Berry Plastics changing hands again

NEW EQUITY GROUP OWNERS

The plastics packaging giant that is Berry Plastics Corp. (Evansville, IN) will change hands for a third time in the last decade. The new owners, private equity groups Apollo Management and Graham Partners, will pay $2.25 billion, and plan to keep current Berry management, including CEO Ira Boots, in place. The deal is expected to close by the third quarter of 2006.

Berry currently is majority owned by Goldman Sachs Capital Partners (60% holding), with JP Morgan Partners holding a 27% stake. It was purchased from First Atlantic Capital in 2002 for $837.5 million. Berry''s current ownership announced in March they would seek "strategic alternatives to maximize shareholder value" (more in May 2006 MPW, pg. 10). In the fiscal year ended Dec. 31, 2005, Berry reported pro forma annual sales of $1.3 billion.

Berry, which injection molds, thermoforms, and extrudes closures, containers, tubes, and bottles, among other applications, boosted its 2004 sales to $814 million, following the 2003 acquisition of Landis Plastics Inc.''s five U.S. plants for $228 million, and the 2005 purchases of Kerr Group Inc. and its nine North American facilities for $445 million.

The company currently operates 23 U.S. facilities, as well as wholly owned operations and joint ventures in Mexico City; Norwich, England; Milan, Italy; and Guangzhou, China.

Philadelphia-based Graham Partners is a middle-market industrial private equity firm with $850 million under management. Graham Partners'' founders are no strangers to the plastics packaging industry, with much of their early money made after selling one firm they founded-rigid packaging processor Graham Packaging Corp. (York, PA).

Graham Group, run by the Graham family, still owns Graham Machinery Group, a manufacturer of extrusion blowmolding equipment (also York, PA). The Graham family retains a minority holding in Graham Packaging, but Chris Lawler, managing principal at Graham Partners says that the separate groups have no intention of combining, merging or making any arrangements between Berry and Graham Packaging.

In Brief

Santoprene adds IM unit

ExxonMobil Chemical''s (Houston, TX) Santoprene specialty products technical center in Akron, OH has added a new 130-ton vertical injection molding machine to assist customers with insert and overmolding projects using Santoprene thermoplastic elastomers (TPEs).

New Saudi PP plant

Saudi European Petrochemical (Ibn Zahr, Riyadh) will build a 500,000-tonnes/yr PP plant erected at the Ibn Zahr complex in Al-Jubail, Saudi Arabia. The plant is scheduled for completion by Q3 2008. This is the third PP plant being built there.

Herrmann ups presence

Ultrasonic welding equipment supplier Herrmann Ultrasonics (Karlsbad, Germany) will double its North American presence, moving in September into a new 20,000-ft2 plant in Bartlett, IL from its existing Schaumburg, IL site.

New MPM chairman

A new chairman is settling in to lead MPM Group following its acquisition by Madison Capital Partners (Chicago). Pepyn Dinandt, who has been chairman since 2002, last month was replaced by Richard Osborne of Madison Capital. MPM includes Berstorff, Krauss-Maffei Plastics Machinery, Demag Plastics Group, and Netstal.

P.E.T.S. to Chennai

Plastic Engineering & Technical Services (P.E.T.S.) this fall will open a 25,000-ft2 manufacturing facility in Chennai, India to manufacture custom-designed hot runner manifolds and supporting systems.

RPC expands beauty business

Leading European rigid plastics packaging processor RPC Group has acquired two injection molding facilities, one each in Marolles, France and Mozzate, Italy, from the Crown group, and will integrate these into RPC''s division focused on packaging for the beauty/personal care markets. The price of the purchase was not publically revealed; the two acquired facilities generated 2005 sales of about ?45 million and about ?2 million EBITDA.

Heritage sees big future in compostable bags

Ecoflex biodegradable copolyester from supplier BASF is being employed by Heritage Bag (Carrollton, TX), which claims a 40% share of the U.S. plastic bags market, to produce compostable bags for food waste disposal. Heritage''s BioTuf bags are approved by the Biodegradable Products Institute (New York, NY) and are certified via ASTM D6400-04 for their ability to biodegrade swiftly (30 days in an industrial composting facility) and safely during municipal or commercial composting. BioTuf bags incorporate calcium carbonate filler called Minapol developed by Heritage Plastics (Picayune, MS).

"The process used to make BioTuf liners requires a polymer with good melt strength and excellent toughness. Thanks to Ecoflex and Minapol technology, we are able to meet these needs with a bag that is environmentally friendly and very competitively priced," says Peter Klaich, director of compostable and biodegradable products at Heritage Bag.

