Familiarity with change no surprise in this industry

Last year was a surprising year for the metallizing industry in a number of ways. The shortage of polyester film contrasted with ample supplies in 1993. Rising film prices contrasted to the declining prices of a year earlier. Improving profit margins compared with tight margins. The Republicans gained control of Congress after some 40 years of Democratic rule.

These are some of the unexpected events that have changed the metallizing industry today.

The polyester film shortage overshadows every other business consideration. While it creates problems for metallizers and their customers, the flip side is positive in some cases.

William P. Foley, customer service manager Vacumet Corp., Wayne, NJ, saw the beginning of a film shortage in March 1994. "Lead times started to move slowly but surely," he said. "By August or September, the shortage really started to hit. Then it became difficult to get film, especially if you hadn't bought from a manufacturer. By the end of the year, companies making plans for 1995 actually cut people off, and they weren't accepting customers. Offshore suppliers dried up at about the same time. The price for polyester film began to rise."

"This is the first time it's not just a US situation," William H. Nelson, market manger, ICI Films, Wilmington, DE, said. "This is a global situation. As a result, prices have substantially risen over the course of 1994." Nelson's view is the market will remain tight through 1995 and probably the early part of 1996. As a producer of polyester film, he said, "We believe there is a shortfall of about 200-million lb. globally over the three-year period of 1994, 1995 and 1996."

Nelson also said the announced capacity increases will bring that shortfall to a net even situation starting in 1996. "Any additional capacity after that time will start to swing the supply/demand balance the other way," he said. "That's why we're predicting in 1996 and 1997, you will see a shift in supply. As a result, you'll start to sec a declining pricing structure with over capacity, and we'll go through another four- to five-year period until it swings the other way, which is the normal cycle time."

One of the other factors that contributed dramatically to the supply/demand imbalance in the US is the exchange rate. "A lot of the polyester resin suppliers are in the Pacific Rim," Bill Symington, president of Canslit Inc., Milton, Ontario, Canada, said, "Japanese manufacturers aren't shipping to North America because the money's just not there. So, it's mostly going into the European market."

The polyester film market has been depressed for many years and now it's just trying to catch up. "The prices go up but the film still isn't available," Symington said. "The producers won't even accept orders."

Canslit had been receiving about 120,000 lb. per month. Now, they get 80,000 lb. about every six weeks. Lead times for delivery are out to 12 to 16 weeks. Therefore, orders have been placed for next summer. Lack of film has caused a layoff at Canslit.

"We're spending most of our time now trying to find film to metallize for our customers," Symington said. "Customers keep calling, and I keep saying I just don't have any film."

"There hasn't been enough polyester film capacity in North America to satisfy North American demand so a substantial amount of film had to be imported. Over the past few years, the percentage of imported products needed to satisfy North American demand continued to grow," Mark Mitravich, sales and marketing manager, thin films, Hoechst Diafoil Co., Greer, SC, said.

According to Mitravich, until last spring, imported film had been able to satisfy that balance. "But the rising demand in other parts of the world, in addition to the growing demand in North America, created a supply/demand imbalance in North America.

"The last thin-film line came onstream in 1989 and since that time, prices haven't been at a level that justified reinvestment in additional thin-film capacity" Mitravich said.

The supply of thin polyester film for the US market will remain tight through the first half of 1995. "But we've seen in the past that the market turns around quickly," Mitravich said. "When the market does turn, it will move very quickly. As a result, we're trying to pay very close attention not only to our own inventories but to our customers' inventories." Despite the industry-wide film shortage, Mitravich said, "We have continued to meet our commitments, and we believe we will continue to do so in 1995 because our commitments are consistent with our production capabilities."

"I'm in the middle of trying to examine alternatives, given the shortage of polyester film," James Lordi, CEO, Scharr Industries Inc., Bloomfield, CT, said. "Obviously when you talk about polyester, the intelligence we have suggests that before it gets better, it gets worse, especially in price." In response, Lordi said, "What you do as a company is get resourceful. You try to solidify your current sources, you try to diversify into other opportunities and you respond to your customers' needs and requests where alternative films may work in a given situation."

