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M.A. Hanna focuses on the 'custom' in custom compounding.

Hardly anyone could fall to notice that M.A. Hanna Co. has been busy lately. Through a string of domestic and foreign acquisitions, the Cleveland-based firm has assembled complementary compounding, colorant, and distribution businesses. Hanna is now a Fortune 300 corporation with $1.7 billion in sales and annual resin processing capacity of almost 800 million lb. With compounding operations now in the U.S., Canada, Mexico, Puerto Rico, and Europe, the company claims to be the largest independent compounder of nylon in the world. So where does Hanna go from here?

For one answer, we took a look at the newly created MA. Hanna Engineered Materials group, based in Dyersburg, Tenn. It was formed by consolidating three formerly independent operations - Colonial Plastics, Monmouth Plastics, and Texapol Corp. Interviews with top officials revealed that the group's future plans include tighter focus on customer-driven specialty thermoplastic compounds. Also, a new comprehensive business-management computer system will coordinate numerous functions - from receiving customer orders and managing inventories to formulating a resin batch on the shop floor. And further acquisitions will expand its resin portfolio into higher-performance engineering thermoplastics.

BIG FIRM MUST 'THINK SMALL'

Hanna's thrust in the near term is continued growth by focusing "smaller" - that is, an even greater concentration on processor needs for custom-made compounds. Douglas J. McGregor, president and CEO, foresees a widening of what he calls the "intermediary gap" during the next five years. This "gap" has been created by the closer strategic alignment of major resin producers with large OEM manufacturers and tier-one vendors, thereby creating an opportunity for compounders to service the needs of small to medium-size processors.

McGregor's mission is to raise customer-specific compounds to 50% of its total sales in 1995, as compared with 43% last year. Hanna's new business information system will help provide the means for the company to achieve greater speed and nimbleness in filling smaller specialty orders.

Richard A. Shafer, manager for strategic marketing in Engineered Materials, says his group's average customer order today is 18,000 lb; just five years ago it was 100,000 lb. Smaller orders reflect processors' needs for more application-specific material grades and the trend toward just-in-time manufacturing.

But the change also represents an evolution on the part of Hanna, which is focusing its efforts more on custom compounding of specialty resins, rather than on high-volume toll compounding as in the past. This transformation is illustrated in the company's capital-equipment investments, which are now geared toward small-batch runs.

"Years ago our emphasis as a toll compounder was on filling larger orders and producing longer runs of more generic compounds," Shafer recalls. "But we recognized that this was a limiting business strategy for us, given the industry trends. More and more, that high-volume business is being captured by the major vertically integrated resin producers. We've identified the custom compounding business as a prime growth opportunity, and we've resourced our operations accordingly.

"Today our focus is on customized material solutions to match processor and market needs," he continues. "We view this as a wide-open field of business." Unlike a resin supplier, Hanna is not tied to any single resin strategy, Shafer explains, so it offers a greater variety of material solutions.

The difference is evident, for example, in Hanna's Texapol line of engineering thermoplastic compounds, which include nylon, acetal, and polycarbonate. Shafer says "standard" Texapol grades have been virtually eliminated; orders today are nearly all for specialty grades tailored to a specific processor's needs. Those needs frequently come down to specific processing requirements, such as part release from tools, shrinkage and dimensional stability, and regrind utilization.

COMPUTER INTEGRATION

The company has just gone on-line with a new information management computer system supplied by SAP America Inc. of Philadelphia. The system will integrate and coordinate Hanna's vast array of compounding resources. It will be used to overhaul operations such as inventory control and material planning.

Keith D. Rodden, general manager of the Engineered Materials group, described the new SAP "R3" system as being crucial to Hanna's self-imposed urgency to reduce changeover and delivery times and concentrate on small-order, custom-tailored compounds.

The system incorporates such features as electronic order entry for customers; real-time tracking of job status, production rates, and inventories; and statistical process and quality control. Field-service representatives and sales engineers now can tap into this databank via modem and laptop computer from a processor's facility and access Hanna's full catalog of formulations and processing capabilities. The computer also can track a customer's order history and annual material usage, allowing field representatives to help processors forecast their future resin needs.

HIGHER-PERFORMANCE TPs

Rodden says the next major move for the Engineered Materials group will be to acquire (or develop) the capability to compound higher-performance engineering thermoplastics. His definition includes materials that offer higher continuous-use temperatures (350 F and above) and greater toughness over a wider temperature range.

Rodden hinted that new polymers to be added to Hanna's compounding portfolio could include PPS, liquid-crystal polymers, advanced polyesters, polysulfone, and PEEK.
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Title Annotation:M.A. Hanna Co.
Author:Gabriele, Michael C.
Publication:Plastics Technology
Date:Jun 1, 1995
Words:830
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