Tech Trends
Sep 4th, 2008 Print this article Talking pipe and profile with Wolfgang StudenerBy Matt Defosse 
Workers install plastic pipe. While some markets see declines in demand for plastic profiles, pipe demand has remained steady, or grown. |
The construction market is in the tank, not just in the U.S. but also throughout much of Europe. Currency issues bedevil processors in the European common currency countries. China’s growth starts to slow. Time to tap an expert’s outlook.
Wolfgang Studener has been at the helm of the Battenfeld Extrusion Group for 18 years; the Group includes Battenfeld Extrusionstechnik (BEX), American Maplan Corp. (AMC), B+C Extrusion Systems (Foshan) Ltd., Extrusion Kempen, and a JV in India. Together, the Group claims a 25% share of the plastic pipe extruder market and a 15% share of the plastic profile extruder market. If you want to talk pipe and profile, then talk to Wolfgang. (This interview includes the complete text from our article in the September 2008 issue of the magazine, as well as additional text not printed in the magazine.-Ed.)
MPW: The pipe market seems to keep developing but the profile market is not doing well, due to the building & construction industry’s problems in the U.S., Spain, the U.K. and elsewhere. Correct?
Studener: Between 2005 and 2007, the market for pipe, profile and sheet extrusion equipment grew by about 30%; we grew faster. After the substantial expansion of global production capacity in all areas of extrusion, we now expect demand to slacken and even contract in some areas. We think that the overall market for extrusion equipment will shrink by at least 15 % over the next two years following the peak in 2006/2007. This will mean a noticeable decline, but still on a relatively comfortable level.
The overall pipe extrusion equipment market is expected to remain virtually stable, since plastic pipe are unrivaled as convenient products for plant irrigation, fresh water transport and wastewater disposal. Water, and efficient water transport, is a huge theme in the whole world.
MPW: And profile?
Studener: Our forecasts show the most pronounced decline of about 30 % in the window profile extrusion market but medium- to longer-term we see a significant investment push for plastic window profiles in the remodeling market for residential housing, especially in Western Europe and also Germany. This will be mainly triggered by the much higher energy costs for homeowners. In the U.S., we already see the effects of the slump in new housing starts in the order books. Unfortunately, the outlook for 2008 is not very encouraging with only 1 million new houses to be built compared to 2 million in 2007. In the U.S. profile processors tell us it’s a catastrophe. Pipe isn’t as bad there. The situation in the housing markets in the U.K. and Spain unfortunately is similar to that in the U.S. In Russia there were large investments in the last years, leading us to believe in a temporary slowdown in the profile market. There too, though, pipe continues to be good.
MPW: Do you see any demand for non-vinyl (PP, ABS) window/door profile equipment in certain markets?
Studener: Not really. In our opinion, PVC is still and will be for the foreseeable future the material of choice for window profile extrusion. PVC’s major advantage is its excellent price-performance ratio. PVC compound is significantly less expensive than ABS, for example. Also, the environmental issues that have negatively influenced the discussion in the past are resolved. Using new calcium-zinc stabilizers, PVC is widely unrivaled. ABS is only used in exceptional cases.
MPW: Have we reached the limit of profile output with double strand extrusion or do you expect to see more triple and quadruple extrusion from a single line in the future - i.e. higher output from fewer extruders?
Studener: The line speed that has established itself in recent years as a general benchmark in the high-performance bracket of twin-strand extrusion lines manufacturing PVC window main profiles is twice 5-6 m/min. For auxiliary profiles such as glazing beads, triple or quadruple extrusion is widely used depending on the availability of appropriate tooling. In any case, tooling is the decisive factor in profile extrusion. Today, high-performance extruders yield output rates of up to 1000 kg/hr which needs to be handled properly by the profile die. Insiders expect, however, that line speeds of 8-10 m/min will come within reach for twin-strand processes within the next few years, thanks exactly to continuous improvement in tooling and calibration technology.
MPW: A few of your competitors now offer pipe extrusion equipment that can change the dimensions of the pipe ‘on the fly’. Do you predict this sort of system has a good future or are processors more interested in dedicated, high-output lines for a single product?
