ANAHEIM, CALIF. — AEP Industries Inc.'s stretch-film operations will broaden product offerings and emphasize distributor relations in a drive to excel in a niche with growing production capacity and pricing pressures.
``We are diligently working on new high-performance films that will separate us from the pack,'' Glenn Cooper said in an interview at Westpack, held Sept. 23-25 in Anaheim.
Cooper is corporate vice president of AEP's stretch-film division, one of six operations of the South Hackensack, N.J.-based firm. He said AEP is close to announcing a new high-performance film.
AEP hopes the new films ``will take the focus off'' the customer's usual question, ``What is your price today?'' Cooper said.
``A price alone does not equate to the value,'' he added. ``You need to look at the per-unit cost basis, evaluate the true performance of the film and equate that to what is the packaging cost to wrap your pallet [and transport it] from point A to point B so it gets there without any damage.''
Cooper withheld schedule and raw material details but noted, ``We believe a comprehensive product line is key to our long-term success.''
A larger presence helps. In a major move last October, AEP bought Borden Inc.'s packaging division.
``It catapulted us into being a truly global company,'' he said. ``When you look at the stretch-film companies in the business right now, there are very few companies that can bring that to the table.''
Now, AEP has a worldwide stretch-film capacity of about 350 million pounds. Domestic plants are located in Mountain Top, Pa.; Matthews, N.C.; Chino, Calif.; Alsip, Ill.; and Waxahachie and Gainesville, Texas; and overseas facilities, in South Africa, Holland and Japan. The latter is a 50-50 joint venture with Hitachi Chemical Co. Ltd.
``We are positioned to compete strongly on a regional basis and nationally, and we have some economies of scale by the amount of raw materials we buy,'' Cooper said.
``The stretch-film business is in a severe overcapacity mode, [and] we expect for that to continue for the next few years,'' he said.
``There are several companies that have entered the market in the last few years, from 1995 and beyond, but they have additional capacity that they plan on bringing into the system. Consequently, it is going to have a continued rippling effect throughout the industry and will create what we believe to be further price pressures.''
He said AEP's stretch-film operations are ``positioned extremely well, not only to weather the storm [but] with respect to [an] onslaught of capacity coming on.''
And he appreciates distributors: ``We need to continually help to improve their bottom line, and along the way, we need to make sure we reach acceptable profit goals as well.''
Historically, AEP has made low density flexible polyethylene film products, and Borden produced PE-based stretch-wrap films for unitizing pallet loads.
AEP reported profit of $8.3 million on sales of $570 million for the nine months ended July 31.
Its stretch-film business competes mainly with Tenneco Packaging of Deerfield, Ill., and Atlantis Plastics Inc.'s film operations.