Finnish 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 claims its design, which replaces the screw and barrel of an extruder with a sharp conical rotor, can manufacture less-expensive wood-plastic composite products by providing multilayer extrusion and foam core processing with higher fiber content than normal.
But manufacturing the equipment in Finland is not practical, and Conenor is exploring various business models based on producing it in China, CEO Markku Vilkki said Oct. 21 at the China International Forum of Wood Plastic Composites in Huangshi.
“We have discovered that manufacturing in Finland is much too expensive to sell this equipment,” he said in a presentation at the event, sponsored by the China Plastics Processing Industry Association's Wood-fiber & Plastic Composite Committee. “So we see a great opportunity if our equipment can be manufactured at low-cost in China.”
Conenor, a technology development company headquartered in Tempere, Finland, already licenses the extrusion system to Finnish extruder maker Maillefer Extrusion Oy in Vantaa. But the two firms are working together to find a Chinese partner, according to Vilkki.
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 companies are looking at 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 talk. “What is the best format — we are open to discussions, as to how to make it best for both of us.”
The Finnish firms want to keep their 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 developed its first conical extrusion technology in the 1990s, and had early partnerships with and financial support from Finnish plastic pipe maker Uponor Oyj and the former Nokia Cables, building about 20 extruders. Those operations retain exclusive licenses to use their technology in their respective markets, pipe and cable, according to Vilkki.
Over the years, Conenor also has received several million euros in funding from Tekes, a Finnish government agency that funds technology and 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 a cost level that would allow business to happen,” Vilkki said.