LONDON — Engineering polymers producer Victrex plc may build a new plant in the United States to produce as much as 8.8 million pounds per year of its polyaryletherketone resin.
The company, based in Thornton Cleveleys, England, is weighing whether to located its second polymer production operation in Britain or the United States, and still has to decide on the new plant's capacity. Victrex officials said they will announce final details in December.
Victrex now has one plant at Hillhouse, England, with capacity of 3.3 million pounds per year. Even after a current project to raise capacity there to 4.4 million pounds per year, the site has space for a new plant, said international marketing manager Andrew Walker.
One scenario being considered calls for an investment of about £30 million ($49.2 million) in an 8.8 million-pound plant that would begin operating in 2003, Walker said.
Victrex's latest expansion plan comes just as the company announced a marked slowdown in U.S. sales volume. Victrex blamed this on reduced demand in the electronics sector due mainly to the Asia-Pacific economic crisis.
Today, the firm exports 97 percent of its polyaryletherketone, to original equipment manufacturers in the automotive, industrial, medical, and electronics sectors in Europe, Asia and North America.
Victrex, formed as the result of a 1993 management buyout from British giant Imperial Chemical Industries plc, plans to add 1.1 million pounds per year as part of a £7 million ($ 11.5 million) investment it plans to complete early in 2000, said Victrex Chairman Peter Rowley.
In addition, the firm is taking the resin granulation process in-house with a $5.74 million plan to build a new plant at its Hillhouse site.
The move in-house will begin next year and is aimed at quality control.
The U.S. market weakness comes as a result of a slowdown in demand in the computer semiconductor and disc drive manufacturing sector — primarily due to lower production in South Korea.
Victrex sees this as a short-term setback.
``The market will come back stronger and heavier in the medium term,'' Walker said.
In contrast, the firm has reported continuing strong growth in Europe in the six months to March 1998.
Polyaryletherketone's success depends on the development of new market opportunities. One new opening for expansion in North America appeared after the polymer was approved for food contact by the Food and Drug Administration, Rowley said in his statement accompanying the half-year results.
The report showed pretax profit up 34 percent to $11 million on half-year sales up 24 percent to nearly $40 million.
Automotive is a strong market for polyaryletherketone in Europe, where applications for the polymer include anti-lock brake systems and air-conditioning units. In the United States, industrial applications include pump and valve seals and compressor parts for the chemical processing and oil industries.
The product also is being used in the aerospace and medical sectors, Walker said.