Canadian Plastics November/December 2008

CanadianPlastics www.canplastics.com

IN PROFILE

2nd annual Extrusion Benchmark Survey!

POLYMER PRICING

The latest intelligence from the Resin Outlook Conference

ALSO INSIDE

• Highlights from the Expoplast trade show in Montreal • The top 10 biggest news items of 2008!

NOVEMBER/DECEMBER 2008

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contents

Canadian Plastics NOVEMBER/DECEMBER 2008 VOLUME 66 NUMBER 10

LOOKING BACK...

The March 1987 issue of Canadian Plastics reported on Cleveland, Ohio-based composite molder Glastic Company, and its development of composite panels for use in bowling alleys.

Designed as a nostalgic throwback to the wood-grained look of bowling alleys built in the 1950s, the panels were made from a fiberglass mat/polyester resin system, with woodgrained graphics and wear surface molded in a single operation. For its achievement, Glastic was given the SPI Composite Institute’s annual best overall product award for 1986.

page 10

Number of the month:

*$16.67

*Average hourly operator wage, excluding benefits, in a Canadian extrusion shop. (see pg. 21)

4 Editorial: • When the going gets tough, the politicians do nothing 6

Executive’s Corner: • Risks across the cycle

7 News: • Retrospective: The highs and lows of 2008 • Industry turns out for Expoplast trade show • News Briefs and People 10 Ideas & Innovations: • From man-made grain to plastics additive 25 Technology Showcase 26 Plastics Data File 27 Advertising Index 27 Classifieds 29 Design Ideas: • Plastics in the house 30 View from the Floor: • Understanding BPA PLUS:

page 12

page 29

cover story 12 AUTOMOTIVE: SUPPLIERS CHANGING GEARS With rumours of a merger between GM and Chrysler in the air, doing business for the Big Three automakers no longer seems like such a safe bet. For Canadian parts suppliers, collaborating with OEMs and suppliers in Asia can offer a path to future prosperity — provided they follow the right directions.

features 16 RESIN OUTLOOK 2009: AGE OF UNCERTAINTY Rising crude oil prices, volatile feedstock costs, economic meltdown, and hurricanes — we’ve seen it all over the past year. And for an industry that depends on resin as on lifeblood, the results could be dramatic. Inside, find out how these and other factors will affect the price of commodity and engineering resins into 2009, and beyond.

21 EXTRUSION BENCHMARK SURVEY: AN INDUSTRY PROFILE The results of the 2nd annual Canadian Plastics Extrusion Benchmark Survey are in! Purchasing intentions, resin consumption rates, revenue totals — it’s all here. Get the latest information on how the pipe and profile extrusion industry fared in 2008, and how it may look in 2009.

Jim’s Tip, Buzzword of the Month

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editorial

When the going gets tough, the politicians do nothing

I

n 2006, our magazine got into trouble with a few of our readers over an editorial criticizing the Harper government’s policy as it related to Canada’s plastics industry.

Sadly — and at the risk of causing further offence — I’m forced to reaffirm that sentiment after watching this year’s federal election, with one important distinction: none of Canada’s federal parties are putting forward policies that adequately address the problems facing our industry.

As soon as the election was called, the Canadian Plastics editorial staff engaged industry leaders and companies in a conversation about what a change in government would mean for this sector. The election was even the topic of discussion for the September 15 episode of CanPlastics TV. Although it was painfully evident that this election was mostly about politicking — the parties seemed to be more interested in being the first past the post than listening to their constituencies — the vote seemed to be a way for our industry to send a clear message to Ottawa. In Ontario, the province that has arguably borne the brunt of the manufacturing crisis, Premier Dalton McGuinty called on voters to pick the party with the best vision for the sector.

But here’s the problem: none of the federal parties have a measured, comprehensive strategy to deal with the problems facing this sector. And it’s not for a lack of trying on our part.

Though the Conservative minority government has delivered in areas like tax breaks, such as the accelerated capital cost allowance (ACCA) on machinery and equipment, industry leaders have generally agreed that the government hasn’t done enough for the ailing sector.

The Conservatives have preferred to take a “hands off” approach towards manufacturing. The Automotive Parts Manufacturers Association (APMA) has twice now sought millions of dollars in funds

from the federal government to help its members stay solvent, to no avail.

For their part, opposition parties seemed to sit silently by during the last government’s tenure until the Conservatives signaled an election. When manufacturing did come up in the latest federal campaign, the entire manufacturing sector was reduced to a single issue. Never mind that the sector is made up of a diverse set of industries, and each one is dealing with a different set of circumstances.

On the federal political scene, the decline in manufacturing is measured by job losses in the sector. And though the job losses in the sector are an important consideration, our federal politicians seem far less concerned about the loss of vibrant businesses and homegrown innovation.

Leaders castigated their opponents for not doing enough, and vowed to do more for manufacturing, but no one demonstrated how they would go about it. They were happy to show up outside a factory for a stump speech or a photo opportunity, but delivered nothing substantive in terms of policy.

I am perhaps most disappointed with New Democratic Party leader Jack Layton. While Liberal leader Stephane Dion squandered the majority of his campaign on policies that were met with voter skepticism, Layton used the last days of his campaign to travel through Ontario communities that have been left devastated by declines in manufacturing.

Finally, I thought, a politician who is willing to take the government to task for their passivity. But on closer inspection, his views — to reconsider fair trade deals and deliver policy from the “kitchen table” — seemed to be overly idealistic and out of touch with the crisis at hand. At a time when manufacturing is going through seismic shifts, populist rhetoric isn’t going to cut it.

That’s the overall impression I got from the federal election campaign past: there’s a whole lot of hand wringing and finger pointing, but no steady hand.

Umair Abdul, assistant editor uabdul@canplastics.com

www.canplastics.com MANAGING EDITOR Mark Stephen 416-510-5110 Fax: 416-510-5134 E-mail: mstephen@canplastics.com TECHNICAL EDITOR Jim Anderton 416-751-5749 E-mail: jimeditorial@yahoo.ca ASSISTANT EDITOR Umair Abdul 416-510-5112 Fax: 416-510-5134 E-mail: uabdul@canplastics.com ART DIRECTOR Valerie Perrott PRODUCTION MANAGER Steve Hofmann 416-510-6757 E-mail: shofmann@bizinfogroup.ca PRINT PRODUCTION MANAGER Phyllis Wright PUBLISHER & EDITORIAL DIRECTOR Judith Nancekivell 416-510-5116 Fax: 416-510-5134 E-mail: jnancekivell@canplastics.com CIRCULATION MANAGER Diane Rakoff 416-510 5216 Fax: 416-510-6875 E-mail: drakoff@bizinfogroup.ca HEAD OFFICE 12 Concorde Place, Suite 800, Toronto ON M3C 4J2. 416-442-5600, Fax: 416-510-5134 CANADIAN PLASTICS is published 10 times a year by the Business Information Group, a division of BIG Magazines LP., a leading Canadian information company with interests in daily and community newspapers and businessto-business information services.

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EDITORIAL ADVISORY BOARD: Brian Read, president, Horizon Plastics Company Ltd. Tom Meisels, president, F.G.L. Precision Works Ltd. James Ellis, vice-chairman, CPI Plastics Group Ltd. Mark Lichtblau, vice-president, Haremar Plastic Manufacturing Ltd.

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executive’s corner

Risks across the cycle

By Bill Empey, Prism Economics and Analysis

T

he Canadian plastics processing industry is near the bottom of the most severe business cycle ever experienced. But this is a cycle, just like all the others, and a recovery is coming. The trick is managing the risks and sticking to a strategy.

The North American and European economies fell into a recession in the fall of 2008. The cause of the current problems is a loss of confidence in political and economic leadership and institutions. The plastics industry in Canada was ahead of the cycle with shipments and production declines that began in 2005.

The winter of 2008-2009 will be the darkest period. The earliest likely time for a general recovery will be during 2010.

This commentary divides the cycle — from the middle of 2005 to 2010 — into five stages and describes circumstances and risks at each stage.

ANATOMY OF A CRISIS The crisis for the plastics industry began in the middle of 2005 when the Canadian dollar rose past US$ 0.80 and North American vehicle production and housing began a cyclical decline. Many Canadian processors were vulnerable to offshore competition.

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Canadian shipments began a slow decline, while the industry was still growing in the rest of the world. The major risk was a loss of market share — especially in the United States.

During the summer of 2007 the U.S. subprime mortgage crisis depressed activity in the U.S. Declines in Canadian plastics shipments accelerated across all markets. Higher costs and lower product prices squeezed profits. Financial losses and employment cut backs became common.

Risks shifted to a loss of equity and many firms moved to the U.S. or were taken over by U.S. companies.

The full-blown global financial crisis began during the summer of 2008. A recession began during the third quarter and will continue until the summer of 2009. Risks are simply survival and all attention is focused on cash and the balance sheet. Orders are falling and receivables go unpaid, as credit availability for customers becomes a concern. Market risks are most severe in the vehicle sector with declining North American production (and the survival of GM, Ford and Chrysler) as the biggest risk.

The financial crisis will ease during the winter as confidence builds in new leaders and policies. American consumer spending will be slow to respond, but low prices and pent up demand for housing and vehicles will prompt new purchases. Employment and orders will be growing again, energy and resin costs much lower, during the summer of 2009, but activity will be far below past trends. Prices will be low and margins limited. Risks at this time will be attached to customer relationships and finding sales in the markets that recover first.

