DN Plastics, a minority-owned compounder in Grand Rapids, Mich., is wrapping up a successful first year of operation and plans to add a second compounding line in March. DN was launched in February 1999 by Raj and Sunita Agrawal. Raj, a native of Surat, India, moved to the United States in 1982 to attend Michigan State University. After earning his doctorate in chemical engineering, he spent eight years at Holland, Mich.-based Tier 1 supplier Donnelly Corp. and four at Noble Polymers, another Grand Rapids compounder, before spinning off on his own.
"I was looking for better opportunities to pursue my own compounding venture," Raj Agrawal said of his decision.
Raj's wife, Sunita, also a native of India, is an accountant, who previously worked for Arthur Andersen Consulting.
In its first year, DN produced about 20 million pounds of thermoplastic polyolefins and thermoplastic elastomers for a variety of exterior and under-the-hood auto parts. Its output should jump to 30 million pounds this year with the installation of its second line.
DN hopes to add glass- and mineral-filled polyolefin product lines this year and also hopes to begin selling its compounds in the office-furniture market.
Agrawal estimates that the firm's 2000 sales will reach $3 million. DN, which also runs a research-and-development lab and has materials-testing capabilities on-site, operates in a 15,000-square-foot leased facility. The company has six employees.
The second line will max out DN's current space, causing it to look for a new site when it next expands.
Agrawal said he wouldn't be surprised if more minority plastics entrepreneurs look to compounding to secure some of the business that Tier 1 manufacturers have set aside for minority-owned businesses.
For example, Lear Corp., one of DN's initial customers, sent $250 million of business to minority-owned companies in 1999 and plans to increase that to $300 million in 2000, according to supplier diversity director Chuck White.
"Compounding is a new way for Tier 1s to meet the 5-10 percent [minority-business] goals they've set," Agrawal said. "They're currently purchasing compounds from other suppliers, so it's just a matter of resourcing."
Lear's White said his firm "is looking forward to a long-term relationship" with DN.
"We got involved with Raj because of his ability to formulate designer resins for us," White said. "He was able to fix some problems we were having in under-the-hood applications."
White added that Lear has had some difficulty locating minority-owned compounders, saying that some firms that present themselves as such have turned out to be resellers or distributors who have the compounding work done by nonminority compounders.
Although DN is one of only a few minority-owned compounders in the United States, Agrawal hasn't looked into any state or federal funding available to minority-owned businesses.
"A lot of times minority businesses rely on the minority crutch, but that's not our thing," he said. "I believe our products can compete with those produced by billion-dollar companies."
"Whether you're a minority or not, you've only got one life to live, so I'm just going out and doing my best," he added. "I don't want to have any regrets when I'm 70."