30 August 2006

Demand booming for NatureWorks polylactide

Unprecedented growth is pushing NatureWorks LLC to maximize production in Blair and accelerate projects there to expand output of polylactide resins. Growth drivers include high oil prices, proactive brand owners and consumer interest in green products.

Addressing the supply-side squeeze, NatureWorks instituted 24-7 production several months ago and began a concerted effort to manage its growth, said Dennis McGrew, president and chief executive officer since February.

“When you move from intermittent production to 24-7, you define where the bottlenecks are in the process,” he said in a telephone interview from the company’s offices in Minnetonka, Minn.

Only recently has the NatureWorks PLA plant in Blair started to approach its annual nameplate pellet capacity of 300 million pounds. The privately held operation withheld production and sales details.

NatureWorks is waiting for authorization from its parent, Cargill Inc., to expand capacity, McGrew said.

“As we complete additional capacity projects in Blair, we will begin to study alternative sites.”

The Blair plant, which opened in 2002, is collocated with various Cargill operations on a 1-square-mile site. Cargill supplies dextrose to NatureWorks along with infrastructure utilities.

To avoid overcommitment, NatureWorks transitioned recently to a policy of managed growth from its historical unconstrained growth in processing natural plant sugars from corn to make proprietary NatureWorks PLA.

The policy change surprised some. “People cannot call in and get all they want immediately,” he said. “Some folks are wishing they had come to the party earlier.”

McGrew characterized the growth in NatureWorks PLA demand and market applications since early 2005 as a “trifecta” combining:

  • Sustained high oil prices that NatureWorks “thought would fall off in the last half of 2006.”

  • Speedy global adoption of corporate social responsibility goals in packaging, with brand owners pushing the issue to a “much greater extent than in the past.”
  • Consumer desire for “environment-friendly alternatives and a willingness to pay more” for those products.

The supply squeeze is frustrating some who recently “decided to adopt PLA when asked by a brand owner or retailer” to do so, McGrew said. NatureWorks makes families of resins with different properties. PLA can be used in thermoforming, sheet extrusion and injection stretch blow molding.

NatureWorks said it has experienced a 100 percent increase in its customer base over 30 months and an annual average growth rate of 45 percent over four years. “We are moving from the early adopters to the early majority,” he said.

The company competes with petroleum-based resin makers, but it is the world’s only volume PLA producer. Others have small-scale PLA output, but there is “no one (else) with any significant capacity,” McGrew said.

NatureWorks employs about 220, with 45 percent each in Blair and Minnetonka and the balance scattered around the world, he said.

Cargill and Dow Chemical Co. of Midland, Mich., set up a 50-50 joint venture, Cargill Dow Polymers LLC, in 1997. Privately held Minnetonka-based Cargill, a major agricultural products processor, acquired Dow’s stake in January 2005.

(Cf. news of May 09, 2006.)

Source: Plastics News Aug. 25, 2006.

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