As difficult as the film shortage is, it isn't the only problem metallizers face. Quality is another. "In fact, quality has slipped a bit," Symington said. "Improvement in the metal adhesion of polyester film hasn't moved forward either. When you're running flat film out, you don't take the time to check quality as closely as in the past, and quality has slipped a bit. It's on the core and out the door. When you're sold out, you don't reject too much."

The polyester-film shortage has caused metallizers to consider working with other films. Symington said "I've got people asking me to look at nylon to replace polyester."

Vacumet has been "very fortunate," according to Foley. "We have relied on nurtured relationships with domestic polyester manufacturers, and we're not feeling the shortages other metallizers are. We have nurtured the domestic market for the past 15 to 20 years for several reasons; one is they are here, their reaction is faster, they give a lot of technical support and sales support. They can react much better."

Foley agreed one of the causes of the shortage in polyester film is China and Brazil have had poor cotton crops for the last two years. "Because of the shortage of cotton, polyester resin has been going to make fiber, not film.

"Panic buying is another cause of the shortage," Foley said. "People have stocked up on film even if they had no immediate use for it and have worsened the situation. When they started seeing tightness, they ordered film they thought they might need. If they find they don't need it, they cancel the order or delay the shipment."

According to Robert W. Graham, Mylar business manager, packaging films, Du Pont Co., Wilmington, DE, rapid market growth is certainly an underlying cause of the film shortage. "Demand for polyester film grew at an annualized rate of 7% to 8% during 1994 with very strong growth in all markets with packaging and industrial specialties growing at 10% and some niche markets at 25%," Graham said. "Even the straight commodity markets that would typically see 2% growth were growing at 5% or 6% or better. All segments grow at least double the growth rates we saw in 1993. We're forecasting the growth rate will drop down to 4% to 4.5% in 1995, due to the shortage in film."

Despite film shortages, Graham said the number of inquiries and interest in new applications for both metallizing and polyester film is amazing. "I see at least one new application a week," he said. "In metallizing, I see extreme interest in foil replacement for both metallized film and coated film in packaging. One new application a week is very specific to packaging. There are a lot of new developments in the industrial segment."

"There's an incredible increase in the demand for polyester film," Ronald C. Wood Jr., technical services manager, Rhone-Poulenc Inc., Holcomb, NY, said. "We're sold out and having a very difficult time keeping up with orders." Among other reasons for the shortage, Wood cites the shortage of ethylene glocol and DMT, which causes a shortage in resin production.

"We have heard from our customer, the converters, that their customers, the end users, are increasing their demand for polyester-film constructions," Wood said. "Some end users are going back to polyester from polypropylene or going to polyester for the first time because it tolerates a wider temperature range. It's a more forgiving film, too, so they're going to pay a little more for the structure to get the operating benefits ."

The shortage of polyester film hasn't dampened business for Tony Broomfield, manager, GVE America, Charlotte, NC. "A metallizer is a big chunk of capital equipment," he said. "From the initial thought to getting the thing delivered could take three years. Machines are being delivered this year that were conceived two years ago."

According to Ray Woody, president, Himac Inc., Danbury, CT, "The shortage of polyester film is going to go on for another three years. It hasn't affected us as much as it has some of the others. We buy from about five different polyester suppliers all over the world, plus one domestic supplier. We move about 700,000 lb. a month of polyester, about 8.4 million lb. per year.

"We see raw materials continuing to be tight," Woody said. "Prices are going through the ceiling. Our business is pretty healthy right now and the reason is, we pay the bills and we pay them on time. And, when things get tight, that's who suppliers want to supply - the people who pay their bills.

"We're turning down business because we don't have the capacity. One of the reasons we are inundated is that we have film. The polyester-film shortage will certainly shake out this industry further. The weak players are going to fall faster.

"Film capacity isn't the problem," Woody said. "There are lines in the world that are shut down for a lack of resin. The available resin is going to produce PET bottles and fiber for China due to the poor cotton crop. So, the spot market for resin has been soaked up for fiber. At the point in time that the spot market contracted out for fiber, they could make more money for fiber than they could for film. Today they could probably get the same price.

