For Karl-Heinz Krah GmbH, the United States is the final frontier.
The Schutzbach, Germany-based company has introduced its next-generation pipe extrusion technology at 35 plants around the world since 1999, including China, Saudi Arabia, Turkey, Scandinavia and Croatia.
The newest addition: Krah Texas Inc., located in Early, population 2,500, about 150 miles southwest of Dallas.
This month production will commence at the 21-acre site, marking the transfer of Krah's technology from Germany. In its first phase the firm will employ 42 to make large-diameter pipe for water and sewer applications. The plant is the first U.S. operation to offer large-bore thermoplastic pipe in sizes up to 154 inches with a monolithic joint, officials said.
``We're putting in material-handling equipment for polypropylene and polyethylene,'' said George Coleman, formerly a consultant who switched gears to lead Krah Texas. ``We're right on top of the market here. Now, we can provide a system that can be certified for zero infiltration with a life factor of 100 years.''
The United States: Krah's high wall
This is Krah GmbH's second attempt to bring its technology to the United States. In 1999 Krah and a major North American pipe producer were working toward a joint venture, but the plan fell through.
``We were unsuccessful, and now we're trying it again,'' said Alexander Krah, president of Krah GmbH. ``We are fighting in the U.S. market. But we'll never give up. We have to fight. The U.S. market is too important to lose.''
Krah's entry into the U.S. market should be rapid since there are existing American Society for Testing and Materials standards under which its product falls, said Thomas Walsh, a Houston consultant.
``You have to have ASTM standards for each product,'' Walsh said. ``The U.S. market has tended to go for cheap products. The end users tend to be very cost-conscious, which makes penetration in the U.S. harder.''
Still, Krah's efforts are symptomatic of a worldwide trend: Globalization means more pipe technology is headed to North America, he said.
``North American producers can no longer keep thinking regionally. Overseas producers also have to pay attention to North American markets,'' he said in an Oct. 28 telephone interview.
``This is a perfect example of where technology tends to be foreign-invented and brought over here. European and Asian technology is starting to come over here. The next step is innovative Asian technology.''
Additionally, it's no secret that the country's drainage and waste-water infrastructure is in need of repair. According to the Water Infrastructure Network in Washington, ``New solutions are needed to what amounts to nearly $1 trillion in critical water and wastewater investments over the next two decades.''
``The city of Dallas itself needs $20 billion over the next 10 years just to bring its system up to be able to pass the federal government's requirements,'' Coleman said. ``We get excited when we talk about this project because we're so close to it. ''
It's not unusual for pipe producers to guard their businesses like a mother protecting her newborn, and Coleman said the plant will be off limits to outsiders. But he did offer some details about the operation and the Krah process.
For instance, Coleman and crew will not use a rail system to deliver resin to Krah's back door. Instead, the firm will depend on trucks owned by Krah Texas. The materials will be transported from a site about five miles from the facility.
``It allows us to continually have economies of scale of the material, and we will have plenty of room for the materials,'' he said. The firm also will manufacture nearly 10 silos, using the Krah technology, to hold the material. Krah Texas anticipates annual resin consumption of 12 million pounds.
By the end of 2003, the firm will add another line to the 50,000-square-foot plant in Early, which by then should support an additional 43 employees.
``We feel like the future for us as a company is to take experiences and methods being used in the world market and bring them back,'' Coleman said during a recent interview in Early. ``We're going to solve problems by selling total piping systems. We can step to the table and give them a total certified system.''
Krah uses an extrusion winding process. The system also allows for limited waste, officials said.
``With Krah, you make good pipe within an hour,'' said Willem Boltong, president and chief executive officer of AIM International Inc. of Macon, Ga., which brings European technology to the United States. That compares with an average of nearly six hours in standard pipe extrusion. ``That accounts for every size, but more importantly, you have more productive hours. You can maintain lower inventories.''
A key feature is the pipe's monolithic joint. During production, the joint socket is integrated with wire, which then is jointed with an electro-fusion welder in the field, officials said. The process creates the homogenous joint. The pipe can be produced in solid-wall or profiled extrusion with a wall thickness up to 8 inches.
