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August 10, 2011 02:00 AM

ACI still growing after 25 years

Frank Esposito
Senior Staff Reporter
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    SIDNEY, OHIO (Aug. 10, 4:40 p.m. ET) — Advanced Composites Inc. recently marked its 25th year of navigating the highways and byways of the North American automotive field. And the firm isn't slowing down — with plans to add compounding capacity at two of its sites by the end of 2012.

    The Sidney-based company is one of North America's largest compounders of polypropylene and of PP-based thermoplastic olefins. The firm employs almost 600 at plants in Sidney; Nashville, Tenn.; and Aguascalientes, Mexico. A new production line is slated for Sidney by the end of the year, with another line to be installed in Mexico by mid-2102.

    ACI was formed in 2003 from a merger of C&C Tech of Sidney and ATC Inc. of Nashville. Both of those firms opened their doors in 1986 as compounders dedicated to working with Asian automakers that were locating plants in North America.

    ACI's current ownership consists of majority owner Mitsui Chemicals Inc. and partners Mitsui & Co. Ltd., Mitsui Plastics Inc., Prime Polymers Co. Ltd. and Marubeni America Corp. — all Japanese-based materials firms or their U.S. subsidiaries.

    Top ACI officials recently met with Plastics News at the firm's Sidney headquarters to review progress the firm has made in its first 25 years — and to take a look at what lies ahead.

    President and CEO Yasujiro Shigeta said ACI has thrived by expanding its business beyond its initial core of Asian automakers. The firm now does a sizable amount of work with carmakers based in Detroit and Europe.

    ACI officials also have worked to combine C&C and ATC, which had been rivals before the merger. C&C had been a large supplier for Honda, while ATC had done more work with Toyota, Hyundai and Nissan.

    The worst of the economic downturn may be behind ACI, with 2010 sales equal to the firm's best year ever, according to Vice President Rob Morgan.

    “We've expanded our customer base and focused on high-quality products,” he said. “Our plants are almost sold out now.”

    The addition of the two new lines will give ACI almost 600 million pounds of compounding capacity. Future additions in Sidney might require the firm to physically expand its site there.

    New work in bumper fascias and instrument panels are among the projects that have allowed ACI to bounce back, said Shinji Horibe, vice president of corporate planning. Automotive trim work and mold-in color for instrument panels — allowing for replacement of paint — also have helped, he added.

    But things got pretty dark before the dawn, for ACI and many other auto-focused firms. At the worst point of the slowdown, Morgan said ACI's sales were down 35 percent from their peak. The firm also had to lay off numerous workers, but now has called most of them back, he said.

    “We saw things going down in the second half of '08 when prices for almost everything spiked,” Morgan recalled. “Then the financial crisis hit in September, and in the first half of '09, everybody stopped making cars.”

    But things turned around pretty quickly. “The fourth quarter of '09 was OK, and we ended up being profitable for the year,” Morgan said. “The Cash for Clunkers program was the turning point. It had the desired effect.”

    But just when the comeback seemed for real, ACI was met with another challenge in the form of the earthquake and tsunami that hit Japan in early March. The firm's Japanese suppliers were heavily impacted by those events, although Shigeta said they've recovered much faster than anyone had expected.

    “Our major customer base had a parts shortage, although they had some inventory in the U.S.,” he said. “We saw a negative impact from Honda and Toyota, but we didn't have to do a layoff and it's bouncing back in the third quarter.

    “July was almost a normal month, with Toyota and Honda back to full production,” Shigeta added. “The OEMs have done a remarkable job of recovering, especially since automotive was one of the industries most affected. And Mitsui had almost no operating issues.”

    And like many automotive suppliers, ACI has been challenged to find ways to do more with less, by lightweighting parts and finding ways to improve cycle times.

    “Those things are constantly under review,” Horibe said. “Customers want thinner walls [in auto parts] and higher physical properties.”

    And ACI has been among the many PP users rocked my massive volatility in resin prices this year. But strong specifications mean ACI can't really use lower-priced recycled or regrind resins in making its compounds.

    “Resin pricing is a threat we've had to manage,” Morgan said. “For us, it's about more than saving 1 or 2 cents a pound.”

    ACI marked its 25th anniversary in late July with a ceremony in Sidney where a commemorative memorial was unveiled. Mitsui Chemicals President and CEO Toshikazu Tanaka traveled from Japan to attend the event.

    But now, ACI is focused on the future. Morgan said the firm expects “high-single-digit” sales growth this year, as North American auto builds bounce back from a low of 8.5 million in 2009 to an expected 12.5 million in 2011.

    “One of our core strategies is to develop products to meet market challenges,” he said. “So we're going to continue to expand.”

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