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Planting The Seeds For A Future In Plastics

By: Heather Caliendo 22. May 2015

 

Winners of the Techmer PM sponsored Student Design Awards. 

 

There have been several stories lately from a number of companies describing the ways in which its employees are engaging with the younger generation. It is great to read about, after all, it’s estimated that there are approximately 600,000 skilled manufacturing jobs that are currently unfilled in the U.S., and 2.7 million manufacturing workers are expected to retire in the next 10 years.

 

Here’s a rundown of some of the initiatives.

 

TECHMER PM

 

Techmer PM (Clinton, Tenn.) is the founding sponsor of the Royal Society of Arts United States (RSA-US) Student Design Awards (SDA). David Turner, vice president of sales & marketing for Techmer PM, told Plastics Technology that the company serves as a sponsor for the Student Design Awards as a way to support student designers, many of whom will be pioneers of the next generation in design. Past winners include Richard Clarke, global vice president of design at Nike.

 

“As a leader in materials design, Techmer PM supports both current and future designers to help enable them to bring their ideas to life,” he said. “This is part of our overall effort to support all levels of the supply chain to drive the plastics industry forward by helping to foster collaboration and innovation.”

 

The company recently recognized the recipients of six prominent design awards. Held April 25 at the Cooper Union for the Advancement for Science and Art in New York City, the 2015 program’s finalist submissions comprised 23 projects from a collective 36 students representing eight different universities.

 

The Bill Moggridge Award for Interdisciplinary Design is among the awards funded by Techmer PM, given this year to Keshev Ramaswami of the Pratt Institute for his project EXOL[L]NEA. The award, which is named in honor of the late William Grant “Bill” Moggridge (IDEO founder, design visionary, and former SDA winner), was introduced by Alex Moggridge, Bill’s son, and presented by Clarke of Nike.

 

Clarke gave the keynote speech and credited the award with “changing his life.” He encouraged student designers to “look for the companies that dare to dream with you.”

 

The RSA-US Student Design Awards, which seeks to inspire collaborative, multidisciplinary, design-led social change, will celebrate its 90th anniversary this year in the United Kingdom, while the U.S. program is in its third year. Both the U.S. and UK programs are open to undergraduate students currently enrolled in colleges and universities.

 

AMCOR RIGID PLASTICS 

 

Amcor Rigid Plastics (Ann Arbor, Mich.) launched a neat program that connected students from around the world. Its 21st Century Global Cyber Pal Student Design Challenge project paired Manchester, MI students in Joanna Van Raden’s fourth-grade class with 42 Australian third- and fourth-graders in Greensborough, Victoria to develop packaging design concepts for juice bottles, food containers and fruit snack pouches.

 

During the project, Manchester and Greensborough students shared their packaging design ideas through an online educational platform called Edmodo. They also viewed different weekly project video lessons compiled by two Amcor Rigid Plastics’ senior industrial designers, Rick Rangler and Greg Hurley.

 

“These videos emphasize the critical roles technology and teamwork play in creating innovative packaging designs,” Rangler said. “It also represents a peek behind the packaging design curtain for students who are interested in learning more about this dynamic line of work.”

 

In April, Amcor Rigid Plastics awarded an $8,000 Amcor Community Program grant to provide four Luther C. Klager Elementary School classrooms with technology and furniture to enhance students’ 21st century STEM learning experience.

 

“We’re committed to supporting educational programs that share our passion for responsible packaging in Manchester and other local communities,” said Charlie Schwarze, an Amcor Rigid Plastics global sustainability manager and Amcor community program administrator. “We make community grants available so our co-workers can partner with local organizations to build better and stronger communities.”

 

STRATASYS

 

Stratasys Ltd. (Eden Prairie, Minn.) joined SME’s Bright Minds as a program partner for three industry events to help develop and enhance future careers in additive manufacturing.

 

The Bright Minds program gives students the opportunity to learn about additive manufacturing through lectures, workshops, panel discussions and various hands-on challenges. Program participants will also be introduced to educational and career opportunities in additive manufacturing. 

