Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Plastics News China
  • Rubber & Plastics News
logo-pn-color
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • End Markets
    • FYI Charts
    • LSR World
    • Multimedia
    • NPE2021
    • K Show
    • Special Reports
    • Top materials of injection molders
      Recycled PET use by product category
      US PET, flexible packaging desintations
      Global fluropolymers additives market: CAGR
    • NPE exhibitors question handling of deposits for canceled trade show
      Exhibitors back NPE cancellation: ‘We couldn't take that risk'
      NPE2021 canceled as in-person event
      NPE reviews its options as pandemic prompts exhibitor to exit
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • What Keeps You Up At Night
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Polymer Points Live
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • Videos
    • Galleries
    • Podcasts
    • CEO Issue
    • Best Places to Work
    • Processor of the Year
    • Rising Stars
    • Women Breaking the Mold
  • Opinion
    • The Plastics Blog
    • Kickstart
    • Heavy Metal
    • One Good Resin
    • BRICS and Plastics
    • All Things Data
    • Viewpoint
    • From Pillar to Post
    • Perspective
    • Mailbag
    • Perspective: Making the best of working from home
      Nypro's Gordon Lankton left the plastics industry a better place
      Recognizing Plastek Industries for all-around excellence
      Let's look forward, rather than back, to mark COVID anniversary
    • Kickstart: Plastics ready to take flight on Mars
      Kickstart: Let's hear it for leftovers
      Kickstart: Big data, big bowls and consumer packaging
      Kickstart: A vexing vaccination question
    • Heavy Metal: Coronavirus edition, plus the work of working from home
      Don't put off succession planning
      What's a good gift for your cobot? Batteries?
      Here's some big ideas to mull over the holidays
    • PE resin trends highlighted in Shell report
      Dow's Lowry honored by World Economic Forum for sustainability work
      Africa impacts new colors from Ampacet
      Plaskolite marches into madness with its own online bracket
    • Climate debate in Washington increasingly includes plastic
      There was no choice but canceling NPE still a big deal
      The business case for producer responsibility
      Think divided government stalls plastics legislation? Think again
    • Want prices? Introducing historical resin pricing, now available in a downloadable form
      A new annual ranking: Top processor gains
      Thermoformers: Would you believe a 12 percent gain?
      Just how big is thermoforming in North America?
    • Working from home: Rugrats edition
      Nypro's Gordon Lankton left the plastics industry a better place
      Let's look forward, rather than back, to mark COVID anniversary
      Virtual pitfalls derail exhibits for builders' trade show
    • PEX pipe maker Uponor donates $30,000 for Texas storm relief
      Virtual pitfalls derail exhibits for builders' trade show
      PPI puts $200 bounty on exhumed HDPE conduit
      Raise the roof: Housing starts hit a 12-year high
    • Perspective: Making the best of working from home
      Perspective: The Materials Wars: Is plastic actually better?
      Perspective: Plastics manufacturers — a surprising contribution to sustainability
      Plastics industry business owners: Listen to your future workforce
    • Mailbag: Additional fees for electric vehicles ‘unfortunate'
      Mailbag: Where's the plastics industry's response to critics?
      Mailbag: Manufacturers struggling to follow COVID-19 safety rules
      Modernizing recycling infrastructure will benefit businesses as well as the environment
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
    • Maintenance can ensure efficient blender operation
      Dosing: Perfect for adding color
      Blending vs dosing: What you need to know
