British Polythene Industries plc, Europe's leading polyethylene film producer, is taking on cut-price plastic retail bag suppliers from Asia at their own game.
The Greenock, Scotland-based extruder and converter, which has been forced into costly restructuring to counter strong import competition, is doubling extrusion capacity to 221 million pounds per year at its PE film and bag plant, Xinhui Alida Polythene, at Xinhui, China.
BPI has closed or reorganized seven subsidiaries this year, cutting 158 jobs. Reorganization and short-term trading losses cost the company £3 million ($4.8 million).
Even so, the company invested about $34.6 million in 1996 to buy out a string of 11 United Kingdom firms manufacturing PE film, woven polypropylene containers and PE and paper bags. The firm expects to add as many as three more acquisitions this year, according to Jack Paton, group industrial division managing director.
BPI launched Xinhui Alida in 1995 with an initial investment of £3 million ($4.8 million). A Chinese-owned partner invested a similar sum, Paton said.
The plant in China is relatively small by BPI's standards, but the expansion has been prompted by satisfaction by BPI's European retail customers.
BPI has completed the reorganization of its retail plastic and paper bag operations. It included transferring film extrusion from the former Low & Bonar unit of Bibby & Baron Ltd. at Bury, England, to its Alida Packaging Ltd. plant at Heanor, England.
BPI reported a 17 percent drop in profit through June 30, to $23.5 million, while sales were up 12 percent from the same period a year ago, to $357 million.
Cameron McLatchie, chairman and chief executive officer, blamed the results on overcapacity in stretch wrap film and a strong pound sterling, which attracted imports from Italy and Belgium.