HUANGSHI, CHINA (Oct. 25, 4 p.m. ET) — Finnish extrusion equipment firm Conenor Ltd. is looking for a Chinese manufacturing partner to cut costs for its multilayer wood-plastic composite extrusion system, after deciding it cannot produce it cheaply enough at home, the company announced at an industry conference in China.
The company claims its design, which replaces the screw and barrel of an extruder with a sharp conical rotor, can manufacture cheaper WPC products by providing multilayer extrusion and foam core processing with higher fiber content than normal.
But it's found that manufacturing its equipment in Finland is not practical, and is exploring different business models based on manufacturing in China, Conenor CEO Markku Vilkki said in an Oct. 21 presentation at the China 5th International Forum of Wood Plastic Composites in Huangshi city, Hubei Province.
“We have discovered that manufacturing in Finland is much too expensive to sell this equipment,” he told delegates at the event, sponsored by the China Plastics Processing Industry Association's Wood Plastic Composite Committee. “So we see a great opportunity if our equipment can be manufactured at low-cost in China.”
Conenor, which is a technology development firm, already licenses the extrusion system to Finnish extruder maker Maillefer Extrusion Oy, but the two firms are working together to find a Chinese partner, Vilkki said.
Maillefer has a long-term license and would remain part of the business, including providing technology assistance to any would-be Chinese partner, Vilkki said.
The European firms are looking at different business models, ranging from buying components from Chinese firms and keeping final assembling in Finland to licensing the manufacturing of the complete extruder to a Chinese company.
But they are open to other ideas, including selling their Chinese patents to a Chinese company, Vilkki said.
“We have a certain model we would like to see happen but that is not the key,” he said in an interview after his speech. “What is the best format, we are open to discussions, as to how to make it best for both of us.”
The European companies, however, want to keep control of sales outside of China, while the Chinese partner would control the country's internal market, he said: “We want to have the market outside of China for ourselves.”
Conenor, based in Tampere, Finland, developed its first conical extrusion technology in the 1990s, and had early partnerships and financial support with Finnish plastic pipe maker Uponor Oyj and cable manufacturer Nokia Cables, building about 20 extruders.
Uponor and Nokia retain exclusive licenses to use their technology in their respective markets, pipe and cable, Vilkki said.
Over the years, Conenor also has received several million Euros in funding from Tekes, a Finnish government agency that funds innovation, Vilkki said.
The companies estimate they could save at least one-third on manufacturing costs in China, and likely more if the complete machine is built there, which would be enough to make the technology cost competitive, he said.
“We have been happy with Maillefer, and they have been very helpful for us, but at the moment the true fact is that there is no way they could manufacture this equipment in Finland on such cost level that would allow business to happen,” Vilkki said.