      Going low or high: Comparing volume
    • Colors and custom compounds
      In the laboratory: Compounding solutions
      Recycling content: Resins going ‘green’
      Compounding: Glass and other fillers
    • Dryer maintenance: Don’t err with air
      Dryers: Options for a shop’s process
      Dryer installation: Going central?
      Resins: Hygroscopic or non-hygroscopic
    • Electric injection molding presses: Efficiency is key
      Hydraulic injection molding machines
      Proper maintenance can prevent downtime
      Hybrid injection molding machines
    • Purging Hot runners: Open or closed methods
      Purging extrusion machinery
      Purging extrusion blow molding machines
      Purging: Chemical, abrasive and non-abrasive
    • Controls, special applications boost production, profitability
      Robot maintenance key for smooth operation
      High-speed robots: A rapid way to increase efficiency
      Robots: Every shape and size
    • Maintenance: Key for efficiency
      Shredders: Plastic in pieces
      Safety first for size reduction
      Granulators: The right fit
    • Video: Structural foam molding
      Structural foam molding: Flexibility for processors
    • Mold inventory: How many molds does a shop have?
      Molds: Innovation
      Mold changeover: Saving time and money
      How molds work
    • Labor: Apprenticeships may provide answer
      Internships: Solving the skills gap in-house
      College training, programs
      Lean Six Sigma: Transforming business operation
  • Events
    • Plastics News Events
    • Industry Events
    • Livestreams/Webinars
    • Ask the Expert
    • Polymer Points Live
    • Reifenhäuser Technologies Livestreams
    • 2020 Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
    • Polymer Points Live - April 2021
      Polymer Points Live - February 2021
      Polymer Points Live - January 2021
      Polymer Points Live - December 2020
    • Plastics in Healthcare 2020
    • Plastics News Executive Forum
    • Plastics in Automotive
    • Plastics News Caps & Closures
    • Plastics in Healthcare
    • Women Breaking the Mold Networking Forum
  • Resin Prices
    • All Resins
    • Commodity TPs
    • High Temp TPs
    • ETPs
    • Thermosets
    • Recycled Plastics
    • Historic Commodity Thermoplastics
    • Historic High Temp Thermoplastics
    • Historic Engineering Thermoplastics
    • Historic Thermosets
    • Historic Recycled Plastics
  • Rankings
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Data Store
  • Directory
  • More+
    • Classifieds
    • Digital Edition
    • Newsletters
    • Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Processor of the Year submissions
    • Sponsored By Bandera
      Bandera US was born for the North American market
      Sponsored By Ensign Equipment
      Filling systems customized for any process or budget need
      KraussMaffei
      Sponsored By KraussMaffei
      KraussMaffei retools in US with investment from parent ownership
      Sponsored By Mitsubishi
      Innovative new technology from Mitsubishi Engineering-Plastics Corporation helps reduce emission footprints
    • KraussMaffei
      Sponsored By KraussMaffei
      KraussMaffei Retools in US with investment from Parent Ownership
    • Sponsored By ENGEL Machinery
      Tailored maintenance for injection molding machines and robots
      Sponsored By ENGEL Machinery
      Improve maintenance efficiency with e-connect.monitor
      Sponsored By ENGEL Machinery
      Maximum precision for lowest shot weights
      Sponsored By ENGEL Machinery
      Even more cost effectiveness for small precision parts
    • Shell Polymer
      Sponsored By Shell Polymers
      Food and beverage trends impacting the polymer industry
      Sponsored By Conexiom
      Use Sales Order Automation to free up time for CSRs to focus on customers, not manual entry
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
July 19, 2004 02:00 AM

