Better margins through product differentiation and high-value products
Gordon Graff -- Purchasing, 11/4/2004 2:00:00 AM
When General Electric's GE Plastics division acquired LNP Engineering Plastics in early 2002, it was not clear how GE would integrate the huge plastics compounder into its own operations. But at a recent press conference at LNP's Exton, Pa. headquarters, GE executives said that their company intends to stress specialty and high value-added plastics and that LNP, with its newly expanded technology development center, will play a pivotal role in development of those products.
(GE has invested about $2.9 million to upgrade the facility, which now has a broad array of seemingly brand new compounding, molding, materials analysis and R&D equipment.)
The company hopes the advanced technologies being developed at the new LNP tech center will both help improve margins and also be an asset in minimizing the impact of two issues that all plastics compounders with global operations face: the rising costs of raw materials and issues related to "surety of supply."
That emphasis on specialty and high value-added plastics, says Charlie Crew, president and CEO of LNP Products, is essential in an era when inflation is eating up plastics producers' margins and when downstream customers are demanding value and product differentiation. "We're going to be devoting more of our technical resources to specialties" that address selected portions of the market. (LNP and GE's other plastics operations became part of the newly formed GE Advanced Materials unit last January, along with GE's silicones and quartz businesses.). However, Crew was quick to add that GE has no immediate plans to abandon its commodity plastics businesses.
There are several markets where Crew sees "growth opportunities" for specialty plastics: autos, electronic equipment, medical devices, and replacement of metal gears with plastic ones in industrial machinery.
In autos, fuel systems and structural components are the most promising. In electrical equipment, polymers that can replace metals are the most inviting target. In addition, says Crew, while overall growth of plastics in electronics isn't as great as it was a few years ago, there is still ample room for penetration of plastics into electronic packaging and materials used to handle wafers and chips.
At the press conference, Crew and other LNP executives outlined ongoing areas of plastics technology development at GE:
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Non-halogenated flame retardants. These additives are in great demand in Europe, and gaining traction in North America.
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Extreme thermal-dissipation plastics. Such polymers are able to drain heat away as efficiently as metals, which may allow them to challenge metals in high-heat machinery and electronics applications.
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Plastics that can act as thermostats. These materials conduct heat up to a certain temperature and then become non-heat-conductive until the temperature drops. Possible applications: heating systems for vehicle mirrors, seats and steering wheels, and diesel pre-heaters.
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Antimicrobial additives. These can be compounded into existing plastic resins to retard the growth of fungi, algae and other microbes. Uses include molded articles used in healthcare, food service, children's toys, and furnishings.
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Controlled release plastics. These resins release lubricants from plastic gears in order to reduce wear in machinery.
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