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November 01, 2010 02:00 AM

Amcor's Long sees big PET prospects

Dan Hockensmith
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    PET packaging veteran Bill Long has his eyes on bringing more recycled material into the production stream.

    In a wide-ranging Sept. 29 telephone interview, Long, president of Amcor Rigid Plastics in Ann Arbor, Mich., described his vision of the future of PET.

    “It's still consumer-preferred, you get great clarity and you can do wonderful things with it in terms of shape and design, and creating shelf appeal,” he said.

    “[There are] lots of remaining opportunities to continue to grow, both with organic customers in existing markets, and through conversion of additional packaging mediums from [other] substrates to PET.”

    But first, U.S. processors have to do something about low PET recycling rates, which hover around 26-27 percent of virgin material that is introduced into the marketplace, he said.

    “That recycled material historically has been thought of as competing for the virgin resins business; it has got to be thought of as a raw material substitute for [purified terephthalic acid] and [monoethylene glycol] that's used to make resins.

    “We have to think of it like the aluminum business, where north of 50 percent of feedstock for aluminum production is recycled material — as opposed to going back and mining bauxite.”

    Amcor Rigid Plastics is part of Australian packaging giant Amcor Ltd. Long joined Amcor PET Packaging in 2002 following its acquisition of Ratingen, Germany-based Schmalbach-Lubeca AG's global PET and closures businesses. Long worked in various positions at Schmalbach-Lubeca, as well as at Milwaukee-based Johnson Controls Inc.'s PET business prior to its 1997 purchase by the German company.

    In March, Amcor created Amcor Rigid Plastics: It consists of the renamed Amcor PET; Bericap North America, a closures joint venture between Amcor and Bericap GmbH & Co. KG of Budenheim, Germany; and the rigid plastics container unit of Alcan Packaging's global pharmaceutical business, which Amcor acquired in 2009.

    Long now oversees a business unit that employs 6,000 in 76 plants in 12 countries. According to Plastics News' 2009 industry survey, Amcor ranked No. 2 among North American blow molders, with blow molding sales of $2 billion.

    Amcor earlier this year bought Ball Corp.'s plastic packaging operations in the Americas for $280 million. The sale included plants in Ames, Iowa; Batavia, Ill.; Bellevue, Ohio; Chino, Calif.; and Delran, N.J.; and research and development operations in Broomfield and Westminster, Colo.

    Long said the transition from Ball to Amcor proceeded smoothly at all of the facilities.

    “What we've seen in 60 days is a first-hand look at those pieces of business and markets and customers that we were not doing business with because we didn't have the barrier product that the particular customers were buying from Ball — as was the case with the Plasmax wine bottle.”

    Two of the acquired plants specialize in polyolefin-based rigid plastics, Long said, which was an added value for Amcor.

    “Having two plants which make a business in that space credentializes us in a way that will help [us] grow in those markets,” he said. “That allows us to get much more traction and have more opportunities to pursue with existing and potential new customers that would have been much more difficult to accomplish [by] buying equipment and trying to enter those markets organically.”

    Long said Amcor Rigid Plastics is turning the former Alcan rigid pharmaceutical packaging business — part of the Alcan Packaging global assets acquired in 2009 for $2 billion from London-based Rio Tinto plc — into a solid performer.

    “We're making some pretty significant investment in it to upgrade assets and tooling,” he said.

    “As far as synergies go, there have been some in terms of overhead and [selling, general and administrative expenses] that have already been capitalized on, but we really see the big opportunity in the pharma plastics business [is] in terms of top-line and bottom-line growth where we think there's some pretty good demographic tailwind behind it.”

    There are some operational improvements and cost reductions that will be driven by investments Amcor makes in upgraded assets and tooling, he said.

    The rigid pharmaceutical packaging business has plants in Millville, N.J.; Des Plaines, Ill.; Youngsville, N.C.; Cayey, Puerto Rico; and São Paulo.

    For the fiscal year ended June 30, Amcor Ltd. reported profit of A$183 million ($176.9 million) on sales of A$9.85 billion ($9.53 billion), with a nearly 14 percent drop in full-year profit from fiscal 2009 related to costs associated with the Alcan purchase.

    The company singled out Amcor Rigid Plastics as a particularly bright spot, with higher 2010 sales volumes in South America offsetting sluggish demand in North America.

    However, “volumes in North America have been seasonally stronger … due to the record warm temperatures across most of the Midwest and Atlantic coast” beginning in the fourth quarter of fiscal 2010 and heading into 2011, according to a recent Amcor news release.

    Looking ahead, Long said that while he's still bullish on PET, Amcor is keeping abreast of new developments in materials.

    “What is of interest and has probably captured more of our attention is continuing to carry on dialogue with other members of the supply-chain industry on how to increase [PET] recovery rates.

    “The No. 2 thing that has been of interest of us is biomass raw materials. Glycol produced from sugarcane is an interesting development; whether that can economically replace fossil fuel sources of MEG [monoethylene glycol] in the future or not remains to be seen, but it's worth paying attention to,” he said.

    Amcor continues to innovate in traditional packaging, including the hot-fill beverage market in the U.S. Recently, its 20-ounce, panel-less PowerFlex longneck became the PET bottle of choice for a Highland Park, Ill., sports-drink startup called Greater>Than.

    A unique feature of the PowerFlex is its patented base. An inverted, cone-shaped diaphragm within the base draws upward as the liquid cools. It has geometric characteristics that enable the diaphragm to deflect upward as the vacuum is created.

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