By Michael Legault
In a pipe and profile market that is becoming increasingly global, growth and profitabilty hinge more than they ever have on the ability of the supplier to "bring something to the table." That somethi...
In a pipe and profile market that is becoming increasingly global, growth and profitabilty hinge more than they ever have on the ability of the supplier to “bring something to the table.” That something could be innovative product, increased operating effciencies, faster, customized deliveries, economies of scale or some combination of the package.
PIPING INTO NEW MARKETS
Multi-national REHAU Inc.’s RAURIB seamless, extruded ribbed PVC pipe is an example of an innovation that is expanding market share for the company by, quite literally, breaking new ground. Now on the market for about five years, RAURIB was designed to compete directly with concrete in storm and sewer pipe applications, says Eric Mingo, director of marketing, pipe division at REHAU’s North American headquarters in Leesburg, VA. Previously, solid-wall PVC was unable to effectively compete against concrete in storm and sewer pipe because the wall-thickness required made PVC cost-prohibitive. The ribbed design in RAURIB, however, acts as a structural reinforcement in the pipe, which in turn requires about 50 percent less material in comparison to solid wall PVC pipe. While concrete is still cheaper to make than PVC, RAURIB, which is made in lengths up to 13 ft., has overall cheaper installation costs than concrete pipe, which is limited to lengths of 6 ft. 6 in. Fewer joints mean less chance of leakage.
Another innovative feature of the pipe is a belled end that is made in a one-step process during extrusion. “Traditionally a product like this is belled off-line,” notes Mingo. “In our process, the pipe is belled on-line, so there are no secondary steps which add costs.”
REHAU recently supplied Baie Comeau, Que. with 2,200 metres of 24 in. diameter RAURIB pipe for a sanitary sewer line servicing a new industrial park. The installation required the pipe to be buried in seven metres of soil heavily saturated with water, making infiltration a concern. A main factor in the contractor’s decision to use RAURIB pipe was the pipe’s ease of installation and longer pipe lengths, which resulted in 50 percent fewer joints in comparison to concrete, thereby lessening the chance of water infiltration.
REHAU also produces a cross-linked polyethylene (PEX) piping, RAUPEX, which it markets as part of a complete PEX plumbing system, including controls, fittings and valves and other components. Widely used in Europe for over 20 years, PEX piping is four time lighter than copper and more flexible, so it needs fewer joints. PEX piping has also been shown to be more resistant to chemical damage than copper and have fewer deposits. RAUPEX piping is also used in under-pavement ice and snow melt systems, one of which was recently installed at Queen’s Park in Toronto.
HIGH PROFILE SIDING
The 90s have been very good to the construction market in general, and vinyl siding in particular. The reason is purely economic–vinyl siding is at least half the cost of aluminum. Gentek Building Products Ltd.’s Burlington, Ont. facility has been able to effectively capitalize on both the favorable economy and vinyl’s advantages. Purchased by Genstar Capital Corp. in 1994, Gentek opened its new state-of-the-art Burlington production plant, offices and warehouse in 1995 and since then has averaged about 10 percent growth per year. It recently completed a 150,000 sq. ft. warehouse expansion, giving the facility a total of 400,000 sq. ft. of floor space. With projected growth at 15 percent over the next several years, the plant will be adding several new extrusion lines next year, as well as new compounding capacity, according to plant manager Kong Chen.
Currently the plant runs over a dozen extrusion lines, comprised mostly of 130 mm twin screw extruders. The facility sells about two-thirds of its vinyl siding to the U.S., where it is used primarily in renovation, and the remainder in Canada, where it is used mostly in new home construction. The Burlington plant also uses a small portion of its extrusion capacity to supply window profiles to a subsidiary Gentek window fabricating facility in Lambert, Ont.
“We’ve invested heavily in this plant and we’ve become a significant player in the vinyl siding market in Canada,” says Chen.
Gentek uses a specially developed co-extrusion process to manufacture vinyl siding with an outer layer that has enhanced weatherability properties. The outer layer, which is made of a more costly, weather-resistant material, comprises only about 20 percent of the co-extrusion, resulting in siding that effectively combines good performance with cost-efficiency.
Chen says machinery improvements such as bigger extruders, better dies and better downstream equipment have vastly improved the throughput and efficiency of their operation. “Ten years ago lines were producing maybe 500 lb./hr., whereas with today’s equipment you can produce 2000 to 3000 lb./hr.,” Chen notes.
Gentek’s siding is certified by the Vinyl Siding Institute (VSI), which runs unannounced, periodic audits to ensure the company’s product meets VSI’s material and performance standards. Chen sees VSI certification as giving Gentek a distinct advantage in market that is moving toward higher quality standards for vinyl siding.
“A few years ago the trend was more toward cost cutting by taking material out of product,” says Chen. “Today the market has shifted toward more premium products that can better withstand extreme weather conditions, such as hurricanes.”
SOUND MANAGEMENT PRACTICES HELP
One of the most important parts of Gentek’s operation is a highly automated materials blending and handling system which allows the company to cost-effectively customize material for its product line. The system consists of silos, automated transfer and blending equipment and centralized extruder distribution all operated, via a PLC-driven network, by a single person in a central control room.
Chen says Gentek places high importance on training, employee involvement and continuous improvement, and makes it a strategic objective to hang on to its workers. One aspect of that objective is the company’s continuous improvement sharing plan, in which 10 percent of the plant’s productivity gains are returned to the employees. Also, Chen notes, the company’s large warehouse capacity means the plant can produce steadily year ’round and avoid laying off employees during the siding’s market traditional seasonal lull.
“We carry some extra cost having such a large warehouse full of product,” says Chen. “But ultimately we feel it helps us run more efficiently, because we don’t lose people and then have to retrain.” Chen also adds that the large warehouse capacity shortens delivery lead time.
Product diversity and vertical integration are two key strategies at REHAU. The company was founded in 1948 in Germany as a manufacturer of PVC pipe used as a replacement for metal pipes, as most of the country’s foundries had been destroyed in the war. It now has 39 plants and 81 sales offices in 41 countries, employing 14,000 people, with core product focus spread across four main areas: window and door; pipe, automotive and general products. It cuts the majority of its own tooling at a central tool and die shop in Springfield, VT.
The company’s three Baie d’Urf, Que. facilities have effectively tapped into REHAU’s considerable expertise and resources, becoming leading producers of extruded profiles for the automotive and furniture industries (see Canadian Plastics, Oct. ’99). The Baie d’Urf extrusion plant uses a variable extrusion cross-section technology that was developed in Germany, based on a technology licensed from a Japanese company. In Canada, the company also operates a plant in Prescott, Ont., which extrudes pipe and window profiles, and two more plants in Winnipeg, which make window profiles. CPL