DUSSELDORF, GERMANY — LNP Engineering Plastics Inc. is buying a conductive compounds business, plans to open its first office in China and is negotiating with an undisclosed party to gain a foothold in South America.
Three senior officials of the Exton, Pa.-based compounder discussed these developments in an Oct. 28 interview at the company's K'98 booth in Dusseldorf.
Robert Schulz said the acquisition of the Faradex product line from DSM NV's Performance Polymers unit in Sittard, Netherlands, is part of a broader LNP strategy ``to identify and buy pieces of business segments that might not be big enough to interest the big boys — but are good for us.''
Schulz is president and chief executive officer of Kawasaki LNP Inc., the firm's Japanese-owned holding company.
``We see the majors pulling back to more basic chocolate and vanilla flavors [of resins]. They're evaluating what they want to do,'' said Schulz, a 33-year LNP veteran.
Bernard Lanham, managing director of LNP Engineering Plastics Europe BV in Raamsdonksveer, Netherlands, said of the Faradex line: ``It was very small for DSM, but very interesting for us. They never took it globally; they only sold it in Europe. We plan to take it worldwide.''
In the deal, due to be completed in mid-November, LNP purchased the manufacturing equipment for the compounds, plus the worldwide rights for the Faradex patent and trademark. Lanham said LNP will move the one extrusion line from DSM's compounding plant in Genk, Belgium, to LNP Europe's headquarters factory in Raamsdonksveer.
``It will take a couple of months to shift the line and get it running,'' he said. Terms of the deal were not revealed.
Faradex molding compounds are available in a range of polymers, including ABS, polypropylene, polycarbonate and PC/ABS. They provide shielding protection in electronic components against electrostatic discharge and electromagnetic interference.
LNP claims that the Faradex ready-to-mold compounds provide EMI shielding levels that can be matched only by blending conductive concentrates with unfilled polymers, but that such blends tend to separate and yield variable moldings.
Separately, Schulz said LNP by early next year will open a warehouse and office in Shanghai, China, that will be overseen by a resident Chinese manager.
``We've got to be there,'' he said. ``We're firmly committed to the region.''
Schulz pointed out that LNP's compounding plant in Malaysia is doing well, and already has expanded since opening in 1995. It presently runs five production lines, but can accommodate 12. In anticipation of further growth, he said, ``We've started looking beyond Malaysia, but there's no need to make that decision yet.
``The Asian flu has affected us,'' Schulz said of the continuing economic crisis in Asia. But the biggest effect has not been where one might expect.
``LNP Americas' business has actually dropped more than that in Asia, since multinational [original equipment manufacturers] have shifted business from the U.S. to Asia,'' where the plunge in currency values has made manufacturing and exporting more cost-efficient. ``Our business in the Asia Pacific will be bigger in 1998'' than in 1997, he said.
Halfway around the world, meanwhile, LNP is making plans to enter the South American market by the end of 1999, either by acquisition or joint venture, according to LNP President Richard Burns. Discussions to that effect are under way now with an unidentified party, he said. That operation, likely to be in Brazil, would make LNP's full range of products, though not its Verton long-fiber-reinforced thermoplastics line initially.
In terms of potential, Schulz said, ``We view South America now as we did Southeast Asia five or six years ago.''
But there are differences: In Southeast Asia, much of the business is from U.S. transplants, has a computer and business equipment focus, and is heavily export-oriented. In South America, there is a strong European as well as U.S. transplant customer base, and the market is automotive-intensive and oriented toward local consumption.
Schulz is cagey when asked about LNP's size, but indicates that the firm's global sales are roughly in the $250 million range.