Wellman Inc. has delayed a major PET resin capacity increase at its Pearl River plant in Bay St. Louis, Miss.
Shrewsbury, N.J.-based Wellman had announced earlier this year that it would add 285 million pounds of annual capacity by converting a fiber line at the site.
However, Tom Duff, chairman and chief executive officer, said in a Dec. 3 news release that the plan will be delayed ``until [Wellman] is able to improve the project's economic return.'' In the meantime, the fiber line will remain idle.
The company originally planned to add the capacity by the first quarter of 2004. The conversion work takes about a year to complete, investor relations officer Dennis Sabourin said in a telephone interview.
Wellman will continue with plans to restart 260 million pounds of amorphous PET capacity at its Palmetto, S.C., site as part of a supply agreement with rival Voridian Co. of Kingsport, Tenn. Of that amount, 200 million pounds will be available in 2003. The Palmetto capacity was idled earlier this year when Wellman closed polyester fiber operations in Fayetteville, N.C., and Marion, S.C.
Employment levels in Palmetto will be unaffected by the restart, Sabourin said.
With Voridian handling the solid-stating of the amorphous material for the bottle-grade market, Sabourin said, Wellman will gain 100 million pounds of new sales for a capital cost of only $10 million, which is roughly the cost of restarting the amorphous line and operating some packaging equipment.
In addition to the Wellman/Voridian project, PET manufacturers DAK Americas Inc. and M&G Group expect to add more than 900 million pounds of capacity in North America by the end of 2003.
It's been a challenging year for Wellman, with sales down almost 3 percent to $763.7 million in the first nine months, compared with that period in 2001.
Sales in its packaging products unit - which includes PET resin and accounts for more than 51 percent of total sales - were down more than 5 percent to $392.7 million.
In addition, an accounting change turned a nine-month profit of more than $23 million from continuing operations into a loss of almost $198 million.
Wellman ranks fourth in North American PET capacity with a market share of about 15 percent. The firm also is one of the world's largest PET recyclers.
