Inteplast Group Ltd. of Livingston, N.J., is making a $12 million investment to boost biaxially oriented polypropylene film capacity at its facility in Lolita, Texas.
The site near Point Comfort, Texas, operates as part of Inteplast's AmTopp division. Inteplast will streamline six extrusion lines, AmTopp President Homer Hsieh said in a May 25 telephone interview.
``We were thinking of adding a new building, but that would have been about a $45 million investment,'' Hsieh said. While the capacity on a new line is about 45 million to 50 million pounds, he said, the streamlining will take less time and cost less.
The BOPP market is seeing some imports in the United States and is in a tight supply situation, Hsieh said. At the Lolita location, Inteplast operates two buildings for BOPP production, one that houses four lines and another housing two.
``We're happy that our demand also is over capacity,'' he said.
Through the streamlining projects, officials in part will increase the size of motors and line speed. The equipment modifications will improve film quality and output. Capacity will be increased by 25 percent to 300 million pounds annually.
Inteplast's BOPP films are used in products including tape, packaging and labels. Last year, AmTopp invested $12 million at the Lolita site for its stretch film production. Under that project, the company added two Davis Standard cast film extrusion lines for thin-gauge film.
``That investment is going pretty well,'' Hsieh said. ``We're running one line.''
Its BOPP operation includes two adjacent buildings with 770,000 square feet of production floor and two warehouses with 25 million pounds of inventory storage capacity.
Inteplast Group's campus in Lolita has nine manufacturing buildings, with more than 3 million square feet of space.
According to Applied Market Information Ltd. of Bristol, England, the BOPP film industry is one of the strongest-growing sectors of the flexible packaging industry, but overenthusiastic investment in recent years has driven down margins and utilization rates around the world.
In its latest report, released in April, AMI officials said the global industry now looks set for a period of readjustment, with investment rates slowing from heights in the early 2000s. Utilization rates should improve steadily during the next five years, which is likely to bring relief to hard-pressed BOPP margins.
Globally, market demand still is advancing at rates over 5 percent per year, with much higher demand forecast in developing regions. Therefore, AMI said, the risk remains there could be another surge in investment to reverse that trend.