WEATHERING THE STORM Economic recovery will restore production growth to historic rates during 2010. Plastics processing will lead and media reporting of the recovery may not be apparent until late in the year.

Survivors will be a part of the new “polymer processing” industry with capabilities in sustainable products, hybrid materials, mass customization and value added products. These four elements are at the centre of the Plastics Technology Road Map, developed by the industry in 2007. All of the economic and technological fundamentals driving that vision are in place. It just gets harder to see them emerging through the risks and losses of the recession.

The risk that spans the entire cycle is that industry and political leaders will lose sight of the strategic vision. If they drop investments in technology, lay off experienced engineers and managers and cancel training programs, Canada will miss out on the jobs, profits and prosperity that will grow in the new polymer materials industry.

Bill Empey is a managing partner at Prism Economics and Analysis, a Toronto-based consulting firm serving clients with economics, industrial-labour relations, and social research expertise.

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news

THE HIGHS AND LOWS OF 2008

Canadian Plastics made some big moves this year — our print magazine got a full redesign, and we launched CanPlastics TV, the industry’s first and only episodic Web TV show. For the industry at large, meanwhile, there was no shortage of big developments. Below, we recap some of the peaks and valleys of a memorable 12 months. the major factors behind the company’s demise.

Workers laid off from Progressive Moulded Products protesting in July.

AUTO INDUSTRY GETS FLAT TIRE: Although many small suppliers have met their end over the last few years, 2008 may be remembered for the fall of many major auto suppliers. Midland, Ont.-based Huronia Precision Plastics Inc. was placed in receivership, and 80 jobs were cut. Perhaps most notably, Concord, Ont.-based molder Progressive Moulded Products Ltd. failed to restructure its ten plastic plants in Ontario. The company reported revenues of over $290 million and had more than 2,000 employees. The company’s assets were auctioned off in September. And most recently, Tillsonburg, Ont.’s largest employer DDM Plastics announced that it would cut more than 460 jobs, leaving the company with about 200 employees.

NOT-SO-BIG THREE: The three major automotive OEMs fared no better in 2008.

In October, plans for a GM-Chrysler merger were put on ice after the U.S. government rejected GM’s bailout bid. The OEMs continued to close plants and cut costs, which had a significant impact on their supply chain. For instance, Oakville, Ont.-based compression molder Polywheels Manufacturing Ltd. filed for bankruptcy this summer. Polywheels primarily manufactured parts for big pickups and SUVs, and cited GM’s decision to close its Oshawa truck assembly plant as one of

CPIA GETS PLASTIC SURGERY: The industry’s national association underwent a restructuring: the Environment and Plastics Industry Council (EPIC) became an autonomous unit within the association, and the Canadian Plastics Industry Association (CPIA)announced that it would close its last regional office in Montreal. Only three councils with the greatest membership — the Composites Council, Plastic Film Manufacturers Association of Canada and the Vinyl Council — will be supported by the CPIA, and the rest were phased out. Additionally, CPIA president and CEO Serge Lavoie announced that he would retire from his position in early 2009.

LIVING IN A MATERIAL WORLD: Suffering from squeezed profit margins and high energy costs, several major raw material suppliers hiked up their prices this year. Perhaps most notably, Midland, Mich.-based Dow Chemical Co. announced it would increase product prices by as much as 25 per cent in July — and this after a 20 per cent hike already announced by the company in May. BAGGED: Retailers continued to jump on the anti-plastic bag bandwagon. Among them, the Liquor Control Board of Ontario decided to phase out plastic shopping bags in order to become “greener.”

Sajjad Ebrahim

TAKING THE LEAD: Sajjad Ebrahim, president of Brampton, Ont.-based thermoformer received the CPIA’s Leader of the Year award, and was featured on the May 2008

cover of Canadian Plastics magazine. The CPIA also presented Lifetime Achievement awards to Poly Expert president Gilles Plante, and to Robert Krycki, founder of Mississauga, Ont.-based Future Design Inc. MACHINERY MAKEUPS AND SHAKEUPS: The injection molding machinery market went through some changes this year. Press maker Battenfeld was acquired on April 1 by auxiliary equipment, robot and mold supplier Wittmann Kunststoffgerate GmbH. Engel stopped manufacturing injection molding machines at its Guelph, Ont. plant earlier this year, shedding 225 jobs from the facility. The company did retain nearly 30 employees at the Canadian plant, dealing mainly with sales, service and spare parts, and the facility will continue to produce key molding cell automation systems. And Bolton, Ont.based Husky Injection Molding Systems Ltd. has stopped producing large-tonnage machines to focus on packaging and PET preform markets.

LA BELLE PROVINCE(!): In Quebec, the Expoplast trade show in October measured up to the show’s last outing in 2005, and the CPIA called the show an unequivocal success (see pg. 8). Not all was well in the Quebec industry, however. Earlier this year, the CPIA’s Quebec executive committee resigned and created a new unaffiliated plastics association in Quebec. The committee accused the CPIA of being hostile to efforts to bring in a new governance structure for the Quebec region, and of being too Ontario focused. At press time, the new association Federation des Plastiques et Alliance Composites had reached its fundraising goal, and was poised to hire a new director-general.

BYE BYE, BPA: After another year of negative scientific studies, retailer boycotts and industry efforts to protect the substance, Canada became the first coun-

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Industry turns out for Expoplast 2008 try to formally declare bisphenol A (BPA) hazardous to human health. The announcement came months after Minister of Health Tony Clement proposed a limited ban on the product, but said that people “need not be concerned” about the health effects of BPA. THE WORLD BEYOND: While there was plenty of news to report on within the plastics industry, many of us are talking about the changes in the outside world.

Everyone had their eyes on the meltdown on Wall Street, and many voiced their concerns about a recession in Canada. (For now, many experts believe that Canada will avoid a recession.) And both Canadians and Americans went to the polls to vote in national elections. As predicted from the outset, the picture in Canada isn’t much different than it was last year — Canadians elected their second consecutive minority Conservative government.

In the U.S., Democrat Barack Obama was elected as president after eight years of a Bush presidency. President Obama ran on a platform of hope and change, but will America — and, indeed, the world — look better or worse in 2009? Stay tuned.

ANNIVERSARY:

FUTURE DESIGN INC.

Blown film equipment supplier Future Design Inc., of Mississauga, Ont., celebrated its 30th year of business on October 3 with an open house at its manufacturing plant.

The company displayed the Saturn VII 83-inch cooling ring, which will be in production in early 2009 in Asia. Founder Robert Krycki (right) and new president and CEO Gary Gould pose at the event.

Against a backdrop of global financial meltdown and a plastics industry under stress, October’s Expoplast trade show in Montreal was a “solid success,” according to the CPIA. While the number of companies exhibiting was slightly less than at the previous event in 2005 and the number of attendees were slightly reduced, the overall value of Expoplast to the industry and the community it serves was very high, said CPIA’s Tom Sockett, Expoplast show manager.

In addition to the show itself, the occasion marked the 11th edition of the Galea awards. Awards were presented to Felix Composites, a Saint-Hubert, Que. based company specializing in elastomer compounds; Kingsey Falls, Que.-based Cascades Specialized Products Group; and Montreal-based IPEX Inc., which specializes in the manufacturing of pipe and fitting systems made of PVC, ABS, PP and composites.

Composites also took centre stage at this year’s Expoplast. “This was the first attempt to build a composites presence at Expoplast, and despite a difficult environment, it went very well,” said Duncan Cross, director of the CPIA’s Composites Council.

Five companies and seven not-for-profit associations participated in the first ever Composites Pavilion.

Expoplast was opened by, left to right, Ron Desjardins, director of business development at Plastilec Inc. and chairman of the show’s organising committee; Richard Deschamps, an advisor in economic and sustainable development, representing the mayor of Montreal; Nicole Ménard, parliamentary assistant to Raymond Bachand, Quebec’s Minister of Economic Development, Innovation and Exports and Minister of Tourism; and Denis Cloutier, vice-president of marketing at PolyExpert, and chairman for Québec of the Canadian Plastics Industry Association.

NEWS BRIEFS Ontor Ltd., through its Toronto division RoMark Technologies, has been appointed exclusive distributor for Canada of West Warwick, R.I.-based Guill Tool & Engineering, Inc., a designer and manufacturer of extrusion tooling for the plastic and rubber industry.

Pipe manufacturer Rehau Industries Inc. has closed its plant in Prescott, Ont. as part of the company’s strategic shift from production and sale of PVC pipe. The closure will leave 40 people out of work. A limited staff will remain at the plant through March 31, 2009 to oversee residual inventory managementrelated logistics, the company said.

Blown film supplier Copol International

of North Sydney, N.S., has won their fourth Nova Scotia export achievement award from Nova Scotia Business Inc. for its polypropylene film used in numerous flexible packaging applications. Distributed in countries around the world, the film is used for bread bags, textile bags, and clothing wrapping.

Mississauga, Ont.-based extrusion systems supplier Macro Engineering and Technology Inc. has announced that it has expanded its production facilities. The new company facility is a neighbouring building to Macro’s main plant in Mississauga.

The company noted that expansion was necessary following the increased sales reported by the company at the beginning of 2008.

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PEOPLE

(Left to right) Louis Corriveau, Jean-François Continelli, Angela Salera, company president François Côté, Jean-Philippe Côté, and David Marois.

