Intertape Polymer Group Inc. plans to enter the fast-growing polyethylene stretch wrap market by investing more than US$20 million to install 100 million pounds of annual capacity. The Montreal packaging firm estimated the North American market for the pallet wrap material at about 1 billion pounds, worth more than US$750 million per year. Intertape said in a June 30 news release that it will bring its new capacity on stream by mid-1996.
``We share their enthusiasm about the market,'' said Richard Hurwitz, spokesman for major stretch wrap producer Atlantis Films of Atlanta. ``But that is a fairamount of new capacity.''
Hurwitz said in a telephone interview that Intertape's market estimates are similar to Atlantis Films' figures. He added that only 50-55 percent of the potential pallet wrap market in North America has switched to using the PE film. Market immaturity promises growth of more than 10 percent per year for the rest of the decade.
Intertape officials were not available to elaborate on project details. The company did not say in the news release where it will locate the capacity. It has plants in Crowley, La.; Danville, Va.; Tampa, Fla.; St. Laurent, Quebec; and Truro, Nova Scotia. Earlier this year it entered a joint venture with Fibope Portuguesa to make polyolefin shrink wrap for the European market in Porto, Portugal.
Stretch wrap complements Intertape's shrink film product line. It also makes pressure-sensitive sealing tape, woven polyolefin packaging and plastic beverage shipping containers. The public company had sales of C$54.7 million (US$39.9 million) and profit of C$4.8 million (US$3.5 million) for the first quarter, ended March 31.
Hurwitz said PE pallet wrap's growth is assured because it is more cost-effective and secure than other pallet-containment methods. Steel and plastic strapping, tapes and wire have been conventional pallet-containment materials.
Stretch wrap demand jumped more than 20 percent last year but will grow much more slowly this year, Hurwitz said from his office in Miami, headquarters for Atlantis Films' parent, Atlantis Plastics Inc.
AEP Industries Inc., another stretch wrap major, has been reaping benefits of entering the market 10 years ago, according to a recent report by Investor's Business Daily. Stretch wrap helped in AEP's 55 percent profit increase to $4 million in its first quarter, ended Jan. 31. The South Hackensack, N.J., firm's sales in the quarter, at $58.7 million, reflected a 9 percent rise in volume and 37 percent jump in unit prices from a year ago.