Charles E. Larsen, CEO, Celplast Metallized Products Limited, Scarborough, Ontario, Canada, said, "Right now we're in a very uncertain time frame from a materials standpoint." Larsen said business is "up a little bit, but we are nowhere near enjoying the potential that we could have enjoyed if materials had been available. The flip side of that is if materials had been available, we might not have had as much demand as we currently do, as some of it may be because our competitors are short of material."

Larsen asked, "How short is the shortage? How may people have tandem orders? A raw material shortage is created when there is one less pound than is needed by the world economy. That one less pound just keeps moving around from customer to customer to customer."

Referring to the cotton situation, Larsen said, "I've heard it said a 1% increase in the amount of polyester fiber going into a cotton/polyester blend fabric is equal to the amount of PET going into plastic bottles in North America. Now, who knows how much is actually going into blends, but even a half percent might account for a film shortage."

Larsen also thinks the world hasn't recovered yet from the recession as much as we think it has. "Shortages make it appear the economy has recovered. But, we're running into shortages because during the recession some capacity was shut down. Now, we're being hit by external factors like poor cotton crops and other things that further create the shortage. I don't think worldwide demand for polyester film is as strong as some people think it is. There's less available, and, therefore, if supply doesn't meet demand or is at all tight, you get what appears to be a shortage, which has people saying business must be good because everyone is sold out."

The shortage of polyester film is definitely going to have an impact on metallizing business at Madico Inc., Woburn, MA. "Our business in industrial products, or what we call technical films, is most often a custom-made business," Joe Benedict, sales manager, said. "I think a lot of companies are in the same kind of a situation where you don't want to have vast supplies of inventory on your floor. You want to be able to move materials in and out as quickly as possible and that flexibility has been taken away from us a little bit. You have to factor in extensive lead times in your business plan. This gets difficult because you have to estimate your customer's needs as well as his customer's needs. In most cases, customers are used to a four-to-six week lead time. Then all of a sudden, you go to a 12-week lead time, and it becomes a problem."

Deliveries of polyester film are stretched out very badly, according to Jack Weisman, president, Metallized Products Inc., Winchester, MA. "However, MPI metallizes substrates provided by our customers and if the customer has a problem getting polyester film, we inherit it."

Weisman became president of MPI on March 15, 1994. The new company is the former industrial division of the original MPI, while its consumer products division became a different company. Weisman had been a director and consultant to MPI.

"Polyester film isn't the only shortage the metallizing industry faces," Randall D. Jacobs, marketing manager, Van Leer Metallized Products USA Limited, Franklin, MA, said. "Paper is another. The metallizing industry is very competitive. There are essentially three major metallized paper producers in North America. Each is well capitalized because they're divisions of larger corporations.

"The economics are changing rapidly due to the rapid rise of raw materials, especially paper costs, which are a major portion of the cost of metallized paper," Jacobs said. "The ability to pass along the increased raw material prices will he critical to the future profitability of the industry."

Coincident with the shortage of polyester film and paper is control of Congress by the Republican party. How great an impact will Newt Gingrich's House and Bob Dole's Senate have on the metallizing industry? Not much is the consensus.

"The new Congress has the potential for creating a more positive environment for business growth," Ward Thompson, president, Camvac, Oak Brook, IL, said. "If the cost of central government is reduced and taxes are reduced as a result, then obviously both individuals and companies will have more earnings available for investment."

Du Pont's Graham is worried about interest rates. "That's the one major concern that we have, that the rapid increase in interest rates that occurred in 1994 will, in the second half of '95 in particular, slow down the economy and growth much faster than anyone anticipated."

Rhone Poulenc's Wood thinks "it may be possible for our company and our customers to spend a little bit more time on running the business instead of shuffling all that government paperwork."

According to Earl Hatley, market development manager, AlliedSignal, Morristown, NJ, "We would expect business to be much easier if the people who are now in power do what they say they are going to do. There's a lot of cost of doing business now involving regulations and documentation. We would be looking forward to a simpler way of life so to speak."