 

“Stratasys is proud to be sponsoring Bright Minds for the fifth year in a row,” said Sig Behrens, general manager of global education at Stratasys. “This program provides young students the opportunity to learn about 3D printing and its many capabilities. We believe that 3D printing is changing the way things are made. We have a core focus on inspiring and recruiting as many young people as possible to learn the skills of the future that employers are looking for. Programs like this are key to building that pipeline of talent."

 

Bright Minds is an educational program created by Society of Manufacturing Engineers for high school and college students, educators, and administrators to support the future of manufacturing careers. Each Bright Minds event enhances the collaboration with manufacturing leaders and combines workshops with hands-on challenges to give participants the necessary tools to prepare them for future career challenges.

 

How is your company involved with recruiting the younger generation?

Molding, Then and Now

By: Tony Deligio 20. May 2015

That quote from Amos Golovoy who in 1991 in New Orleans launched what is today Molding 2015 but was then “Advances in Polymer Processing”. In 1994, the event’s name was changed to Molding, but the goal then as now was to help people in plastics make better parts faster. That was a particular area of interest back then for Golovoy who was working for automotive OEM Ford Motor Co.

 

“At Ford Research, I was involved in research on plastics properties and processing,” Golovoy says. “The general knowledge in the area was diffuse. I thought a conference that focused on plastics processing would help.”

 

Back in 1991, the main conference sessions covered injection molding, rapid prototyping, mold making, computer aided engineering (CAE) and molding simulation. At the second conference, presentations examined gas assist, co-injection, SCORIM, automated molding cells, robotics, metallic lost core technology, and more.

 

Speakers came from some recognizable companies, which have since changed their names and/or ownership, including Battenfeld of America, Co-Mack, Lexmark, Mannesmann Demag, Wittmann Robots, and Pitney Bowes among others.

 

Some important injection molding topics the conference has covered over the years include:

 

  • Gas assist
  • Co-injection and multi-materials molding
  • In-mold processing (assembly, coating, labeling, decorating)
  • Automated molding cells
  • Clean Room medical molding
  • ‘Green’ molding
  • LSR Molding
  • Micromolding
  • Mucell

  

“Individuals come and go,” Golovoy remembers, “but the majority of speakers and attendees are from the molding industry, resins suppliers, and OEMs.”

 

To learn more about Molding 2015, visit the event’s website where you can view the full agenda and register.

In-Situ Nucleated PP Rivals Conventional Nucleation

By: Lilli Manolis Sherman 19. May 2015

A new technology for polypropylene nucleation just might be a game changer. We were recently contacted by Borouge, the joint venture between Abu Dhabi National Oil Company (ADNOC) and Austria’s Borealis regarding this apparently breakthrough technology.

 

Since its founding in 1998, Borouge has become a leading innovative polyolefins supplier serving plastics processors in 50 countries across the Middle East, Asia, and Africa. Daniel Van Houcke, lead application development engineer, explains that the new nucleated PP is based on the Borstar Nucleation Technology (BNT) which was developed with the help of their new Borouge Innovation Center in Abu Dhabi.

 

What should be of particular interest to PP injection molding processors is that the nucleating effect of BNT is obtained in the polymerization reactor (in situ), and boasts numerous advantages over the standard approach of adding a nucleating agent during pelletization. These include: a robust and consistent nucleation effect; higher and faster crystallization temperature; inertness and low taste and odor; and, reduced impact of colors or shrinkage of the material.

