CHARLOTTE, N.C. — After stints at stretch-film giants Mobil Chemical Co. and AEP Industries Inc., Bill Rice has ventured out on his own, founding Pinnacle Films Inc. in Charlotte. How does the 25-year film veteran Rice plan to carve out a place in the highly competitive market for pallet wrap? By focusing exclusively on seven-layer cast film with metallocene-based, linear low density polyethylene for strength. Metallocene resins are more expensive than standard LLDPE, but metallocenes will allow Pinnacle to offer customers thinner, high-performance film at a lower net price, he said.
"We plan to be the king of light-gauge film," Rice said. "We're going to lead the downgauging revolution."
Production started Dec. 18 on a seven-layer cast-film line from Battenfeld Gloucester Engineering Co. Inc. Rice said Pinnacle invested $4.1 million in the equipment, which includes the machine, a flat die and feedblock from Cloeren Co., resin silos and special features such as continuous gauge measurement and robotic roll handling.
Battenfeld Gloucester, of Gloucester, Mass., supplied the entire turnkey line, which has five extruders.
The line can pump out up to 2,000 feet of cast film per minute, or 20 million pounds a year. Pinnacle aims to replace standard 80-gauge stretch film with its 60-gauge film.
Today in plastic films, metallocene-based resins have become the Next Big Thing. Rice lived through an earlier breakthrough — the first three-layer LLDPE cast stretch wrap, called Mobil X.
Rice, 53, is feeling deja vu. And he likes it.
"When stretch film first started, linear low density came in against other competing resins. And it was like you were taking high-strength steel against cast iron. The evolution of metallocene resins now allows you to use titanium against high-strength steel," Rice said during an interview at the Charlotte factory.
Mobil introduced X film in the late 1970s. "Within a year it had totally obsoleted and revolutionized the industry. No other film could compete. It was the film of choice for wrapping pallets," Rice said.
Stretch pallet wrap swept through the shipping business, replacing conventional ways to secure boxes on a pallet, such as strapping and other types of plastic film. Today, machines that automatically spin-wrap loaded pallets with film have become as common as fax machines at companies around the world.
"Anything that ships on a truck, with boxes or cases. VCRs. TVs. Procter & Gamble and Kraft Foods are huge users of stretch film, because you can use 35 or 40 cents worth of stretch film on a pallet and protect it from pilferage, protect it from damage of load shifting," Rice said. "It's a very cheap medium to protect your goods. That's why it's grown so dramatically in the last 20 years."
Rice got in on the ground floor. He was working at Mobil in institutional packaging when the company sent him to Belgium as European sales and marketing manager for X film. Mobil set up a plant to make the three-layer film, which could cling to itself. Rice set up sales operations in 15 countries during a whirlwind three years, from 1981-84. Mobil X racked up a 70 percent European market share for stretch-wrap.
"It was a lot of fun," he recalled.
He returned to the United States and became Mobil's national marketing manager for stretch film, based in Rochester, N.Y. He left Mobil for a position at film extruder Arrow Industries in Carrollton, Texas. In 1987, AEP Industries hired him to start a stretch film business, based at a plant in Matthews, N.C.
AEP grew into North America's largest stretch film manufacturer. Rice ended up as executive vice president of the stretch film division until he left in 1997 to head the custom film division of Atlanta-based Atlantis Plastics Inc.
He left Atlantis in mid-1998 to start Pinnacle Films.
Pinnacle becomes only the second U.S. company to make seven-layer cast stretch film. The first was another start-up company, Quintec Films Corp., which installed a seven-layer Black Clawson line at its plant in Shelbyville, Tenn. President Terry Jones said Quintec plans to add a second line this year.
This year, Sigma Stretch Film Corp. will push stretch film even further. Battenfeld Gloucester is scheduled to deliver a nine-layer cast stretch film line in March to a Sigma plant in Belleville, Ontario. Several other stretch film makers are running five-layer lines.
Despite the activity in five layers and up, Rice said that three-layer lines still dominate the installed base of machines. Seven-layer metallocene technology will help Pinnacle stand out.
"That's our goal, to take stretch film out of the commodity area," Rice said. "Today, as a three-layer technology, it's a commodity. All the big guys, they sell on price, they don't sell on performance."
Seven layers are better than three, Rice said. Running metallocenes in a three-layer cast film line — where the core layer might typically account for 70 percent of the total — means the best option is to blend the metallocene-based resin into the core. Rice said that blending waters down the desirable metallocene properties.
The seven-layer construction means Pinnacle can run metallocenes in a single, very thin layer or a combination of several layers.
Robert Weeks, Battenfeld Gloucester's vice president of sales and marketing, said pricing pressure is driving stretch film makers to buy more efficient, higher-output extruders.
"The market is being driven by downgauging. More layers allow you to use high-end resins economically," he said.
In addition to cutthroat pricing, stretch film, an $800 million business in the United States, still suffers from too much capacity, according to industry observers. One analyst, G. David Moore, said U.S. customers bought 1.2 billion pounds of stretch film in 1998, when capacity was 1.6 billion pounds. Some of that excess was sucked up by a stronger-than-normal 1999, said Moore, who runs Moore Associates Consulting Ltd. in Cumming, Ga.
Rice acknowledges the oversupply problem. "But the approach we're taking with higher-performing products should allow us to sell profitably," he said.
In a normal year, the stretch film market grows 6-7 percent, Moore said. The market in 1999 grew by a robust 8-10 percent, he said, as distributors stocked up to beat price increases.
Huston Keith, a flexible packaging analyst, isn't quite so bullish. He pegs annual stretch film growth at 3-5 percent during the next few years. "You're looking at [gross domestic product] plus 1 percent," said Keith, principal at Keymark Associates in Marietta, Ga.
Keith said stretch wrap already controls about 80 percent of the standard shipping market, called palletizing and unitizing. Since pallet wrap is by far its biggest market, stretch wrap has become a victim of its own success, he said.
Moore said hot specialty markets are taking up some of the slack. For example, many movers now wrap furniture before loading it on a truck. Instead of cardboard boxes, new furniture also comes wrapped in plastic. So do bulk products at wholesale clubs, industrial rolls of paper or snack bags, even steel coils.
In Charlotte, Rice already is thinking expansion. Pinnacle moved into 55,000 square feet of leased space in an industrial park in May. Starting in early 2001, Rice plans to add one more machine each year, and expand the space, until he reaches four cast film lines.
In addition to new technology, Rice is counting on a special distribution strategy to set Pinnacle apart. Instead of selling through multiple distributors in a given area, Pinnacle is setting up exclusive, or very limited, deals with one distributor in each area. That lets the distributor concentrate on selling the film's performance and the brand, without competing against somebody else selling Pinnacle film.
Pinnacle also is offering cling on one side of the film/no-cling on the other side, as standard on all its products. That feature means wrapped pallets won't stick to each other when packed tightly on a truck.
The company employs 15. It takes just two people to run the film line on each shift, an operator who monitors the computer-controlled machine and a person to prepare rolls for shipment.
Rice said the company stresses safety and quality. Automated roll changing is a key, when rolls can fill up as fast as every 45 seconds, for small hand-wrap.
"It allows them to focus on quality. You can't have a guy that's beat after six hours. He's not going to care what he puts on a skid. So I look at automation as a way to save your people. It's not there to save dollars," he said.