JLM Industries Inc. plans to buy the distribution business of online resin seller getPlastic Inc. The deal includes getPlastic's supplier agreements and customer lists.
GetPlastic will continue to exist but will change its name to Resinate Corp. and will shift its focus to developing purchasing software.
JLM Marketing, a wholly owned subsidiary of the Tampa, Fla.-based resin distributor, plans to hire several field sales representatives from getPlastic, said Jeff Ulbrich, JLM vice president of sales.
The purchase hands JLM the right to represent about eight suppliers of engineering materials and gives it stronger product offerings in nylon, polyethylene, thermoplastic elastomers and other resins, Ulbrich said.
JLM - which in December bought Broomall, Pa.-based engineering resin distributor Franklin Polymers Inc. - also will license technology from getPlastic to help it transact business electronically.
``It will be a commercial hook to get and keep business,'' Ulbrich said in a July 23 telephone interview.
The getPlastic transaction, terms of which were not announced, validates an emerging industry change in dot-com usage. Where a year ago companies were talking about independent trading exchanges as a means to buy and sell plastic resin, today many suppliers are building their own private purchasing networks, said getPlastic President and Chairman Robert E. Kennedy.
GetPlastic, based in Burlington, Mass., has spent the past 15-18 months developing its Resinate software while at the same time creating a Web-based distribution system for engineering resin. Launched in June 2000, getPlastic took title of material from various suppliers before reselling it on the Web.
The Resinate software initially was expected to become part of its purchasing site, Kennedy said. But the growth of Resinate, which the company now will license to customers, overshadowed the company's growth in online distribution, Kennedy said. The dot-com company decided at that point to sell the Web-based distribution business.
The Resinate package includes tools to select material properties and attributes, perform a resin cost analysis and assist with problem-solving in manufacturing.
``At the end of last year, we were approached by a major [original equipment manufacturer] who wanted us to license the technology,'' Kennedy said. ``We thought about it and decided, why not go that direction? Many companies have their own e-commerce solutions, and we have the tools to support that business.''
Several other plastics-based Internet companies, including Westchester, Ill.-based Commerx Inc., also have decided to move to software systems instead of conducting online transactions. GetPlastics' major investor, Cambridge, Mass.-based Zero Stage Capital, and several board members pushed for the shift, Kennedy said.
JLM plans to work with such midsized getPlastic suppliers as Toray Plastics America Inc. and Radici Plastics USA and with several Asian resin manufacturers, Ulbrich said.
JLM will consider more acquisitions. The company recently secured an added $31.5 million in financing, and Ulbrich said its next move might be to buy a specialty compounding company.
While JLM will become the first licensee of Resinate technology, it does not plan to move all its business to the Internet.
``It's a strategy we're pursuing cautiously,'' Ulbrich said. ``We don't see people rushing to demand online purchasing capabilities from suppliers and distributors. It's certainly an important tool to have, but it still has to evolve.''
JLM expects the deal to close by the end of July.
Meanwhile, employment at getPlastic is down to 12-15 people from a high of more than 20. Resinate Corp. plans to add new employees with technology experience as it pursues the new software business, Kennedy said.