 

Borouge has launched the first BNT-based grade--fully compliant with food-contact regulations BorPure HJ311MO--for use in such applications as confectionary packaging, microwaveable containers, take-out food containers, media cases, and houseware containers. Field tests comparing this material to a conventionally nucleated PP grade showed the following significant benefits for processors and/or end users:

 

• >10% improvement in flow leading to better processability

 

• >10% reduction in cycle time—mainly through reduction of cooling time and easier demolding due to faster crystallization

 

• >10% reduction in processing temperatures leading to lower energy consumption

 

• >10% improvement in Charpy impact performance

 

• Significant improvement in organoleptics (taste and odor)

 

• Less breakage (waste) due to enhanced impact

 

• Microwaveable and reusable  

 

A lower carbon footprint is also claimed for the new PP achieved by cycle time and energy reduction. “With the drive for sustainable innovation supported by proprietary Borstar technology and our advanced research capabilities, Borouge is committed to add value to life by shaping the plastic materials of the future,” says product development manager Balakantha Rao Kona.

 

According to Kona, the new Innnovation Center serves as a focal point for innovation in the polymer development and application technology. With over 70 professionals and technicians from 20 different countries, the Center is designed to provide value-added plastics for customers worldwide, focusing on the infrastructure, automotive, and advanced packaging industries. This investment includes extensive laboratory and application pilot resources. Product development focuses on high-performance, cost-effective, and differentiated polymer solutions that ensure the success of Borouge customers throughout the value chain while also helping to address some of the major global sustainability challenges. The Borouge facility also collaborates with the European innovation centers of Borealis, local and international educational institutions, and many key industry players.

 

Initially, processors interested in the new BNT-nucleated PP can contact Kona at: Balakantha.Kona@borouge.com. The material, which is now being produced commercially and which has been tested at various processors with excellent feedback, according to Kona, can be expected to be made available in the near future via Borealis (U.S. office is in Port Murray, N.J.).

           

Want to find or compare materials data for different resins, grades, or suppliers? Check out Plastics Technology’s Plaspec Global materials database.

 

What’s Your Company Worth?

By: James Callari 19. May 2015

As I wrote in a previous blog, this is a good time to be in the business of melting plastics. More and more existing processing concerns are expanding by adding to their manufacturing footprint and buy new machinery. Processors from Europe and even China are setting up plants in the U.S. to tap into a growing and very optimistic American market.

 

And, to no one's surprise, this bump in business has also resulted in an uptick in mergers and acquisition activity. Obviously, making an acquisition is another way to expand a business. What’s more, when business conditions are good that also presents an opportunity for firms seeking an exit strategy to get maximum value for their operation.

 

So, what’s your business worth? To help you find out, Plastics Technology reached out to one of the experts in the field. Deborah Douglas is the managing principal of Douglas Group, a St. Louis-based M&A firm that specializes in selling plastics processing companies. Ms. Douglas is a published author of two books, her most recent: Ripe: Harvesting the Value of Your Business. She is frequently asked to speak at varied industry and trade events and often serves as luncheon speaker for general business forums. She has been published in numerous trade and business periodicals including Plastics News, ISHN, The Wall Street Journal, Fortune Magazine, and Profit Magazine to name a few.

 

In this Q&A blog, Ms. Douglas discusses some of the issues processors need to consider to properly evaluate the worth of the business should they be pondering selling it. In two blogs to follow, she’ll offer her tips on how you can be better at selling and buying a plastics processing business.

 

 

Plastics Technology: So please fill plastics processors in on what’s happening on the M&A front?

 

Ms. Douglas: There is so much acquisition activity right now that navigating it is really a difficult and hot topic for owners. We are receiving a lot of requests from owners about how to value their companies, and questions on how to proceed in considering sale.

 

Owners of plastics processing companies have intense interest in the merger and acquisition activity they see, but the primary hook to that interest is a desire to know how much the company they own may be worth in the M&A markets of today.

 

Plastics Technology: So how do they get started?

 

Ms. Douglas: The simplistic and most obvious answer to that question involves some sort of multiple of the pretax earnings of the company in question.  However, real-life market conditions actually go far beyond that to come to value.

 

Owners seeking such value probably always need to “start” with a calculation of EBITDA, which approximates cash flow of the enterprise.  EBITDA is earnings before interest, taxes, depreciation or amortization.  To develop such tally owners also need to make that “owner- neutral” —by adding back or subtracting out any odd-ball impacts on the numbers caused by non-arm’s-length transactions. 

