Radnor Holdings Corp. will expand its recently purchased plant in Mooresville, N.C., bringing $40 million in new equipment to the site during the next two years, according to local officials.
In November, Radnor paid $28.7 million for Polar Plastics Inc., an injection molder and thermoformer of disposable cups, plates, containers and other products. Polar had a 342,000-square-foot Mooresville plant and an older, 58,000-square-foot site in Winston-Salem, N.C.
By early June, Radnor will close the leased Winston-Salem plant and focus its growth on the underutilized Mooresville facility, Michael Kennedy, Radnor president and chief executive officer, said during a March 24 conference call with analysts.
Some Polar managers will be laid off during the consolidation effort, he said. In total, about 34 employees will be affected by the moves, he added.
But those workforce reductions are temporary, according to Melanie O'Connell Underwood, executive director for economic development with the Mooresville-South Iredell Chamber of Commerce. On April 11, Mooresville town commissioners awarded Radnor $864,000 in tax incentives over six years, if the company enacts the expansion plans it shared with city officials, said Underwood, who is based in Mooresville.
The company plans to buy $40 million in new equipment for the Mooresville facility starting this spring and continuing over two years, and to hire about 200 employees, she said. Currently, the Mooresville plant has about 250 full- and part-time workers, Underwood added.
Radnor considered expanding one of its other facilities before deciding on Mooresville, Underwood said. The investment was a welcome surprise for the community, she said.
``This is a lot more than the $20 [million] to $25 million that [Polar Plastics] first invested when the plant opened'' in 1998, Underwood said. ``It's a tremendous expansion, and we're quite excited that they're adding to our community and our workforce.''
Officials at the Radnor, Pa.-based company declined comment on the expansion. The firm also is planning an initial public offering, and is sensitive about making public comments before the IPO is completed, officials said. No date has been set for the IPO. However, the company gave some inkling of its plans for Mooresville during the conference call, when Radnor discussed its year-end sales results. The North Carolina plant will play a featured role in the growth in new products, especially polypropylene cold drink cups, Kennedy said.
Polar had thermoformed those cups, a lower-cost alternative than traditional paper or molded polystyrene drink cups, Kennedy said. Polar's expansion into PP cups attracted Radnor, a large maker of expandable PS foam cups through its Phoenix-based Wincup Holdings Inc. unit.
``The [Mooresville] plant was substantially underutilized,'' Kennedy said. ``We were fortunate to identify this company and this facility. We can drop the equipment into the plant and save the cost of a greenfield start-up.''
Overall, the company plans to spend about $19 million in 2004 to upgrade equipment - more than half of that related to the introduction of new products, Kennedy said.
The market for thermformed PP cups has attracted some competition. One of Wincup's largest U.S.-based competitors is Evansville, Ind.-based Berry Plastics Corp.
Berry is close to capacity at its Alsip, Ill, plant, President and Chief Executive Officer Ira Boots said in a March 19 conference call with analysts. That led to a temporary manufacturing slowdown in December while new equipment was installed, he said.
``It's a good problem to have, but it's never fun when a customer is not getting what they want,'' Boots said. ``But we're having huge success initially in PP drink cups.''
Radnor, also a maker of expanded PS foam and specialty chemicals, recorded sales of $341.6 million in 2003, according to its annual report. Close to $200 million of that total came from packaging.