A. Schulman Inc. will spend $10.5 million to expand and renovate a facility in Akron to make additive compounds for the film and packaging markets.
The project is focused on a 164,000-square-foot Akron warehouse site that was last used for compounding in 2001. The effort is expected to create 80 jobs over five years, according to a July 28 news release from the Ohio Tax Credit Authority.
The authority has granted Fairlawn, Ohio-based Schulman a five-year tax credit of 45 percent for the project. The credit is valued at almost $210,000 and will require Schulman to maintain operations at the site for 10 years.
In a July 30 phone interview, Schulman Chairman, President and Chief Executive Officer Joseph Gingo said choosing to locate the project in Akron ``was purely a financial decision.''
``We're going to save a lot of money because the building is already there,'' he said. ``We've been using the building for our resin distribution business, but were using only about 20 percent of the available space. The building also has rail sidings, which is a real plus.''
Production will begin by the end of the year on one or two new twin-screw extrusion lines, each with annual capacity of 10 million to 15 million pounds, Gingo added. Ultimately, the building could house as many as four twin-screw lines plus additional machinery.
Initial products will include additive masterbatches for film and packaging. Gingo said white concentrates later could be added to the site's product mix.
In moving into the packaging market, Gingo said he wants to imitate Schulman's top-ranked concentrates businesses in Mexico and Europe.
``We have a better chance of competing in masterbatch [concentrates] than we do in engineering plastics,'' he said. ``You can be a niche guy in engineering plastics, but if that niche gets too big, the big companies will swoop in and take it. In masterbatch, there are a lot more opportunities.''
Gingo added that the packaging push also will allow Schulman to de-emphasize the auto market, which at one point made up 40 percent of its North American business.
Schulman's European customers with U.S. operations are potential targets for material to be made in Akron. Some of those customers had been served with material from Schulman's Mexican site. That material now will be sold throughout Latin America, Gingo said.
Schulman considered a building the firm recently constructed in Findlay, Ohio, before deciding on Akron. The Findlay site first was intended to house Schulman's Invision-brand sheet business, but now both the building and property will be sold, Gingo said. Sites in Illinois, Indiana and Missouri also were considered.
News of the Akron expansion comes only a few months after Schulman closed plants in St. Thomas, Ontario; and Orange, Texas.
Adding masterbatch capacity in the U.S. will allow Schulman to further diversify in the region, said market analyst Saul Ludwig of Key Banc Capital Markets in Cleveland.
In the first nine months of its fiscal 2008 through May 31 operating income at Schulman's North American units fell 30 percent to $3.9 million, even as sales inched up 2 percent to $361 million. The firm's overall nine-month sales grew 10 percent to $1.5 billion and operating income climbed 26 percent to $175 million.