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The 2015 SPE Research/Engineering Technology Award Nicely Goes To...

By: Lilli Manolis Sherman 29. May 2015

Having served on the SPE Automotive Division board of directors in many roles in the last 23 years, Suresh Shah is the 2015 recipient of the prestigious SPE International’s Research/Engineering Technology Award. Shah was honored for his longstanding contributions to automotive plastics and composites developments at companies like General Motors and Delphi Corp. The prize, which included an engraved plaque and a $2500 honorarium, recognizes outstanding achievements in the fields of plastic research and/or engineering technology and is one of the highest honors to an individual bestowed by SPE.

 

Throughout his distinguished automotive plastics career, Shah has worked in advanced processes such as gas-assist injection molding, co-injection molding, microcellular molding, hybrid plastic/metal molding, and direct inline-compounded long-fiber thermoplastic (D-LFT) composites. His other work has included materials development involving natural fiber composites, nanocomposites, D-LFT composites, and TPOs and TPEs.

 

Shah has authored over 70 publications, two of which have won SPE Best Paper Awards at the society’s ANTEC conference, and he holds 44 intellectual properties—27 U.S. patents, 10 defensive publications, and seven trade secrets. In addition, he was inducted as a Gold Level Hall of Fame Innovation Award winner at Delphi for his technical contributions and 40+ intellectual properties in December 2014. He led the development of the SuperPlug door hardware module in 1991—introducing gas-assist injection molding to GM.  For this technology, which has been translated to more than 30-million vehicles worldwide since 1993, Shah received SPE’s Automotive Division’s 2011 Hall of Fame award, and a host of international awards.

 

In 2009, Shah was named Scientist of the Year by the Engineering Society of Detroit and its 77 affiliate councils, and also received tributes from the governor of Michigan and the mayor of Troy, Mich. In 2003, he received the SPE Honored Service Member award for his contributions to the SPE Automotive Div. Two years earlier, he was inducted as a Technical Fellow in SPE and a year before that he was inducted into Delphi Automotive Systems’ Innovation Hall of Fame—again for his technical contributions to the company.

 

In 2000, his work on TPO skin formulations for GM’s Pontiac Bonneville sedan won the SPE Automotive Div.’s Interior Product innovation award. In both 1996 and 1998, Shah was nominated for the Boss Kettering award at GM for his efforts bringing innovation into production that has significant impact on corporate profit. And in 1997 he was given GM’s Presidential Council Honors Award.

 

Other technologies he worked on that won awards include the SPE Automotive Div.’s Body Interior category for the NUMMI (New United Motor Manufacturing, Inc.) assist grip handle in 1991, and SPI’s Award of Excellence for a composite window guidance channel in 1990.

 

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

 

 

 

 

Colored PET: Pretty To Look At; Headache For Recyclers

By: Heather Caliendo 28. May 2015

oPTI lightweight foamed PET bottles from Plastic Technologies Inc (PTI). The company says the process enables white or silvery colored bottles to be made without additives. 

 

PET. Thanks to its hygienic, strong and extremely lightweight characteristics, the packaging industry has embraced the material. And don’t forget that PET is the largest material recycled in both the U.S. and Europe. Traditionally, unpigmented PET has the highest value and the widest variety of end-use applications for recycling, according to the Association of Postconsumer Plastic Recyclers (APR, Washington, DC, USA).

 

But trends aren’t always about what’s easy and right now, many brands are taking a new path: colored packaging. The idea behind packaging with bright colors is pretty simple: it produces bottles with striking visual attributes and offers the potential to give brands differentiation in the marketplace. But this ‘colorful’ world of packaging could be problematic for recycling.

 

The trade group Plastics Recyclers Europe (PRE, Brussels, Belgium) recently discussed how the markets of milk packaging, home and personal care are switching from HDPE to PET for cost, marketing and sustainability reasons. However, this market shift could bring about more than 300,000 additional tones of colored PET, including black and white colors. PRE warns that the PET recycling markets can’t afford to absorb these extra colors.                                               

              

“If collected and sorted together, these numerous colored containers will need extra sorting in the PET recycling plants,” the organization stated. “In order for recyclers to sell this colored fraction, the material will have to be tinted in black or grey, but no market currently exists for such a material in high quantities.”

 

According to the APR, the use of translucent and opaque colors is for bottle-to-bottle and engineered resin uses. Although newer sorting technology is capable of identifying white PET from other PET colors, much is also problematic and should be examined for their impact on the recycling process. Inclusion of nucleating agents, hazing agents, fluorescers and other additives for visual and technical effects should be examined specifically by the reclaiming industry for impact on the overall plastic bottle recycling stream, the APR states.

