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November 08, 2001 01:00 AM

Axxicon Mould still eyeing U.S. acquisition

Joseph Pryweller
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    DÜSSELDORF, GERMANY (Nov. 8, 9:50 a.m. EST) — European-based Axxicon Mould Technology again is shopping for a U.S. mold maker to buy, after postponing a purchase earlier this year.

    The large mold-making conglomerate, based in Eindhoven, the Netherlands, would like to launch a deal on American shores within the next five months, said Chief Operating Officer Arno Wendrich.

    Wendrich, interviewed Oct. 29 at K 2001 in Dusseldorf, said the U.S. market presents a ripe opportunity for a large, full-service mold maker.

    “We've looked at how the market has developed on that continent,” said Wendrich, appointed COO in September. “[An acquisition] would fit our activity level. There is a high-end market in the United States for a mold maker who can provide added value.”

    Axxicon Mould Technology formerly was part of Eindhoven-based Axxicon Group NV, an injection molding and mold-making company. On Jan. 18, Biel, Switzerland-based Mikron Holding AG completed the purchase of Axxicon Group in a deal valued at 124 million Swiss francs ($69.9 million).

    The activity level that Wendrich spoke of continued after the sale. Mikron, a molder of cellular-phone housings and medical devices, split the mold-making end of Axxicon into a separate, independently run division.

    The molding portion — including U.S. plants in Rochester, N.Y., and Anderson, S.C. — now falls under Mikron's Plastics Technology division, while the mold-making portion has kept the Axxicon name.

    Wendrich's mold operations already have been targeted for growth, even in a year when tooling sales are down worldwide. Mikron has earmarked an investment of US$8 million to US$10 million this year to add equipment to Axxicon's five European mold-production facilities and expand its plant in FÃ¥revejle, Denmark. That facility was owned by Mikron and had shifted completely to tooling.

    The United States again is on the radar screen at Axxicon. When Mikron first announced the Axxicon acquisition in October 2000, the company said it also planned to buy an undisclosed, U.S.-based injection mold maker with annual sales of about $34 million.

    Other than a sales office for optical-disc molds in Aliso Viejo, Calif., Axxicon has no U.S. mold-making operations.

    But market conditions conspired to put the kibosh on that deal. In January, Mikron said it would delay buying a U.S. company while it restructured its molding operations. That deal is now off the table, Wendrich said.

    Those conditions also caused Mikron to say that it would close a European molding plant and lay off about 300 workers in 2001. Depressed conditions in the telecommunications market, especially at Telefon AB LM Ericsson of Stockholm, Sweden, led to the problems.

    In August, those slow conditions also spurred Mikron to sell a 50 percent share of a new molding plant in San Antonio to TecStar Manufacturing Co. of Germantown, Wis.

    Now, the company is starting to recoup its losses and invest for the next upturn, Wendrich said. The Axxicon division, more immune from the instability of the telecommunications market, was told to stay on an aggressive growth path. he said.

    Besides the United States, the company wants to continue its expansion into China and Malaysia, Wendrich said. The molding and tooling divisions currently share a plant in Suzhou, China.

    Axxicon Mould Technology sales are expected to reach 65 million euros ($58.2 million) in 2001, down slightly from about 81 million euros ($73 million) in 2000, Wendrich said. The downturn in sales has not affected plans to enter other markets.

    The U.S. market had been dominated by small craftsmen and family-owned businesses. Wendrich said. That climate is changing, and smaller shops might not have the strength or stamina to survive in a more global economy, he said.

    “It's been much more fragmented in the United States,” said Wendrich, who served as managing director of Axxicon's plant in Helmond, the Netherlands, before taking his new position. “Many small shops are going out, and customers want shops with the capacity to extend to many areas.”

    Potential targets for acquisition would need to serve some of Axxicon's major end markets, including molds for compact discs and digital versatile discs, medical and pharmaceutical parts, SmartCard telephone cards, and automotive components.

    The company will continue to specialize in those higher-end applications and in producing multicavity molds with short lead times, Wendrich said.

    “When we were bought by Mikron, our focus continued to be production tools for the outside world,” Wendrich said. “We're absolutely focused.”

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