Global polyester film markets will witness further consolidation this year, beginning with DuPont and Teijin Ltd., which have agreed to a joint venture in polyester films, the companies announced Feb. 3.
The announcement comes about a year after DuPont acquired Imperial Chemical Industries plc's polyester film business and solidified its position as the world's largest producer of such films.
The new venture will have annual sales of about $1.4 billion, representing a little more than 25 percent of the world market, officials said in a teleconference. The companies will be equal partners in the venture, with Teijin contributing an undisclosed amount of cash because its films business is smaller than DuPont's.
Wilmington, Del.-based DuPont's current polyester sales represent about 70 percent of the joint venture's projected total. Combined films capacity will be more than 660 million pounds per year.
Francine Cheeseman Shaw, DuPont Films vice president and general manager, said in a telephone interview that the firms expect to complete the deal in the fourth quarter.
The joint venture will make the firms less vulnerable to market cycles, Shaw said. A key attraction is Teijin's major stake in polyethylene naphthalate films, a relatively small business for DuPont. Teijin sells the films for advanced photography systems and magnetic media.
DuPont ``has dabbled'' in those markets but mainly produces PET films for packaging, electrical and electronic applications, she said.
The venture will allow DuPont to be more active in Japan and Asian markets and broaden Teijin's reach into markets outside Asia, according to Shaw.
Teijin makes PEN film in Gifu, Japan, while DuPont's PEN film operations are in Hopewell, Va., and Dumfries, Scotland. Teijin's other plants are in Utsunomiya, Japan; and Jakarta, Indonesia; and it has an existing magnetic media joint venture with DuPont, with plants in Circleville, Ohio, and Contern, Luxembourg.
DuPont makes PET films in Circleville; Florence, S.C.; Richmond, Va.; Luxembourg and Foshan, China. It also makes PET film in plants it acquired last year from ICI in Hopewell; Dumfries; Rozenburg, Holland; and Ibaraki, Japan. It also makes PEN resin in Fayetteville, N.C. Teijin has been buying PEN resin for its film production.
Shaw said there are no plans to close any of the venture's plants, despite tough market conditions. DuPont has been shutting down older, inefficient PET film lines and by the end of the year will eliminate about 500 jobs as newer lines boost productivity.
Shaw said she expects the next few fiscal quarters to be challenging as Asia's economic troubles continue to suppress PET film sales. Still, global markets are growing about 5 percent a year.
Teijin's sales force and related operations will be included in the joint venture immediately upon its formation. Teijin's manufacturing operations will be dedicated to the joint venture but will not be included formally until 2001 because of Japanese accounting rules.