Extrusion and auxiliary equipment supplier Auxiplast Inc. has added new staff at its facility in Sainte-Julie, Que. Louis Corriveau is the new area sales manager for reclaim and compounding, sheet and thermoforming, blown and cast film accounts in Quebec and Ontario. In addition, there have been a number of promotions: JeanFrançois Continelli to sales and service manager, David Marois to parts and project manager, Angela Salera to office manager, Marcel Côté to service technician in charge of Auxiplast’s rebuilding services, and Jean-Phillipe Côté to inside sales and customer service representative.

Phil Lem of Polyone Corp. will be taking over as president of the Society of Plastics Engineers’ Ontario section as of January 1.

Chemical distributor L.V. Lomas, of Brampton, Ont., has named Yves Noel as marketing manager, Specialty Products.

Struktol Company of America, of Stow, Ohio, a global supplier of specialty polymer chemicals, has appointed Gilbert Hamrick as president.

Mike Mancini, general manager of D-M-E Molding Supplies and a former employee of Ontario Heater & Supply, died on September 16 at the age of 51. He is survived by his wife Pauline, son Darrel, and daughters Lisa and Caitlin.

CORRECTION: The “Layer Upon Layer” article in the July/August 2008 issue failed to mention that Alpha Marathon’s new 10-layer fully automatic project will feature a Triton Cool air ring with the patent pending Alpha Touch fast response fully automatic gauge control software system and Alpha’s state of the art fully automatic winder with in-line slitters. — Canadian Plastics regrets the error.

Phil Lem

Gilbert Hamrick

MILAN, MARCH 24-28, 2009

MINATECH INC.

On October 4, automation and test equipment supplier Minatech Inc., of Woodbridge, Ont. threw a 10th anniversary party in Woodbridge. Company founder and president Michael Mravyan (centre) poses with daughter Natalie and son David, both of whom work for the company.

BASF has appointed Juan Carlos Ordonez as group vice president, Coatings, in North America. He is based in Southfield, Mich.

INTERNATIONAL PLASTICS AND RUBBER INDUSTRIESʼ EXHIBITION

ANNIVERSARY:

Our international exhibition, from March 24 to 28, 2009, is more appealing than in the past because PLASTʼ09 will be held concurrently not only with IPACK-IMA (www.ipack-ima.it), as in 2006 but also with two other trade shows: CONVERFLEX (www.converflex.it) and GRAFITALIA (www.grafitalia.biz)

www.plast09.org

concurrent with

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ideas and innovations

From man-made grain to plastics additive

By Mark Stephen, managing editor

I

t’s not often that a development from the 19th century can benefit today’s plastics industry, but a little-known grain called triticale may do just that.

First bred in laboratories in Scotland almost 150 years ago, triticale is a hybrid of wheat and rye that combines the good grain quality of the former with the disease and environmental tolerance of the latter.

Traditionally used mostly for forage or animal feed, the grain has only recently been made into a commercially viable crop, finding its way into health food store products, breakfast cereals — and, if a group of Canadian researchers is successful, into plastics products, as well.

For the past year, a large-scale project has been underway to develop triticale into a suitable additive for use in plas-

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tics processing. The project was initiated through Ecole Polytechnique de Montreal, and Agriculture Canada. Funding is approximately $10 million per year, and comes from the Alberta provincial government, and also from the Agricultural Bioproducts Innovation Program (ABIP), a multi-year program that seeks integrate resources from academic, public, and private sectors to build greater research capacity in agricultural bioproducts and bioprocesses.

Among the approximately 20 agencies and organizations involved is the National Research Council Canada’s Industrial Materials Institute (NRC-IMI), in Boucherville, Que. “Our mandate in the project is to adapt our thermoplastics starch research to the triticale grain,” said Michel Huneault, project manager at NRC-IMI. Like a lot of bio-additives projects, Huneault continued, the push behind this particular effort comes from the agricultural industry, as a way of increasing the value of biomass, and also offering an alternative to expensive petroleum.

What separates the triticale project, however, is the nature of the hybrid grain itself. “Biopolymer research based on corn and other types of biomass can be limited by government regulation because these materials are consumed as food crops,” Huneault explained. “Because triticale is not commonly used as a food crop, there’s very little governmental regulation sur-

rounding it, and this allows us to modify the triticale genome to make it more suitable for use as an additive.”

Another advantage of triticale is the plentiful nature of both wheat and rye in Canada. “It’s difficult to grow corn in Western Canada, for example, whereas wheat and rye are readily available, and also inexpensive,” Huneault said.

In other ways, however, the grain shares the limitations inherent in organic additives. “As with other naturally-occurring additives, the main limitation in using triticale with thermoplastics is the processing temperature,” he said. “As an additive, triticale will work well with resins that can be processed below 200°C, such as polyethylene and polypropylene.”

The triticale project is still several years away from completion. “Like all biopolymer research projects, progress is somewhat hampered by crop availability, which depends on growing seasons,” Huneault said. “At present, NRC-IMI is still in the process of receiving different samples of triticale for analysis.”

Huneault is confident nevertheless that the end result will be a reliable, commercially available bio-based additive.

“In addition to offering an inexpensive, naturally-occurring alternative to traditional additives, the added advantage of a triticale-based additive is that it won’t take away product from food crop supply.”

NRC-IMI (Boucherville, Que.); www.imi.cnrc-nrc.gc.ca; (450) 641-5000

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automotive

CHANGING

GEARS

By Umair Abdul, assistant editor

N

ews of a potential merger between automakers General Motors and Chrysler sent a wave of speculation through the auto industry in

Rumours of a merger between GM and Chrysler highlight the uncertainty currently surrounding North America’s auto industry. For Canadian parts suppliers, collaborating with OEMs and suppliers in Asia can offer a path to future prosperity — provided they follow the right directions.

October.

While talks between the two companies were put on hold after the Bush administration didn’t come forward with a reported US$10 billion to US$15 billion in government aide to finance the merger, the discussions are emblematic of the continued volatility at the former Big Three.

For Canada’s auto parts suppliers, however, the mere spectre of a merger between any members of the Big Three is enough to cause unease. Which product platforms would be divested if two of the companies merged? And, more importantly, what would a major OEM merger mean for

the companies’ North American supplier base?

This and other unsettling news from Detroit is forcing many parts suppliers to consider potential work with Asian OEMs and suppliers.

LOOKING BEYOND DETROIT Asian auto work is not new, of course.

Canadian suppliers have been making parts for Asian OEMs and suppliers for decades now. But for small- and mid-sized enterprises, positioning their business to meet the needs and wants of Asian companies can pose a particular set of problems.

The Automotive Parts Manufacturers’ Association (APMA) has launched a new program that is designed to help

GM, Chrysler merger: yea or nay?

The possibility of General Motors acquiring Chrysler has certainly got Canada’s automotive industry talking — although not necessarily in unison.

A merger between the two auto giants would create a firm with about 36 per cent of the auto market and plants across North America. In Canada, the two companies employ about 30,000 people — 20,000 at GM and 10,000 at Chrysler — and have assembly and parts plants across southern Ontario.

Many automotive analysis and research firms didn’t mince words, predicting that the merger would create a ripple effect for suppliers.

“A merger of the two, or an outright acquisition of Chrysler by GM, would lead to a swift shakeout of U.S. parts makers as product platforms converge and new vehicle programs are eliminated,” noted SupplierBusiness, a research company focused on auto supply base issues.

The Canadian Auto Workers (CAW) also spoke out against the

merger. “We cannot solve the industry’s problems by reshuffling company brands,” said CAW president Ken Lewenza. Warning that the merger threatened thousands of jobs, the CAW also called on the federal Competition Bureau to oppose any merger that does not include protection for Canadian operations.

Auto industry analyst Dennis DesRosiers, meanwhile, is relatively optimistic that the merger won’t affect the automakers’ Canadian operations, which include a GM plant in Brampton, Ont. “The stuff in Canada is seen to mesh as well as any with what GM needs, so I don’t think it’s as negative for Canada as some people might,” DesRosiers said.

In the end, the merger — or another similar to it — may prove unavoidable. “A link between at least two members of the Detroit’s Big Three — whether GM, Chrysler or Ford — is now considered inevitable,” noted SupplierBusiness. “The three OEMs are bound to be transformed into two, and it will happen soon.”

12 Canadian Plastics November/December 2008 www.canplastics.com

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automotive

suppliers achieve operational effectiveness with Asian OEM considerations in mind.

The program has been put together with $600,000 in funding from the Ontario government, provided to the APMA to assist companies through training programs.

“We were exploring with the government about the difficulties in this industry, and one of the things we put forward was that companies need more assistance and training,” explained APMA president Gerry Fedchun. “They need to be able to upgrade themselves, and get better at things, and a lot of them don’t have the wherewithal to do that.”

Using the government funding, the APMA partnered with two consultants with first-hand knowledge of Japanese business philosophies to design a three-phase program.

SPEAKING JAPANESE The first phase of the program consists of a complete analysis of the supplier’s operations. Instead of applying a cookie-cutter solution to the supplier’s business, the consultants look to identify any potential areas of improvement.

“Everyone is at different stages of this, so it really needs to be tailor-made for each company,” explained Fedchun. “You have to go into the company and do it there.”

The two consultants from the Operations Expertise Inc., who developed the program, visit the supplier and evaluate their operation using a nine segment survey known as an Operational Effectiveness Review (OER).