Studener: Generally speaking, we see equipment that helps processors increase their flexibility, for example to change pipe dimensions ‘on the fly’, as a useful addition. Especially suitable are these systems for large pipe manufacturers who can equip some lines with such systems. Those lines usually are dedicated to running small production lots. Moreover, systems for dimensional changes ‘on the fly’ are in our opinion advantageous within limited, small dimension brackets, such as if a processor manufactures pipe in the diameter range of, for example, 63 mm to 110 mm or 125 mm to 250 mm. And here also, appropriate tooling needs to be available.
MPW: XLPE and rPP pipes essentially are competing as materials for transporting hot, potable water. Is demand still regional (XLPE - North America; PP - Europe, particularly Eastern Europe and Turkey) or do you see demand for both solutions in many markets?
Studener: It’s correct that both materials are used for the same hot water applications. The PP-R pipe extrusion is simpler and the final pipe is lower in cost. The disadvantage is that the final installation costs are quite high, as many more fittings are needed compared to XLPE, which leads to longer installation times. This is in fact the reason why this pipe is preliminary used in so-called ‘low cost countries’. In the long term we expect the XLPE pipe to be the winner due to its advantages in installation, its higher flexibility, and last but not least its better material characteristics in terms sanitary requirements like disinfection.
PEX with aluminum is a hot combination; it bends easily, brings together the best of both materials. Copper is being pushed out of this market; too expensive.
MPW: How will BEX react to the slowdown in the North American market?
Studener: In light of the overall uncertainty about the short-term economic prospects, the current market situation in North America is insufficient. With new housing starts expected to be down 50% this year, the sales numbers for extrusion equipment are declining which is also reflected in the recently released SPI sales numbers for the first quarter 2008.
As you know, Triton not only bought the Battenfeld Extrusion Group but also Cincinnati Extrusion based in Vienna, Austria. The local hubs of both corporations, American Maplan in McPherson, KS, and Cincinnati Extrusion in Erlanger, KY, operate as separate companies. In order to cope with the market slowdown, we’ll strengthen our multi-brand strategy on the one hand and on the other hand, we’ll further improve our internal processes and reduce costs. To achieve these internal goals both U.S. companies will be merged by the end of 2008. But let me say that again very clearly. We’ll not merge the AMC and CET brands. The integration process will be in the back end, mainly in purchasing and in operations, not noticeable for customers. Kurt Waldhauer (Ed. note: longtime American Maplan president) will run the entire North American business.
MPW: And in China?
Studener: China has experienced very high GDP growth rates over the past decade and the extrusion industry has strongly participated in that. What could be seen at Chinaplas 2008 in Shanghai was the number of imported extrusion equipment declining, but this is not applicable for locally Chinese manufactured machines. Luckily, BEX is in a position to be able to provide high-end equipment from Germany for high-sophisticated applications and also Chinese-manufactured extruders and extrusion lines using German engineering know-how and processing expertise and thus, combining both sides to the benefit of our customers.
As in the U.S., BEX and CET operated separate companies in China until the beginning of 2008. After a thorough evaluation process, we have decided to merge the two companies and move the headquarters of the newly founded B+C Extrusion Systems (Foshan) Ltd. to Shunde, since 1996 the location of Battenfeld China. In the long run, we’ll close the Cincinnati plant in Dalian and will manufacture both machine brands, Battenfeld and Cincinnati, in Shunde. But again, it’s important to keep in mind that we’ll not merge the Battenfeld and Cincinnati brands. The integration process will be in the “back-end”, mainly in purchasing and in operations, not noticeable for customers. Both brands will be sold independently in Asia. Peter Schuerz is running B+C Extrusion Systems in Shunde since the merger.
MPW: How has the WPC profile market developed for BEX? Prognosis for the future?
Studener: Within the Battenfeld Extrusion Group, our sister company American Maplan Corporation (AMC) in the U.S. operates as the global competence center for natural fiber composite (NFC) processing. AMC is a pioneer in NFC extrusion and holds a strong market position in the NAFTA region.
