Not Getting Rusty

For more than 30 years, Northern Technologies International Corporation (NTIC) has quietly but profitably produced plastic packaging impregnated with corrosion inhibitors. Its products emit vapors that coat their metal contents and provide five years of rust protection while they’re enclosed in packaging. “I think every major automotive company and automotive supplier worldwide is our customer, in one form or another,” says Patrick Lynch, president and CEO of the Circle Pines company.

This May, NTIC struck out in a new direction by launching Natur-Tec, a new business unit that makes and markets a line of biodegradable plastic products designed to displace conventional petroleum-based plastic wares. At launch time, Natur-Tec already had logged $300,000 in sales, and it sparked a 35 percent jump in the price of NTIC stock, from around $8 to more than $11. It had been trading on the American Stock Exchange but moved to Nasdaq in June (symbol: NTIC). (It was trading at $12 as of September 30.)

Though the immediate impact of NTIC’s new business unit shows promise, Lynch concedes that he can’t yet provide a detailed long-term outlook on Natur-Tec’s prospects. “It’s almost like asking me about the potential of some of the Internet start-up companies in ’98,” Lynch says. “The bioplastics market is still in its infancy. We’re growing at the same time the market is growing.” Bioplastics represent less than 1 percent of the $4 billion worldwide plastics market. But Lynch says that the sector has been growing at about 50 percent annually: “Which means that by 2015, for example, the bioplastics market will be about $35 billion.”

Natur-Tec is building a broad-based product line atop a proprietary process that NTIC developed with Ramani Narayan, a professor of chemical engineering at Michigan State University, who Lynch describes as “probably the best known figure in the bioplastics area worldwide today.”

NTIC is commercializing the process, in which resins readily available in the marketplace are reformulated and used to make products that “have better performance properties than the competitive alternative,” according to Lynch.