Expanded polystyrene (EPS) is the packaging and construction solution of the future, believes ISO Moulders managing director, Phil Hollick.
With over 20 year’s “polystyrene experience”, he should know.
Hollick’s career extends from making the raw materials used to manufacture polystyrene to running a business producing polystyrene cups to heading up ISO Moulders which produces a wide variety of products for industrial applications.
“We convert expanded polystyrene. The raw material comprises tiny beads that look like sugar. We pre-expand the beads using a process that is much like making popcorn,” he explains, adding that the ultimate density of the polystyrene and its suitability for different uses depends on the size of the beads used to make the finished product.
Raw materials are brought in from the East simply because local manufacturers can’t compete. However, even when beneficiating these imported materials, the process is far from simple and very capital intensive.
ISO Moulders’ main product is moulded protective packaging. Excellent heat resistance and limitless design possibilities make EPS the number one choice for this purpose, according to Hollick. ISO Moulders products are used by manufacturers of white goods, television sets, small appliances, electrical components, pharmaceuticals and even cakes! Big brands that are on its customer list include Defy, Altech, Samsung, Whirlpool and Franke Kitchens.
The company also markets cut to spec EPS products such as insulation, point of sale displays and a variety of construction solutions including cornices, panels, insulation and construction blocks. In addition, large EPS blocks are cut into sheets according to customers’ requirements using state of the art cutting machines that can produce sheets that are just a couple of millimetres thick. Here, common applications include core insulation in freezers, cold rooms, park homes and truck bodies, cold insulation storage tanks and vessels, insulation of chilled water piping, signage and display and point of sale displays.
Because a core part of ISO Moulders’ business is to assist companies with the actual design and fabrication of moulds for packaging, a key element of its offering is service. “We don’t just sell polystyrene, we sell service. To me, this is all you can offer as a business. If you sell service, do what you promised and make sure that you follow through, the rest will fall into place,” says Hollick.
Closely aligned with its service ethic, ISO Moulders has located its three factories close to key customers. The Jacobs operation is located alongside Defy, the Isithebe factory close to Whirlpool and the Ezekheni factory near Ladysmith is close to the Defy fridge and freezer factory.
Defy and Whirlpool run 24/7 and have to have access to polystyrene as this forms the base on which appliances such as fridges are built. “If we didn’t supply the polystyrene, the whole process would stop,” says Hollick who explains that a fridge is positioned on and built up from a 1,2 kg polystyrene base.
Different appliances require different polystyrene foundations which means that, when different lines are run, these have to be on hand. In addition to being time critical, having a manufacturer close by means that manufacturers don’t have to use up valuable space storing bulky materials, adds financial director, John Heron.
Getting to this point has been a 20 year process. The company was created two decades ago by the companies RJ Southey and Isowall. During a discussion at a trade show in Portugal, their two chief executives realised that they were both using large volumes of polystyrene, making a standalone factory a viable investment.
“As luck would have it, by the time they got the factory together, the market had collapsed leaving the factory with no prospective sales,” he explains.
At the time, he was running a company in Johannesburg that made polystyrene cups. He had worked for Sentrachem, which manufactured the polymers used as raw materials for a number of years. However, when import duties fell away in the eighties, he realised the company’s days were numbered as they could not compete pricewise. So, together with his boss, he decided to set up the cup manufacturing operation.
Armed with a business plan, they soon discovered that they couldn’t raise finance through conventional channels and put their pride in their pockets and approached a previous customer with whom they had had a fall out. “Within a few minutes, he had written a cheque for the full R2,4 million. He shook my hand and said we’re partners. We only put something in writing six months later!” he remembers.
His first foray into business ownership went well. After about three years, he took a call from a friend – who happened to be the chief executive of Isowall at the time – with an offer to take over the Pinetown factory and buy a stake in the company. He welcomed an opportunity to return to Durban, sold his company to a competitor and headed for the coast.
On arriving in Pinetown, he says he worked flat out to get business and succeeded to the point where many of his competitors closed.
Eventually, ISO Moulders agreed to build a second factory in Swaziland to supply Fridgemaster’s now closed operation there. Again, this was purely on a handshake.
When Fridgemaster shut, they managed to keep the factory ticking over for another two years before following suit.
The strategy behind locating the plant there was sound, however, and he soon found that by committing to putting factories alongside big manufacturers it was possible to offer the just in time service that would secure the lion’s share of their business.
The original operation remained in Pinetown for 15 years. With their sights set on gaining more business from Defy, they decided to relocate five years ago, starting with a facility in Mobeni and then, shortly afterwards, shifting the entire operation to the current site in Jacobs. This facility is ten times bigger than the original factory and marked a major turning point in the company’s growth.
Hollick recently sold his stake in the company to partner Southey Holdings, which has a diverse portfolio which spans marine, oil and gas, contracting and manufacturing. The group has a policy of autonomy within each operation which allows for innovative strategies, often resulting in the group leapfrogging competitors and succeeding in greenfields markets.
As passionate as ever, he remains in the driver’s seat and believes that moving under the banner of such a large parent (with turnover of R2,5 billion) will provide the support needed to grow the company, enabling it to continue to develop a number of potentially lucrative products and move into as yet unexplored markets and sectors.
At this point, 70 percent of ISO Moulders business is slanted to moulded packaging for producers of white goods. However, adds Heron, while 80 percent of business is for large customers, 80 percent of orders come from smaller businesses which means that there must be opportunities to grow here.
Other potential growth areas include packaging for pharmaceutical products, cooler boxes needed to transport temperature sensitive foods such as fresh fish and even a possible packaging solution to protect huge rolls of stainless steel during shipping. ISO Moulders is also looking to grow production of seedling trays for the forestry industry and vegetable growers.
Then there’s the construction industry. New building regulations require that all new houses must be insulated to regulate temperature and cut electricity usage. “That’s a big opportunity for us and we are already feeling the pull,” he says.
There’s even the prospect of whole houses, clinics and even schools being partially or completely built out of polystyrene.
In addition to growth, ISO Moulders is also putting a great deal of effort into recycling. Polystyrene has been undeservedly branded environmentally unfriendly but it can be recycled up to 20 times. As a result, says Herron, the company doesn’t dump scrap but either re-uses it in its own processes or sells it as a usable item to customers as far afield as China.
The next step is to actually buy back scrap from customers for recycling. “We want to get to the point where this is a major contributor to our business,” he says.