Compounders appear optimistic but guarded as volumes pick up: Part 2 of 2

Frank Esposito
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    Use your imagination

    As traditional markets grow more challenging, it's only natural for compounders to cast their nets in different directions.

    Winona-based RTP answered that challenge by venturing into commercial nylon and polycarbonate sheet production last year. The firm installed its third sheet line earlier this year, according to marketing manager Joe Arras.

    At Ferco Color in Ontario, Calif., diversifying meant launching liquid color production last year. And color concentrates maker Ampacet Corp. of Tarrytown, N.Y., is aiming for both quality and quantity. In March, the firm started an ongoing schedule of introducing four new product grades per month. Previously, an entire year with six new grades would have been a good year, said senior director of business development Frank Iannotti.

    But the dream compounding-sales assignment of the year may have taken place in Fairlawn, Ohio, where top-five compounder A. Schulman Inc. launched a partnership to design a new golf cart with injection molder Thomson Plastics of Thomson, Ga., and Club Car Inc., an Augusta, Ga.-based golf cart maker.

    Augusta, of course, also is the home of the Augusta National Golf Club, which hosts the prestigious Masters Tournament every year.

    Schulman will supply 80 percent of the plastic on the new design, including compounds used in trims, canopies, bag holders and battery containers. In all, six different Schulman products will be used.

    ``This was a clean-sheet program, where we worked with them to redesign the golf cart from the ground up,'' Schulman President and Chief Executive Officer Terry Haines said.

    ``This is a nice example of an application where we can supply several different materials.''

    Other new Schulman products include Aquasol-brand polyvinyl alcohol being used in biodegradable detergent pouches, and ``cool concentrates'' that reduce the surface temperature of plastic lumber on outdoor surfaces.

    A Chinese backlash?

    The presence of China as a low-priced supplier of finished plastic parts and myriad other products is a fact of life for compounders, with many of the major firms opening plants there or at least planning to.

    PolyOne will open its third plant there, in Shinzhen, in the first quarter of 2005. The plant will make products for color, engineered materials and formulating businesses. Schulman's first Chinese plant opened this month as well.

    But at the same time, a number of compounders mentioned a potential move in the other direction.

    ``The China effect is still there, but some work in China has come back to Mexico,'' LNP's Crew said. ``People want speed, but they can't always get that in developing countries.

    ``A lot of tools have shifted to Asia in the last two or three years,'' he added. ``But some of it is coming back. Some customers don't like the lead times and logistics in Asia.''

    Ferco President Jennifer Thaw said her firm has witnessed a number of molds coming back from China because of product pirating.

    ``Some people are moving molds from China to Mexico because they're concerned about protecting their markets,'' Thaw said.

    And the timing demands of the fickle packaging market also could help to keep more of that business in North America than originally was believed.

    ``Some business has moved to Asia, but there's been a slow shift to more local manufacturing as companies are changing the looks of their products more often, Clariant's Sirois said.

    ``Packaging will stay in the region and not move to China,'' Reynolds said. ``Innovation in packaging has value at the brand level.''

    John Jones, an industry consultant with Forrestal Consultants International in Princeton, N.J., described color as ``a big marketing tool that's increasing faster in the U.S. than in other parts of the world.''

    ``In the U.S., color is more aesthetics than function,'' Jones said.

    Sirois said he's also a bit surprised by North America's ability to keep injection molding business.

    ``We didn't expect injection molding to hold up as much as it has,'' he said. ``We thought it would move more offshore. But that just shows how large the industry is, that we'd hear so much about it leaving and there's still a lot here.''

    M&A might be back after all

    A return to the acquisition sprees of the 1990s might not be around the bend, but mergers and acquisitions activity is expected to pick up, particularly among small to midsize compounding firms.

    ``We're in a boomlet,'' said Bill Ridenour, president of Polymer Transaction Advisors Inc. in Newbury, Ohio. ``The trend of specializing to preserve margins should increase the pace of M&A activity in compounding, particularly in concentrates, that are less price-sensitive.''

    Such activity in the past year has seen the big boys of the industry remain on the sidelines. Ferco's Thaw said she's been approached six or seven times by large compounders in the past three years with offers to buy her company, but none of those offers have come in the past six months.

    ``It's a matter of digesting what you've got,'' Ampacet's Iannotti said. ``[Large firms] might start to invest again when the smoke clears in 2005 and 2006.''

    Recent North American deals include:

    * Lucent Polymers of Evansville, Ind., buying the assets of Prime Source Polymers, a Warren, Mich.-based firm that went out of business late last year.

    * Private equity firm Metapoint Partners LP of Peabody, Mass., buying Nylon Corp. of America (Nycoa) in Manchester, N.H.

    * Leonard and Emili Slott buying Vi-Chem Corp. of Grand Rapids, Mich., from Nicholas Plastics Inc. Leonard Slott had managed the Vi-Chem business for several years.

