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News
August 25, 1997 02:00 AM

PERSTORP, OTTO SWAP PRODUCT PRODUCTION

Richard Higgs PLASTICS NEWS CORRESPONDENT
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    Two top European molders of plastic containers for waste and materials handling have struck a deal intended to allow each to excel in its own core product area within the region.

    Perstorp Plastic Systems of Perstorp, Sweden, specializes in industrial materials handling with products such as crates, cases and pallets — but the firm also molds waste-handling containers. Otto Group of Kreuztal, Germany, is a leading world manufacturer of waste-handling bins and systems, but also has ventured into the materials-handling market.

    Under the agreement, Otto's industrial division will produce Perstorp waste-handling products at its molding plants in France and Germany, while Perstorp will manufacture Otto's materials-handling brands at some of its European plants.

    The transaction still allows Perstorp to produce waste containers in Sweden for the Scandinavian market on behalf of Otto. The deal does not include the companies' U.S. operations.

    The deal, announced by Perstorp Plastic's parent, Perstorp AB, will mean, in practice, an exchange of products, injection tools and product brands.

    The agreement ``is part of our efforts to attain a better market structure in Europe, consisting of fewer, larger and thus more-profitable manufacturers of our types of products,'' said Perstorp Plastic President Wiking Henricsson.

    The deal, which is subject to approval by German and Swedish government officials, is due to be completed in September.

    Perstorp Plastic expects to become the largest European manufacturer of plastic-based materials-handling products following the agreement, with a market share of 15-20 percent, Henricsson said.

    Excess capacity in materials-handling container production has resulted in a tight European market and intense price competition in some areas, according to Perstorp.

    The situation has been exacerbated by weak European demand and the high cost of plastic raw materials in the past year, Rolf Rahmberg, Perstorp AB vice president for corporate communications, said in a telephone interview.

    Perstorp Plastic and Otto's industrial division are comparable in business size, each having annual sales of a little more than $30 million, according to Perstorp.

    Perstorp Plastic has manufacturing plants in the United States, Austria, Estonia, Finland, France, Germany, Spain, Sweden and the United Kingdom, plus joint ventures in Thailand and Malaysia. It has injection molding presses with clamping forces as large as 4,200 tons.

    Perstorp Plastic produces materials-handling containers, chiefly of high density polyethylene, in a capacity range of 20-100 liters, Rahmberg said. Customers primarily are in the industrial assembly and retail distribution sectors.

    Otto spokesman Sven Seidler said his firm remains a world force in waste-handling systems, but lags behind industry leaders in materials handling. Otto's plastic container molding production is concentrated in Europe at two plants, in Neuruppin, Germany, and Crissey, France. They also do some custom molding.

    Earlier this year the firm announced that its U.S. division, Otto Industries Inc., would phase out its captive molding operation in Charlotte, N.C., and farm the work out to custom molder Arkay Industries Inc. of Miamisburg, Ohio.

    Perstorp Plastic employs about 950. Its parent reported sales of 12 billion Swedish kronor ($1.7 billion).

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