SIG Plastics International GmbH, which wants to sell its Kautex business to focus on its core market of machines for blow molding packaging, has decided to close a 4-year-old U.S. assembly operation in New Jersey that makes Kautex accumulator-head machines.
Ten assembly employees will be laid off after SIG shuts down manufacturing in North Branch, N.J., said Wolfgang Meyer, president of the SIG Kautex business unit, which makes industrial molding machines. Meyer said a shrinking North American market for accumulator-head machines means the U.S. manufacturing operation no longer makes economic sense.
The U.S. operation, SIG Plastics Technologies (USA) Inc., will import Kautex industrial machines made in Bonn, Germany.
SIG will continue to use the North Branch facility for its North American sales, service and spare parts for its complete line of equipment. That includes Kautex blow molding machines, the packaging line of Blowtec models for making one-step PET containers and extrusion blow molded polyethylene bottles, and Corpoplast, the two-step PET machines. About 35 people continue to work there.
A U.S. official for SIG stressed that the company remains committed to the packaging side of the business, which is doing well.
``While there is shrinkage on the Kautex side, we are in a true expansion mode in the Blowtec and Corpoplast side,'' said Peter Andrich, vice president of sales for Blowtec and Corpoplast.
SIG just bought a major container blow mold maker, Ryka Blow Molds Ltd., in Mississauga, Ontario.
Based in Neuhausen Rhine Falls, Switzerland, SIG entered the plastic blow molding machinery business in 2000 when it bought Germany's Krupp Kunststofftechnik GmbH from Thyssen Krupp AG. The deal also included equipment for making metal food and beverage cans.
SIG inherited the New Jersey assembly plant that Krupp opened two years earlier, in 1998. The North Branch operation marked the first full-scale U.S. assembly for Krupp. But after the business changed hands, the Kautex part never really fit with Sig's core business of packaging equipment, industry sources said. This year, faced with the slowing machinery market, SIG is cutting 150 jobs from extrusion blow molding machinery for both the automotive and packaging sectors.
Kautex makes large accumulator-head machines, including single-layer presses and specialized multilayer machines for automotive gas tanks. Kautex also produces extrusion blow molding machines that make complex technical parts such as automotive ducts.
Meyer said the New Jersey assembly operation was confined only to the single-layer, accumulator-head machines - one of the hardest-hit North American machinery segments in recent years. The machines make industrial drums, trash cans and other large parts.
Meyer said Kautex has a North American market share of 30 percent for the category of accumulator-head machines and extrusion blow molding machines that make containers larger than 30 liters. In 2000, that market totaled $60 million, but it plunged to $26.5 million in 2001, he said.
``The first half of this year leads me to believe it will shrink further'' in 2002, Meyer said.
That puts Kautex's North American sales at about $8 million. ``This is not sufficient to support a U.S. manufacturing operation,'' Meyer said.
The North Branch plant never did assemble multilayer Kautex presses, PET machines and extrusion blow molding machines.
Even before the deal for Krupp, SIG was a major packaging technology company, but it focused on machines for processing foods, such as chocolate, and made Combibloc aseptic beverage cartons.
Kautex, Blowtec and Corpoplast fall under the SIG Beverage division.
News that SIG wants to sell Kautex surfaced in a news report from Europe that quoted Carlo Venturi, SIG Beverage chief executive officer. He said SIG will be selective and will sell Kautex only to a good partner for a fair price. Venturi said SIG will keep Kautex if no buyer is found, but Kautex must improve its profitability, the report said.
Venturi could not be reached for comment for this story. A SIG spokesman said company officials actually had disclosed their intention to sell Kautex in August, during a meeting with financial analysts. Contacted Oct. 16, Meyer confirmed Kautex is for sale.
``The Kautex business is not the core business of SIG and therefore, if the right buyer comes along and the right amount of money is offered, SIG would certainly consider parting with the Kautex business unit,'' he said.
Meyer said the decision came from the Swiss headquarters. Employees in North Branch were notified Oct. 11, he said.
Kautex officials are informing customers of the decision, he said.
The question now: Who will want to buy Kautex? Officials from four potential buyers could not be reached for comment: Graham Machinery Group, Davis-Standard Corp., Milacron Inc. and Bekum Maschinenfabriken GmbH.