Interviewed at the NPE tradeshow in Chicago, Klaich said the cost of these biodegradable bags is still about 2-2.5 times that of polyethylene bags, but, he emphasized, the system cost is actually lower as composting is significantly less costly than paying dumping duties. BioTuf runs on standard extrusion lines at the same efficiencies as PE, he said. Heritage is the only compostable bag supplier guaranteeing 7-day bag life for bags filled with fresh grass, he said; this matters to homeowners who don''t want bags to disintegrate before they make it to the compost heap.

Heritage is so positive on biodegradable packaging, and on the need for communities to lower landfill costs, that the processor has hired a strategic planner as it considers investing in composting facilities.

AEC moves into new combined manufacturing plant

Auxiliary equipment supplier AEC (Wood Dale, IL) is completing the move to a new 180,000-sq-ft manufacturing facility in New Berlin, WI, which will combine production operations in Wood Dale and Milwaukee. Kevin Chudyk, VP of sales and marketing, says the company''s revenue is up double digits over the last year, justifying the new facility, which will have 240 employees. AEC will maintain a marketing, sales, accounting, and engineering presence in Wood Dale. Parent company, ACS, which also owns Sterling and Cumberland, also has plans to move into new corporate headquarters, adding 50% to its space.

ICIS plans recycled PET price offering

Chemical reporting agency ICIS has announced plans to add a weekly European recycled PET price report. Launched in response to increasing recycled PET demand, the report will offer information on recycled bottles, flakes, and food-grade pellets.

In response to European recycling regulation, recycled PET in Europe has grown, increasing to 665,000 tonnes of PET bottles collected in 2004, up 8.5% over 2003. By 2007, that collection is predicted to increase to more than 900,000 tonnes.

Albemarle has Asian expansion plans

Albemarle (Baton Rouge, LA) announced plans to build a new phosphorus-based flame-retardant manufacturing facility at its technology and business center in Nanjing, China. Set to be operational by the second half of 2007, it''s slated to tap the growing demand for fire resistance in construction and electronics markets. The plant will supply flame retardants for rigid and flexible polyurethane foams used in insulation and PC/ABS and PPE/HIPS alloys found in electronics enclosures.

Motorola Far East manufacturing investments approach $200 million

Motorola Inc. (Schaumburg, IL) announced that it would invest $60 million to expand its operations in Singapore over the next two years. The company plans to add staff, research and development, information technology systems, and manufacturing-process technology. Global purchasing procurement, as well as sourcing and logistics, for all of Motorola''s business units ranging from mobile devices to networks and connected home solutions will be handled from this center.

The company also announced a $100-million investment to build a handset and telecommunications equipment plant near Madras, India. Analysts see the new plant as an effort to stay on the heels of rival Nokia Corp.''s dominance in the Indian market, and follows plans by Nokia to establish a handset-manufacturing plant near Madras as well. A Wall Street Journal report noted that India is "adding four million new mobile-phone subscribers every month."

Not surprisingly, processors too, primarily injection molders, are hot on Nokia and Motorola''s heels. Germany''s Balda (Bad Oeynhausen) for instance, and Perlos, the Finnish injection molder and contract manufacturer, both have invested in new molding capacity in India. During June''s NPE, Michael Wittmann, GM of auxiliary equipment manufacturer Wittmann (Vienna, Austria), noted that about 500 injection molding machines are being moved to Chennai, India now, many if not most for the cellular phone market. His firm is opening a new subsidiary in Chennai in the third quarter: "We''re following our customers," he said.

Motorola is also planning to increase its operations in Vietnam to exploit growth opportunities in that country. Motorola had a 22% market share for handsets by the end of 2005, up from 18% a year earlier.

PolyOne''s plans for Poland

Thermoplastics and masterbatch compounder PolyOne Corp. (Cleveland, OH) will construct a new manufacturing facility in Kutno, Poland to supply color masterbatches for extrusion and injection molding processors in Poland and central Europe.

The facility is PolyOne''s second in Central Europe, joining the company''s plant in Gyor, Hungary, which opened in 1998. The compounder also has sales offices in Krakow, Poland and Prague, Czech Republic to support Central and Eastern Europe.

Kutno is centrally located in Poland, with direct access to the main Berlin-to-Moscow transportation corridor. The company expects construction to be done by Q1 2007, with production and sales initiating at the same time. In 2005, PolyOne had sales of $2.5 billion, selling compounds made from manufacturing sites in North America, Europe, and Asia, as well as joint ventures in North and South America.

Steinwall Inc. wins training award

Custom injection molder Steinwall Inc. won the 2006 Progressive Manufacturing Award in Training & Education, at the Managing Automation conference in June in Las Vegas. Competition included Fortune 100 companies IBM, Dell, Caterpillar, and GE, among others.

The company''s "Orient Me!" interactive training program, developed in-house for Steinwall employees, is offered through the Society of the Plastics Industry to its members.

