Foam manufacturer Cellect announced Wednesday that it will sell equipment from its physically blown polypropylene foam business and enter into a licensing agreement with foam supply company Armacell of Mebane, N.C.
Cellect President and CEO Scott Smith said he could not disclose the financial details but described it as a sale of some equipment and a “long-term” licensing agreement that will allow Armacell to use some of Cellect’s patented technology.
“We were approached by Armacell a while back about possibly licensing technology and equipment, and this is the deal that evolved. We are a licensor of technology, and this is in no way shape or form a sale of Cellect,” Smith said.
Cellect employs about 100 people in the village of St. Johnsville. Smith said the licensing agreement with Armacell will not result in any layoffs and may enable the company to continue to grow amidst skyrocketing costs.
“This licensing deal allows us to survive in the most difficult economic environment I have ever seen. We have seen unprecedented petrochemical and energy increases. It’s been massive,” Smith said.
The licensing agreement will allow Armacell to use both Cellect’s technology and the trade name of its physically blown polypropylene foam PropaCene, which can be used in a variety of products including automotive water shields and food packaging.
Armacell said one of the advantages it seeks from acquiring the right to produce PropaCene is that the material is “100 percent recyclable,” enabling potential rapid growth as an alternative to less environmentally friendly foams.
“In addition to expanding our product line, this purchase fits with our commitments to global leadership in engineered foams, the environment and energy reduction,” said Jim Mars, the head of Armacell’s North American operations.
In a separate transaction, the two companies completed a long-term global supply agreement for Armacell to market, sell and distribute Cellect’s irradiated sheet foams under the trade name I-Cell. In North America, Armacell will sell I-Cell products as well as I-Cell material for undisclosed applications. Outside North America, Armacell will be selling I-Cell for all applications and products.
“Cellect has developed proprietary formulation and process technology. With Armacell’s global footprint, we expect to grow sales rapidly in a variety of specialty applications,” Mars said.
Smith said the deal with Armacell, coupled with increased domestic demand for Cellect’s commercial foam products, may mean the company has a bright future.
“This situation should allow us to ultimately create more jobs and continue with our expansion,” Smith said. “We’re seeing exports grow. Chinese goods can’t be shipped to the U.S. [because] the cost of exporting their goods has skyrocketed, so for those in American manufacturing who can figure out how to survive this inflationary environment, three to five years down the road, [they] will probably see good times.”
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