DAK Americas LLC has entered into a “post-acquisition phase” as it absorbs the two major purchases it has made in the last 18 months.
In late 2010, Charlotte, N.C.-based DAK bought the PET business of Eastman Chemical Co., including a plant in Columbia, S.C., for $600 million in cash. Then in mid-2011, DAK paid $185 million for the PET business of Wellman Inc., including a 950 million-pound capacity PET plant in Bay St. Louis, Miss.
Those moves — combined with Indorama Ventures Public Co. Ltd.'s purchase of a PET business from Invista — placed 90 percent of North American PET capacity in the hands of only three firms: DAK (the largest with 40 percent), Indorama of Bangkok and M&G Group — Gruppo Mossi and Ghisolfi — of Tortona, Italy.
“We've now got a pool of manufacturing technology that we can optimize across our asset base, and use those attributes in all of our plants,” Tom Sherlock, specialty polymers vice president, said in an interview at NPE2012, held April 1-5 in Orlando.
“We've also been able to expand our product grades and get more offerings into our major market segments,” he said. “The two acquisitions have been very good for us. The Eastman deal has been more challenging since it was more complex and bigger. We also had to make new work processes and culture work in Columbia.”
Resins Vice President Jon McNaull added that he believes the Columbia site now feels “more empowered” and DAK has gotten through it all “in a positive way.”
Contrary to what some in the industry had expected, DAK plans to keep the plants it has acquired operating at their current capacity levels.
“The intention is to keep growing,” McNaull said. “From a trade leadership perspective, we'll run the resins with the best attributes at the plants that fit those attributes and that serve the business well.”
For example, he added, the former Wellman plant — known as the Pearl River plant — is best suited to serve West Coast markets, so resins used by West Coast customers would best be produced there.
And even with only three major players in North American PET, Sherlock said that the market “is still a very competitive arena.” McNaull added the concentration of production could result in better materials available to the carbonated soft drink sector and other end markets.
At NPE2012, DAK spotlighted several products, including Array, a specialty polymer with potential uses in fibers, nonwovens, film and packaging, and similar markets.
In the broader PET field, DAK officials said that North American demand could increase 4.5 percent this year after growing at a little more than 5 percent in 2011.
Starting next year, growth should average 3.5 percent for the next several years, as the region's economic recovery slows a bit.
Some sizable tea brands switched from glass to PET, which helped growth. Bottled water also continued to grow at a 4-5 percent rate. And energy drinks “increased dramatically,” Sherlock said.
These categories offset the behemoth carbonated soft drink field, which was flat to declining.
PET now also could gain from volatility and higher prices in polypropylene, Sherlock added.
“People want out of that volatile [PP] situation,” he said.
DAK operates U.S. PET plants in Charleston, S.C.; and Wilmington and Fayetteville, N.C. In 2008, the firm bought a pair of PET plants from Kingsport, Tenn.-based Eastman in Cosoleacaque, Mexico; and Zárate, Argentina.
DAK is part of the Alpek unit of Mexican conglomerate Alfa SAB de CV. Alpek's other products include polypropylene, expanded polystyrene, nylon and nylon feedstock caprolactam.
Other units owned by Alfa make frozen foods, aluminum auto parts and telecommunications products.