MEXICO CITY - Royal Plastics Group Ltd. is considering manufacturing its extruded plastic housing system in Latin America and Asia. The firm may set up joint ventures or direct manufacturing in Mexico, Argentina and Colombia within two years, and add at least three Asian joint venture plants.
Royal executives discussed the plans at the March 3 opening of a single-story, private show house, built in Cuernavaca, Mexico, using components from Royal Building Systems (Cdn) Ltd.
In September, RBS set up a unit, Royal Building Systems de Mexico SA de CV, headed by Italo Tajer, president of Advanced Profiles SA de CV, Royal's profile plant in Altamira, Mexico.
Advanced Profiles is investing around US$1 million this year to extend its range of extruded profiles. Next month, the firm will add a window profile extrusion line, and a door profile line is planned for later this year.
Tajer said 20 more window lines will be added in the next two years. He said the market for such plastic windows is just taking off in Mexico and Royal will need to invest about US$4 million over two or three years.
Vic DeZen, Royal Plastics group president and chief executive, said Royal intends to add RBS extrusion lines at AP when the market justifies it.
Once demand reaches 4,000 units locally, Royal will launch a $30 million RBS plant with more than 20 extruded component lines next to AP, Tajer said. It initially will have as many as eight lines.
Royal has invested about $5 million in Mexico, primarily in the AP operation. When the group went public last year, it bought out Tajer's 40 percent share of AP.
In Argentina, RBS has a joint venture partner and will establish a US$30 million building-parts plant by the end of this year, DeZen said.
RBS has signed a joint marketing deal with Armando Boulihesen, who heads Royal's local subsidiary, Royal Building Systems (Argentina) SA. This eventually will operate a parts plant there.
Royal also intends to establish another joint venture housing-parts manufacturing unit in Colombia at the end of this year or early in 1996. He added that Royal is looking at the market potential around SÃŒo Paulo, Brazil.
In Colombia, RBS is negotiating for a public housing project in the Pacific port city of Buenaventura that could mean supply of as much as 6,000 basic, 323- to 484-square-foot homes during five years.
In China, RBS is overseeing construction of 300 motel units in a C$2.5 million (US$1.78 million) deal in Haikou, China, with state agency China Minerals and Metals Import and Export.
The agency bought the units in 1993 and shipped them to China early last year, but permit problems held up their erection until recently, said Angelo Bitondo, RBS general manager. Top group executives, including DeZen, will travel to Beijing this month for talks with government and private sector officials. Royal expects to form a venture with a Chinese business group.
``The [Chinese] group is talking of setting up five plants in about two years,'' Bitondo said in a telephone interview.
He admitted RBS experienced a minor setback in its current Chinese venture, dealing directly with China's federal government. It now is considered better to work with local authorities.
Royal executives also said they are in talks with a land holding company in Jakarta, Indonesia. RBS is supplying a model center and show units and will do a market study to determine the feasibility of a joint venture production plant. If the project proceeds, the plant eventually will comprise eight to 10 extrusion lines, Bitondo said.
In Bangkok, Thailand, Royal executives expect to sign an agreement with a potential Thai plant partner. The unnamed firm is a land developer and producer of building products, including some in plastics.
The Canadians will go to Malaysia to talk to another potential joint venture partner. But Royal plans only one or two joint venture plants in Southeast Asia initially to avoid underuse of capacity. Bitondo would not name the potential partners.
Royal Plastics reported sales of C$110.2 million (US$78.2 million) for the quarter ended Dec. 31, up from C$87.9 million (US$62.4 million) the previous year. Profit was C$6.8 million (US$4.8 million), vs. C$4.8 million (US$3.4 million) on a pro forma basis for 1993. Excluding pro forma adjustments, profit for the 1993 quarter was C$8.3 million (US$5.9 million).
