Southwall Technologies Inc. of Palo Alto, Calif., will shorten its European supply line with the opening of a joint venture next year. Construction of a 55,000-square-foot plant begins this month in Gross Rohrsdorf, Germany.
During 1999, Southwall is shipping about 25 million square feet of its coated polyester film products from Palo Alto to European glass makers supplying automotive original equipment manufacturers, Thomas G. Hood, president and chief executive officer, said in a June 16 telephone interview.
The thin film coatings selectively absorb, reflect or transmit certain types of electromagnetic radiation for architectural, automotive and electronics applications. In laminated glass, the film supports safety and security functions and provides better in-car sound properties, Hood said.
Hood said the Palo Alto facility is close to capacity. The automotive market for XIR-brand film is doubling every year, with most uses in German luxury models and those from France's Renault, he said.
In the first phase, partners Southwall and Venture Management Partners GmbH of Berlin anticipate investing $25 million for the structure, three vacuum web-coating systems from Von Ardenne Anlagentechnik GmbH of Dresden, Germany, and related equipment. Southwall will license its production knowledge and intellectual property.
The venture, Southwall Europe GmbH, plans to begin shipments in early 2000 to automotive glass customers such as units of Cie. de Saint-Gobain of Paris, Pilkington plc of London and Guardian Industries Inc. of Auburn Hills, Mich. On May 24, Southwall Technologies announced a $30 million supply agreement for 2000-01 with Saint-Gobain, its largest customer.
The plant will employ 40 in 2000's first quarter and 200 upon implementation of a second phase. The partners anticipate building a 25,000-square-foot expansion and installing at least two more Von Ardenne machines in a couple of years, Hood said.
Germany, the state of Saxony and the government-supported Industrial Investment Council in Berlin provided administrative support, incentives and grants. The funds account for about 35 percent of the project cost, Hood said. Debt financing covers the remainder.
In creating five-layer composites, Southwall uses optical-quality polyester film that it encapsulates with polyvinyl butyral from Solutia Inc. or other suppliers.
Nasdaq-listed Southwall reported a loss of $1.5 million on sales of $10.9 million for the quarter ended April 4. The company employed 236 at year's end and had a loss of $7.8 million on 1998 sales of $50 million.
Southwall is rebounding from several quarters of financial pressures from quality issues involving anti-reflective products for computer cathode-ray tubes made by Sony Corp.'s display division. Hood said the albatross no longer dominates company results.