One Canadian metallizer looks sympathetically on what has been happening in the US. "What Clinton was trying to put through means you are just catching up with us, national health care, 17 weeks of maternity leave plus another 16 without pay with a guarantee of getting your job back, no replacement workers during strikes, all the things everyone was worried about, we already have," Celplast's Larsen said. "I guess I just sat back and welcomed you guys to the high cost of doing business in a liberal economy. So now we're just listening to the verbiage of the politicians and waiting for reality to set in."

Republican control of Congress may help business at Flex Products Inc., Santa Rosa, CA, according to John Matteucci, manager of process equipment technology. A lot of the firm's business is with government agencies. For example, Flex Products makes a security device for currency.

A preview of what might happen nationally under a Republican Congress is provided by a look at a Massachusetts metallizer. "A microcosm of what happened across the country happened here four years ago in this very Democratic and liberal state," David Koopman, vice president, Reflex Technologies Inc., North Andover, MA, said. "We elected a Republican governor. One of the things he's done is focus on business issues, making it attractive for businesses to be in Massachusetts. Just recently, one metallizer moved from Connecticut to Massachusetts."

Reflex Technologies was formed in June 1994 by David Koopman and Ron Caterino, who is the company president. Caterino is the former president of Metallized Products.

In addition to being friendlier to business, John Marcantonio, vice president of sales, Leybold Technologies Inc., Enfield, CT, believes "the enforcement of environmental and other regulations may not be quite as strict."

Nevertheless, polyester film manufacturers are becoming more proactive on environmental issues worldwide, according to Sherrod Tatum, global product life cycle manager, ICI films. He is located at the company's Hopewell, VA, manufacturing plant. "I do believe environmental protection is going to be more market-driven," he said. "You will see continuing proactive work by industry regarding environmental issues. We're trying to do the right thing environmentally and economically too."

William A. Glasgow, business manager, BN products, Advanced Ceramics Corp., a manufacturer of evaporation boats in Cleveland, OH, sees "a slowdown or a hold on EPA, health and safety regs. Things will stay pretty much as they are without a lot of new ones added."

H. H. Hormozi, president of H. H. International Inc. and Associates, a consulting firm, Streamwood, IL, believes the impact of the Republican-controlled Congress overall will be positive. "We may see some relief in taxes and positive impact in the area of regulatory activities with an eye to cost-effectiveness." However, the former director of manufacturing and engineering at Quantum Performance Films, Streamwood, IL, warns, "Inflation may be higher than expected."

Despite shortages and increased raw material costs, the metallizing industry is expected to continue to grow. Gene Leo, project director for Omega Research Associates, Pittsburgh, PA, recently published a comprehensive report on the industry. He projects "total demand for metallized materials will grow from 161-million lb. in 1993 to 195-million lb. in 1998. Packaging end-uses, including labels, are expected to be about 60% of total demand in 1998. OPP and PET films will account for 60% of metallized packaging while paper and paperboard will account for an additional 30%. The growth rate for metallized packaging materials is expected to be about 5% in most years."

Leo expects "no major increase in in-house metallizing capacity by film producers or converters. However, rapid technological improvements in metallizing equipment and the increased cost of state-of-the-art equipment will force many of the smaller players out of the business due to their inability to compete with larger companies."

Camvac's Thompson sees similar growth ahead. It will vary from 5%-8% to 12%-15%, depending on geography. "Europe will probably be at the low end and Asia at the high end," he said.

He saw unprecedented increases in raw material prices in 1994. "If any single factor works to retard growth of metallized products, it will be a continued escalation of the cost of raw materials," Thompson said.

The cost of raw materials to metallizers is going to continue to go up, according to AlliedSignal's Hatley, "just due to the uptick in the economies around the world and the pressure that's hinging on supplies of raw materials. We've seen the cost of caprolactam (nylon) go up 50% in the last six months and that price will stay at that level for the next 18 months or so because the demand is so high in all industries, very high in autos, housing, and consumer products. And, of course, the demand for packaging films has been very high in the last six months. About 10% of total caprolactam production goes into film. We don't have a nylon film shortage right now, but we do have a long lead time."

"Metallizers can no longer limp along at 1980 speeds," Terry Carroll of Core Connections Inc., North American representative for Israels' Hanita Coatings, said. "To sell straight metallized film today, you gotta be flying. The successful metallizers run at about 1,500 fpm and can pump down in less than 10 min. Without this kind of speed, you can't be in the metallizing business."