``I've always said that we could build big pipe,'' Coleman said of his 44 years in the plastic pipe industry. ``But what do you do about the joint?''
Early is a neighboring community of Brownwood, a university town that hosts a Performance Pipe plant. Performance Pipe, now a unit of Chevron Phillips Chemical Co. LP, integrated Krah's first-generation technology, known as Spiralite, in the 1970s.
But Krah wanted to improve its joint, which was extrusion welded by hand, a method customers did not especially favor, Krah said.
In addition, the former technology would yield only 400 pounds per hour. ``Now, [it's] about 900 pounds per hour,'' Krah said.
The concept offers a total piping system, including manholes. Moreover, the thermoplastic system also will be the first system where engineers can control 100 percent of their design, and it gives engineers the ability to develop their own system.
``The engineer can tell us what he wants,'' Coleman said of the multilayer method. For example, high density PE pipe can be processed with an inner core of Kevlar. ``We can make this wall whatever we want, whatever pressure we want. We can even put aluminum foil in it. We've always, as an industry, told [engineers] what we have to offer, and they have to go through and pick it out - and every item has had a limitation. What we will offer the engineers is the ability to design their own systems to what they require in the pipeline.''
Boltong said the system will remain watertight under deflection.
``That has always been the problem with larger pipes,'' he said. ``It's very difficult to seal the joints. Anything over 48 inches, you'll have problems with traditional joint systems. The way Krah is engineered, we can do faster installations and obtain that proper joint.''
Krah also can coextrude the pipe with a lighter inner lining for inspection purposes.
``Polyethylene by its nature is black,'' Boltong said. ``If you have a sewer line, if the inside of that is black, it's not inspection-friendly. In this case, we make it yellow because it is the best soft-reflecting color when walking through that line. It's not a requirement yet here in North America, but it is a very good sales tool. And it has a very important, practical use. I think in that respect we are ahead of the game.''
The flexible plastic also allows the pipe to adapt to earthquakes and natural disasters, officials said. The firm has several high-profile jobs, which officials would not disclose. They also would not disclose the cost of the operation.
``The investment is very large, but our plans are to have the plant sold out 100 percent when we fire it up,'' Coleman said. ``It is a high investment, but when you look at the output and the pounds, it becomes nothing like the others in our industry, either. The return on investment is less than three years.''
According to officials, the pipe is 70 percent less expensive to transport than steel.
``We plan to sell against competing products in concrete, ductile iron and steel,'' he said. Additionally, Krah has an ``abundance of distributors who want to be part of the distribution group.''
Coleman said he does not view other plastic firms as competition. By industry estimates, concrete dominates the market, with sales of $17 billion. Krah plans to target just 1 percent of concrete's share, said comptroller Mary Krobot.
``We will not sell a commodity product,'' Coleman said. ``We do not want to get caught up in what's happening in the corrugated pipe business. It's become a commodity now. If you can't compete with Hancor [Inc.] or Advanced Drainage Systems [Inc.], you better stay out of that business. That is what's happening. We feel like we've got 17 years before anyone will be able to come at us. Krah and the Coleman Group will defend the patents.''
For the city of Early, Krah is welcome business after CMI Johnson Ross Co., a cement firm, ceased operations. The firm was Early's largest employer and the closing affected about 160 workers. Johnson Ross had been in business since 1949, officials said.
The city purchased the Krah property for $1.5 million, arranging a lease-purchase agreement with Coleman.
``It's tough enough growing jobs in Texas,'' said Quincy Ellis, executive director of the Early Chamber of Commerce and Early Economic Development Corp. ``We don't have to be a beggar in this world economy. We can be a leader. We will be a player. We had what Coleman needed, and he had what we needed. It was a marriage made in heaven. We believe we can open doors for ancillary companies with Krah.''
Coleman's current business plan is to build three to five plants within the next five years. Each plant will host two lines. AIM's Boltong said Krah currently is eyeing New York and Florida, though he would not reveal details.
``We'd like to get Texas up and running,'' he said. ``Very soon thereafter, we'd like to go with the other facilities.''