Companies with in-house manufacturing must ensure that their production footprint represents a true and sustainable source of competitive advantage. The following example, drawn from our direct experience with a key client – a global leader in the industrial sector – illustrates both the complexity and the strategic relevance of this type of decision.
The client’s objective was to determine which of two fundamentally different manufacturing platforms would best support its business, taking into account detailed financial and organizational implications, as well as alignment with its long-term strategic objectives.
Product Overview: Polyolefin Plastomers / Elastomers
The analysis focused on polyolefin plastomers/elastomers, primarily metallocene-catalyzed ethylene-co-α-olefins with densities below 0.91 g/cm³:
- copolymers of ethylene (or propylene) with alpha-olefins (butene, hexene, or octene), produced using metallocene catalysts
- typical composition: ~65% ethylene or propylene and ~35% alpha-olefin
- density range: 0.88-0.91 g/cm³
- often referred to as VLLDPE (Very Linear Low-Density Polyethylene)
Plastomers bridge the gap between thermoplastics and elastomers, combining rubber-like physical properties with the processing advantages of thermoplastics – hence the term plastomers.
Two alternative production technologies were evaluated:
- Catalloy-based technology
- Lupotech G technology
Market Context and Industry Assessment
To define the optimal manufacturing footprint, we also conducted a comprehensive assessment of the global plastomers industry. The market is currently in an expansion phase, driven by the following supply-and-demand dynamics:
- More than 1,800 kt of global plastomer capacity, including existing and planned expansions (with all new capacity located in Asia-Pacific)
- Estimated demand of approximately 900 kt, implying a potential risk of overcapacity
- Asia-Pacific accounts for ~50% of capacity but only ~28% of demand
- Strong growth across established applications (automotive, films and packaging, consumer goods, etc.)
- Increasing reliance on competitive, proprietary production technologies
- Need for continuous innovation to sustain competitiveness
- Availability of product development capabilities to enable new applications
- Favorable techno-economic performance compared to alternative materials such as SBC and PVC.
We then performed a detailed techno-economic evaluation of the alternative manufacturing solutions, assessing capital requirements, operating costs, scalability and overall profitability
Leveraging our analytical capabilities and methodologies, we compared the financial performance of the two manufacturing platforms, as summarized in the table below.
By integrating market analysis, detailed financial modeling and strategic considerations, we were able to identify the manufacturing solution that best met our client’s objectives and long-term strategic priorities.