“We survey the status of where they are, and then offer assistance in two areas — support and position them for new opportunities with Asian companies and offer general recommendations to improve their current profiitability,” noted Murray Mason, senior partner Operations Exper-

tise Inc. Mason spent nearly 14 years developing and commercializing hydroform technology, working with OEMs such as Ford, GM and Chrysler. He also worked as a chief engineer for nine years at one of Honda’s largest suppliers, introducing the same new technology on the Civic and Accord. The other senior partner is Jim Phillips, former VP of purchasing of Honda North America.

As part of the first phase of the program, Mason notes that they look at some of the hard measures based on the effectiveness in areas such as manufacturing, quality, maintenance and materials management. But the group also looks at “soft” areas, which can help create the right impression on Asian customers.

“Their expectations are going to be different as far as ways of doing things, and how they judge you is going to be different,” explained Mason. “They will, for instance, look at the cleanliness of the plant, and use that as an indicators of a well-run business.”

Both Mason and Fedchun note that the Japanese look for a higher level of cleanliness

and orderliness than North Americans do, and it can be an important consideration when trying to make a positive first impression on potential customers.

Additionally, Mason says that Asian customers also place a greater emphasis on employee-driven improvement programs, which is uncommon in the North American industry. These programs are designed to get improvement ideas from the people working on the floor.

Once Mason and his team have completed their operational effectiveness review and provided a full report with general recommendations, the second and third phase are designed to design and implement specific action plans and verify the results.

The APMA recently completed a pilot program for its operational effectiveness

APMA GEARS UP

With the initial pilot program now complete, the APMA is making some slight tweaks and rolling out the program members and all the automotive parts manufacturers with facilities in Ontario.

“Those five companies that went through the pilot have really now completed phase 1 of the regular program,” explained APMA’s Gerry Fedchun.

Suppliers looking to get involved with the operational effectiveness program should contact the APMA directly.

Automotive group helps Chinese OEMs connect with North America

For North American automotive suppliers looking to grow their business in China, the Automotive Industry Action Group (AIAG) is trying to make the task a little simpler.

The Detroit-based AIAG has introduced an Emerging Markets (EM) membership category to support North American members who conduct business and/or source in emerging markets such as China.

“The purpose of this new membership opportunity is to accelerate Chinese suppliers’ assimilation into the global automotive supply chain through their adoption of the accepted industry standards, guidelines and best practices developed at AIAG,” said CEO Scot Sharland.

As part of the initiative, the AIAG has opened a representative office in Shanghai to support its members that are conducting business in the Chinese automotive industry.

For information about joining the AIAG, as well as a pdf document outlining the group’s effort to bridge gaps in the Chinese automotive supply chain, go to www.aiag.org.

www.canplastics.com November/December 2008 Canadian Plastics 13

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“Japanese OEMs and suppliers look at fundamentals that are very basic, like cleanliness and product flow.” program, with five companies participating. Mason notes that he worked with two suppliers prior to working on the APMA program, and both were able to increase their business dealings with the Japanese.

AUTO PILOT Based out of Cambridge, Ont., Canadian General-Tower Limited manufactures automotive interiors made of both PVC and non-PVC materials. The company has two facilities in North America, and currently employs 800 people. CGT has facilities in China and Thailand, and is also involved with the European market.

Additionally, the company is currently on the cusp of getting into the Mexican market.

The mid-sized firm has $300 million in

annual sales and already supplies to all of the Japanese OEMs and suppliers.

“We’ve got experience with that, and we know that they take the time to look,” noted Jan Chaplin, president and CEO of CGT. “They look at fundamentals that are very basic, like cleanliness and product flow.”

Though CGT doesn’t need the help when it comes to selling into Asian markets — the company is already selling to those suppliers — Chaplin participated in the pilot program to get the general benefit of improved operational effectiveness.

The program started with an initial meeting between Chaplin and the consultants to go over the program’s methodology. The experts then took a plant tour to get the lay of the land, and used it to get their indicators.

“Then they gave us a grocery list of about ten things that they drew our attention to,” she explained.

“The one that stuck in my mind was that they commented on our organizational structure for management personnel and the way we were structured on the top,” she continued. “They thought it was too complex for an organization of your size.”

She notes that the process forced CGT to look at their operations in a different way. And though they chose to disregard the program’s advice in at least one area, she admits that the experts were right.

“They discouraged us from implementing IT software that was intended to improve our information system...they said it seemed kind of fundamental, whereas we have a complex environment,” noted Chaplin. “We went ahead with it, and as it turned out, we ended up pulling it.” CPL RESOURCE LIST Automotive Parts Manufacturers’ Association (Toronto); www.apma.ca; 416-620-4220 Canadian General-Tower Limited (Cambridge, Ont.); www.cgtower.com; 519-623-1630 Operations Expertise Inc.; www.oegroup.ca; 416-388-3260

14 Canadian Plastics November/December 2008 www.canplastics.com

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resin outlook

RESIN OUTLOOK 2009: A

Rising crude oil prices, volatile feedstock costs, economic meltdown, and hurricanes. These and other factors combined to keep resin prices high late into 2008. The next year will bring lower costs for some — but not all — of the major commodity and engineering resins.

Polyolefins

Domestic polyolefin demand will decline between one to five per cent through 2009.

North American polyolefin exports are expected to decline by 10 to 20 per cent by end of 2009.

Polyolefin prices should decline through 2009, but it’s difficult to quantify the amount.

Shannon Schneider, Nexant ChemSystems

Styrenics

Hurricanes have kept polystryene price high, but prices will drop throughout 2009. Demand for polystyrene will continue to slow, while the Middle East will begin exporting large amounts of styrene, dropping operating rates in North America.

Peter Feng, Chemical Marketing Associates Inc.

ttendees of the 2008 Canadian Plastics Resin Outlook Conference in October could not but be aware that the year just behind them had been particularly difficult. Crude oil prices have doubled in the past 12 months, with considerable impact on petrochemical feedstock prices. Adding to this, the value of the Canadian dollar has risen dramatically, at one point briefly exceeding parity with U.S. currency. Finally, the American economy has slowed, with defaults in subprime mortgages triggering turmoil in North America’s financial markets.

Given these and other seismic shifts in the business bedrock, it’s safe to say every conference attendee had questions about resin prices for the year to come.

The answer, according to forecasts delivered by a wide range of industry experts, is mixed. Prices will fall for some, but not all, of the commodity and engineering resins during 2009 and beyond, and resin markets will expand or contract according to a variety of factors.

THE EXPERTS PREDICT

ECONOMIC BACKGROUND With all eyes on the U.S. economy these days, Paul Ferley, assistant chief economist at RBC Financial Group in Toronto, forecast a period of weak growth ahead for that country.

The good news, Ferley said, is that aggressive policy actions by the U.S. government should prevent any sustained declines. “Also, hints of a stabilization in U.S. housing sales provide a hopeful sign that the housing market decline has reached its trough, and rising housing prices would facilitate a recovery in financial markets,” he explained.

Ferley forecast a real U.S. GDP growth of approximately two per cent for the end of 2009.

Turning to Canada, Ferley suggested the Canadian economy ultimately would weather the U.S. slowdown. “Energy prices will remain high historically, as concerns about oil supply ease only slightly,” he said. “Demand from emerging markets will remain strong, keeping non-energy commodity prices high.”

PET

Nylon

PVC

Polycarbonate

Prices in North America will drop due to an influx of Asian-made PET. Three to four per cent growth rates for North American PET market are expected in the long term.

Landon Feller, ICIS Weak domestic demand, due to decline in construction markets, will cause PVC prices and margins to weaken into 2009. Also, net capacity expansion of 3.6 per cent is expected in North America in the next year.

Kevin Allen, Platts

Increased feedstock and additive costs will pressure nylon margins and pricing in the short term. In the longer term, nylon will align with feedstock and energy costs.

Mark Wasilenski, BASF The polycarbonate market is under pressure as CD market contracts. There will be a glut of PC on the global market beginning in 2010, as Middle East manufacturing plants come on-line.

Paul Blanchard, Chemical Marketing Associates Inc.

16 Canadian Plastics November/December 2008 www.canplastics.com

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U

:

resin outlook

UNCERTAIN TIMES

By Mark Stephen, managing editor

The strong Canadian dollar and high export prices have been weighing on net exports, Ferley also said, with the restraint from net exports further aggravated by weak U.S. growth near term.

“In contrast to the U.S., housing construction in Canada is holding up well,” Ferley said. “Canadian housing prices are starting to move lower, however, mirroring those in the U.S., and Canadian housing starts will slow significantly in 2009.”

Canada’s real GDP growth is forecast for approximately 2.5 per cent by the end of 2009. “To ensure this weak growth is shortlived, the Bank of Canada is expected to keep interest rates low,” he explained. “A moderate pace of growth will keep the unemployment rate out of inflationary territory.”

Coming off its near-historic rise to above parity in early 2008, the value of the Canadian dollar will fall throughout 2009 to approximately US$0.90 by the end of that year, Ferley concluded, due to a rebound in U.S. growth, and moderation in commodity prices.

POLYOLEFINS One of the most popular of today’s resins, polypropylene (PP) is used in such products as appliances, automotive parts, diapers, food packaging, housewares, and medical components. Notwithstanding this, PP capacity is actually on the decline in North America, according to Shannon Schneider, a polymer consultant with Houston, Tex.-based Nexant ChemSystems. “This is the first time since 1980 that capacity in the U.S. and Canada has declined from the previous year with no prospects for additional capacity,” she said. Substantial amounts of new capacity are, however, expected in Brazil, China, the Middle East, and Venezuela.

