A reawakening is under way on East Tallmadge Avenue in Akron.
That's where A. Schulman Inc. has spent $10.5 million to renovate and retrofit its original production plant first used in 1929 into a modern facility that is expected to make the company a larger player in the packaging market.
The 164,000-square-foot plant last was used for compounding in 2001. Since then, it's been a warehouse for Schulman's resin distribution business. The renovation project included installing a brand-new electrical system that could handle the two new Coperion twin-screw extrusion lines that began commercial production in February.
The decision [to invest in Akron] was made before the economy turned south, North American concentrates business manager Chuck Hampton said during a recent interview at the Akron plant. We decided to press forward with the investment despite the current economy and the softness we saw in the fourth quarter of 2008.
Packaging tends to lead the way out of a recession. We're also investing in sales training and adding sales staff for that market.
Previously, Schulman had made Polybatch-brand concentrates at a plant in Orange, Texas, but that site was sold to toll compounder Alloy Polymers Inc. in early 2008. Alloy has continued to toll-produce concentrates for Schulman at the Orange plant, and Schulman also has used its own plant in San Luis Potosí, Mexico, to serve the U.S. market.
Chief marketing officer Paul Boulier said it makes a lot more sense for Schulman to grow its packaging market share from a location in the Midwest.
There are a lot of key food-packaging end markets in the Midwest, and it was inefficient to serve them from Mexico and Texas, he said. A lot of major packaging customers are within 500 miles of the Akron plant.
We had been selling masterbatch [concentrates] in North America for some time, but since the shutdown of the Akron plant, there had been no commitment to infrastructure for the product, added Polybatch operations director Michael Claxton. I think our customers will welcome this commitment.
Value-added additive and white masterbatches will be made in Akron, while more commodity-type products will continue to be made for Schulman by Alloy in Orange. Color concentrates will be made at an existing Schulman plant in nearby Sharon Center, Ohio.
Target markets for Schulman's packaging concentrates include film, rigid color packaging, flexible packaging and hygienic films. The site will make concentrates based mostly on polyethylene and polypropylene incorporated with antiblocks, slips, antimicrobials and other additives.
Derold Hines, a 10-year Schulman veteran, transferred from the firm's Nashville site in August to oversee the new operation as plant manager.
Schulman also has added 20 production jobs in Akron since the project began.
The new extrusion lines a 40-millimeter and a 70mm have been accompanied by all-new software programs and blending equipment. It was assembled via design collaboration with Schulman's European operations, using twin-screw technology with multiple feeds, Claxton said. Each of the lines has annual capacity of 10 million to 15 million pounds.
Our focus here is on quick change, Claxton added.
As many as four new lines could easily be added in Akron, officials said, and the property has room for additional expansion. Currently, the compounding renovation is using half of the building, with the other half used by Schulman's resin-distribution work, which employs 15 at the site.
A long-standing Schulman research and development lab is located across the street from the renovated plant. The lab was unaffected by the compounding closure eight years ago, and recently received two new pieces of color-analysis equipment.
The Akron site has additional significance for Schulman, since it was run for many years by Joseph Gingo Sr., the father of Schulman CEO Joseph Gingo Jr. After a lengthy career with Goodyear Tire & Rubber Co., Gingo Jr. took the top job at Schulman in early 2008. He had served on the company's board since 2001.
Schulman officials are hopeful that a deeper move into the packaging market will improve financial results that saw profit tumble 18 percent in fiscal 2008, even as sales grew 11 percent to almost $2 billion. Sales in the first quarter of the firm's 2009 fiscal year ended Nov. 30 were down 22 percent to $388 million as profit fell 21 percent.
But at the renovated Akron plant, optimism is the order of the day.
This was our first plant. It made all the Schulman products at one time or another; it literally saw the birth of most of our products, Claxton said. And we basically gutted it from the ground up in order to make something new.