PolyPipe Inc. shut down two extrusion plants Aug. 17 and is transferring the capacity to newer, more efficient plants. Company officials said the move will make the firm more competitive.
The Gainesville, Texas-based maker of polyethylene pressure pipe closed its plants in Kimball, Neb., and Roaring Springs, Texas.
PolyPipe's plant portfolio now consists of five facilities: in Gainesville; Erwin, Tenn.; Fernley, Nev.; Sandersville, Ga.; and its newest plant, Evansville, Wyo.
``We're going to be able to produce just as much as we did a year ago, with two fewer plants,'' said PolyPipe Chairman Brent Williams in an Aug. 21 telephone interview. ``We're lowering our cost structure and improving efficiencies.''
PolyPipe also has large-diameter capacity at three of its plants after a series of expansions. The company is extruding 36-inch pipe in Gainesville, 54-inch pipe in Irwin and gargantuan 65-inch pipe in Fernley.
``We're one of the few [high density] PE pipe producers with large-diameter capacity across the country,'' Williams said.
PolyPipe is owned by Halifax Group of Washington, a private equity firm.
The various expansions and efficiency upgrades are a continuation of the plan implemented when Halifax bought the company in early 2005, Williams said, adding that company officials will continue to look for growth opportunities.
``We're certainly bullish on the long-term outlook for the HDPE pipe market,'' he said.
PE pressure pipe is the dominant material for gas distribution in North America but, unlike in Europe, lags way behind competing materials in the water-distribution market.
Market penetration for PE pressure pipe in water applications is about 4 percent, Williams said, whereas it is greater than 50 percent throughout much of Europe.
``The average municipal water system loses 15-20 percent of clean water back into the ground from exfiltration,'' said Williams, referring to failed joints and leaks caused by corrosion. ``[PE] pipe is the only leakproof pipe material.''
PolyPipe officials expect the overall PE pressure pipe market to continue to grow about 8 percent annually, as it has for the past 25 years. With just 4 percent market share, the future looks bright, Williams said.
``When you look at the room it has to grow - we expect adoption to accelerate. We expect HDPE to be [specified] more frequently, the opportunities within the industry to decrease wall thicknesses and lower cost - the upside is just massive,'' he said. ``We're seeing the evolution first-hand.''