Report by Liz White, editor
"We are just on the edge of a certain recovery after a difficult year for all markets in both plastics and PU," said Marco Volpato, managing director of Cannon SpA.
Despite the difficulties, Cannon "approached this crisis in a very good manner," and was able to gain good results, Volpato added (see box).
"Historically we consider ourselves no l in the refrigeration business, and no l in PU in total volume - not necessarily in all fields," he added. And while Cannon is to some extent dependent on the vehicle business, it is by no means the group's only outlet.
Cannon's approach relies on it being present in all sectors, in slabstock foaming, in panels, in CASE (coatings, adhesives, sealants and elastomers). The only PU areas it does not cater for are spray coatings and roof spray foam, the latter still mainly in the US, Volpato said.
The Cannon MD sees the group's continuing success as coming from three directions:
Firstly, in R&D, Cannon is highly motivated to develop new things with "a great interest in innovation across the whole range." Cannon works with customers, raw materials suppliers, and chemical systems producers to combine their competences and develop new equipment to meet specific needs, supporting this work with investment and resources, he said.
Secondly, Cannon is close to its customers, wherever they are. "In this fragile market,
Cannon is different to the others because historically it has been able to harvest real competence." It has set up its own operations and trained local people ''to really form a team and get involved," Volpato said. "You need some size to be at that level," he observed.
Thirdly, Cannon is an SME that is still family owned. It does not have to answer to shareholders and needs no capital from outside. So Cannon does not have to focus on short term returns, but can do what is best for the business longer term, he indicated.
"Of course profit is important," Volpato observed, pointing out that Cannon is able to reinvest profits straight back into the business.
In polyurethanes, Cannon is "the only equipment supplier with the advantages of size and family-owned independence," he stressed.
US missing out in recovery
During the crisis, Volpato said, Cannon rationalised production, so that lead times could be cut and functions speeded up.
Now that business is getting back to normal Cannon has "really appreciated the benefits of this process," Volpato noted.
But the Cannon MD also said that currently there is "not a strong, stable recovery.
"We now face the situation where China, India and several other areas are seeing growth, but the US is what is missing, ”he said.
In the US, Cannon strives to keep its technical competence strong, and has had good results recently, Volpato said.
In order to do this in machinery, it is a question of winning, “one or two jobs over the competition,” he pointed out.
In Asia, Cannon has been dominant since the 1970s and its “risk there lies in losing market share,” Volpato added at an October 27 interview with UTI at K2010.
Price cutting an issue
Discussing the competitive nature of the business, Volpato agreed that price cutting has been an issue in the machinery sector, “Not only for us but for everybody in the sector.”
This is relat4d to the fact that suppliers have to sell to emerging regions such as China, North Africa and South America, where there is local competition, and “European prices may not be the most attractive,”Volpato noted.
Some companies take the view that, as volumes drop, they need and order to fill their workshops and keep going, he said.
But Volpato feels the true way to look at this, as a supplier, is to assess the chain of value in the business. Cannon is strong enough to be able to go to its suppliers and ensure aht the effort to keep costs down is shared along the whole chain," he said.
He added that price cutting does not apply universally. "There are some areas where value for customers is far more important than the cheapest offering. The answer is to play in a different way," Volpato feels, by value-chain adjustments, and also from looking at internal strengths, such as the ability to make different parts in different regions and thus keep costs down. Cannon makes equipment in Italy, the UK, Germany, China and Japan.
Volpato stressed that. "We have produced our own high-pressure variable output pumps for a long time now," while this is an area some competitors have recently moved into.
The increasing focus everywhere on insulation and energy conservation means outlets in district heating systems, for example, are increasing, he said, noting that quality of mixing is very important for effective insulation.
In renewable energy, Cannon has a business in wind blades and solar panels, using PU in various ways. Volpato described this as the "technology of today and also of the future."
Another growing use is foamed frames for windows and garage doors, for example, where valuable energy saving means there has been a "real boom" in Europe, said Volpato.
Cannon has various technologies to feed PU into the frames so as to cut out all gaps between the frame and glass and eliminate any routes to form a thermal bridge, he added
In automotive, Volpato said, advances in sound absorption technologies, have produced a range of sophisticated materials, and Cannon has developed uses in Germany and in the US for German OEMs, for a heavy layer spray PU with a high loading of inert material, he noted.
In flexible foam, the right mixhead is crucial, Volpato said. "We think our AX mixheads offer the maximum performance on the market," he added. They give Cannon the chance to supply a full package, and develop a strong partnership with the automotive OEMs, said Volpato.
In seat design, carbon-fibre reinforced plastics are coming in as a substitute for metal frames (see story p7). Cannon has made such a a preform for car maker BMW, he said.
High battery weight for electric cars means that it becomes even more crucial to make components lighter, so this means more fibre/res in composites, he said.
Cannon also sees growth in PU elastomers as they become easier to process ... "PU elastomers will find wider outlets in industrial mass-production-type uses," Volpato feels.
Sales held up well in 2009
Cannon ended 2009 with sales of € 185 million, a drop of €22 million versus 2008's figure, with the split the same: 57 percent in plastics and 36 percent in the energy/ecology business (aluminium and electronics form the remainder).
As many other makers of polyurethanes machinery have told UTI, Volpato noted that 2008 was very good year for sales. Then volumes dropped suddenly, at the beginning of 2009, especially for the commodity businesses - refrigeration, panels, flexible foam, furniture and automotive, Volpato said.
