In a $40 million expansion, Graham Packaging Co. LP plans to install and operate a PET bottle manufacturing facility within Quaker Oats Co.'s beverage plant in Atlanta.
Graham will produce blow molded, hot-fill PET plastic bottles for Gatorade Thirst Quencher.
The agreement should create 60 jobs at the plant, which will begin operating in the second quarter of 1999. Quaker Oats will add 200,000 square feet to the 400,000-square-foot plant in order to accommodate equipment and to expand warehousing.
Neither company would disclose the number of blow molding machines in the plan.
``This is very beneficial from a cost standpoint,'' Rick Frazier, Quaker Oats director of beverage East, said in a telephone interview. ``And with PET bottles, this is a true partnership relationship with our supplier.''
Quaker Oats runs seven Gatorade plants in the United States and this venture with Graham Packaging is Quaker's first-ever plant-in-plant operation. Frazier said the company will evaluate if this type of operation should be installed at other plants based on a cost-benefit analysis of the Atlanta plant.
``I don't think so, but after the evaluation it may be prudent to look at other facilities,'' he added.
Although this is Quaker's first plant-in-plant operation, Graham Packaging is approaching 20 on-site plants worldwide. And while this type of arrangement is not an industrywide trend, it is what Graham Packaging prefers.
``This is a unique focus of Graham's,'' said Roger Prevot, senior vice president and general manager of Graham Packaging's food and beverage business unit. ``We've done this a long time. More of our new facilities are on-site than off-site.''
An in-plant operation necessitates openness regarding technology and financial data.
``It works well because the people operating the bottle-making equipment view themselves as part of the customer's manufacturing team,'' he said. ``This enables us to provide a higher level of service, quality and continuous improvement.
``This is not for everyone,'' Prevot warned. ``It requires a level of intimacy and long-term vision. Companies wanting to do this must be very comfortable with their customers and willing to establish long-term relationships.''
Quaker Oats selected Graham after a two-year search. Gatorade has an 80 percent share of the U.S. sports-drink market, with sales of $1.4 billion worldwide in 1997, Chicago-based Quaker Oats said in a Sept. 14 news release.
Graham Packaging produces PET, high and low density polyethylene, polypropylene and PVC bottles for the beverage, food, motor oil, medical and pharmaceutical, household and industrial chemical and personal-care industries. The York, Pa.-based company operates 47 plants in 10 countries. It had placed No. 5 in Plastics News' ranking of North American blow molding companies with estimated sales of $515 million.