The capacity expansion - by over one third - follows a complete upgrade and capacity increase that took place less than 5 years ago. The new production capacity will be dedicated to the production of high viscous polyamide 6, which is used in for amongst other things, flexible packaging, which is used extensively in the packaging of food such as vegetables and meat.
According to business group director Jos Goessens, this increase in production capacity comes in response to the demand for the high quality material that is required for these applications. "Over the last few years DSM Engineering Plastics has built a strong position in these applications," he said. "This expansion will support us in our current leading position and in remaining a strong leader in this segment."
In film form, Akulon polyamide 6 is used in packaging, especially for food applications to improve barrier properties and extend the shelf life of pre-packaged foods. Recently, DSM Engineering Plastics announced the introduction of two new product lines: Akulon XP - for film applications - and Akulon Ultraflow for injection moulding.
Plastic films used in barrier flexible packaging have made substantial gains against metals, paper, and glass, according to a recent study by the Kline group. Over the last five years, industry growth has prevailed in spite of constant demand for higher performance at lower cost.
According to Kline's materials industry manager LaVerne Ellerbe, these market pressures have been a key driver behind the growth for plastic films. "In the price-driven flexible packaging markets, barrier film converters like Pliant and Pechiney Plastic Packaging have found a competitive advantage in new technologies. They've developed new film structures, coating technologies, and package designs that compete more effectively against foils and other traditional barrier materials."
Key developments in flexible packaging include recent equipment advances that have enabled coextrusion of films with more than seven layers. New package structures like multilayer standup pouches and metallic films have also allowed plastic films to aggressively compete against rigid packaging in a number of areas such as snack food packaging.
Innovations in barrier coatings technology have also intensified intermaterial competition among plastic films, including high-performance barrier structures fabricated from OPP and PET. And multilayer coextruded films are now vying for a larger share against laminated and coated film structures.
The Kline study predicts that over the next five years, continued consolidation and intense competition will drive industry participants to formulate clear strategies for what lies ahead. "Packaging materials suppliers need to be aware of where their products and their competitors' products are in their life cycles in order to focus their R&D efforts, defend market share, and maintain growth," said Ellerbe. DSM is confident that this predicted growth in flexible packaging will continue. With the expansion of the existing polyamide factory, the company is evidently happy to put its money where its mouth is.
"This substantial investment of several tens of million Euros demonstrates DSM's commitment to engineering plastics and our intention to grow in performance materials in line with our Vision 2005 strategy," said Jan Zuidam, vice chairman of DSM's managing board. "This investment underlines that the growth of our Engineering Plastics business is particularly focused on new applications, which emphasises the importance of innovation for DSM."
The polyamide plant is due to be completed by mid 2005.
The DSM group has annual sales (pro forma including the recent acquisition - renamed DSM Nutritional Products) of €8 billion and employs 26,000 people around the world. The company is headquartered in the Netherlands, with locations in Europe, Asia and the Americas.