AEP Industries Inc. has purchased a plant to make a strong push into the retail shrink film market, an industry now dominated by only two main players in North America.
The film producer, based in South Hackensack, N.J., bought a 30,000-square-foot plant in Matthews, N.C., and will use it to make polyolefin shrink film for retail displays, according to Edward Weiss, the new managing director for AEP's Flxtite Shrink Films Division.
The company recently formed the division and hired Weiss, one of the founders of shrink-film producer Epsilon Opti Films Corp. Weiss, formerly executive vice president of Epsilon, left the company at the end of last year after it was purchased by flexible packaging giant Sealed Air Corp.
Sealed Air's Cryovac division and Bemis Co. Inc.'s Clysar unit, recently purchased from DuPont, are the primary North American competitors in retail shrink film. Intertape Polymer Group Inc. also makes the film on a smaller basis.
High entry barriers, requiring a substantial investment in capital and technology, have kept many flexible packaging companies away from the film, Weiss said in an Oct. 24 telephone interview. Until recently AEP's main shrink film bundling operation was for industrial use.
``AEP was dabbling in the retail business and had interest in getting more involved in it,'' Weiss said. ``It was essentially one of the few flexible film businesses that the company was not doing. I have my marching orders to change that.''
Retail shrink film is used to wrap compact discs and digital versatile discs, various food items and trays in grocery stores, and some books and other consumer products. Mass-merchandise stores such as WalMart Stores Inc. use the film to bundle multiunit food items, Weiss said.
AEP, a large producer of such products as PVC deli-counter film and polyethylene pallet stretch wrap, wants to capture growing opportunities in the market, Weiss said. The new division will make biaxially oriented, multilayer shrink film made from polyolefins and PVC. The PVC film will be produced on existing lines at AEP's PVC film plant in Griffin, Ga., while polyethylene film will be made at an existing AEP plant in Matthews, Weiss said.
The new plant, on 4 acres of land, will make polyolefin-based shrink film. The company plans to expand that operation when business grows, Weiss said. He did not disclose the number of extrusion lines or employees.
The new plant, AEP's 21st globally, started in early October. ``It's another arrow in our quiver at AEP,'' Weiss said.
For the first nine months of 2002, publicly traded AEP recorded sales of $483 million, up from $478 million for the same period in 2001. The firm was 14th among film and sheet companies in North American sales for 2001, according to a Plastics News ranking.
The shrink-film bug has hit another U.S. manufacturer. SKC America Inc., a maker of polyester film, started making PET shrink film for bottle labels at its Covington, Ga., headquarters plant in September, said spokesman Jeff Brown. The company, owned by SKC Ltd. of Seoul, South Korea, previously had made the shrink film only in South Korea.
The film has been used more extensively in Europe and Asia until now, but opportunities are expanding for bottles here, said Brown.
``It's a booming market,'' Brown said. ``But one reason it has not grown in popularity as fast here as in other places is that it has been difficult to get a consistent supply of good, shrinkable film. We saw a good opportunity to move the process forward.''