 

PRE says that its data shows that if PET milk bottles contain TiO2, the recyclers’ end product will be highly contaminated. For example, the transparency of clear recycled PET will be reduced (i.e. haze affect), while colored recycled PET will have TiO2 up to 5%. In both cases, this will lead to a fall in the use of recycled PET on the market, the group states.

 

“These ‘colorful’ future trends will weaken the image of PET as a recycled product. Additionally, it will create great difficulties for the PET recycling industry, which already has other market barriers to overcome,” the group said. “Furthermore, the existing HDPE recycling industry, which already has a market for colored HDPE applications (e.g. the pipe industry) will suffer if colored PET continues to grow.”

 

The solution? PRE believes its full body sleeves/labels that could still produce a colorful effect. But let’s not forget that full body shrink sleeve labels also present plenty of problems in the recycling process. PRE says it calls on the PET and HDPE value chains to join efforts to avoid breaking the circular functioning of these recycling streams.

 

What are your thoughts about this? Should PET have a colorful future?

China Serves Up Stiff Competition in Table Tennis and Plastics Machinery

By: Tony Deligio 27. May 2015

Billed as a live-action personification of energy efficiency, a table tennis match between Germany’s professional ping ponger, Timo Boll, and two up-and-coming Chinese youth players more closely reflected the shrinking gap between the two country’s plastics machinery sectors. (Check out a slide show of the action).
 

Staged by the VDMA, Germany’s machinery association, and Adsale, organizer of Chinaplas 2015 in Guangzhou, the exhibition pitted 34-year-old German national Timo Boll, currently placed 7th in ITTF World Rankings, against two rising youth stars in Chinese table tennis, ages nine and 12.
 

Boll, the world’s No. 1 player as recently as 2011, towered over his youthful competition in size and game, and was certainly energy efficient in his play, dispatching the boys 11-2 and 11-3 in action that took less than 10 minutes, including warmups.
 

In game play, the Chinese youth showed flashes against the German veteran, with brief, albeit early leads, impressing Boll in the process. Of the 9-yr-old, Boll, who started playing at age 4 coached by his father, said the youngster’s skills were ahead of his own at the same age, with the potential to keep improving.
 

“He has the motivation, he will practice,” Boll said. “He’s still a little small and a bit nervous, but I think he’s a player who will practice hard and wants to be a good player, and I wish him luck.” Of the 12-yr-old, who dueled Boll to several lengthy rallies, the Germany professional spoke highly of his technique and aggression.
 

At the show, machinery executives also acknowledged the rising credibility of China’s game on the machinery front. In a sector that continues to grow, Chinese equipment makers’ share of the domestic market has risen every year since 2008, jumping from 49% in 2008 to 78% of the total “plastics machines” consumed in China in 2014, according to CPMIA.
 

Despite declines in 2012 and 2013, overall exports of Chinese made equipment have risen from nearly $1.12 billion in 2010 to just over $1.45 billion RMB in 2014, according to the CPMIA.
 

A key component for growth at China-based injection molding machine maker Haitian, which had record revenues ($1.21 billion) and gross profits ($395 million) last year according to Chief Strategic Officer Helmar Franz, was derived from record exports, which were up 13.1% in 2014 fiscal year to $375 million.
 

At the show, Ralf Pampus, director of strategic sales for Reifenhäuser’s blown film division and managing director for the company in China, acknowledged China’s rise as a rival to Germany. “The competition against local machine manufacturers is challenging,” Pampus said, acknowledging that firms like his can still differentiate but also noting that Chinese machine makers continue to improve.
 

The day before the match VDMA held a press conference to promote its Blue Competence energy efficiency push, featuring leading figures from top German firms. One of those, Karlheinz Bourdon, senior VP technologies at KraussMaffei, said of the exhibition match: “I’ll tell you what tomorrow is—the present playing the future.” He was of course, talking about table tennis, but in the years to come, the same sentiment could be said about Germany and China’s respective equipment industries.

PE Film Market Analysis: T-Shirt Bags

By: James Callari 27. May 2015

Last year, processors consumed about approximately 1.35 billion lb of polyethylene to produce grocery sacks, also known as t-shirt bags. Though ban, taxes and other environmental roadblocks are seemingly never-ending threat, the market should experience modest growth of 1.6% a year through 2017, when PE consumption for T-shirt bags will reach 1.420 billion lb.These are among the conclusions of the most recent study of the PE Film market conducted by Mastio & Co., St. Joseph, Mo.

