polyethylene. About 50 workers lost their jobs in the closing, he said. He would not comment on what equipment will move to Reidsville.
Zarn opened the Madera plant in March 1990. The land and building are owned by former Zarn shareholders; Plastic Omnium has been leasing the facility, he said.
Zarn officials made the decision to close the plant, Paterline said. He would not say how long they had been thinking about shutting down that operation
and consolidating the two-wheel cart business under one roof. But, he said Zarn recently has ``re-engineered'' the Reidsville operation, with the help of several Plastics Omnium engineers on loan from France, to make that setup more efficient.
Meanwhile, another Plastic Omnium subsidiary has begun blow molding automotive parts in the United States. In March, Plastic Omnium Industries Inc. moved into its 109,000-square-foot manufacturing plant in Anderson, S.C. Last week the plant was days away from beginning operations, according to company President Jacques Jaubert. It will make PE fuel tanks and painted polypropylene fascias and bumpers both for General Motors Corp. and for BMW AG's plant in Greenville, S.C., he said.
The $30 million plant represents the French firm's first investment in U.S. auto part production, though its European business for blow molded plastic fuel tanks and fascia is sizable, with customers such as Chrysler, Ford, BMW, Renault and Peugeot, Jaubert said.
When the plant is in full gear, annual sales should reach $15 million, Jaubert said. He would not say what equipment the plant operates. It employs about 60, but that number should rise to 200 by the end of 1996, he said. The unit's technical and sales offices are in Troy, Mich.
Paterline called Compagnie Plastic Omnium a ``a big parent with deep pockets.''
The company is a world leader in plastic two-wheeled carts, and is committed to developing that market in North America, he said. About 70 percent of European households use the trash carts, compared with about 15-20 percent of U.S. households, he said.
``There's tremendous growth left in the United States, much more than the Europe market,'' Paterline said.
Since Plastic Omnium acquired Zarn, in August 1991, it has invested heavily in equipment and upgrades, according to Paterline. Last year Zarn's Reidsville plant added its largest blow molding machine yet; with a 100-pound accumulator head, the machine ``is capable of molding two 90-gallon carts in one shot,'' he said. This year it installed a new 50-pound head machine, he said. The company makes the carts in three nominal sizes: 30, 60 and 90 gallons.
The mainstay of Zarn's blow molding business is the two-wheeled carts, ``pretty evenly split'' between municipalities and large, private haulers. But the municipal business comes and goes, he said.
Last year Zarn lost a sizable contract with the city of Los Angeles to German-owned Plastopan North America Inc. Although Zarn's bid for the business was lower, Plastopan won points for promising to put a plant in economically depressed South-Central Los Angeles. In September, Plastopan opened its 42,000-square-foot injection molding plant, with 45 workers, and began filling a $16.8 million contract for 480,000 carts, said Plastopan's vice president, Catherine Bump.
It is the firm's first U.S. operation.
Between 1991 and 1994 Los Angeles yielded two hefty contracts for Zarn, a total of nearly 500,000 units, according to Enrique Zaldivar, project manager for Los Angeles' Department of Public Works. Of those carts, more than 350,000 were shipped from Madera, he said by telephone June 28. Both Bump and Zaldivar said they found out only recently that Zarn was closing its California plant.
When Zarn lost the L.A. contract, Madera plant manager Scott Pugh said the plant had plenty of West Coast work without it.
That business was neither a major loss to Zarn nor a factor in the plant's closing, Paterline said.
``We hadn't shipped any carts to L.A. in over a year,'' he said.
The Madera plant also was supplying much smaller orders to Riverside, Calif., and San Diego, about 25,000 carts apiece, he said.
For now the firm's only major municipal contract for carts in the West is with Albuquerque. But, Paterline said, Zarn ``will be bidding aggressively'' for the region's city and private-hauler business.
Under a current contract, Zarn is supplying Los Angeles with 5,000-10,000 60-gallon carts made of 45 percent post-consumer HDPE, Zaldivar said. The carts typically are made with 10-20 percent recycled content, he said. During the next two years, the city will test the containers, which carry a five-year guarantee, in its curbside pickup program.
A large part of that recycled resin comes from a facility Zarn operates in Reidsville, where it recovers post-consumer plastics from curbside pickup programs and municipal carts that have ``hit the end of their life,'' and reprocesses them into pellets, Paterline said.
He called the municipal cart business ``very, very competitive,'' with eight to 10 companies vying for their piece of a market characterized by ``too much capacity for too few orders.''
Zarn is the only blow molder in that business, served largely by injection and rotational molders, he said. Municipal contract awards for the carts are largely political, he said. But once a company wins a contract, it generally is renewed.
Zarn's $34 million in annual sales placed it 10th among North America's top industrial blow molders for 1994, according to Plastics News estimates. In line with Plastic Omnium's outlook, Zarn gradually has sold off most of its custom business, including smaller machines for doing small-part work, Paterline said.
Though the cart business is the blow molder's biggest, Paterline said Zarn's other segments are ``not insignificant.'' They comprise nursery containers made of 100 percent HDPE and sold under the Zarntainer trade name; and plastic garbage cans for Sears, Roebuck and Co., which Sears sells under its own brand name.
The nursery container operation is in Atlanta. Pugh, who headed manufacturing at Madera, will become that plant's manager, Paterline said.
Zarn employed about 400 before the Madera operation closed. It is based in Reidsville.
Zarn and Plastic Omnium Industries are among five wholly owned U.S. subsidiaries of Paris-based Compagnie Plastic Omnium, which is traded publically on the French stock exchange. The parent has kept a low profile in the United States, Paterline said.
Last year the firm had worldwide sales of more than $1 billion, Jaubert said. It employs about 6,300.
The company's other business segment is in fluoropolymer and high-temperature specialty plastic components.