CHICAGO — Though it is both hunter and hunted, Applied Extrusion Technologies Inc. hopes to lead global consolidation in the oriented polypropylene film industry.
``We're ready to have manufacturing capabilities overseas,'' President Thomas Williams said in an interview at Pack Expo 98, held Nov. 8-12 in Chicago.
``Most logically, that would be through an acquisition. In the last few years, we've been aggressive about speaking with people in the industry about acquisitions. AET will be driving consolidation in the industry worldwide.''
Williams said he could not comment on whether those talks have included conversations with Hoechst AG of Frankfurt, Germany. Hoechst and Mobil Chemical Co. recently called off the proposed merger of their OPP businesses. Some in the industry say an AET and Hoechst merger may be in the works.
AET has spent several years grooming itself for a lead role in worldwide OPP production. It has invested $150 million to upgrade or add cost-effective equipment. It has boosted capacity 60 percent over four years ago.
``And we have made a major commitment to product development — that's the lifeblood of this industry,'' Williams said.
Until the OPP industry took a downturn, ``We were the red-hot in the gumball machine,'' he said. Now, he is ready to take advantage of what he believes is a recovering market.
``The North American industry has suffered from overcapacity. But there have been no more new lines announced, and we should start to see improvement shortly. The industry's coming out of a down cycle. Then, we expect to see considerable consolidation in 1999.''
As a start, AET's acquisition of Montell NV's Moplefan OPP operations in Europe and Australia may be complete by spring. Williams said the deal is in the due-diligence phase.
However, in a fourth-quarter statement issued Oct. 13, Williams did not sound as optimistic, blaming September price reductions for lower-than-anticipated earnings.
``Recent pricing activity suggests that not only excess domestic capacity but also economic difficulties in export markets such as Asia and Latin America are causing further deterioration in the North American market,'' he said.
``We now believe this situation will persist and will continue to negatively impact our financial results in fiscal 1999, and an improvement in this situation will not occur until the latter part of 1999.''
As for Huntsman Packaging Corp., he believes that firm's once-persistent interest in acquiring AET has waned. Salt Lake City-based Huntsman made two offers for AET and was rebuked both times.
``We don't expect to hear anything more from Huntsman,'' he said.
Though the company's OPP plant in Varennes, Quebec, is down to only one line, ``it is an incredibly efficient line, and we have outstanding technical resources up there,'' making it economical to keep that plant open. In fact, the company has no plans to sell any of its assets, Williams said.