AKRON, OHIO — A year after moving into the top tier of global PET makers, Gruppo Mossi & Ghisolfi is taking steps to maximize its market opportunities.
The first step: a $35 million improvement in its Point Pleasant, W.Va., plant.
With its February 2000 acquisition of Shell Chemical Co.'s PET operations — 1.3 billion pounds of capacity at four plants in North America and Europe — M&G was transformed overnight from a $300 million-a-year regional player based in Tortona, Italy, into a two-continent operation with about $900 million in annual sales.
Guido Ghisolfi, M&G's vice president of operations and development, said M&G is confident that its family-run approach can succeed in a PET market that has witnessed the exit of global players like Shell and Hoechst AG in recent years.
"The structure of the business has substantially changed," Ghisolfi said in an April 4 interview at M&G's newly acquired Polyester Research Center in Akron. "You're seeing family businesses come in, not just here with M&G and KoSa, but also in India and Spain. The margins that are left in the business don't fit the overall cost structures of large corporate businesses anymore.
"But there's nothing wrong with the business. It's still growing 10 percent a year on a global basis. The companies that were there when we entered the European market [in 1982] — Hoechst, Rhone-Poulenc — are all gone. We're the last of the Mohicans."
Ghisolfi has the vantage point and family background to judge the playing field. His father, Vittorio, was one of the firm's founders, and his brother Marco is a top M&G executive as well. M&G also ranks as one of Europe's largest makers of PET preforms and film. The company was the first to introduce PET into the European packaging market.
One aspect of the family approach that Guido Ghisolfi considers an advantage is the necessity of adhering to the bottom line in the absence of a larger corporate parent to fall back on, he said.
"PET makers haven't returned the cost of capital for years," he said. "Now we must return — there's no other place for the money to come from."
In Point Pleasant, M&G is installing a new solid-state PET line and upgrading two melt-phase PET lines. The project — to be completed by the end of this year — will increase the site's capacity by 10 percent to a total of almost 700 million pounds annually.
"We'll be able to run better and run a wider portfolio of products," Ghisolfi said.
That "wider portfolio" will include barrier resins for the beer market, an area on which PET makers have pinned their hopes in anticipation of a big payoff.
But Ghisolfi said the hurdles facing broad acceptance of PET in the beer market remain substantial, primarily because no single dominant technology has emerged and been accepted industrywide.
"Public perception [of beer in PET] is good, but there are very complex technological challenges," he said. "There's not one technology that everyone can invest in, and every technology that's been offered — whether it's multilayer or coating or plasma or barrier properties — means a megabucks investment. We can't say that one's the safest or most recyclable yet."
With the carbonated soft drink market at or approaching saturation levels, PET makers are looking to markets for bottled water or milk for new opportunities. There's still room for growth in single-serve beverages, which are moving from 20-ounce to 12-ounce sizes, said M&G global PET marketing manager David Swift.
The North American market is expected to grow 7-9 percent annually through 2005, according to an M&G forecast.
M&G plans to stick to PET resin in the United States, with no plans to expand its European PET preforms and films businesses into North America.
"In the U.S., there's a very well-organized industry already here," Ghisolfi said. "It wouldn't be a core business for us to come and make preforms that can easily come from other companies."
M&G also has been active on other fronts, commissioning an Australian firm to build equipment that will recycle post-consumer PET bottles in Point Pleasant, and looking for a chance to move into the South American market. In March, Ghisolfi denied speculation that M&G would acquire Brazilian PET maker Rhodia-ster SA.
Moving ahead into a brave new PET world, Ghisolfi said his firm is off to a good start with the employees it inherited from Shell. M&G has eliminated about 60 manufacturing jobs in Point Pleasant but made little change to Shell's management structure.
"I think employees like having a visible level of ownership," Ghisolfi said. "I was looking at some equipment with our employees at Point Pleasant recently and asked them, `When was the last time your owner knew how many rpm your polymer lines were running?'"