Polyethylene (PE) operating rates were high in 2008, and should continue so throughout 2009, according to Schneider.

“Globally, companies have been operating close to effective capacity,” she said. “Significant changes in investment and trade patterns have and will continue to occur, and additional industry consolidation is expected.” North American PE capacity has declined over the past several years, she continued, and at present no new PE plants are being built in developed countries; the shift is to construction in the Middle East, China and Latin America.

About three million tons per year of new capacity is scheduled for 2009, she said. “In the longer term, too much capacity will severely impact profitability, but accelerate demand growth.”

Canada will continue to be a net exporter of PE in 2009, Schneider said.

In 2009, she continued, domestic polyolefins demand will decline by between one and five per cent. North American polyolefin exports are expected to decline by 10 to 20 per cent by the end of 2009. “Polyolefin prices will decline throughout 2009, but www.canplastics.com November/December 2008 Canadian Plastics 17

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resin outlook

by exactly how much is difficult to quantify,” she concluded. “We predict continuing declines in crude oil and stable U.S. natural gas prices, resulting in pressured polyolefin prices.”

Additionally, large LLDPE and HDPE deficits are projected through 2009 unless substantial new capacity is achieved, but LDPE exports will continue, albeit at a declining rate.

STYRENICS While not garnering as much attention as Katrina, Hurricanes Gustav and Ike caused production disruptions that will impact styrenics pricing in 2009, according to Peter Feng, director of styrenics with Chemical Marketing Associates Inc. (CMAI), in Houston.

As polybutadiene rubber prices have gone up, the cost of that incremental rubber into the feedstock has increased the cost of making high impact polystyrene.

The net price of polystyrene (PS) reached a high of almost US$0.80 per lb. in 2007 and 2008. Prices should have fallen, Feng said, but were kept high as a result of the hurricanes. “Now there is an extended period of high pricing, but this will be behind us soon, and prices will come down,” he

explained. The price of PS rose in North America as a result of the hurricanes, but not in Europe and Asia. “As a result, there are large regional differentials that have built up,” Feng said. “Imports are now coming in and this will balance out the supply and demand picture.”

Demand for PS continues to slow, due not only to high and volatile prices, but also substitution by paper, PP and polythylene terephthalate (PET), changing fashions and technology, and improved recycling programs.

Turning to styrene, Feng noted that styrene production is undergoing a transformation, as more production plants in the Middle East come onstream. “There is very little demand for styrene in the Middle East, so that region will begin exporting,” he said. “This will drop the operating rates in North America going into 2010.”

The key determinant for much of resin pricing lies in benzene, an important precursor to styrenics, nylon and polycarbonate (PC). Benzene has hit new highs, but margins have eased.

Butadiene tightness will continue to affect supply during 2009, Feng said. The main market for butadiene is tires, especially replacement tires. “This is a real

area of growth as Asia and India adopt automobile-centred lifestyles,” he noted.

PET The PET market in North America is maturing but still growing, according to Landon Feller, markets reporter with Houston-based ICIS. PET growth was double that of the U.S. real GDP in 2008, he said, and total North American production in that year was 10 billion lbs. As of 2008, North American capacity utilization had reached 90 per cent.

In 2005, raw PET prices spiked as a result of Gulf Coast hurricane activity.

Three years later, the U.S. raw material supply is seeing similar impact from Hurricanes Gustov and Ike, with prices only now beginning to come down. The price of PET reached US$0.88 per lb., Feller said, which was 25 per cent higher than the average U.S. PET contract price for the preceding 10 years. “This is a trend most participants believe is going to be long term,” Feller said. “It may be a long time, if ever, before we see PET in the US$0.50 per lb. range.”

Going forward, Feller sees a vast Asian oversupply situation developing as North America produces more of its own PET

GROWING THE BIOPLASTICS MARKET Bioplastics are hot, and a wide range of major petrochemical producers is at work on biopolymer developments. A sampling of such projects, by company, includes: • The Dow Chemical Company: involved in a joint venture project in Brazil using ethanol to make ethylene for LLDPE. • DSM Resins: earmarked US$300 million for alternative sustainable chemistry. The company is also currently working on lowtemperature catalysts to polymerize carbon monoxide and CO2.

• Meridian: opening a US$30 million lb. polyhydroxyalkanoate (PHA) plant in 2009.

• DuPont: developing its Sorona polypropyl-

ene terephtalate (PPT) technology, and is also involved in a joint venture project with

Plantic in Australia for cornstarch technology to make cosmetic and food packaging.

• Purac: developing lactic acid technology for improved polylactic acid (PLA).

• Total Petrochemicals: involved in a lactic acid joint venture project with Galactic to improve PLA. • Novamont: developing its Mater-Bi Starch resins, as well as its Origo-Bi clear biodegradable polyester.

• Musashino Chemical: involved in a joint venture with Tejin Chemical to develop heat resistant stereo components involving complex PLA. Source: John Moisson, Jamplast Inc.

18 Canadian Plastics November/December 2008 www.canplastics.com

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resin outlook

material. The result will be a highly regionalized industry, but also an influx of Asian-made PET, marked by slightly lower prices. “Over the long term, we are looking at flat US$0.75 to US$0.90 cent per pound for bottle grade PET in North America,” Feller said. As of September 2008, the 10-year average PET price was US$0.70 per lb., Feller said, and the price of PET throughout 2009 should hover at approximately US$0.66 cents per lb.

Challenges facing the PET industry include lower growth levels caused by a weakness in the macro economy. “Also, fears of chemical leaching in products, the growing recycling market, and lightweighting have definitely put a dent in PET resin sales,” Feller said. “This will continue into the next three years.” In particular, lightweighting — reductions in the amount of PET plastic in products such as bottles — will have an impact on the market, Feller said. “Producers in the U.S. believe that the majority of the impact of this movement will be seen in 2009 and 2010,” he explained. “In the end, we expect three to four per cent growth rates for the North American PET market in the long term.”

PVC The North American market for polyvinyl chloride (PVC) is facing several challenges, according to Kevin Allen, associate editor at Houston-based Platts.

First, he said, pressure is coming from record high raw materials. NYMEX August crude futures passed US$147.00 per lb. in early July, while ethane began climbing in early June and reached record highs at US$1.54 per gallon shortly after. Ethylene prices followed and in early July spot touched US$0.70 per lb., Allen said.

Looking ahead, the biggest issue to affect PVC demand and pricing will be weak domestic demand, largely caused by the decline in residential and commercial construction.

Additionally, Allen continued, feedstock costs are volatile and have recently approached record highs. Spot ethylene numbers were as low as US$0.46 per lb. in February of 2008 and shot up to as high US$0.70 per lb. in the first few days of July, he said.

The price then fell as low as US$0.44 per lb. following Hurricanes Gustav and Ike, before climbing to roughly US$0.60 per lb. “Given the range between February and July, PVC producers were looking at roughly a US$0.10 per lb. increase in ethylene costs alone over the course of six months,” he said. “During that same period, ethane costs jumped from as low as US$0.89 per lb. in February to as high as US$1.54 per lb. in July.”

Unfortunately, he noted, there are no visible signs of near term improvement. “Bank of America forecasts that PVC prices and margins will continue to weaken well into 2009,” he cautioned.

Also, capacity expansion is expected to continue and is estimated to reach 19 billion lbs. by 2011. Net capacity expansion in North America is to be roughly 3.6 per cent in 2009. “In the end, PVC will remain competitive in 2009,” he concluded.

NYLON The precursors to nylon include crude oil, natural gas, benzene, cyclohexane and PP. The price of benzene, in particular, has always been a determining factor in the price of nylon. The June 2008 benzene contract price settled at US$4.31 per gallon, while the July 2008 contract price came down to a two-tiered settlement of US$4.16 to US$4.18 per gallon, but rebounded to a record high in August at US$4.45 per gallon.

According to Mark Wasilenski, of BASF Corporation in Wyandotte, Mich., increased feedstock and additive costs will put pressure on nylon margins and pricing in the short term. In the medium term, he continued, projected lower feedstock energy costs will allow nylon pricing to stabilize, but not back to historic levels. Finally, in the long term, nylon will align with feedstock and energy costs as global supply and demand remains in balance.

“Currently, the market trends driving nylon use include demand for lighter parts for fuel efficiency in the automotive market,” Wasilenski said. “Nylon also offers greater design freedom, and allows for injection molded parts rather than metal stamping.”

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resin outlook

POLYCARBONATE “After years of premium performing and high-priced success, the bloom is slightly off the PC rose,” said Paul Blanchard, senior consultant with CMAI. “Under certain conditions, the situation may arise where PC slides into a commodity status.”

The optical media market, including CD and DVD cases, is currently the largest category of PC use, Blanchard said, but is under increasing pressure as a result of the growing number of people downloading music rather than purchasing CDs. The future of the PC industry lies in growth, Blanchard continued, and in keeping resources focused on developing new applications. “The PC industry ResinConfAd/AB217/CPL 11/11/08 3:22 PM needs another monumental application to drive future growth,” he said. “Automotive glazing might perhaps fill this void.”