 

Plastic bags still face competition from paper bags, as some consumers believe paper makes for a more natural and environmentally safe bag, says Mastio. Truth be told, paper manufacturing pollutes the water, releases dioxininto the atmosphere, contributes to acid rain, and depletes the tree population, the study points out.

 

Moreover, Mastio states, PE t-shirt bags consume 40% less energy than paper when produced, and generate 80% less solid waste than paper bags. Fewer atmospheric emissions are produced and less waterborne wastes are released with PE t-shirt bag production compared to paper bag production.

 

Currently, reusable cloth sacks continue to make inroads into this market due to the pressure from several state and city governments. Many states and cities are in the process or have already enacted legislation on single-use, paper and plastic bags that varies from an all-out ban to imposing a tax or bag fee on each bag at the point of sale. As a result, many stores are now selling their own reusable cloth or plastic sacks to consumers, Mastio point outs.

 

MATERIALS TRENDS

 

T-shirt bags are made primarily of HMW-HDPE and MMW-HDPE. HMW-HDPE is the resin of choice due to its superior strength in thinner gauges than LLDPE or LDPE. HDPE resins, particularly

 

UHMW-HDPE and HMW-HDPE grades, maintain the desired strength levels when downgauged, and have very high impact resistance.

 

LLDPE and LDPE resins are utilized when there is a desire for a strong bag that has improved printing properties, a softer texture, and more surface gloss. The various grades of LLDPE resin utilized included the following: LLDPE-butene, LLDPE-hexene and LLDPE-octene. LDPE-homopolymer resin was also incorporated in the production of t-shirt bags. The cost and appearance are typically higher for LLDPE bags when compared to HDPE bags, and some bag strength is sacrificed. With the small operating margins that most grocery stores experience, HDPE bags are a more feasible economic choice.

 

TECHNOLOGY TRENDS

 

T-shirt bags are made via the blown film process. Some 20 or so years ago, most t-shirt bags were single layer. Last year, according to the Mastio report, nearly 72% of t-shirt sacks produced were coextrusions, generally three layer. On average, says Mastio, PE t-shirt bags used 30% less material today than bags made five years ago. Advances in the PE resins used to produce t-shirt bags have reduced material requirements without decreasing bag strength.

 

MY TWO CENTS

Equipment builders argue that too many processors are making do with older equipment when newer technology will permit them to produce better quality films at higher speeds. One industry source estimates that more than 70% of the 20 billion lb/yr of blown film is currently processed on equipment that’s 10 years old or older. But T-shirt bagmaking is a highly competitive market will razor-thin margins, making big capital equipment investments a big challenging.

 

That argument aside, if more processors followed the lead of Novolex (Hilex Poly), staving off environmental threats might be a bit less challenging. The firm made a huge commitment in setting up an infrastructure allowing to collect post-consumer film and reprocess it into new bags. Read that story here.

Got the Right Value for Your Company? Here Are Tips on How to Sell It

By: James Callari 27. May 2015

 

In part one of this-three part blog series, we featured a Q&A with Deborah Douglas in which she offered tips on what plastics processors need to know to get more savvy on evaluating the worth of the their company. Her insights are both useful and timely in light of the spate of M&A activity in plastics processing of late.

 

Ms. Douglas is an expert on such matters.  Sheis 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 recentRipe: 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 part two, she provides tips on how owners of processing businesses can get better at selling.

 

Plastics Technology: As companies prepare to move forward in the selling process, what are the “keys” to ensure they do well in the end?

 

Ms. Douglas: First and foremost, it is critical for owners to keep the process highly confidential. We have never had an owner sorry about keeping the sale confidential.  Unfortunately, we have had owners who insisted upon open discussion, who were sorry in the end.  If your employees know that you are considering sale, they may become afraid.  That doesn’t mean that all will race out to look for alternative jobs, but your best people encounter those opportunities without really trying.  If they’re insecure at the moment, they may just think, “Maybe I should at least look.  You never know…” Also, customers too may become insecure to know you are thinking of sale.  They may think, “At least I should try to make sure I have alternative vendors I could turn to.  Just in case…”

 

The most successful owners who sell for the true home run pricing usually find the “best” buyers in unusual places.  Many of the seller owners we talk with tell us at the outset, “I probably know who’s going to buy me.  It will be one of these three or four companies.”  Usually they’re thinking about competitors who they know. 

