Indiana Bio-Composites LLC has a new owner and the go-ahead for an expansion both in physical size and into new markets.
The Elkhart, Ind.-based supplier of natural-fiber composites, marketed under the name FlexForm, completed a deal March 1 that turned it over to a West Coast investment group.
The players in the deal would not release the purchase price or even identify the new ownership, except to say that it is a privately financed group with various other holdings, including broadcasting.
Indiana Bio-Composites did identify one of the group members: Colin Hurren, who also is a managing director for Scotland Group Inc., a consulting management company with offices in San Francisco and Newport Beach, Calif.
Hurren did not respond to requests for comment but said in a written statement that the purchase is "a very exciting opportunity for us.
"Indiana Bio-Composites has excellent management and a unique range of products that have applications in many different markets."
Indiana Bio-Composites already has established sales in the auto industry. It supplies the polypropylene, kenaf and hemp material used as a substrate under the Eco-Cor label by interior supplier Johnson Controls Inc. — and already in production for the 2001 DaimlerChrysler AG Sebring convertible.
IBC began production in October 1999 and posted $2 million in sales its first year. The company claims more than $40 million in booked business heading into its third year of business.
However, its growth was stunted because one of its investor-owners — Kafus Industries Ltd. of Vancouver, British Columbia — is in bankruptcy. The investment group bought up all of IBC's assets from Kafus, bankers and other holders and provided the financial backing to forge ahead, said Garry E. Balthes, vice president and general manager.
"We're already making our moves forward in business development," Balthes said. "We've gone from survival mode to forward development."
The company plans an 87,000-square-foot expansion to its 50,000-square-foot facility in Elkhart and is preparing for new business in the office furniture, construction and recreational vehicle and truck markets, he said.
Those new lines should be up and running by July 2002 to meet the expected increase in demand for the natural-fiber composites, typically produced with a combination of PP and fibers from plants such as hemp, flax, kenaf or jute.
Little Falls, N.J.-based consulting group Kline & Co. Inc. estimated that the demand for both wood and agricultural fiber used as plastic additives will increase 30 percent per year in automotive applications and 60 percent annually in building products.
Used in automotive applications, a biocomposite can reduce the overall weight by 50 percent compared with a glass-filled composite and also is easier to recycle.
The biggest selling point, though, is that it sells for about a third less than fiberglass, said Carl Eckert, senior vice president for Kline & Co.
Natural-fiber composites are more popular in Europe, he noted, with North American adaptation running about five years behind.
And, Eckert noted, most of the North American producers are like IBC — small operations just beginning to touch the potential market. As they reach more customers, however, both the demand and the infrastructure to produce the composites will grow, he predicts.
"Right now, you're going to see that within this embryonic industry, you've got a lot of mom-and-pop shops and everything is going to be going in fits and starts," he said.
With new owners in place, Balthes said, Indiana Bio-Composites has the backing it needs to make an impact.
"The interest in the product is there, and the market is there," he said. "For us, it's a new beginning."
