By: Don Loepp

Category: News
Issue Date: 08-22-94
Page: 1

DULUTH, GA. - The largest U.S. jewel box molder is getting bigger, spending $82 million during three years to expand its domestic and European capacity plus $80 million during four years to introduce new products. Japanese-owned Atlanta Precision Molding Co. Ltd. plans to build a new West Coast plant, probably in El Dorado County, Calif., next year. To expand its East Coast capacity the firm will add presses to its Duluth, Ga., facility, and may build another plant in Virginia.

This all comes on the heels of an expansion into Europe last year, with construction of a plant in Helmund, the Netherlands.

The new round of expansion is an effort to chase the growing optical disc manufacturing market, said David Stumpff, vice president for marketing and advanced product planning.

"The reason we're going to the West Coast is the same reason all the [compact disc] manufacturers are going there. That's where all the computer software houses are. CD-ROM is growing about 100 percent a year. There needs to be a jewel box manufacturer out there,'' he said in an Aug. 11 interview at company headquarters in Duluth.

According to APM research, about 19 U.S. plants made optical discs in 1990, many in the Southeast and Midwest. By 1995 about 50 plants will make discs, with many of the new players on the West Coast and Northeast.

One big APM customer, Sony Corp. of America, is building a $50 million disc plant in Springfield, Ore. APM's goal is to have its jewel box plant, to be called California Precision Molding, operating two months before Sony Oregon, slated for mid-1995.

Because jewel boxes have become a commodity item, APM wants a plant near its customers to avoid hefty shipping costs. CPM will compete with Asian jewel box suppliers and with other forms of packaging.

"Packaging for CD-ROM is still a question,'' Stumpff said. "At least 1,500 people are publishing software or text on CD-ROM. So the packaging won't be standardized soon.''

Until now APM has kept a very low profile. The firm did not display at trade shows and did not need to seek publicity.

APM is already a major supplier of jewel boxes to five of the world's top six record suppliers, plus all the major CD replicators. The firm claims to hold a 50 percent share of the U.S. jewel box market, a share it has held since 1990 - and which it intends to keep, despite heavy imports from China and Hong Kong.

While Far East suppliers have an edge in cheap labor and resin, APM counters with state-of-the-art automation.

"The only way we can maintain our competitiveness is technology: better mold design, reliable equipment, more effective and faster automation, and the lowest possible cycle time,'' explained Mark Miller, vice president of manufacturing.

The thoroughly automated Duluth plant already pumps out more than 1 million jewel boxes each day - up from about 1 million per month when the firm started in 1987. Through press and robotic upgrades, the plant expects to make 485 million to 500 million cases next year.

In the late 1980s manufacturers typically produced jewel boxes at cycle times of 11-14 seconds. APM runs at roughly half that speed today and, with a $1 million-plus investment in new automation and molds, it expects to cut that by 20 percent in the next few years.

WEA Manufacturing Inc., a unit of Warner Communications Inc., uses APM as its primary source of jewel boxes, based on cost, quality and service performance, said Mike Fica, WEA's corporate group purchasing manager in Olyphant, Pa.

"Their production is very consistent,'' Fica said in a Aug. 15 telephone interview. "All jewel boxes go into high-speed, automatic machines. If the parts are inconsistent, the machines you can't fool.''

APM's Duluth plant now has about 92 injection presses, all from Sumitomo, most with 180 tons of clamping force. Raw material is delivered from floor trenches. The few operators in the massive complex - the firm has a total of 83 employees - zip about the cavernous production area in golf carts.

About 90 percent of the presses run hot-runner molds. Jewel box parts are removed from the machines by robots - Yushin is the key supplier - and assembled, packaged, sorted, boxed, palletized, shrink-wrapped and sent to a staging area, all without human intervention.

The firm started in a 50,000-square-foot leased building, completed a 50,000-square-foot addition in 1990, and moved across the street to a 170,000-square-foot site in 1991. That has been expanded to 250,000 square feet.

APM is a joint venture with four Japanese-based parents. Mitsubishi Corp. owns 40 percent and Mitsubishi Industrial Corp., a wholly owned unit of Mitsubishi Corp., based in New York, owns 20 percent. The remainder is split between Sumitomo Heavy Industries - parent to APM's molding machine supplier - and Nakatani Sogyo Co. Ltd., an Odawara, Japan, company that makes jewel boxes.

APM has made parts other than jewel boxes, including cases for floppy disks. The firm recognizes that betting all its chips on jewel boxes carries some risk, so APM plans to spend $80 million during the next four years to develop and introduce new products.

Currently its only other significant business is making parts for the MiniDisc, a Sony-developed product. APM makes all the parts for the MiniDisc except the disc itself. The discs have been slow to catch on in the audio field, in part due to cost cutting by cassette makers. APM hopes to jump-start the business.

The company has designed a fully automated prototype system to assemble MiniDisc components. APM is targeting major record companies and CD replicators as potential customers. The equipment can assemble 56 MiniDiscs per minute.

"We think the major push for MiniDiscs will be on the computer side,'' Stumpff said. "We knew it would take several years.''

On the jewel box side, APM continues to expand internally as it plans the new California plant.

The plant in the Netherlands, known as European Precision Molding, makes about 50 million jewel boxes annually. That will increase to about 100 million by the end of this year, and the firm plans to spend $25 million during the next three years to hike that capacity to 300 million.

APM also plans to spend $57 million during three years to increase its U.S. capacity to 700 million jewel boxes annually.

In addition to California, APM wants to add capacity for about 200 million jewel boxes annually on the East Coast. Capacity for at least 100 million will be in Duluth, and the firm now is considering plans to build another plant near Chesapeake, Va., where Huntsman Chemical Corp., one of its key polystyrene suppliers, has a resin plant.

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