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August 01, 2013 02:00 AM

Joyce Foam survives with new technology

URETHANES TECHNOLOGY INTERNATIONAL
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    SYDNEY, AUSTRALIA — Australian polyurethane foam manufacturer Joyce Foam Pty. Ltd. says it has invested A$10 million (US$9 million) in new technologies since 2010 to remain competitive in Australia's "shrinking" foam market.

    Joyce Foam, trading as Joyce Foam Products, manufactures in Moorebank, near Sydney, and has sales locations in four other states — Queensland, Victoria, Western Australia and South Australia.

    The company was originally part of Perth-based Joyce Corp. Ltd., but Joyce Foam was sold to India-based flexible PU foam manufacturer Sheela Foam Private Ltd. in 2005 for A$16 million (excluding property and debt). Sheela is headquartered in Ghaziabad, a city in the Indian state of Uttar Pradesh, about 11 miles east of Delhi.

    The sale occurred after the Canberra-based competition watchdog — the Australian Competition & Consumer Commission — refused Joyce Corp.'s proposed merger with Melbourne-based foam manufacturer Pacific Brands Ltd. ACCC opposed the merger on the grounds it would give Pacific Brands too much market power.

    Kathy Jack, Joyce Foam sales and marketing general manager, said the company's strategy is to maintain its sales growth in Australia's increasingly difficult manufacturing market conditions, where demand for foam is decreasing.

    She said many Australian furniture manufacturers no longer require foam because they are moving manufacturing operations offshore. "We are losing market share through no fault of our own."

    Since 2010, the company has invested A$10 million in new technologies, including a variable pressure foam (VPF) machine, which Jack said is the most environmentally friendly foam machine available.

    Using VPF technology, Joyce Foam's products are manufactured in an enclosed, pressure-controlled environment, eliminating the need for blowing agents, for example, liquid CO2 and methylene chloride, to help the foam rise. The enclosed process also captures emissions.

    Jack said Australian manufacturers must demonstrate a "competitive edge" to remain in business, and Joyce Foam's new technology and machinery allow it to create foam grades not previously offered by an Australian manufacturer.

    Consequently, Joyce's market share, particularly in the bedding industry, has grown since VPF technology was introduced. Jack would not say what Joyce Foam's market share had grown from, but estimates it now holds 40 percent of Australia's foam market.

    Jack said India's and Australia's foam markets are different. Australia's "mature" market is about 10 years more advanced than India's in some areas. However, India's "emerging" market has growth potential.

    While India has a growing demand for automotive foam, Australia's demand is shrinking as car manufacturers move offshore.

    Jack said Sheela initially bought Joyce Foam eight years ago to acquire the division's advanced manufacturing technologies, and Joyce continues to share its technologies with the Indian parent company. In exchange, Sheela shares its new foam products, developed by its chemists.

    In 2010, Joyce Foam consolidated its manufacturing operations into a single site in Moorebank. As agreed during the 2005 sale arrangements, Joyce Corp. leases the 441,320-square-foot property to Joyce Foam.

    In a company statement, Joyce Corp. Chairman Dan Smetana said the Moorebank property will return to market rents in November 2015 when the lease agreement expires.

    He said he expects the land to be in high demand because the New South Wales government plans to develop a transport hub in the suburb. "We don't have long-term goals to own and hold industrial property and may look to put our holding on the market in the future," Smetana said.

    A Joyce Corp. spokesman said the company will consider the opportunities available in 2015, and may sell the property. If it decides to sell, Joyce Foam will either buy the property or have to negotiate an agreement with the new buyer, he said.

    Jack said Joyce Foam was not planning to move from the Moorebank site "any time soon," particularly since it has invested millions of dollars in new technologies.

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