By: Catherine Kavanaugh
August 16, 2013
RAPID CITY, S.D. — WL Plastics Corp.'s new plant in Rapid City is cranking out HDPE pipes as the business continues to grow with the oil industry.
The Fort Worth, Texas-based company celebrated the opening of its 45,000-square-foot facility this week.
The plant began manufacturing operations on schedule following a hiring flurry to fill all 43 openings with the average starting pay of about $30,000.
"It's fantastic," plant manager Kenny Costello said. "We have state-of-the-art equipment — it's all touch screen and computerized — and a great workforce."
WL Plastics invested an estimated $12 million into the land, building and equipment, which is located on an 18-acre site in Rapid City. Resin arrives via a rail spur in Rapid City and is hauled by truck to the plant, where it is extruded into pipe ranging from less than an inch to 24 inches in diameter.
The plant is running 24 hours a day, every day of the week to supply its customers.
"They're mostly in the oil field up in the Bakken about four hours away," Costello said, referring to North Dakota's portion of the shale formation that has become the largest unconventional oil field in the United States.
In June, oil output in North Dakota increased to a record 756,980 barrels a day compared to 746,340 in May, according to Bloomberg.
WL Plastics decided to build its new plant in South Dakota to tap into a new labor force and take advantage of financial incentives offered by Raid City and the state, said David Fink, the firm's senior vice president of sales.
"If you're right on top of the oil field activity you're competing with all the energy companies in the area," Fink said. "This was a good opportunity to get a good employee base and the incentives put forward made the package attractive to us."
The Rapid City facility reportedly has the capacity to produce 60 million pounds of pipe every year and is expected to post revenue of $50 million to $60 million annually. Fink wouldn't confirm the capacity figure and he described the revenue projection as a rough ballpark number.
WL Plastics has corporate sales of $320 million, according to Plastics News's 2013 North America Pipe, Profile and Tubing Special Report.
With Rapid City in production mode, the company now has seven plants, including one that opened last year in Snyder, Texas, another major oil-producing region.
"The oil field business definitely is the majority of what we're doing from those two facilities but we're not exclusive to the oil and gas business," Fink said, pointing to product lines for municipal water and sewer systems, mining business and agricultural irrigation.
The company received a $500,000 package of incentives from Rapid City to build there and the state approved $10 million of revenue bonds through the South Dakota Economic Development Finance Authority.
South Dakota is stepping up efforts to find ways to create jobs by servicing the oil fields in North Dakota and Wyoming. In June, the state hired a business strategy firm to lead the way, marking a shift from attempts to expand employment in other sectors like bio-fuels and wind power.
WL Plastics has only been in production since June in Rapid City but company officials are talking about future plans.
"We're off to a good start," Fink said. "All of our lines are operational. We have a good customer base that we followed into that area that we're continuing to support and grow with and there is room for future growth. There's potential for an additional line and 8-10 people in the existing building. If we expanded the building, if that's ever warranted, there could be more growth."