CLEVELAND — Ferro Corp., already one of the largest U.S. polypropylene compounders, is adding capacity in Evansville, Ind., and opening a plant in Indonesia to continue the growth of its plastics unit. With $255 million in 1999 sales, plastics is the smallest of the Cleveland firm's three major businesses, but it showed the best sales growth in 1999. Plastics grew almost 7 percent, while sales at Ferro's chemicals unit dropped 5 percent and sales at its coatings unit dropped 1 percent. The firm's total sales stood at $1.35 billion last year.
Jay Finch, Ferro vice president of plastics, chalks the unit's growth up to strong sales into the automotive and appliance markets.
"We've had a lot of success with Maytag and other appliance makers in replacing engineering thermoplastics with our products," Finch said.
The growth is leading Ferro to increase capacity for it Gapex-brand glass-filled PP compounds by 30 percent in Evansville later this year. The increase will be reached by debottlenecking existing lines, Finch said, and is needed because Ferro is taking back some of the high-volume business it had farmed out to toll compounders.
In Jakarta, Indonesia, Ferro is opening a color compound plant this month with annual capacity of 6 million to 10 million pounds. The plant's products will be aimed at markets for packaging and consumer durables.
Ferro also is increasing capacity at its polymer additives plant in Fort Worth, Texas, by 50 percent this year.
Plastics growth has continued into 2000 for Ferro, as its first-quarter plastics sales were 15 percent higher than during the same period in 1999.
At the firm's annual meeting, held April 28 in Cleveland, Chief Executive Officer Hector Ortino said Ferro will be "more proactive in pursuing acquisition candidates" for its plastics and chemicals units in 2000.
The company's most recent plastics acquisition was Advanced Polymer Compounding Co., a thermoplastic elastomer manufacturer in Carpentersville, Ill., in March 1999.
Overall, Ortino said he expects Ferro to increase sales 6-8 percent annually through 2003. He added he's been disappointed with the company's stock price, which was near $31 per share a year ago but closed at $22.375 per share May 3.
"Our stock price isn't reflective of our performance, but it's in line with what's happened to our peers," Ortino said. "Our current price is not warranted and reflects a market that was over-focused on New Economy stocks and didn't appreciate Old Economy stocks like specialty chemicals."