He said the rise in raw material costs is "a good thing for metallizers" because "if their cost of film has gone up 10% and they can pass along a 10% total increase in finished product, they can get their margins back."

At the same time, Carroll expects polyester costs to rise even more this year. "Those increases seem to generate more interest in substrates other than polyester."

At Hoechst Diafoil, Mitravitch said, "To ensure healthy business, the metallizing industry will have to maintain or develop satisfactory margins in light of the changing raw material costs and pressures from end-users for price stability.

"If you look at North American expansion since 1989, the only new film production lines that have come onstream have been for the magnetics market." Mitravitch said. "What that tells us is the margins haven't been satisfactory enough to lead us to the point we would reinvest in putting a new production line in North America."

Without satisfactory margins, neither the metallizer nor the polyester film supplier can keep up with growing demand. "We need margins that will enable either one of us to reinvest the necessary capital to support growth, otherwise you run the risk of forcing film suppliers and metallizers and their customers to look into alternative technologies to meet their needs," Mitravitch said.

Paulo Raugei, executive vice president, Galileo Vacuum Systems Inc., East Granby, CT, said he expects "capital equipment investments in North America to remain strong" for the rest of the decade.

"In the manufacturing sector, the US has to fill a gap of many years of low investment, which has led to obsolete machinery and, as a consequence, to a general level of noncompetitiveness in this sector" Raugei said. "This situation isn't common to all industries and certainly doesn't apply to the high-tech sector, such as semiconductor manufacturing. We think it applies to the metallizing industry where the proportion of state-of-the-art equipment is comparatively low with respect to Europe and Asia. In fact, in North America, we can still notice a large part of the installed base made up of old metallizing machines, many times homemade."

Du Pont's Graham pegs the growth of the metallizing industry "somewhere in the 5% range, plus or minus 1%. One of the contributing factors is going to be film supply; polyester, polypropylene, biax nylon, whatever. Film is very tight now and will continue tight. What drove the polyester film market more than anything is there was no capacity of any real consequence added during 1993 and 1994. Growth in demand for polyester film exploded at about 7% or 8% in 1994. The industry had been predicting a growth rate of only about 2% or 3% demand growth in 1994."

From a global standpoint, Graham expects polyester will be tight through 1995, "strictly because there is no significant new capacity coming onstream until the end of the year.

"Polypropylene won't be as tight for as long but film demand is going to be pretty strong," Graham said. "In addition to continued tightness, there is going to be continued pressure on polyester prices because our raw materials are going up much more in 1995 than what we saw in 1994."

Part of the anticipated sales increase in 1995 will come from toll metallizing with more control of sales by the customers, the converters, according to Rhone-Poulenc's Wood. "We sell film to the converter lint ship it to the metallizer for the converter," Wood said. "Part of the reason for this is that, traditionally, metallizers have been low-price buyers. With the very tight supply of polyester film, they've been having difficulty getting film. As a result, what volume of polyester they're getting now is coming through the converter, their customer. We expect this to continue for quite some time because we expect polyester to be tight for tWo years."

Woody's margins at Himac are substantially better this year compared to last. "They're like night and day," Woody said. "We're passing raw-material prices through to our customers, and we buy smarter than most people. It has a lot to do with buying a lot and paying your bills."

Shortages in films and paper, ups and down in profit margins, call for changes in the way metallizers and their suppliers conduct business. Hoechst Diafoils' Mitravitch believes "companies must concentrate on differentiating themselves on the basis of customer satisfaction. That's one way we're going to be successful in a very competitive market. Day in and day out quality is expected by our customers, and providing it is one of the ways to keep customers satisfied."

According to Ed Koinski, market development specialist, Hoechst Diafoil, at thin films, "fast response to questions, rapid turn-around and overall response time to questions on such things as shipping dates is included."

Woody raised a cautionary note. "There's less and less need for an intermediate converter, which is what a metallizer is. I see more and more pressure on that part of the business, and so you have got to look at ways to move upstream, downstream, or spread out where you are. And, we're looking at all three of them."

