Zotefoams plc, a specialized British plastic foam producer, plans to invest $15 million to set up a plant in the United States to enter new low density foam markets.
The company, which was formed in a 1992 management buyout by five BP Chemicals Ltd. executives, also plans to launch its cross-linked polyethylene block foam in Asia before the end of the year.
Zotefoams, based in Croydon, England, already has a North American sales and marketing subsidiary, Zotefoams Inc. in Hackettstown, N.J.
The firm is studying nine potential sites for the new U.S. plant, which is not likely to be in operation before 2000. The initial $15 million phase will see a plant around a third the size of its British counterpart, with capacity of about 1.57 million cubic feet per year, said finance director Geoff Billson.
By siting a production unit in the United States, Zotefoams will gain access to major low density specialized foam markets where it believes its advanced technology should win business in areas such as aviation, automotive and sports and leisure, Billson said.
Zotefoams' board of directors will make a final decision on the project in October, he said. Its exact timing and full details will be announced by February, when the publicly traded company reports its 1997 year-end results, Billson said.
Zotefoams is investing a total of £4.2 million ($6.76 million) this year at its sole United Kingdom plant. By next year, said Billson, it will have expanded its 4.72 million-cubic-feet-per-year plant by 25 percent to meet growing demand, mainly in the United Kingdom and continental Europe. Only last year it boosted capacity by 30 percent.
In addition, the firm has earmarked £1 million ($1.61 million) of the investment to modify part of its foam production process to allow it to cut the density of its product nearly in half. Zotefoams already claims to produce the world's lowest-density PE foam.
The 60-year-old firm, originally in the expanded rubber business, has developed its own foam technology using nitrogen rather than chemicals to blow the foam from resin, Billson said.
The firm is completing trials on a new high-temperature polypropylene foam suitable for special applications in car production late this month.
The foam should be unveiled commercially by October.
The new foam, which is not cross-linked, can be used for applications such as car wing mirrors, dashboard interiors and vehicle door panel linings.
Zotefoams also has developed a high-toughness PE material using metallocene resin, due to be launched later this year. The material is aimed at the leisure and sporting goods market, for items such as backpack shoulder straps and sports footwear.
Packaging, sports and leisure and toys remain the firm's top three market sectors, and it is enjoying strong growth in North America. A jigsaw puzzle toy, foam-backed Puzz-3D, launched by Montreal-based Wrebbitt Inc., has taken off and now is being produced under license by Hasbro Inc., using Zotefoams' foam.
Last year Zotefoams' sales took a knock because Wrebbitt stockpiled foam to supply Hasbro as well for its own use, and then used that inventory. In 1996, Zotefoams reported sales down 6 percent to £21.4 million ($34.5 million).
Zotefoams says that Wrebbitt already is developing new applications for the foam, in some cases to substitute for wood or rigid plastic in toys.