Bright prospects
The plant engineering sector is reaping the benefits of a favorable investment climate in the international plastics industry

Systems running at full capacity,
increased demand for new technology and higher throughput performance are currently driving demand for plant
engineering products and services in the bulk goods industry. PROCESS
interviewed Wolfgang Horn, Managing Director of Zeppelin Silos & Systems which is based in Friedrichs-
hafen, Germany.
? Mr. Horn, what is your general assessment of the current business outlook in the plastics industry?

Horn: The strong performance of the global economy is good news for the plastics manufacturing and processing industry, and for the chemical industry as well. Production capacity utilization is high across the board, and plastics consumption worldwide is growing at sustainable rates. There is even some indication of overheating in certain markets.

? What effect does this have on the plant engineering industry?

Horn: Capacity restraints at suppliers of production and processing equipment and systems limit the plant engineering industry’s ability to fully satisfy market demand. Shortages of raw materials can drive costs up dramatically on ongoing projects. This may lead to some project delays or cancellations.

? From the silo and systems supplier’s point of view, how have market requirements evolved in recent years?

Horn: There are two aspects to that question.

1. In response to the globalization of the plastics industry, silo and systems suppliers now have to maintain a presence in the regions where our customers are investing. Zeppelin has subsidiaries in all of the major markets and regions including China, India, Singapore, Italy, England, Belgium, Brazil and the US. We are currently establishing a presence in Russia and Saudi Arabia.

2. In addition to the ongoing globalization process, there has been a major shift in technological requirements. The capacity of production plants has risen dramatically, and hourly throughput in the 80–100 ton range has now become standard. As a result, we have to continually enhance our components and processes in order to meet customer expectations. Zeppelin uses the world’s largest bulk goods test center at the Friedrichshafen site to verify and improve the design of its systems.

? What are your key markets?

Horn: Order rates are very satisfactory in all of the regions where we operate including North and South America, Europe and Asia. We are pleased with the performance in Eastern Europe and Russia in particular. The Near and Middle East region is very important to us at this point in time. New mega plants with production capacities in excess of one million MT/yr are currently under construction in the region and in Saudi Arabia in particular. Zeppelin has established a strong position in the market in recent years, and we are taking advantage of the current boom. China is another key market for us, and the level of investment in the country remains high.

? Is there a difference between the domestic and the international markets?

Horn: Because the plastics industry operates in a global market, system requirements are based on the same standards and specifications. Due to the geographical proximity and absence of language barriers, domestic projects are naturally very welcome. However, large domestic contracts from companies such as Borealis and Sabic are handled in accordance with accepted international practice, and project management must meet the same stringent standards as on any large international order. Our project managers and other team members who handle large international projects need excellent inter-cultural skills. This is particularly true in the Near and Middle East Region, for example in Saudi Arabia, where the cultural and natural environment represents a major challenge for our employees on site.

? How do you as a turn-key supplier react to these different business environments?

Horn: Proximity to the customer is a key success factor. Zeppelin has subsidiaries in all of the regions. These companies are able to provide the full range of sales, engineering, administration and production services. We also use our subsidiaries to tap into the local procurement market, which minimizes shipping charges and customs duties. Our installation teams operate around the world. Zeppelin has set up a joint venture with a local partner near Al Jubail in Saudi Arabia for the production of silos and blenders.

? Is the upturn in the plastics manufacturing and processing industry likely to last?

Horn: The plastics business is cyclical. The current situation in the industry is largely based on the need to add significant manufacturing and processing capacity worldwide. It appears today that this capacity will begin to service the market within the next year or two. Even if consumer demand continues to rise, this situation will lead to increased price competition and pressure on margins in the plastics manufacturing industry. Plastics processors will then be in a position to exploit the situation. As a result, the favorable business climate in the plastics industry should be sustainable during the next two to three years.

? Mr Horn, thank you taking part in this interview.