 

Plastics Technology: Owner neutral? Could you provide a specific example?

 

Ms. Douglas: For example, If the owner takes out salary $ 1 million a year for himself, but his arms-length value (i.e., a sensible fair market value for a replacement person) might be, say $250,000, that means there’s a $750,000 add-back to the numbers to really come up with a fair EBITDA level of performance (restating EBITDA to be “ as if” expense were really only $250k per year). 

 

If, on the other hand, the owner doesn’t take any salary as expense, even though he really does put in hours and work extensively for the company, that company should have a “deduct” to come back to approximate arm’s length EBITDA.

 

Plastics Technology: What needs to be considered after EBITDA?

 

Ms. Douglas: After coming to a reasonable fair value of EBITDA for the company, owners then need to estimate what sort of “multiple” of EBITDA their company would likely bring in a competitive buyer market.  The average plastic processor could generally estimate that they might get someplace between a 5 multiple and perhaps a 6.5 multiple for sale.  That multiple could sink below 5 for a very small enterprise, or for an entity with significant owner dependency, or other problem issues.  On the other hand, that multiple could rise above those guidelines, maybe to 7 to 10 for example, for patented proprietary products or technologies, or for ownership of binding long term contracts with customers.

 

Plastics Technology: What are the kinds of things that tend to drive up value?

 

Ms. Douglas: The things that tend to push pricing up include:

  • Exceptionally high profit levels (15% plus for plastics processors)
  • Strong and growing customer base with promising future prognosis
  • Outstanding second tier management
  • State of the art equipment and facilities
  • Well-defined focus, with exceptional expertise in some defined area
  • Long term contracts with customers
  • Double-digit growth rates
  • Strong and stable balance sheets

 

Plastics Technology: On the flip side, what are the conditions that tend to drive value down?

 

Ms. Douglas: Things that tend to suck pricing downward include:

  • Dependency on one or a few big customers
  • Declining margin trends
  • Lack of capable second-tier management
  • Litigation history
  • Lack of growth in recent history
  • Below average profitability (EBITDA under say 5-7% for processors)
  • Serious capital-equipment needs in the near future

 

Plastics Technology: Of course if there is more than one prospective buyer that certainly strengthens the seller's position. Is that fair to say?

 

Ms. Douglas: Regardless of company-specific situations, pricing is always, inevitably, much stronger if the would-be seller is able to find and court multiple competitive buyers. Good competition for any given seller can throw all “norms” for pricing out the window, to the great benefit and happy day for the selling owners.

 

Our firm sold a company several years ago, which we thought would produce a value of around $30-35 million.  As we progressed on the deal, we found that there was one group of particular buyers, who desperately wanted access to our client’s customers.  Before we came upon the goldmine of truly great buyers, we had 15 offers for our client.  Offers ranged from about $25 million to high $30s.  When we found the perfect buyers, we suddenly, in one week, had three offers over $50 million.  We closed that deal about 60 days later, at an all-cash price of $67 million.  Our client was ecstatic, and we were well-paid and very happy.

 

Competition can make a huge difference.  There’s a quote I like that paints the picture.  Al Capone said, “You can get a lot more with a kind word and a gun, than with a kind word alone!”  A good competitive selling process is the seller’s gun!

PE Film Market Analysis: Shrink Film

By: James Callari 18. May 2015

 

Last year, processors consumed approximately 805.6 million lb of PEs of various varieties to produce shrink film. With an average annual growth rate (AAGR) of 2.2%, PE resin consumption for the production of shrink film is expected to reach 860 million lb by 2017. The biggest application for shrink film is for unitization of consumer products, with new applications for constantly being developed. The public’s growing appetite for the convenience and cost savings of purchasing products in bulk has spurred the increase in demand, as has—relatedly—the continued popularity of superstores, warehouse stores, and wholesale clubs.

