ATLANTA (July 6, 2:35 p.m. EDT) — Ever since its birth in April 2000 as a plastics dot-com consortium, Omnexus has been preparing for this moment.
The company has amassed at least $75 million in funding, by conservative estimates, from more than 20 global suppliers. It has spent a laborious year building, refining and testing a Web system to ease the online buying of resin, equipment and other products.
It has crafted a resin-sourcing catalog and cobbled together a before-unrelated phalanx of competitors, with 1,663 resin grades and 99 brands now listed on its Web portal.
It has attempted to make life simpler for processors wanting to compare and contrast resin data and equipment needs and place a purchase order without the hassle of paperwork, phone calls and faxes.
Omnexus, with offices open on two continents and more than 60 employees, is now armed and ready to take on the world.
All it needs is an infusion of customers, namely processors, to enlist in its brigade. But will processors join up?
“We've built our field of dreams,” Chief Executive Officer Peter Dunning said during a late-May interview in Atlanta, the firm's U.S. headquarters. “We're ready to let loose on the market, and we think we can provide processors with some attractive advantages.”
With the backing of some of the largest resin and equipment companies in the industry, Omnexus has powerful allies. A few processors already have started using the site, and sales representatives — many of them formerly selling material for Omnexus' founders — are knocking on doors.
But while the pace is furious inside the Omnexus suite in a downtown office tower, competition is equally fierce in other quarters. The wrestling match for plastics electronic commerce has more Hulk Hogans than it did a year ago. It has arguably fewer companies, but other dot-coms also have some firepower and a head of steam behind them.
“It may make life a little harder for Omnexus in the short term,” said Steven Kafka, e-commerce analyst with consulting firm Forrester Research Inc. of Cambridge, Mass. “I don't think they're going away, because they have some pretty major backers. But they need to figure out what they need to do to compete.”
That competition includes Hunters-ville, N.C.-based resin distributor GE Polymerland, owned by GE Plastics. Polymerland, which sells resins from more than 30 suppliers, expects to conduct more than $3 billion in plastics transactions over its Web site this year.
“GE likes to be in your face,” said Leif Eriksen, research director for chemical and process industries with Boston-based AMR Research Inc.
It also includes an old player that has some new muscle, ChemConnect Inc. of San Francisco. The company merged in June with Richmond, Va.-based Envera, marrying Envera's technology to connect the computer systems of customers with ChemConnect's resin exchanges, auctions and commodity swaps.
ChemConnect plans to compete head-on with both plastics and chemical consortia sites, said Michele Hincks, vice president of marketing. “We have a lot of plastics expertise,” Hincks said. “And we have a very full e-commerce strategy.”
Meanwhile, larger processors are setting up their own internal computer systems to buy and sell products. For instance, Graham Packaging Inc. of York, Pa., now links its 30 facilities in North America and plans to conduct about 70 percent of its transactions electronically on its site this year, said information technologies director Jeff Rishel.
The blow mold-ing company does not have much use right now for Omnexus' site or anyone else's, Rishel said. Areas such as ordering custom colorants or tracking orders can be done more efficiently on its own network, he said.
“Our observation is that the industry is still way too immature to jump into any of those,” Rishel said. “We'd rather go down this path right now and see what happens with some of the marketplaces.”
Even resin suppliers, such as Summit, N.J.-based Ticona/Cel-a-nese AG, have intertwined Internet channels. The Summit, N.J.-based resin firm has investments in Omnexus and is a national distributor with Polymerland. The company also is developing its own site, Ticona Direct, and has a stated goal to move 65 percent of resin sales online by the end of 2003, said global e-business director Kevin Cronin.
The reason for the diverse investments: The market is huge. Forrester Research said that about $2.7 trillion in e-commerce business will be done by 2004, and Kafka said that number is a tad conservative.
Omnexus offers some mass to anchor its mission as the public dot-com marketplace of choice. Its five founding members — BASF Corp., Bayer AG, Dow Chemical Co., DuPont and Ticona/Cel-a-nese — have been joined by nine other resin suppliers, compounders, distributors and equipment producers with investments in the company. Several other suppliers will offer products over the site.
Omnexus wants to connect processors and suppliers in a kind of global village, where products are ordered and information is available for comparison shopping. The company even offers a news service with a daily electronic-mail feed. Its Latin-truncated name is loosely translated as “one intersection.”
