Two firms that already work closely together, Demag Ergotech GmbH and Van Dorn Demag Corp., announced their formal marriage Nov. 19.
Merging into a single injection press company called Demag Plastics Group will result in a unified stable of machines for customers in Europe and the United States, according to executives.
The Van Dorn name will continue to be used on machines sold in North America, which will be assembled in Van Dorn Demag's plant in Strongsville, Ohio. Demag Plastics Group will keep using the Ergotech name outside of North America.
Demag Ergotech and Van Dorn Demag had been sister companies under the umbrella of Mannesmann Plastics Machinery AG.
In a Nov. 19 news conference, officials laid to rest industry rumblings that the combined company would de-emphasize the Strongsville plant, which employs about 550. Citing the difficult U.S. market, the company laid off about 40 people in August, but Bill Carteaux, who leads Van Dorn Demag, said there are no layoffs planned now.
``This move together is not a move to eliminate positions in either organization,'' Carteaux said.
Carteaux, however, declined to give details about the future of Van Dorn Demag's machining plant in Duncan, S.C., which industry sources say will be sold. ``We are in the process of trying to strategically position that facility,'' he said.
The Nov. 19 news conference outlined how the companies will link up in technology and people. They plan to present a single portfolio of products by K 2004 in Germany, and some blended machinery products will be shown at NPE 2003 in Chicago. Van Dorn Demag is known for two-platen, all-electric and vertical presses. Demag Ergotech is a leader in multicomponent machines and for hybrid presses that combine electric and hydraulic power.
Carteaux, of the U.S. side, and Demag Ergotech head Helmar Franz will share the position of executive managing directors of Demag Plastics Group. Other members of the new executive board are:
* Gerhard Becker and Peter Weiss are chief financial officers.
* Gerd Liebig will be chief strategic and marketing officer, a new position responsible for positioning, corporate development and public relations.
* Helmut Schreiner will be chief technology officer, in charge of research and development, control technology and blending the two product lines.
Still vacant is the post of chief operating officer, in charge of machine production.
Franz and Carteaux said Demag Plastics Group will run as an integrated global company, with assembly plants in Schwaig and Wiehe, Germany; Strongsville; Chennai, India; and Ningbo, China. Parts and subassemblies may come from any location, but assembly and customization will be done at the DPG factory closest to the customer, Franz said.
For now, Demag Plastics Group will maintain dual headquarters, in Schwaig and Strongsville, Liebig said.
Officials said the new company will continue to operate Van Dorn Demag's screw factory in Fountain Inn, S.C., officials said.
Sales for 2001 from the combined operations would have been 356 million euros ($319 million). Of that, 244 million euros ($219 million) came from Demag Ergotech, with Van Dorn Demag accounting for 112 million euros ($100 million). Franz said officials expect 2002 sales to be the same or slightly less.
All the sales come from injection molding machines. The new company will jump up to No. 2 in the world in terms of injection press sales, Carteaux said. He declined to say which company is the largest.
The new company hopes to increase sales from the current combined total of 2,000 injection presses annually up to 3,000 by 2005.
Demag Plastics Group officials stressed that improved service to global customers is the driving force behind their merger - not a desire to cut costs by MPM's owner, New York-based buyout firm Kohlberg Kravis Roberts & Co.
``They're not pushing it. It is not strictly a cost-cutting measure on our parts; it is strictly to better serve our customers,'' Carteaux said. ``This was not their idea to put this together. It was our idea to put this together.''
Demag Plastics Group announced some details of its merger strategy:
* The company plans to develop a line of basic presses, beginning with a 271/2-ton model, which will use existing mold-clamping mechanisms.
* All multicomponent presses with clamping forces of 55-1,430 tons will be retained without changes.
* Because of rising U.S. demand for larger high-speed presses, the company plans to extend the sizes of its El-Exis S hybrid press to a top clamping force of 1,100 tons.
* Two-platen Caliber presses will have clamping forces up to 4,400 tons.
* Both companies' vertical injection presses will be blended into a single series with clamping forces from of 381/2-1,100 tons.
* Van Dorn Demag's all-electric press, the IntElect, will become part of an entire machine series for standard applications, with clamping forces of 55-385 tons.