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June 21, 2000 02:00 AM

Resin e-biz plans launch

Joseph Pryweller PLASTICS NEWS STAFF
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    CHICAGO — Omnexus, the new name of an online trading marketplace from six major resin producers, blends Latin words meaning "all" and "coming together."

    The site wants to be just that to injection molders: the complete, all-encompassing source for swapping resin and other products over a Web-based version of Grand Central Station.

    Details of the dot-com agreement, first announced in April, were unveiled June 20 during a news briefing at NPE 2000. Builders of the resin-maker-backed portal said they would go further than previously suggested.

    Instead of just offering an online catalog to injection molders shopping for list resin prices, they would provide customized prices to different processors and handle all ends of the transaction.

    If resins are traded over a central box office at Omnexus, the site founders suggested that most other independent injection molding portals might have to get out of the way.

    "The Internet has changed the way transactions are done," said Bill Ray, global director of e-business for Dow Plastics. "We had to be a leading part of this or choose not to be competitive."

    Omnexus plans to go live in North America in October. Headquarters will be based in Atlanta.

    The portal, www.omnexus.com, will be rolled out to Europe in January 2001 and to Asia next spring, said interim Chief Executive Officer Yaarit Silverstone.

    The site was created in April from a letter of intent signed by BASF Corp. (Booth S714), Bayer AG (Booth S154), Dow Chemical Co. (Booth S2700), DuPont (Booth S3342) and Ticona/Celanese AG, which is not exhibiting at NPE.

    Material supplier Solvay Engineered Polymers (Booth E13503) joined the group last week.

    Together, the founding resin fathers said they invested more than $50 million to create the resin-buying site.

    They plan it to be a neutral site. The reins were handed off temporarily to Andersen Consulting in a strategic alliance. The management and consulting firm plans to refine the site until permanent Omnexus executives are found.

    Projected sales for the new company, to be based in Atlanta and Zurich, Switzerland, were not announced. The site eventually plans an initial public offering, once a solid foundation is created, Silverstone said.

    The portal eventually will attempt to be all things to all molders. Included in the plans are functions offering order and delivery tracking, credit and financing services, electronic requests for quote, product searches, design help and software that connects to a processor's computer system.

    "We'll be able to automate all the functions with that of a processor's system," said Omnexus Chief Executive Officer Stan Vlasimsky, another Andersen partner based in Frankfurt, Germany. "To be successful, we can't only be price-based but we have to offer service and performance."

    Those functions will go online sometime after the system starts in October, Vlasimsky added. The site will begin by offering an efficient method to place resin orders, he said.

    The portal also will allow some elbow room to processors that do not want to pay list resin prices, Silverstone added. Processors will receive tailored resin prices based on existing contract terms with the suppliers, she said.

    That ambitious business model could challenge the traditional marketplace for resin buying, said Jay Dwivedi, senior plastics consultant with Kline & Co. in Little Falls, N.J.

    With the advent of online trading services, price differences are becoming less of an issue between one resin company and another, Dwivedi said.

    "[The new site] is an outcome of what's been happening in the market," Dwivedi said. "Pricing has become transparent for many resins. It's very hard to have different price points like a company had in the past."

    Resin companies see the realities of moving to an online model, Dwivedi said. Other independent exchanges trading plastic — such as spot exchanges from ChemConnect, CheMatch and others — could suffer as a result, said Diana Smith, DuPont global director for e-business and merger and acquisition strategy.

    "It's difficult to do all the buying over a [spot exchange] site," Smith said. "A buyer doesn't know when the material or volume will be available. At our site, they'll know exactly what they're getting and when."

    Omnexus plans to replace some of the online resin marketplaces sites and work with others, Silverstone said.

    The new company also plans to open the site to machinery suppliers, distributors and tooling companies, she added. Announcements of other partners are coming soon, Silverstone said.

    The technology platform will be developed by IBM Corp., Ariba Inc. and I2 Technologies Inc. The same group is developing software packages for other industries, including consortiums in health care and electronics, said S. Craig Hodges, marketing vice president for chemicals and petroleum with IBM Corp.

    Working with company consortiums, instead of with outside exchanges, brings suppliers closer to customers, Hodges said. That need is driving some end users, including those in the automotive industry, to set up their own portals, he said.

    "Customer relationships become less critical for outside Web companies," Hodges said. "When companies create their own online marketplace, they can connect to private portals and strengthen those relationships. It creates a lot of opportunity."

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