 

Plastics Technology: And is this how it usually turns out?

 

Ms. Douglas: After 24 years in this business, I have learned that those top three or four are almost always wrong.  The best buyer is not the obvious.  It’s the company that’s not in your business, but does something slightly adjacent.  They get more when they buy you.  They can, for the first time, now do something they could not do before They’ll pay a premium for that head start.  If you want to have a chance for the true homerun sale—the grand slam of a lifetime—hire help who will look exhaustively to identify the perfect buyer.

 

Plastics Technology: Let’s talk a bit about pricing. How do you work that into the conversation?

 

Ms. Douglas: In early conversations with buyers, they will always ask how much you want for your company.  Professionals never set price.  We make the buyer set the price.  The open market will decide who wins.  It is easy for us to maintain that policy, but it is hard for the do-it-yourself owner to do.  Buyers tend to make you feel disingenuous for not responding to that question.  “How can you expect me to move forward if you won’t tell me your price?”  Buyers big enough and smart enough to have the money to make acquisitions know how to set price.  (We would never get the huge prices for transactions that we sometimes do get, if we set the price ahead of time.)

 

In presenting information about your company, it is important to be thorough and honest.  Even if there’s bad news sometimes, or a weakness that you must acknowledge, buyers generally take it quite well if you’re up front about it.  In fact, in many cases if you find the perfect buyer, they will think of it as an opportunity!  (“If this company is making this much now, just think how it will do when I fix the problems!”)  Great deals are consistently made from a foundation of honesty and thorough information.  In this case, honesty pays.

 

Buyers looking at your company may be amazingly fast to offer you a “letter of intent.”  Novice sellers get excited about such offers, and are often far too quick to accept.   A letter of intent gives the seller nothing.  It says the buyer has an interest in buying, it says a price (or sometimes a price range), and it says the seller, by signing, agrees that the buyer can now do due diligence to actually decide if he wants the deal.  In the meantime, the seller, by acceptance, normally agrees to deal exclusively with just the one buyer, and not talk to others.  If you’re thinking of accepting such a letter, consider the following:

 

If the buyer needs a “stop shop” (an exclusive dealing clause) to continue, consider requiring a nonrefundable deposit first.  If you chase away other alternative buyers, they usually will not come back later.  It’s a big deal to pull yourself from the market.

 

Plastics Technology: What kind of information should be included in a letter-of-intent?

 

Ms. Douglas: If you are contemplating a letter of intent, first make sure you have all of the critical transaction details worked out in advance.  If you have to stay with the company—for how long, and what will your compensation be?  Will there be a cap on the indemnifications the buyer will ask for in the purchase agreement?  What happens to profits or changes in balance sheet between the letter of intent date and closing?  Will the physical property be purchased or leased as part of the deal, and if so at what price?  If there’s any noncash piece to the deal, what is the collateral or guarantee that it will really be paid?  The more thorough the seller can be in working out details before exclusivity, the stronger the deal.

 

Plastics Technology: Any other considerations?

 

Ms. Douglas: If you enter into a letter of intent, be sure to define timeframes tightly for the period until closing.  Normally 60 days should be adequate. You may want to put in interim dates for completion of certain elements of their due diligence.  Silly long timeframes to close increase risk of failure and are extremely costly to the seller, who must provide time and attention constantly to buyers as due diligence progresses.

 

Make sure to insert a provision to say that if the transaction price or terms change materially, the exclusivity for the buyer is void.  Such a provision encourages buyers to think long and hard before proposing changes, and can make the difference in preserving the deal or not.

 

Selling is a complex process, and sellers generally need good professional help to get it done.  Look for a representative who does only the sale of companies.  Our normal time to get a sale done is something over 2000 hours (and we’re efficient and know what we’re doing).  It’s time-consuming, and it’s important.  Your attorney knows how, for the legal mechanics, but he does not know the competitive marketplace, and he does not have that kind of time to spend focused on your deal.  Your accountant is not terribly motivated; he’ll probably lose a client when the deal is done.  And he can’t represent you on a success fee basis, because then he wouldn’t be independent.  There are good intermediaries out there, who serve clients reliably and competently.  It is worth the time and effort to find them.

 

Business owners do great things for our country.  They create jobs, and opportunities for people.  They improve goods and services for everyone.  They fill the public coffers with tax dollars.  They deserve success in the end.  Sale of the company is often the culmination of a lifetime of hard work.  It’s worth the time and attention to do well.




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