According to Galileo's Raugei, "We see the market trend for metallized packaging materials going toward tighter requirements in terms of barrier properties and lower production costs. If this trend is factored into the continuing tendency of film producers and large converters to do their own in-house metallizing, it may send a strong signal to the independent toll metallizers. Basically, they will have to match the market requirements for large-size, state-of-the-art machines.

"Capital equipment investment will also play an important role in the likely trend of the metallizing industry toward consolidation," Raugei said. "The impact of the large multinational groups will become even more predominant in consideration of their financial and marketing advantage.

"Smaller converters will concentrate on proprietary products and market niches," Raugei said. "Silica-coated films may be one of them. We can report the installation of the second metallizer with silica-coating capabilities in North America."

Reflex Technologies' Koopman has changed the traditional mold of how companies sell. "A lot of our customers require just-in-time delivery. We encourage that because we can help our customer by having product in stock for him, and the customer doesn't have to carry a huge inventory. You don't see people taking huge shipments that last six months any more. This means we inventory more than we did in the past. We also can supply a customer with a finished product, saving him production expenses."

Madico's Benedict said the company has invested a lot of time and effort in the education of its customer service group. "We're fortunate we have top notch people in terms of knowing our capabilities and expressing that to potential customers," he said.

For years, one of the metallizing industry's goals has been foil replacement. Camvac's Thompson expects "the cost and performance advantages of metallized products to continue to replace foil in packaging applications."

Van Leer's Jacobs reports the conversion of Miller Brewing's foil laminate labels to metallized paper. "This, by itself, will result in double-digit growth of metallized paper demand," Jacobs said. "Economics and environmental trends should continue this trend of substitution." The attractiveness of beer labels has been enhanced for several breweries through Van Leer's HoloPrism holographic papers, which provide a 3-D effect.

"In Europe, a major application which has converted from foil is the cigarette pack inner liner," Jacobs said. It has increased demand for metallized paper by many thousands of tons.

DuPont's Graham said be's "seeing more inquiries on foil replacement now than a year ago, perhaps due to a combination of pricing and long-term environmental concerns. One of the things we're seeing with coated films is the ability to use the microwave. And, that cuts out both foil and metallized films."

Not all developments are made at foil's expense. Flex Products' Matteucci said applications of transparent barriers are starting to let go. "It's going much better in Europe than here, and not as a foil replacement but as a new product area; that is, different ways of marketing food," Matteucci said. "Aluminum foil itself will probably never totally go away. Neither is the transparent coating going to replace metallized film that is being used for its barrier properties. Instead, it will open up new marketing areas."

Globally, the market for metallized products is growing. According to ICI Films' Nelson, "The Asia-Pacific markets are showing dramatic growth. The economics are much more favorable to send film to those markets from Japan. The US market in 1993 was made up of about 30% imports. We believe that number is down to about 20%, which is significant when you realize the market is in excess of 480-million lb."

Advanced Ceramics' Glasgow is seeing "a lot of expansion" in metallizing in third-world countries, China and India, with a lot of new equipment going in. "I expect there will be some growth in the more traditional markets as well, probably the result of a strong economy more than an inherent underlying change in the market structure, but it remains to be seen," Glasgow said.

"The boat business is highly competitive and pricing has continued to decline over the years. You have to get on your toes to make the best product at the lowest cost or you are going to lose," he said. He noted the sales volume of metallized products has increased, which means boat volume is up for all suppliers.

Customer service took on a new approach at ICI Films about two years ago, when the company formed its product life-cycle group under Sherrod Tatum to work with its customers in three broad areas: recycled-content films, postconsumer recycled-content films and film recovery "We've just started a pilot program, working with 10 to 15 customers, to divert material from landfill or recover it one way or another," Tatum said. "Some films can be recycled or incinerated to recover the energy value.

"We don't recycle our customers' materials, we study their waste disposal patterns to see how much they discard and its physical state. We then decide if we need to find a film cleaner for our customer's waste or it can be can recycled as is. If it's too contaminated and it's not economical to do anything with it, we try to find a way to burn it and maybe get some energy value from it.

