Lock & Lock building another Vietnam plant

By Steve Toloken
Staff Reporter / Asia Bureau Chief

Published: April 16, 2013 1:03 pm ET
Updated: April 16, 2013 1:18 pm ET

Related to this story

Topics Asia, Consumer Products, Containers/closures, Packaging, Injection Molding

SEOUL, SOUTH KOREA — Large South Korean plastic container maker Lock & Lock Inc. is investing $30 million in an injection molding factory in Vietnam — its fifth worldwide — as the company increasingly targets inland China and Southeast Asia for growth.

The new Vietnam plant, located in Tien Giang province, is scheduled to be completed in 2014, but the investment comes amid some rising challenges for the firm, including shrinking profit margins.

The Seoul-based firm, in some ways considered an Asian version of Tupperware, reported 2012 revenues of 508.4 billion Korean won ($477.2 million), up 31 percent since 2010.

But while revenues have grown, profit has held steady at more than 62 billion won ($58.7 million), resulting in falling margins.

The company, which has more than 280 injection molding machines in factories in Korea, China and Vietnam, is a household name in parts of Asia and is betting on sales growth in China and Southeast Asia.

China accounted for more than 50 percent of the company's sales in 2012, the first time it crossed that threshold, and now generates 80 percent of Lock & Lock profits, the company said. Its China sales in 2005 were practically zero.

But that growth has come with costs. It's been one factor hurting profit margins, which declined from 21 percent in 2010 to 14 percent last year, the company said in a written response to Plastics News questions.

"Our margins declined due to a couple of reasons," the company said.

"We had so-called 'growing pains,' such as one-off expenses and inventory-related costs as we tried to improve our administrative capability and streamline our businesses in several aspects."

The company added, "Also, we came to spend more … for our geographical expansion into lower-tier cities and inland towns in China."

The company declined an interview with Plastics News, but said in investor information that it has been accelerating its expansion in Southeast Asia and in smaller cities in China, away from the more-prosperous coastal regions around Beijing, Shanghai and Guangzhou.

For example, it said it expanded its sales network from four to 10 cities in Vietnam and strengthened its retail channels throughout the region, including online, in hypermarkets and on television.

China is the "clear growth driver of the moment for both top and bottom lines," the company said. Southeast Asia, it said, has "great potential but [is] more of a long-term story."

The company, which went public on the Korea Stock Exchange in 2010, told Plastics News the new Vietnamese molding factory is designed to meet growing demand in both Southeast Asia and 100 markets worldwide.

It did not provide capacity details of the planned factory but, based on the size of investments at its other four molding plants, the new Vietnam facility would have about 60 molding machines.

It has one molding factory each in Korea and Vietnam and three in China, although it told Plastics News it does not plan additional molding factories in China. It has about 160 molding machines in its China facilities.

Lock & Lock has also been expanding into other plastic containers, like household storage, and into ceramic, metal and glass kitchenware. It also opened glassware and cookware factories in Vietnam last year, and opened its first molding plant there in 2007.


Comments

Lock & Lock building another Vietnam plant

By Steve Toloken
Staff Reporter / Asia Bureau Chief

Published: April 16, 2013 1:03 pm ET
Updated: April 16, 2013 1:18 pm ET

Post Your Comments


Back to story


More stories

Image

Cambro investing $30.4 million in new N.C. injection molding plant

April 18, 2014 2:36 pm ET

Foodservice products manufacturer Cambro Manufacturing Co. Inc. plans to set up a satellite production and distribution operation in Mebane, N.C., to ...    More

Image

Increased orders prompt Georg Utz to add capacity, equipment in Indiana

April 18, 2014 12:20 pm ET

Plastic totes and tray orders have picked up to the point where manufacturer Georg Utz Inc. has added machines, silos and material feed systems to...    More

Spain's Cristian Lay Group buys two materials units of bankrupt LSB

April 17, 2014 11:11 am ET

Spanish industrial conglomerate Cristian Lay Group has purchased two of the bankrupt Spanish PET packaging group La Seda de Barcelona.    More

MGS buying N.Y. medical molding plant from Hospira

April 17, 2014 10:19 pm ET

MGS Manufacturing Group is purchasing the Buffalo, N.Y., injection molding facility and related product line of Hospira Inc., effective July 1. Terms ...    More

Image

German auto supplier Dr. Schneider opens second US plant

April 17, 2014 12:57 pm ET

Dr. Schneider Kunststoffwerke GmbH, a German supplier of plastic interior auto parts, has opened a $29 million manufacturing plant in Russell Springs,...    More

Market Reports

Thermoformed Packaging 2014 Market Review & Outlook North America

This in-depth report provides analysis and discussions of economic and political conditions, market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as strategies being implemented by thermoformed packaging companies. In addition, there are reviews of 25 leading thermoformers in the packaging segment, assessing their growth initiatives and performance metrics over 10 years.

Learn more

Automotive Market Review and Outlook 2014 The Americas

This 75-page report features in-depth analysis of the automotive industry for the Americas. It includes discussions of market trends, legislative/regulatory activity impacting production and threats as well as design strategies being implemented by the major automakers. Detailed charts and data tables outline North American automotive production over the last five years.

Learn more

Plastics Building & Construction Market Review and Outlook 2014 with MS Excel chart data

This report provides in-depth analysis of the plastic building and construction market for North America, including discussions of trends, opportunities, threats and the latest developments in construction trends that impact plastics processors.

Learn more

Upcoming Plastics News Events

May 6, 2014 - May 8, 2014Plastics in Medical Devices 2014

May 12, 2014 - May 12, 2014Plastics News Brazil Pharma Summit

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

February 3, 2015 - February 7, 2015Plastics News Executive Forum 2015

More Events