Blanchard also predicted a glut of

PC on the global market beginning in 2010, as a number of planned PC plants come onstream — including an enormous Saudi-Cayenne project in Saudi Arabia. “North America is a net exporter of PC, and this new capacity will hurt PC exports, and leave PC producers supplying only the demand in North America,” he said. “We foresee the PC market undergoing cost erosion, and this will affect price in a situation where there is too much supply.”

According to Blanchard, the price for general purpose PC should remain at approximately US$1.60 to US$1.80 through 2009. “Suppliers should keep in mind, however, that this Page price 1does not include sales and marketing costs, and that growing demand for PC is a marketing-intensive exercise,” he cautioned.

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20 Canadian Plastics November/December 2008 www.canplastics.com

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extrusion benchmark survey

CANADIAN EXTRUDERS

IN PROFILE

By Umair Abdul, assistant editor

B

Last year’s Extrusion Benchmark Survey gave us a picture of how Canada’s pipe and profile extruders were doing. The 2008 results are in!

y all accounts, 2008 has been a tough year for plastics processors. The high dollar, fluctuations in energy markets and declines in the U.S. export market continued to batter manufacturers in Canada.

And many pipe and profile extruders are dealing with downturns in their key markets. For example, the battered construction market continued to be the biggest market served by this year’s respondents, with 71% serving the sector.

How did Canada’s extruders fare in 2008?

This was the second annual extrusion survey conducted by Canadian Plastics, and comparisons to last year’s results paint a telling picture.

Are Canadian extruders doing THE BASICS any better, or are they worse Before delving into the actual results, it is important to understand the size and scope of this

off than they were a year ago? year’s respondents.

The 2008 Extrusion Benchmark Survey, consisting of 35 questions, was emailed to 440 people at pipe, profile, and tubing extrusion facilities throughout Canada. We received 25 completed surveys.

This year, Canadian Plastics refined its research methodology by limiting its survey sample to one respondent per manufacturing facility. As a result, this year’s survey has a smaller sample that is more representative of the industry.

When asked how many employees worked at their plant, answers ranged from 20 to 200 people. It should be noted that last year’s respondents reported as many as 800 employees and as few as three employees at their facilities.

Twenty-three per cent said they had 100 or more employees at their plants, and another 38% had between 50 and 75 employees. On average, the survey’s respondents had 69 workers at their facility, compared to a 134-worker average in the 2007 survey.

Of this year’s respondents, 38.5% were involved with pipe extrusion, 53.8% perform profile extrusion, and 46.2% use the tubing extrusion process at their plant. Additionally, a small majority (38.5%) categorized their shop as performing custom with some proprietary extrusion.

The remaining respondents were evenly split between exclusive custom extrusion (30.8%) and captive with some custom extrusion (30.8%). No extruders who perform exclusively proprietary extrusion answered this year’s survey.

Over 60% of those surveyed said their plant has ISO or QS9000 certification. The vast majority of this year’s respondents were working in

Ontario (64%) and Quebec (21%), and some respondents worked in facilities in Alberta (7%) and Manitoba (7%).

In addition to the construction and building market, which was served by 71.4% of the respondents, Canada’s extruders also serve the automotive (42.9%), consumer goods (21.4%), electronics (21.4%) and packaging (42.9%) markets. One respondent’s facility serves the appliance and agricultural markets, while another sells products into the plumbing market.

BY THE NUMBERS

$16.67

Average hourly operator wage, excluding benefits

69

Average number of workers at Canadian extrusion facilities

$8,400,000

Average total revenue in 2008

15,200,000

Average resin consumed in 2008 (lbs.)

MACHINERY & PURCHASING When asked about the number of extrusion machines they have at their plant, 15% said they have between 1 and 5 machines; 54% had 6-10 machines; 23% had 11-25 machines; and only 8% had more than 26 machines at their plant.

The vast majority were working on single screw extruders (92.9%), but several respondents also had counter-rotating twin screw extruders (14%) and co-rotating twin screw extruders (7%) at their plants.

On average, 70% of the machines owned by those surveyed are five or more years old. Over one-third of the respondents said that all of their machines were more than five years old. www.canplastics.com November/December 2008 Canadian Plastics 21

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extrusion benchmark survey

Surprisingly, despite the anticipated slowdowns in 2008, this year’s respondents reported a higher machinery utilization rate than last year’s participants. This year, extruders had an average machinery utilization rate of 73%, compared to 62% in 2007.

As part of the 2007 survey, respondents were asked if they planned on purchasing any new extruders within the year. At the time, nearly three-quarters of those who answered said they would not purchase any new extruders over the next year.

Looking at this year’s survey results, that number holds true: over three-fourths of the respondents did not purchase a new extruder in the past year. All of the companies that did purchase extruders used the machines to add capacity rather than to replace old machinery, and all of the new purchased extruders were smooth bore single screw extruders.

Looking ahead at 2009, the picture looks slightly rosier for extrusion machinery manufacturers. Over 40% said they

What Category best describes your plant?

Exclusive proprietary extrusion 0%

Custom with some proprietary extrusion 38.5%

Exclusive custom extrusion 30.8%

Captive with some custom extrusion 30.8%

Additionally, extruders noted that they are slightly more likely to invest in downstream extrusion and auxiliary equipment.

Over 53% said they planned to purchase downstream extrusion equipment like pullers and saws in the upcoming fiscal year, while only about 40% purchased new downstream equipment in the past year.

And 53% said they plan to purchase new auxiliary equipment in the next year, compared to 46% who made actual auxiliary purchases in 2008.

FINDINGS ON FINANCES had plans to buy new extruders in the next year, and two-thirds said they were looking to replace their old extrusion machines.

When asked if they were more likely to buy unit extruders or a complete line (including an extruder, tooling and downstream system), respondents were split right down the middle. Respondents were also equally likely to invest in smooth bore single screw extruders, grooved feed single screw extruders, or twin screw extruders.

In 2008, extrusion firms allocated nearly 3.5% of their budget to employee training, and an average of 6.2% of their budget to product R&D. These allocations are slightly smaller than 2007: last year’s survey respondents allocated an average of 4% to employee training and 9% to product R&D. Based on survey results, a greater number of extrusion facilities are investing in safety and training programs. All of

22 Canadian Plastics November/December 2008 www.canplastics.com

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extrusion benchmark survey

the respondents had a safety program in place compared to 87% in 2007, and all of the respondents had instituted training policies and programs compared to 68% last year.

More manufacturers are also investing in programs related to preventative/ predictive medicine and environmental goals. About 26% more manufacturers have brought in preventative/predictive maintenance programs, and the number of manufacturers with recycling, waste management and environmental programs has increased by 37%.

Harder economic times may have put a pinch on manufacturers, but our survey shows that extruders are actually paying

their machine operators a slightly higher hourly wage than they were last year. The average operator is paid $16.67 an hour, excluding benefits, in 2008, compared to $16.12 an hour in 2007.

And the recent surge in energy prices seems to have had very little impact on the amount of resin purchased by Canadian extruders. Although a few individual extruders reported that they purchased less resin in 2008 than they did in 2007, the respondents generally trended higher. On average, Canadian extrusion facilities purchased 14.6 million lbs of resin in 2007 and 15.2 million lbs of resin in 2008, a year-over-year increase of 4 per cent.

Overall, looking at plant revenues, the

past purchases (by %)

80

60

average extrusion facility brought in $8.4 million in 2008, compared to $8 million last year. It should be noted, however, that the Canadian Plastics survey didn’t ask respondents about increases or decreases in spending and expenses, so it is impossible to determine if higher revenues yielded greater profits.

LOOKING ABROAD When polling our readers about their presence outside of Canada, the Extrusion Benchmark Survey was modified slightly to be more inclusive.

Our survey found that over 40% of extrusion companies have no presence outside of Canada. However, 40% have

Intent to purchase (by%) yes

yes

70

no

no

50

60 40

50 40

30

30

20

20 10

10 21.4

0

78.6

Extruders

41.7

58.3

Downstream

46.2

53.8

Auxiliary

PROCESSHEATERS/AB219/CPL.qxd 8:18 AM equipment extrusion 11/10/08

equipment

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0 Page 1

Extruders

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46.2

Downstream extrusion equipment

53.8

46.2

Auxiliary equipment

Trust your toughest applications to Process Heaters.

The leaders in cast-in heaters • hundreds of units in stock • thousands of documented designs

Process Heaters Inc.

Call toll free 1-877-747-8250 • Email: proheat@processheaters.ca • www.processheaters.ca www.canplastics.com November/December 2008 Canadian Plastics 23

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extrusion benchmark survey Markets served by your plant some presence in the U.S., 16.7% in India and 8.3% in China. Some respondents also indicated that they had a presence in Europe and Mexico.

Canadian extruders were reaching these markets through a variety of ways.

Nearly 60% said they had a manufacturing facility outside of Canada, and 29% had

Automotive

Consumer goods

Presence outside canada

U.S. 41.7%

0

China 8.3% India 16.7%

Better With Plastics

11/12/08

7:26 AM

danger Plastic waste puts seas in astics” “ The Problem With Pl

21.4%

Packaging

Other

None 41.7%

21.4%

Construction/building 71.4%

Electronic

Other (Europe, Mexico, etc.)

33.3%

42.9%

10

20

42.9%

21.4% 30

40

formed a joint venture with a local firm.

An additional 43% of respondents reached those markets through a sales office or distribution centre.