"We'd like to handle this as an industry," Tatum said. "It's the most efficient way to handle the problem. If a customer is buying film from two or three different sources, it makes sense to have one collection system handle all of that polyester-film waste without worrying whether it came from ICI or DuPont or someone else."

ICI Films, as well as other manufacturers, is also involved in a product stewardship program in cooperation with the Chemical Manufacturers Association.

"We have voluntarily agreed to fully implement the program here at Hopewell," Tatum said. "Of course, a lot of other manufacturers are doing the same thing. We're trying to take this process backward to our suppliers and forward to our customers, offering to help them with their own product stewardship programs. Product stewardship is a program in which manufacturers learn exactly what is going into their products and all the ramifications of that. We also make sure that our customers are rising our product in the most responsible way, safely and environmentally."

While the industry has seen drastic changes in film supply, it may also see changes in the types of films it buys. "Film producers will continue to work on in-line coextrusion and copolymer developments that will generate new products over the next two to three years," DuPont's Graham said. "Coextrusion created a lot of interest in polyester film a few years ago and it dried up and set the stage for coex polypropylene.

"As you get the barrier of a rigid container, flexible packaging is pretty tough to beat," Graham said. "Some type of metallized substrate that's coated just might do the job. I think there will be more and more convenience packages like the Capri Sun. There will be some changes in the basic film structure that allow even more creativity with the types of structures that you can develop that can replace rigid."

A new polyester film, a 48-gauge poly-ester with a polyvinyl alcohol (PVOH) coating, has been introduced by Rhone Poulenc. "It provides a very high oxygen barrier," Wood said. "The film was developed in Europe as an answer to the concerns about chlorine in polyvinylidene-chloride-coated films and to offer a higher oxygen barrier than polyvinylidene chloride can. offer. There seems to be a synergistic effect between metallization and PVOH. Our guess is that the few pinholes you get in the metallized coating are blocked by the PVOH and you get a much, much higher oxygen barrier than metal provides alone or PVOH alone.

"It's a more likely foil replacement film than just straight metallized film," Wood said. "Moisture-barrier levels remain about the same. Because the PVOH layer is very smooth, we think you can get a much brighter-looking film. Converters can print on the PVOH surface, if they want to, using a solventborne ink. Rhone Poulenc is the only polyester-film producer that offers products with a PVOH coating."

Rhone Poulenc is also producing a 48-gauge polyester film with a lacquered metallized PVOH coating on one side and a heat seal on the other. The film is also available without metallization.

"ICI Films intends to expand our product offering of coextruded grades of polyester film over the next several years," Nelson said. "Currently we're offering A/B films, that is single-side heat-seal films. We believe that we will commercialize A/B/A and A/B/C structures. The A/B/A structure would offer two-side heat-seal capability. The A/B/C structures could offer the capability of putting recycled and reclaimed material in the center core with two unique surfaces on either side of the film. We believe we have unique technology and flexibility in our manufacturing to produce these products. The next introduction may be mid-1995.

"We recently released a product that is manufactured with a minimum of 25% post-consumer reclaimed material," Nelson said. "It has been available for testing since early 1994. We're being as environmentally conscious as possible with this film. Given the additional process stage, it's impossible to deliver a postconsumer-recycled-content film at no premium in price."

AlliedSignal introduced three nylon films in 1994 under the trademark Oxyshield. "These are oriented-coextruded packaging films targeted to replace polyvinylidene chloride-coated films and aluminum foil," Hatley said. "One, an oriented-barrier type, is currently replacing polyvinylidene chloride-coated films in Europe. The second is an oriented extra-barrier film which isn't only replacing polyvinylidene chloride-coated films but also some metallized films in Europe. The third film type is an oriented extra-barrier retortable film, which is being used commercially in Europe for lidding materials for retort application."

The initial demand for AlliedSignal's new films has come from Europe. "This is where people want high-oxygen harrier films that are transparent and don't contain either polyvinylidene chloride-coated films or aluminum foil and aren't metallized. Demand is now starting to pick up in the US," Hatley said. Additional demand is coming from food processors who want a package that can go through a metal detector.

Hatley also reported on two new products in research and development. One is an oriented-nylon ultra-barrier film. "It can maintain its oxygen barrier properties at very high humidity and is being tested at a number of places," Hatley said.

