Terry Haines has found the future of A. Schulman Inc. in a purple Cadillac bumper.
The bumper is made of plastic sheet produced by Schulman in Sharon Center. After decades of work as a compounder and distributor, Schulman is making the move into commercial sheet production, using the company's own Invision-brand technology.
Haines, president and chief executive officer of Fairlawn, Ohio-based Schulman, displayed the bumper during a recent tour of the Sharon Center site.
He has high expectations for the company's entry into the sheet market, which led to the recent opening of a 15,000-square-foot expansion in Sharon Center to do pilot work. The site eventually will house a commercial line as well.
By 2007, Schulman plans to open a 100,000-square-foot plant in northern Ohio to produce sheet on two more commercial lines. Plants will be built in Europe and Asia as soon as Schulman's legal team can confirm that its Invision-related patents are protected in those countries.
``It's a matter of how quickly we can ramp up and take it to market,'' Haines said in a recent interview. ``Demand [from automakers] is there. They want to do it and they want to do it tomorrow. This is the future of our company.''
The cost of the expansion, new plant and equipment is estimated to be about $40 million. Haines declined to specify possible locations for the new plant, saying only that it will be ``somewhere between Akron and Toledo.''
And while placing a new product into the ultracompetitive automotive market might be the last thing many companies are after, Haines said he's confident that automakers' desire to eliminate painting, combined with Schulman's proprietary technology, puts the company in a position of strength.
If Schulman's plan takes hold, its U.S. sheet sales could hit the $120 million mark by 2010, generating about $55 million in pretax income. Haines said potential sales outside the United States could be three times that size.
Schulman's basic sheet product will consist of a clear layer of its Clarix-brand ionomer; a second, colored ionomer layer; and an adhesive tie layer, Invision technology director Dennis Smith said. A possible fourth layer could consist of a thermoplastic polyolefin substrate.
Initially, Invision sheet will be aimed at automotive rocker panels and bumpers. Schulman officials said that market is in reach because of automakers' concerns about paint-based emissions and increasingly stringent environmental standards.
New paint lines also are costly, averaging at least $500 million for original equipment manufacturers and $30 million at the Tier 1 level.
The project has drawn interest from major automakers in the United States and Japan, Schulman officials said.
Invision sheet already is being used in bumper fascias on the 2005 DaimlerChrysler Neon. No commercial uses are set for 2006 vehicles, but Schulman can make running changes to allow the material to be used on later production models, according to Barry Rhodes, sales and marketing vice president.
Schulman already can match 80 percent of the color palettes used by major automotive OEMs. Outside of the automotive market, Invision sheet could find a home on parts for heavy trucks, all-terrain vehicles and sport motorcycles, as well as lawn mowers, snowmobiles and refrigerators.
Technical barriers to matching Schulman's Invision technology also should protect the company from lower-priced competition for at least five to seven years, Rhodes added. Companies competing with Schulman in the molded-in color market would include industry heavyweights GE Plastics, DuPont Co. and BASF Corp.
Schulman has been working to commercialize Invision technology in various forms since 2001. At that time, the firm was pitching Invision as a polyolefin elastomer material for PVC replacement in auto interiors. As recently as 2002, Schulman was making Invision material at a plant in Bellevue, Ohio, and commercializing it in auto armrests and door assist handles.
Officials with Schulman also stressed that the Invision sheet project predates the challenge made to Schulman management by Barington Cos. Equity Partners LP. Barington, a New York-based private equity firm, has bought up almost 9 percent of Schulman's stock since January, and recently suggested the firm be sold to improve its value to shareholders.
The sheet project ``has nothing to do with the Barington situation,'' Haines said.