WESLEY CHAPEL, FLA. — Alloy Polymers Inc.’s passage to India has been a rewarding one, even if it took longer than expected.
Alloy, a toll compounder based in Richmond, Va., opened a plant in Pune, India, in 2011, after four years of effort. The firm now plans to add a second production line there in April and will hire 10 more workers by the end of the year.
Alloy CEO Kamini Pahuja covered the challenges of Alloy’s Indian move on Feb. 25 at the 2014 Plastics News Executive Forum in Wesley Chapel.
“We needed to follow our customers,” said Pahuja, a native of India. “And even though I’ve lived in the U.S. for 41 years, I wanted to go back.”
Alloy had customers in the packaging and automotive markets who were doing more and more work in India. The firm first had to decide if it wanted to incorporate there — a lengthy process that requires government approval and lots of paperwork. Officials ended up forming the Indian venture as a private limited company, which Pahuja said is similar to being a limited liability corporation (LLC) in the U.S.
They then had to choose one of four manufacturing regions in India. They chose one near their customers and near the port of Mumbai, India’s largest city. Shipping from Mumbai to Egypt — another transportation hub — can save 3 cents per pound on shipping when compared to shipping from Thailand to Egypt.
The Pune site also offered proximity to resin suppliers as well as good highways and dependable electricity.
Alloy was aided in the selection and development process by the Maharashtra Industrial Development Corp., which manages three sites in Pune, a city of about 3 million. The area also had a good labor pool, Pahuja said, meaning Alloy didn’t have to find workers through a temp agency.
The firm was aided in the process by Pahuja’s brother — Kamwal Giuliani — an Indian businessman who now manages Alloy’s operations in Pune. The plant covers almost 100,000 square feet and employs 30.
The firm’s second production line will use a Coperion-brand twin-screw extruder similar to the one installed in 2011. A third line planned for 2015 will be a similar product. At one point, Pahuja said that Alloy considered moving an extrusion line from Richmond to Pune, but decided against doing so for several reasons, including the cost of changing the line from AC to DC electricity.
Alloy’s Pune plant toll-produces compounds based on polypropylene, nylon and other resins. Officials learned that their compound formulations needed to be reworked with local resins and pigments. The plant now has a full quality lab and “can do any complex formulation,” Pahuja said, including “a lot of color matching and color formulation.”
When it came to hiring for the plant, Pahuja found that a lack of automation meant she had to hire three employees in India for every one she needed in the United States. Indian employees also expected Alloy to provide them with transportation to and from work and with meals, as Indian businesses do.
In looking for management employees, Alloy found candidates to be “available, but very competitive,” Pahuja said. “They’re young, bright and hungry, but not always loyal,” she added. “They’ll go to another company if they have the opportunity.”
Labor costs in India also are on the rise, climbing 46 percent between 2010 and 2012. The cost of electricity also is going up, Pahuja said. Alloy also had to adjust to its resin and additives being delivered in 55-pound sacks on smaller trucks, rather than by rail car as in the U.S.
The Pune plant has been named after Subhash Pahuja, Kamini Pahuja’s husband and Alloy’s founder, who died in 2007. Subhash Pahuja launched Alloy in 1982 after buying a compounding business from International Nickel Co. He then moved the firm from Waldwick, N.J., to Richmond in 1988.
Kamini Pahuja joined the firm in 1990 and held various roles — including chief financial officer — before becoming Alloy’s chairman after her husband’s death. In addition to Richmond, Alloy operates U.S. plants in Gahanna, Ohio; and in Crockett and Orange, Texas.
In spite of the challenges Alloy has faced in India, Pahuja said the move has been worthwhile.
“I strongly recommend [locating in India] if you want to be with your customers,” she said. “Once the plant was set up, it’s been easy to run.
“There’s a young, educated labor pool there that’s willing to learn. It’s been a good opportunity for us.”