 

The physical characteristics required of shrink film include strength, puncture resistance, sealability, clarity, and excellent load retention. Some shrink film applications require coloring, ultraviolet light inhibitors (UVI), corrosion inhibitors, venting, varying coefficient of friction (COF) levels, anti-static additives, moisture barriers, printability, hot-tack strength, and controllable shrink or draw down percentages.

 

 

These are among the conclusions of the most recent study of the PE Film market conducted by Mastio & Co., St. Joseph, Mo.

 

 

The study notes that shrink films are classified by the amount of contraction or shrink percentage when heated in both the machine direction (MD) and the transverse direction (TD). The percent of contraction in the machine direction (MD) typically ranges from 50% to 70%, with 60% being the most common.

 

Contraction in the transverse direction (TD) typically ranges from 5.0% to 15%. Shrink films utilized for wrapping paperback books, magazines, and skin or blister packaged products with a cardboard backing require a soft shrink or low percent shrink film. Low force shrink films eliminate buckling or distortion of products and related packaging, according to the Mastio report.

 

MATERIALS TRENDS

 

The Mastio study reveals that LDPE resin remains the principal material of choice for the production of shrink film due to the resin’s high clarity and ease of processing. LDPE-homopolymer and LDPE-EVA copolymer resin grades are extruded separately, blended, or coextruded with other polyolefins for shrink film production. LDPE-EVA copolymer resins are often used to increase the shrink film’s clarity, low temperature flexibility, impact resistance and heat-seal properties. LDPE-EVA copolymer resin is well suited for shrink film and bags that require printing or freezing. LDPE-EVA copolymer resin also provides excellent adhesion when used as a bond layer in coextrusion or lamination with other heat-sensitive substrates such as BOPP film, because the film surface softens as the EVA copolymer content increases. Additionally, a small amount of LDPE-acrylic acid copolymer (LDPE-EAA) was also reported.

 

 

Mastio notes that other resins utilized in the production of shrink film include blends or coextrusions of LLDPE resins including butene, hexene, super hexene, octene (LLDPE-butene, LLDPE-hexene, LLDPE-super hexene, LLDPE-octene), and mLLDPE grades. LLDPE resins, alone, lack the physical characteristics necessary to produce shrink film.

 

More processors continue to use metallocene grades of LLDPE in the production of shrink film, according to the study. The metallocene process produces resins with very predictable performance characteristics that are extremely uniform and consistent. Improved film clarity and impact resistance, in lower gauges are some of the value-added benefits of using mLLDPE resin.

 

TECHNOLOGY TRENDS

 

Blown film is the preferred process of producing shrink film, because it allows the manufacturers to custom design film with the required percent of contraction. Control of contraction and orientation in both the MD and the TD is possible in blown film extrusion.

 

The cast film process, on the other hand, allows greater control of shrink film gauge uniformity, increased clarity, and higher output rates. Another benefit of cast film extrusion is the ability to produce shrink films with less shrink force in the TD, since most of the potential shrink force is limited to the MD. Shrink films produced with the cast film extrusion process are often called “low force” shrink films and are used for applications such as magazine overwrap. Over contraction of shrink films in those types of applications can cause the magazines to wrap or buckle when the outer packaging is heat shrunk.

 

Last year, coextruded structures accounted for about 61% of the market, states Mastio. Three-layer coex structures are most common, though some processors go up to seven.

 

MY TWO CENTS

 

Last year, Mastio reports, the industry’s top six shrink film processors held a collective market share of 60%. These are among the industry largest, most recognizable and most technologically advanced names in the film extrusion market, such as Berry Plastics, Sigma Plastics Group, Bemis North America, AEP Industries, Inc., Sealed Air Corp. (Cryovac Div.), and Cove Point Performance Packaging (Clysar, L.L.C. Div.). Most industry players categorized the market as “strong and stable,” with future growth depending on the overall economy (GDP).

 

Some of the smaller players are introducing new products for bulk packaging to reduce overall packaging usage. Others smaller players are looking at new markets and unique resin blends and combination in an effort to differentiate their product offerings. Market niches seem to suggest an opportunity for smaller processors to compete.




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