With carmakers' expectations on the rise, the marriage of a processor and a machinery supplier seems to make sense. Long before they teamed up last month to form Kiefel Technologies Inc., O'Sullivan Corp. and Kiefel GmbH have carried on a relationship of sorts. The companies have several markets in common.
``We've known Kiefel for years,'' said Shep Campbell, vice president of operations for O'Sullivan's plastics division, in a Nov. 28 telephone interview. ``Their sales and technical people know our sales and technical people. Our products are used on their products.''
The joint venture will manufacture vacuum forming and radio frequency welding equipment, initially for carmakers and their suppliers, then for other end markets that include makers of notebooks, checkbooks and foam-filled stadium cushions.
Together, the firms believe they can give customers a more complete package and lower costs, by providing not only custom equipment and PVC roll stock, but upfront design and processing know-how in the spirit of turnkey operations.
But, Campbell emphasized, Kiefel Technologies is a stand-alone operation, whose primary goal is to supply equipment; it will take care not to step on the toes of O'Sullivan's competitors.
``We recognize that a lot of material used on Kiefel equipment is not supplied by O'Sulli-van,'' he said. ``We're going to stay at arm's length.''
In cases where it makes sense, he said, the whole system will go as one quote. But the new venture is not intended to gain material sales for O'Sullivan, Campbell said.
Campbell would not disclose financial terms of the deal. But for Kiefel, based in Freilassing, Germany, the partnership means a U.S. base for its 34-year-old thermoforming equipment enterprise, which, until now, has had only a sales office in Succasunna, N.J., called Kiefel Systems. Subsidiary Kiefel Inc. already makes extrusion machinery in Wrentham, Mass.
For O'Sullivan of Winchester, Va., the venture, which comes one year after selling its injection molding operations, could mean a boost for its $175 million film and sheet calendering business. End markets that include office supplies and medical products bring in 52 percent of those sales. Automotive customers needing mostly PVC and PVC/ABS roll stock for interior trim - dashboard and door panels, consoles and glove box doors - make up the rest.
The company runs six lines at four U.S. plants, and employs about 700. Last year, it reported sales of $158 million.
Kiefel Technologies will work out of a 50,000-square-foot plant in Hampton, N.H. By early next year, about 25 workers, mostly machinists and engineers, will make in-line vacuum forming and RF welding machines there for familiar customers. The operation will grow with its needs, adding technicians to install equipment and train customers as sales multiply, Campbell said.
In 1996, the joint venture expects about $6 million in business, ramping up to $15 million by 2000, by tapping new markets, both packaging and industrial, and tailoring machines for customers' needs, he said. The new company also will repair and replace parts for Kiefel equipment. Kiefel's Kars Ekendahl will oversee manufacturing. O'Sullivan is responsible for administration, finance and personnel.
O'Sullivan does not expect the deal to help it move PVC in Europe, Campbell said. A proposed global venture with J.H. Benecke AG of Hannover, Germany, to supply vinyl film, never went through. But the firm is more hopeful about German carmakers' material needs for their U.S. operations.
``If transplant companies are interested in a system approach ... they would be targeted accounts,'' he said.
The partnership hopes to help customers that buy package deals cut their costs at the outset, with built-in design features and advice on ``how [O'Sulli-van's] product is going to work'' on Kiefel's equipment, Campbell said.