The NFC market as such has seen high growth rates in recent years and we believe we’ll also see moderate growth over the next couple of years for the relevant applications. After having become popular in North America quite some time ago, recently demand for NFC products in Europe, esp. in Poland and Russia, is picking up.
Most people underestimate how tough it is to process WPC, how much harder it is than to manufacture, for example, PVC window profiles. Processors need to be very, very careful- quality needs to be high, otherwise you’ve bad products, rebates, and more.
MPW: When BEX and AMC were part of SMS, the company could offer a one-stop-shop for all extrusion needs whether pipe, profile, film, or sheet, plus injection molding (such as pipe fittings) through the Battenfeld injection molding machinery business. Since the breakup of Battenfeld as we used to know it, has this had any negative effect on BEX sales or interest in equipment? Or has it been a blessing in disguise?
Studener: Within the SMS Group, to which Battenfeld Extrusionstechnik belonged from 1980, the company functioned as a separate legal entity, as did the injection molding machinery producer of the same brand name in Meinerzhagen / Kottingbrunn and the American supplier of blown and cast film equipment, Battenfeld Gloucester Co. Inc. Battenfeld Extrusionstechnik started to manufacture extruders some 45 years ago. Today, the Battenfeld Extrusion Group, which includes American Maplan, Battenfeld China, Extrusion Kempen, Battenfeld Extrusionstechnik and the group’s joint-venture partner Kabra Extrusiontechnik, has developed into a network covering the three continents of Europe, Asia and USA. With about. 500 employees, half of whom work at our headquarters in Bad Oeynhausen alone, the Battenfeld Extrusion group achieved almost €150 million in sales in the fiscal year 2007.
One year after the transaction, we can say that for us, the situation has clearly improved. As the last few years with SMS were strongly characterized by the problems of the other companies within the group, the acquisition by Triton brought about an overall improvement in our situation. Triton has an excellent reputation, is a very dedicated and knowledgeable investor and partner, and operates with absolute professionalism. The Battenfeld Extrusion Group is in an excellent, financially sound position. We’ve brought our leverage under two within one year.
MPW: Are you satisfied with the outcome of the lawsuit against China’s Cosmos?
Studener: All I can say at this point is that the court in Dongguan ruled in our favor, ordered our competitor to destroy all unlawfully used intellectual property of Battenfeld China and imposed a fine. But since Cosmos apparently has appealed to a higher-ranking court, this case is still pending.
At the end of the day there are two important conclusions to draw. First of all we need to make sure to stay innovative and to further improve our time-to-market position. Secondly, we need to take precautions for our equipment not to be copied that easily.
MPW: How has your JV with Kabra in India developed?
Studener: With Kabra we’ve about a 60% market share in India, with a total of almost 1300 lines sold and just under 100 granulators that have been installed, and expect enormous growth as well. It’s a win-win situation for both of us.
India is a very dynamic market. In 2006, about 14 million tons of plastics were processed into pipe worldwide. Through 2010, the total capacity is expected to increase by 5% annually to about 17 million tons. Market researchers estimate that the annual growth rate in Asia will be about 6%, with India even showing a growth of 15-20%.
In the strongly fragmented Indian market, about 25,000 producers are currently processing a total of approximately 7 million tons of plastics. This volume is expected to grow to 12 million tons by 2010, almost twice the current figure. Today, more than 900,000 tons of thermoplastic material is already being processed into pipes in India each year, more than 80% of which is PVC. Pipe extrusion is also expected to grow at an enormous rate, since more and more pipes are needed for agricultural irrigation systems, drinking water, waste water and gas transport, plumbing and cable conduits.
MPW: Injection molding machine makers in Western Europe and North America are feeling tremendous pressure from Chinese-run molding machine manufacturers offering lower-cost presses. How have BEX and its competitors fared so far?
Studener: Good for us is that so much in extrusion is process technology and processing know-how, not just copying the machine, and we’ve that (processing technology) experience. This may be one reason why customers in the extrusion business tend to be much more loyal than injection molders. So far there is less pressure on us from machines made in Asia than in injection molding, and our chief competitors remain the same well-known names. | 