In 2007, all of the respondents who didn’t have any presence outside of Canada said that they had no plans to enter Pagethose 1 markets. In 2008, 86% said they had

50

60

70

80

no intention of entering other markets, but 14% said they plan to enter foreign markets in 1-2 years.

Interestingly, a smaller percentage of the product at Canada’s extrusion facilities is shipped outside of Canada. Only 31% of what’s produced is being exported, compared to 42% in 2007.

CPL

PLASTICS UNDER ATTACK!

PERILS OF MODERN PACKAGING

Resin bans, retailer deselection, municipalities calling for packaging reductions, consumers shunning plastics! These issues are going to hurt your business.

Public opinion has become increasingly negative. But EPIC's Better With Plastics reputation management campaign will change that!

These companies have already contributed funding support to the campaign:

The Better With Plastics campaign is designed to bust the myths about plastics, set the record straight and tell the story about the benefits of plastics.

Joining the campaign today will help your business and build a positive image for our industry and our products! We need your funding support to launch this campaign.

For more information or to get a pledge form, call Hilary Sturdevant at 905-678-7748 ext. 225.

24 Canadian Plastics November/December 2008 www.canplastics.com

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technology showcase

AUXILIARY EQUIPMENT

Robot for small tonnage I/M machines

The new W801 robot from Wittmann is designed to expand the use of automation on smaller tonnage molding machines ranging from 25 to 120 tons clamping force.

The compact W801 robots have a 3-kg (6.6 lb.) payload and are optimized for size.

Besides the small cross-section of the vertical arm, the construction of the wrist flip is suited to utilize the small mold opening stroke common to small machine sizes.

The W801 is equipped with a fixed kick-stroke reaching over the mold area in order to avoid collisions with machine hoppers and blenders on machines with short injection units. The linear bearings are designed for extended lubrication intervals and high dynamic load.

The W801 robots are available with a horizontal stroke of 1,250 and 1,500 mm (49.2” and 59.1”). The robot offers vertical stroke lengths of 600 and 800 mm (23.6” and 31.5”), a kick-stroke of 400mm (15.7”) with a reach of 515 mm (20.3”).

Wittmann Canada Inc. (Richmond Hill, Ont.); www.wittmann-canada.com; 888-466-8266 Anplast Inc. (Anjou, Que.); 1-800-387-4590

Actuator for clean room environments Designed for clean room environments, the new CGL15N/CGL20N Actuator from THK America, Inc. has a clean, corrosion resistant and long term mainte-

nance-free design.

For low particle generation, the CGL15N/CGL20N features a seal mechanism and a full size cover. AFE-CA grease (designed for clean rooms) is also used to reduce dust. The CGL15N/CGL20N’s Ball Screw and LM Guide come THK AP-C treated for high corrosion resistance.

The incorporation of THK Caged Technology results in long-term maintenance-free performance.

THK Caged Technology employs a synthetic resin cage with a patented curvature that cradles each ball and separates it from the next one. The spaces between the rolling elements retain grease and act as a lubrication system.

THK Canada (Mississauga, Ont.); www.thk.com; 905-820-7800 (Dollard-des-Ormeaux, Que.); 514-685-1046

Coupling station services multiple machines The standard version of Motan’s fully automatic coupling station, Metrolink, supplies up to 15 processing machines automatically with up to 16 material options.

Due to the modular construction, the capacity can easily be expanded and the compact, sophisticated design of the material distribution system enables space-saving integration into the process.

The Metrolink is only in action when

the material is changed, and not whenever a conveying point needs material.

Additionally, the Metrolink produces little wear, resulting in the use of fixed pipe connections eliminating the need for flexible hoses.

Motan Inc. (Plainwell, Mich.); www.motan.com; 800-991-9921 Dier International Plastics Inc. (Unionville, Ont.); 905-474-9874 D Cube (Montreal, Que.); 514-272-0500

EXTRUSION

Double-strand extrusion for window profiles

KraussMaffei’s combination of two 90-32/P twin-screw extruders with a KMD 50 K/P as coextruder provides a compact, double-strand system for extruding coretechnology window profiles, with throughput of over 900 kilograms an hour.

The configuration takes up floor space measuring just 2.5 m by 5.4 m.

To save space, the main switching cabinet for each unit stands at the end of the unit and only small switching cabinets with the necessary control zones and operator panels take up space near the die. Attaching the converters for the water-cooled AC motors above the gearbox also saves space.

The switching cabinet for the coextruder is mounted on rollers and can be moved aside to allow access to the main motor. The unit is not only mechanically flexible; the control system is also configured for extra flexibility, allowing the two main extruders to be controlled together or separately by a defined master.

KraussMaffei Corporation (Florence, Ky.); www.kraussmaffei.com; 859-283-0200

www.canplastics.com November/December 2008 Canadian Plastics 25

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technology showcase

MOLD TECHNOLOGY

TESTING EQUIPMENT

Hasco has now added mini date stamps to its portfolio, designed for the labelling requirements of ultra-small plastics parts.

The Z48715/..., with a 2.6 mm diameter, can stamp product data with precision, even on ultra-small parts.

Also new is the Z48700/... series, offering the possibility of combining month, year or month and year separately.

They are available in diameters of five to 12 mm.

These simple mini-labelling elements are fixed in the mold from the front by press fit and adhesive or, as Z48700/..., screwed from the back. The steplessly adjustable arrow insert can be changed with minimum effort and without dismantling the mould from the mould parting line.

Made of stainless steel 1.4112, the new date stamps offer continuous, problem-free use with long life expectancy.

Hasco Canada (Toronto); www.hasco.com; 416-293-5044

Malvern Instruments has introduced Kinexus, a rotational rheometer platform with adaptive intelligence allows Kinexus to actively guide users at every stage.

Kinexus incorporates technological innovations in the most critical areas of rheometer design, from sample preparation and loading, through measurement set-up and operation, to data analysis and reporting.

Fully integrated into Malvern’s materials characterization range, Kinexus delivers high performance measurement supported worldwide by experts in rheology applications, and informed by the company’s expertise in complex materials, including particulate, macromolecular and multiphase systems.

Two systems are available. Kinexus pro is a high-end rheometer suitable for a wide variety of routine and research applications. Kinexus ultra is designed for the most demanding low torque applications, such as weakly structured and small volume sample measurements.

Malvern Instruments (Westborough, Mass.); www.malvern.com; 508-768-6400

Date stamps for ultra-small parts

plastics data file

Platform delivers intelligent rheology solutions

Get free information from the companies that interest you most. Contact the company directly using the telephone number, e-mail address or web site listed below

Wide Range of Temperature Control and Instrumentation

Your best source for temperature control and automation. Hot runner temperature control systems, heating elements, melt pressure transducers and custom temperature/electrical control panels are just a some of the products offered. Services include repair, calibration and troubleshooting by our highly qualified technicians. Send for this 18-page catalogue for full details on products and services.

AceTronic Industrial Controls Inc. 12-385 Admiral Blvd., Mississauga, ON L5T 2M8 Tel: 800-803-8871 www.acetronic.com

Dust Collectors This impressive guide outlines dozens of N.R. Murphy dust collectors, installations, capacities, styles and models. A must for any reference library. N.R. Murphy Limited has been in business for 65 years and has thousands of satisfied customers.

“Dust Collectors is all we do, so do it right the first time. Just Ask the Experts.”

For more information contact: Craig Moffatt, N.R. Murphy Ltd., Sales Manager, Cambridge, ON Tel: 519.621.6210 Fax: 519.621.2841 Web site: www. nrmurphy.com e-mail: 4nodust@nrmurphyltd.com

Wittmann Innovations

Innovations - Wittmann’s quarterly news letter - offers plastics processors detailed insight into ways to improve their businesses with news and application stories covering Robots and Automation, IML, Injection Molding Machinery, Material Conveying, Drying and Blending, Granulation and Temperature Control. It is available in print and on-line.

Wittmann Canada Inc., 35 Leek Crescent, Richmond Hill, ON L4B 4C2; Tel. 1-888-466-8266; www.wittmann-canada.com

26 Canadian Plastics Novembre/December 2008 www.canplastics.com

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advertising index Advertiser

Page

Arkema Canada Inc. Bayer Inc. - Bayer MaterialScience Canadian Plastics Sector Council EPIC Export Development Canada Hamilton Avtec Inc. Hapco Inc. Haremar Plast’09 PlastIndia Process Heaters Inc. Staubli Corp.

Vortex Valves Wittmann Canada Inc.

16 31 19 24 2 11 14 6 9 5 23 22 30 back cover

Telephone

E-mail

Website

800-567-5726 800-622-2937, ext. 3003 613-231-4470 905-678-7748, ext. 231 866-283-2957 800-590-5546 800-345-9353 905-761-7552

polymers.canada@arkemagroup.com claudette.martins@bayerbms.com info@cpsc-ccsp.ca sales@hamiltonavtec.com sales@bak-ca.com info@haremar.com

877-747-8250 800-845-9193 785-825-7177 888-466-8266

plastindia@vsnl.com proheat@processheaters.ca connectorsusa@staubli.com rbarragree@vortexvalves.com info@wittmann-canada.com

www.arkema.ca www.bayer.ca www.cpsc-ccsp.ca www.cpia.ca/epic www.edc.ca/goods www.hamiltonavtec.com www.bak-ca.com www.haremar.com www.plast09.org www.plastindia.org www.processheaters.ca www.staubli.com www.vortexcanada.com www.wittmann-canada.com

classified ads MATERIALS

Elastomers for injection, extrusion and overmolding

Thermoplastic Compounds with Glass Fiber, Talc, Calcium Carbonate and others

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S C R A P Asico International We buy and sell all kinds of plastic scrap, regrind & pellets.