    * Accel Color Corp. of Avon, Ohio, buying Polytech Color & Compounding of Ontario, Calif. The purchase was Accel's second in four years. It now operates five plants.

    Even so, buyers aren't blindly rushing in. Sellers also might be discouraged by low valuation multiples.

    ``A lot of people are rethinking what's the optimum organization that they need,'' AMI's Reynolds said. ``They're realizing that it takes a lot of hard work to make M&A effective. You have to match an acquisition to your values. There's a lot more analysis of what they want to acquire and what they want to pay.''

    ``If you want to sell today, you're not going to get top dollar,'' Manuck added. ``The market's not right for that again.''

    Goals to meet before we sleep

    Self-improvement continues to keep compounders awake at night. PolyOne's Mitchell said his firm is trying to improve its speed.

    ``Our color matches now average five days and we'd like to improve that to 24 hours, as well as improve our ability to do small lots of 50-500 pounds,'' he said. ``We can do this by using compounding technology to provide a formulation rather than by experimenting.''

    PolyOne also recently has reduced its cent-per-pound cost to make its products.

    ``It takes less people per pound to make it and we're getting more throughput on newer equipment,'' Mitchell said.

    At Teknor Apex, the firm is hard at work to offer better stability in medical compounds for profile extrusion, said Vice President Bert Lederer. While at LNP, Crew said his firm is trying to cut its changeover times in half.

    ``In the custom compounding business, changeover time is the Holy Grail,'' Crew said.

    Eyes on the prize

    Things may be looking better, but no one's suggesting that the compounder's lot is an easy one. Schulman's Haines said his firm ``has had to walk away from a lot of business'' in commodity polypropylene, even in automotive and housewares, because of margin conditions. That took place even though Schulman set a sales record of $1.1 billion in fiscal 2003.

    ``There's a lot of capacity where we couldn't make money,'' Haines said.

    Haines might be comforted by the words of Techmer's Manuck, who's tried to keep things in perspective over a lengthy compounding career.

    ``We'd all like to have a new whiz-bang, sci-fi product with a 90 percent profit margin, but that's not reality,'' Manuck said. ``You need patience to look for incremental improvements in your old products while you're introducing new products.

    ``It takes a while.''

    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    logo-pn-color
    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber & Plastics News
    • Urethanes Technology
    • Plastics News China
    • European Rubber Journal
    • Tire Business
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • What Keeps You Up At Night
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
        • Polymer Points Live
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • FYI Charts
        • Current FYI
      • LSR World
      • Multimedia
        • Videos
        • Galleries
        • Podcasts
      • NPE2021
      • K Show
      • Special Reports
        • CEO Issue
        • Best Places to Work
        • Processor of the Year
        • Rising Stars
        • Women Breaking the Mold
    • Opinion
      • The Plastics Blog
      • Kickstart
      • Heavy Metal
      • One Good Resin
      • BRICS and Plastics
      • All Things Data
      • Viewpoint
      • From Pillar to Post
      • Perspective
      • Mailbag
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • Plastics News Events
        • Plastics News Executive Forum
        • Plastics in Automotive
        • Plastics News Caps & Closures
        • Plastics in Healthcare
        • Women Breaking the Mold Networking Forum
      • Industry Events
      • Livestreams/Webinars
      • Ask the Expert
      • Polymer Points Live
      • Reifenhäuser Technologies Livestreams
      • 2020 Caps & Closures Library
      • Plastics in Healthcare Library
      • Women Breaking the Mold Networking Forum Library
    • Resin Prices
      • All Resins
      • Commodity TPs
        • Historic Commodity Thermoplastics
      • High Temp TPs
        • Historic High Temp Thermoplastics
      • ETPs
        • Historic Engineering Thermoplastics
      • Thermosets
        • Historic Thermosets
      • Recycled Plastics
        • Historic Recycled Plastics
    • Rankings
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Data Store
    • Directory
    • More+
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified
      • Digital Edition
      • Newsletters
      • Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Processor of the Year submissions