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November 30, 1998 01:00 AM

CYTEC DEAL CREATES BMC COMPOUNDING GIANT

Joseph Pryweller PLASTICS NEWS STAFF
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    In a move uniting two of the largest compounders in their market, Bulk Molding Compounds Inc. has purchased the polyester molding compound business of Cytec Industries Inc.

    The acquisition, completed Nov. 23, will turn the West Chicago, Ill.-based compounder, known as BMCI, into the dominant producer of commercial bulk molding compound resins in North America, according to the company and several competitors.

    BMCI paid $17 million in cash to buy Cytec's 68,000-square-foot Perrysburg, Ohio, plant, a producer of polyester and vinyl ester compound resins, plus a sales office in Southfield, Mich., said Cytec spokesman George Yuro. Together, the facilities employ 95.

    The acquisition more than doubles the size of BMCI. Before the purchase, BMCI expected to record $27 million in 1997 sales, said BMCI President Larry Nunnery. The Cytec plant will record about $30 million in sales this year, he said.

    Together, the companies plan to produce about 71 million pounds of BMC resin this year, Nunnery said.

    The Cytec plant ``does exactly what we do,'' he said. ``Now, we won't have customers to fight over. We've been No. 1 and No. 2 in the polyester molding compounds business for five years. It made sense to merge.''

    Cytec, a large chemical company and composites supplier in West Paterson, N.J., announced in August that it would sell its thermoset molding compounds business. Two other Cytec thermoset resin plants in Winona, Minn., and Delano, Pa., are still for sale, Yuro said.

    Active discussions with possible buyers are continuing, he said. Those plants make phenolic and epoxy engineering molding compounds.

    Cytec acquired those facilities when it bought composites supplier Fiberite Inc. last year. Cytec has owned the Perrysburg plant for more than 30 years, Yuro said.

    ``The Perrysburg plant was not strategically important to us,'' Yuro said. ``It's more advantageous to [BMCI] strategically. For them, it's part of their mainstream business, and for us, it's out of the mainstream.''

    Several competitors had looked at the Perrysburg plant. Premix Inc., a resin producer and molder in North Kingsville, Ohio, declined to bid for the facility, said Warren Owens, vice president of Premix's molding compound group.

    Premix decided to focus on a broader base of BMC and sheet molding compound materials, Owens said.

    ``The plant only makes polyester-based BMC material,'' Owens said. ``It makes [BMCI] a large domestic producer of BMC, but the company has no sheet molding compound capability. We see the market growing faster in SMC than in BMC.''

    According to Premix, commercial SMC and BMC sales account for about 240 million pounds in North America, with another two-thirds of the material made by captive molders.

    BMC sales account for about 65 percent of the amount sold commercially, or about 156 million pounds, Owens said. Next year, BMCI plans to produce more than half that total — about 80 million pounds of BMC, Nunnery said.

    BMCI plans to use the acquisition to help expand its automotive business, Nunnery said. BMC is used in applications such as headlamp reflectors and engine valve covers, where high heat and load stability are issues.

    The Cytec plant won a major contract last year from Chrysler Corp. to supply BMC for valve covers on its 1998 LH models. The company also supplies material for General Motors Corp.

    BMCI is a major provider of BMC resins for headlamp reflectors and works with most of the key North American lighting suppliers, Nunnery said. About half the company's business is automotive-related, he said.

    The purchase helps BMCI acquire the size needed to spur more growth, Nunnery said.

    ``Eventually, we'd like to do a technical center approach in Detroit,'' Nunnery said. ``With the critical mass built from the acquisition, we can undertake a major marketing effort. BMC has traditionally been undermarketed until now.''

    Other BMC applications include electrical circuit-breaker covers and heat-sensitive parts for toaster ovens and ranges.

    The Perrysburg plant and laboratory have six compounding lines. Cytec spent $1.5 million in 1997 to automate two of those lines, Nunnery said.

    BMCI's 85,000-square-foot plant in West Chicago has 11 compounding lines.

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