The other developmental film is a second-generation oriented-ultrabarrier film that's retortable. "The barrier on this film is five to 10 times better than the original material, and it's transparent," Hatley said. These developmental films may be commercial in the first quarter of this year.

AlliedSignal makes its nylon films in its Pottsville, PA, plant. The company has approved a second biaxially-oriented nylon film production line for the plant that will have an annual output of 12-million lb. It's scheduled to come onstream late in the fourth quarter of 1996.

The metallizing industry can expect improvement in evaporation boats too. "New compositions that have been stringently tested in Europe before being introduced in the US. These new boats are now in production and are being tested by US customers. As a result, we're a lot broader in scope in terms of optimizing a boat for a customer and getting a customer exactly what he needs," Elizabeth Josephson, product engineer at ESK Engineered Ceramics, Norwalk, CT, said.

"Some people may require two boats for different applications where in the past they'd compromise," Josephson said. "Fine tuning for customer needs is our goal. The quality is up and the compatibility is up for their end use. We have one boat for people who make capacitors, another for making microwave susceptors and another for packaging. And, even within packaging, we're starting to fine tune further than that."

"Everybody's boats have improved," Advanced Ceramics' Glasgow said. "Our boat is better than it was five years ago. Improvements are incremental for the most part. Everyone is looking for that quantum leap in performance. No one has found it yet, but when they do, they will have the competitive advantage."

The industry is seeing technological advances in metallizing too. "Hanita Coatings has improved the metal adhesion of generic nonpretreated polyester film as well as polyvinyl chloride and nylon and has improved their transparent-barrier films," Carroll said. "They have also developed solar-control films that provide increased light transmission with greater solar refection and are also working on the technique to deposit color in the vacuum chamber."

"Metallizing technology has experienced evolutionary improvement rather than revolutionary changes," Van Leer's Jacobs said. "Wider, faster and better process controls have been the major changes."

"We're diddling around with our computerized system, the way We deposit the metal for liquid packaging and with customized boat design," Himac's Woody said. "We have learned how to run heavy densities at high speeds without any spitting. We're also running microwave susceptors at very high speeds and very good density control."

What about clear coatings? According to Flex Products' Matteucci, "The economics of transparent-barrier coatings are getting down to the cost of aluminized-packaging materials, usually silicon oxide or aluminum oxide."

"We expect to develop significant improvements in deposition methods as well as in barrier properties of metallized products," Camvac's Thompson said. He also predicts use of nonaluminum coatings will increase significantly.

Evolutionary changes are apparent in metallizing equipment too. Leybold's Marcantonio said, "The fundamental technology of metallizing is very mature. When we build machines we focus on the engineering of them. We have improved pump-down time, we've improved the transport mechanism, more efficient wire feeding, staggered positioning of evaporator boats and how they are clamped in place, plus improved process control and automations. We try to minimize the handling and cleaning between the runs and we try to maximize that portion of the metallizing cycle where the machine is closed and producing product."

He believes the cost of metallizing machinery is not as important as its ability to produce product at the lowest possible operating cost. "So what's important to my customers isn't the cost of the machine, it's the cost per trait area of metallized film," Marcantonio said. "In other words, cost of ownership is the issue. Metallizers are striving to improve yield and minimize their losses. That's where their profits are."

According to Galileo's Raugei, "Metallizing-equipment manufacturers are positioning themselves to take full advantage of the information super highway. Distance servicing of metallizers through modem connection is already a reality at Galileo. Real-time consolidation of process and statistical quality control data among different plants as well. We will see a lot of activity in areas in the next few years."

In their search for efficiency and productivity, metallizers are making changes on their own. "We've installed our own designed computerized-roll tracking and an order-tracking system," Himac's Woody said. "Our computer system can work with customers who have the same type of equipment, and we can track their inventory so we know when to make another shipment."

Robert W. Marsh, a contributing editor for PAPER, FILM & FOIL CONVERTER, is a familiar face in the metallizing industry. Marsh was executive director of AIMCAL from 1987 to 1992. He has experience in the films area through his work for Du Pont and ICI Americas.

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