The vision is to take costs from purchases — not cut prices — through greater efficiency, said David Jukes, Omnexus senior vice president of sales and marketing and a former executive with resin distributor Ellis & Everard. He equated the rise of Internet tools to the advent of machine automation.
“You didn't see molders use robot arms 20 years ago, and a lot of people thought that wouldn't catch on,” Jukes said. “Now, it's used by everyone as a tool for efficiency. The same can be said of the Internet.”
A new version of Omnexus software, released April 30, offers material data on more than 1,500 resin grades, with as many as 4,500 grades expected next year. Processors can search globally for resin needs, compare those from different firms, check engineering data and place an electronic order that comes with automatic confirmation.
New tools, under an alliance with Conferos Inc., also will allow for product-design collaboration between suppliers and customers.
The business side has been built, too. A year ago, the company teamed with officials from Andersen Consulting, now called Accenture, who were on temporary loan, and the office crawled with expensive consultants.
“We had to change that,” Jukes said.
Now, most Accenture employees have been replaced by permanent Omnexus staffers. Employment is expected to exceed 80 people by year's end, with world headquarters in Zurich, Switzerland. Dunning was plucked from FacilityPro, a commercial real estate dot-com, to head the start-up company.
Dunning, a former executive with software firms Oracle Corp. and SAP America, said he felt closer to the manufacturing world than to a service industry. His technology and Web managerial background are needed to balance the plastics-experienced staff of Omnexus, Ticona's Cronin said.
“Dunning brings a different flavor to Omnexus,” Cronin said. “They'll face potential issues like any start-up company. It needs to be well-managed and well-run, and you can expect him to help with that.”
The site is about 12-18 months from being profitable, Dunning said. Meanwhile, processors pay no fees to use the site, while suppliers can pay subscription and transaction charges. The company plans to offer a mix of other services at various fee levels.
“We're no overnight sensation,” Jukes said. “It could take two to three years to build a successful company.”
Yet, the competition has changed. Looking over its shoulder is Polymerland, which a recent Wall Street Journal article described as difficult to topple. But while the distributor paved the foundation for Internet transactions, the site essentially is operated by one supplier, Jukes said.
Polymerland officials heatedly disagree with that criticism. While no resin competitive with that offered by GE Plastics is available from Polymerland, the site still features broad product offerings, said Mark Rohrwasser, GE Plastics e-commerce manager.
The site also offers engineering and material data on a variety of companies, linking to other resin suppliers. Its engineering area, called GEP Live, averages 20,000-30,000 site visits a week, said e-business leader Beth Pearson.
“The big difference is that we fulfill orders for 30 manufacturers,” Rohrwasser said. “We've been doing this for a long time. A lot of other folks aren't around anymore or aren't doing much on the Web yet.”
Some customers believe GE's commitment to the Internet can be rivaled by no one. Processor United Plastics Group Inc. of Westmont, Ill., uses the site exclusively, said purchasing Vice President Jim Schafer, a believer in Internet trading.
Schafer said he has directed his purchasing team not to use Omnexus.
“I don't believe they have the commitment that comes out of GE,” Schafer said. “There's just no push at Omnexus to make it happen. It seems like those companies saw that GE Polymerland had a good jump-start and decided that they had to do something too.”
But there is dissent among the processing community on which models will be survivors. Injection molder Intec Group Inc. recently moved to Omnexus for material purchases at its Morocco, Ind., plant. The weight of working with a large pool of suppliers helped sway the plant's materials manager, John Martin.
“I'm saving money and saving time,” Martin said. “When my request is made, instead of having someone stand at a desk waiting for confirmation, it is faxed to me in a couple of hours. When you work online, it's done, and you have one less thing in your tickler file to do.”
Differences of opinion about the Web sites will not change any time soon. But Omnexus must prove its worth to its arms'-length investors — who sit on Omnexus' board — for it to succeed, said Eriksen of AMR Research.
“They've had more demonstration transactions than real transactions so far,” he said. “I ask why customers haven't stampeded to Omnexus' front door and tried to barge their way in. Their big challenge is to create a valued business out of this, so they can keep their owners behind them.”
Dunning said Omnexus recently went back to its resin company investors for more funding, although he did not reveal the amount. The site also recently added two equipment suppliers to its list of firms with equity stakes.
That only proves that the backing exists for Omnexus to forge its path, he said.
“Our suppliers realize the opportunity,” he said. “We're in this for the long term, and so are they. Suppliers are seeing some progress, and they'll see a lot more as people realize the efficiencies of using Omnexus.”