A new Tennessee holding firm is on the prowl for several small to midsize plastics processors in the South, Midwest or West.
William J. Cude III and C. Birge Sigety incorporated PolyTen Plastics Corp. in February. They aim to leverage industry experience and investment skills in a group that will share human resources, legal, regulatory and engineering functions, and purchases of raw materials and capital equipment.
Until Jan. 1, Cude was group vice president in Powell, Tenn., of DeRoyal Plastics Group, a three-plant injection molding unit of DeRoyal Industries Inc. His family had sold the molding business to DeRoyal in 1989. Cude has roots in sales and marketing.
Sigety is president and chief executive officer of Tampa, Fla.-based Bison Investments Inc., which formed in 1996 to provide working capital and equity for new and existing businesses.
Initially, PolyTen seeks to acquire at least three injection molding firms, each with annual sales of $2 million to $10 million. Likely targets include family-owned molders supplying electronic, appliance and health-care firms.
``These industries are among the fastest-growing markets for plastics today,'' Cude said.
Buying power, reporting systems and location are keys.
``Larger processors routinely buy resin for 20-25 percent less than smaller companies'' and ``larger processors who buy more equipment more frequently can expect lower fixed asset costs,'' Cude said.
Original equipment manufacturers ``demand support for plants all over the country and want to reduce their vendor base,'' so ``small businesses face a lot of pressures,'' he said.
Geographically, Cude believes ``the South, including Texas, should overtake the Midwest in the next two to five years in terms of plastics production.''
In leaving DeRoyal, Cude also resigned a position he had held since September 1994 as a board member of the Washington-based Society of the Plastics Industry Inc. He continues as vice chairman of a board of governors overseeing SPI's national certification program for production workers.
PolyTen may help a current Bison investment. Aerial Machine & Tool Corp., based in Vesta, Va., makes military and civilian air-delivery products, but ``has not made the transition to polymers in a big way,'' Sigety said. ``That firm can benefit from the changes.''
PolyTen plans by summer to have an office in Nashville, Tenn.