Maureen Steinwall, president of Steinwall Inc., was excited and surprised at winning the award against such notable competition. "It''s a real honor," she said in an interview at NPE. "But, I believe that people are critical to any company''s success. Everyone at the Managing Automation conference got up and spoke about software and hardware, but I reminded them that the most important factor is the `humanware.''"

Mitsui boosts PP compound capacity; chases auto demand

Mitsui Chemicals and its subsidiary Prime Polymer (both Tokyo) plan to hike polypropylene compounding capacity in North America, Thailand and China by 27%, from 237,000 tonnes/yr to 300,000 tonnes/yr, by May 2007. This will ensure that the firm can respond to growing demand for automotive grades in these key markets. The biggest boost will come in Thailand, where capacity at affiliate Grand Siam Composites will rise from 52,000 tonnes/yr to 84,000 tonnes/yr.

Mitsui Chemicals also compounds PP in Ohio and Tennessee. Capacities at these sites will be raised by 11,000 tonnes/yr and 6000 tonnes/yr, respectively, to 109,000 tonnes/yr and 63,000 tonnes/yr.

GretagMacbeth, X-Rite move forward with merger

On Monday, June 19 of NPE week, color measurement technology suppliers X-Rite and GretagMacbeth, which is owned by Amazys Holdings, announced that 99.6% of shares had been tendered in X-Rite''s takeover bid, essentially finalizing the deal, which formerly closed on July 5. Speaking at a press conference on Tuesday of NPE week, Thomas Vacciano, the newly joined company''s president and chief operating officer, said combined 2005 revenue for the firms was $245 million, with 1100 employees altogether.

Nanomats bring together Arkema and Zyvex

Zyvex Corp. (Richardson, TX) and Arkema (Paris La Defense, France) expect to jointly develop nanomaterials applications. Through a licensing agreement, Arkema will use Zyvex''s patented Kentera dispersion technology in conjunction with its own nanotechnology products. Arkema will act as Zyvex''s NanoSolve distributor. Arkema presently manufacturers 10 tonnes/yr of multiwall carbon nanotubes at its facility in Lacq, France.

Chinese counterfeit auto parts draw congressional scrutiny

U.S. Senator Carl Levin thinks it''s time the government did something about fake auto parts being brought into the U.S. from China. The Michigan Democrat recently brought sample counterfeit parts to a Capitol Hill meeting to emphasize the need for a government crack down on counterfeiting in the auto parts industry, which can carry safety issues, beyond the economic impact.

The U.S. Trade Representative has warned it was considering bringing a case against China before the World Trade Organization for failure to enforce intellectual property laws. In 2005, U.S. Customs reported that China was the number one source of counterfeit products seized at U.S. borders, accounting for 69% of all fake goods confiscated.

Names in the news

Demag Plastics Group promoted Larry Alvey to North American sales manager. Formerly the North-Central regional sales manager, Alvey has more than 16 years of industry experience. Prior to joining Demag, he was a direct sales representative for Milacron.

Hot runner manufacturer Mold-Masters (Georgetown, ON) has appointed Patrick Bennett to the position of executive vice-president, responsible for directing and coordinating global sales and marketing, as well as production operations in the Americas.

Erica Cocetta is manager of a new office in Udine, Italy for granulator manufacturer Weima (Ilsfeld, Germany). The firm sees a need for advanced granulation technology in Italy, it says.

Good things, such as promotions, come in threes. Mack Molding Co. (Arlington, VT) promoted Bruce Bixler to VP purchasing, Joan Magrath to VP sales and engineering, and Larry Walck to the expanded role of director of new business development.

[ On the record ]

"Unless we look at the plastics industry and its survival in new ways-in effect standing outside and looking in our windows, we arguably (someday) may not have one in North America to love, earn a living from, and support." P. C. Hoop Roche, chairman & CEO, processor Erie Plastics, Erie, PA.

"The [plastics supplier] industry has become used to steady growth, which can take the sting out of management mistakes. As volumes flatten, there will be less margin for error."

John Nash, senior consultant, AMI Consulting, Bristol, England.

"Price swings [of plastics] have become worse than ever. They cause more headaches than ever, too."

David Gurney, senior sales executive, at processor Innovative Plastics, Huntington Beach, CA.

"Nowadays when I make sales calls the parking lots at processors are full. A while back they were ghost towns. It''s a sign of how strong business is in the U.S." Peter Pollack, regional manager, Nissei America.

"Fortune 500 companies need injection machines in a hurry but they have no budget [allocation] so they''re leasing. The small molders that survived the shake-out have proven themselves technically and they''re buying machines left, right, and center." Yvonne Meadows, account executive. Plastics Equipment Group, U.S. Bancorp Equipment Finance.