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We buy Plastic!

Acrylic * ABS * SAN * PC * PET * CAB * PS * PP, etc.

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Your ad in this section could be working for you right now to build sales.

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www.canplastics.com November/ December 2008 Canadian Plastics 27

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classified ads MACHINERY & EQUIPMENT

INJECTION MOLDING

moldex plastics & tool CUSTOM INJECTION MOLDING Proud of our 40 years in the trade, moldex plastics & tool has earned an enviable reputation for reliability. Our customers have always relied on our proficiency in developing any project from concept to conclusion SERVING VARIOUS SECTORS OF INDUSTRY

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CAREERS

CONFORCE INTERNATIONAL, INC.

NORTH AMERICAN FEED SCREW LTD.

is offering an exciting new opportunity in a key position for a new pultrusion manufacturing facility in the Toronto/ Canada area.

Manufacture New & Rebuild Screws & Barrels. All types; Extrusion, Injection & Twin Screws, New & Reconditioned Barrels, New Tiebars & Complete Tip Assemblies.

Responsibilities will include: equipment procurement, formulation development, line set-up, line operation and quality control. Advanced proficiency with AutoCAD and Solidworks drawing is required to assist with product design and quotation.

6425 Kestrel Road Mississauga, ON L5T 1Z8

TEL: (905) 670-2455 FAX: (905) 670-2457

email: info@northamericanfeedscrew.com

PRODUCTION ENGINEER / PLANT MANAGER Exceptional growth and expansion opportunities for the right candidate. Must have a minimum of 5 years experience in a pultrusion manufacturing environment.

Email resume to ksaliani@conforce1.com

28 Canadian Plastics November/December 2008 www.canplastics.com

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design ideas • plastics in the house

Dishwasher basket makes smooth adjustments with engineering resins

Acrylic fights off mold and mildew As any number of frustrated homeowners can testify, nothing makes a new kitchen or bathroom look old faster than glossy door, drawer and panel surfaces quickly giving way to moisture warpage, mold or mildew.

To combat these problems, Cyro Industries has developed its new Parapan solid acrylic material. Manufactured as a single, non-porous sheet, Parapan is designed to bring a permanent level of radiance, gloss, and moisture-resistance to bathrooms and kitchens.

The material retains colour, gloss, and UV-resistance after processing, the company said, eliminating the need for coating. Additionally, Parapan can be thermoformed, allowing it to follow the contours of a round or oval frame.

Available in 17 standard colours, in thicknesses of 18 mm and 4 mm, Parapan sheets are delivered as cut-to-size and ready-to-install furniture elements.

And unlike coated high-gloss lacquer fronts, the material is also solvent free, allowing it to be recycled and ultimately returned to the manufacturing process.

“Parapan’s appearance, functionality, and durability give homeowners, architects and interior designers a level of creativity they did not previously have,” said Debbie Sulewdki, Parapan product manager. “It sets a new standard for high-gloss furniture fronts.”

Cyro Industries (Parsippany, N.J.); www.cyro.com; 1-800-631-5384

Washing the dishes is already an annoyance, without having to struggle with adjusting the components inside your dishwasher.

Du Pont Engineering Plastics has just helped make the process a little easier with its Delrin acetal resin and its Minlon mineral-reinforced nylon. Both materials are used in a new device designed to adjust the height of the upper basket in automatic dishwashers.

Manufactured by Vestal A.S. of Turkey, the adjustment mechanism allows consumers to move the basket up or down, even when full.

According to Orhan Hulagu, a research and development engineer with Vestal, Delrin was selected for its low wear and friction properties, and Minlon for its strength and stiffness.

The basket features a base plate molded from Delrin interlocking with a rail plate molded from Minlon. Between the two plates, which slide above each other in a vertical motion, there is a fixing plate made of Delrin that locks the basket in place at the desired height.

“We had previously tested other polymers, but had encountered problems with warpage,” Hulagu said. “The Du Pont materials provided the right combination strength and dimensional stability, as well as additional benefits such as appealing surface finish, and overall colourability.”

E.I. du Pont Canada Company (Mississauga, Ont.); www.plastics.dupont.com; 1-800-387-2122

Low-VOC vinyl meets air quality standards Whether a product meets air quality standards or not probably isn’t foremost on the minds of most people shopping for interior furnishings, but reducing volatile organic compounds (VOCs) has long been a priority for plastics manufacturers — and never more so than now, with anti-plastics agitation reaching new heights.

In home and office environments, emissions of VOCs can come from insulation, carpeting, paints and coatings, adhesives, sealant, and numerous other substances. With this in mind, Teknor Apex Company is now offering a new low-VOC vinyl compounds for use in profiles and molded items, extrusion coated fabrics, and extruded and calendered sheet used in residential furniture and furnishings.

Examples of applications include wall coverings, window treatments, furniture trim, and baseboards.

Supplied on a custom basis, the new compounds exhibit the same processing and end-use properties as similar conventional products and are comparably priced, according to Louis R. Cappucci, vice president of Teknor Apex Vinyl Division.

“In contrast to the all-or-nothing thinking of anti-plastics activists, we continue to develop new flexible vinyl products to meet the changing demands of our customers and their markets,” Cappucci said.

Teknor Apex Company (Pawtucket, R.I.); www.teknorapex.com; 401-725-8000 www.canplastics.com November/December 2008 Canadian Plastics 29

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view from the floor

JIM’S BUZZWORD OF THE MONTH:

Understanding BPA

By Jim Anderton, technical editor

I

f you’re reading this month’s rant looking for another tech tip, I’m going to ask your indulgence in a little side track.

This month, I’m going to briefly talk about a chemical compound that’s a hot news item again in Canada: bisphenol A (BPA).

BPA has been classified

by Health Canada as “toxic to human health,” and as industry professionals, it’s vital that we understand this issue.

If you’re like me, friends and family have already asked you about the controversy.

We need to defend the Canadian industry, regardless of where we fit into the plastics sector, so here’s the truth about BPA. BPA is a chemical compound made by a “condensation reaction” of acetone, a

common solvent, (e.g. nail polish remover) and phenol, a common alcohol. Phenols are more common that you think: many sore throat medicines use phenols as a major ingredient.

The resulting BPA molecule has three primary uses in our industry. The first is as a basic monomer from which polycarbonate resin is made. The second is as a precursor in epoxy resin manufacturing and the third is as an additive.

Additive uses are typically as an antioxidant in plasticizers and as a polymerization inhibitor in PVC production. If BPA use was restricted to vinyl siding, there probably wouldn’t be an issue, but the use of PC in baby bottles, sports water bottles and the common application of epoxy resins as a liner in “tin” cans used in the food industry means that human exposure is inevitable. And “exposure” is the key word.

Unfortunately, the media paint BPA as “unsafe” even though the issue is far from black and white. The truth is that exposure generates risk factors, a statistical measure of the likelihood of a disease or illness, a concept more difficult to sell compared to the simplicity of well-known health threats like ionizing radiation or cigarette smoking.

Threshold exposure levels that cause harm vary widely depending on the study, with the U.S. EPA establishing a threshold level of 50 micrograms per kilogram of body weight as a safe maximum. Typical exposure of an infant (the most potentially vulnerable population) feeding from a PC baby bottle is on the order of 13 micro-

Engineering Plastic

A broadly defined and often misused term describing any resin (normally restricted to thermoplastics) that have better physical, chemical, electrical or thermal properties when compared to commodity resins like polystyrene, polypropylene, polyethylene and polyvinyl chloride (PVC). “Engineering plastic” is not restricted to straight resins or alloys, blends or copolymers. ABS, for example, is a copolymer, while polycarbonate (PC) is a neat resin. Both can be considered “engineering plastics.”

grams per kilogram, although some studies suggest that even this low exposure may be dangerous.

Although the science is inconclusive, the media coverage has been negative enough to drive major retailers like WalMart, Toys-R-Us and Mountain Equipment Co-op to demand BPA-free formulations.

Expect BPA to disappear as an additive, but remember that it’s also a monomer used in PC polymerization. Even with the removal of BPA in additives, trace amounts are still detectable if PC products are exposed to conditions that degrade the plastic.

This does not mean that PC products are unsafe. If consumers are worried about the trace amounts of detectable BPA in PC consumer goods the answer is simple: clean them according to the manufacturer’s directions and keep them out of the microwave oven.

The more the public knows about BPA and polycarbonates in consumer goods, the better off the industry is, regardless of the resin you’re processing.

CPL

JIM'S TIP OF THE MONTH Care of Polycarbonates

BPA is just one result from incorrect care of polycarbonate products. Degradation can also cause loss of clarity and even compromised physical properties in finished goods.

The simple answer is to make sure your customer knows how to properly clean PC products. Avoid most common solvents, including methyl alcohol. Warm water is fine (below 60°C) as are vinegar solutions, common household alcohols like ethanol and isopropyl alcohol (rubbing alcohol). Even dilute hydrochloric acid is okay, and borax is a good cleaning agent in water. Common household cleaners to be avoided include ammonia, strong alkalis like drain cleaners and lye, as well as nail polish remover (acetone).

30 Canadian Plastics November/December 2008 www.canplastics.com

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