Plantic Technologies Limited (AIM: PLNT) has entered a joint collaboration agreement with National Starch LLC to establish a site for the manufacture of Plantic products in the US and relocate one of its existing proprietary manufacturing lines from Australia to the US.
The integration of National Starch raw material supply with Plantic’s manufacturing process is expected to shorten the supply chain and reduce the costs of Plantic materials. The new facility will also bring R&D (research and development) and manufacturing closer.
Plantic said that the project represented another step in its long-term manufacturing strategy, enabling its partners that produce rigid sheet, injection moulding, low moulding resins and flexible packaging resin to distribute them more effectively and at a lower cost.
“The manufacturing facility in collaboration with National Starch is expected to significantly reduce the current cost of Plantic materials by integrating the two processes of manufacturing and key raw material supply. This significant progression of Plantic's manufacturing strategy allows us to deliver greater value to our customers, distributors and conversion partners,” said Chief Executive of Plantics Brendan Morris.
Plantic also said it was in discussions with partners and customers to “expand market penetration,” expecting to make more announcements early next year.
The company has also said that its revenue for the full year will be lower than expected, lamenting the “slower than anticipated” economic recovery. However, the loss from operations and cash at year end are set to be in line with expectations following various cost reduction programmes implemented early in the year.
The 2010 results are expected to be in line with previous guidance, partly due to the anticipated effect from the integration of raw material supply and manufacturing.
The two companies have collaborated since 2007, when they signed an agreement to develop new starch technology and starch modification technology with a view to expand potential markets by replacing certain non-biodegradable polymers and delivering new applications.
Shares in the company added 5.5% on the news.