PHOENIX - After a two-year delay, Laich Industries Inc. of Cleveland plans to break ground within 60 days for a 100,000-square-foot injection molding plant and distribution center in Phoenix. Cost of the initial phase is estimated at $2.4 million, excluding a rail siding and silos.
Laich purchased the 18-acre site two years ago for $760,000, after making the decision to close its Rancho Dominguez, Calif., plant, and move to what it considered a more business-friendly climate.
Laich looked at sites in Nevada, Mexico and Arizona.
Walter Laich, the firm's chief executive officer, said several factors contributed to the decision to put off construction.
``The Mexico situation hurt us,'' he said, referring to that country's economic woes.
``Even though we weren't hurt badly from a monetary standpoint, customers took a long time to pay. We lost a considerable amount of sales, and our distributors in Los Angeles got hurt by millions of dollars. But it's coming back slowly.''
Mexico is a large market for Laich, which is a proprietary manufacturer of a variety of housewares for the consumer market.
Laich said that the increases in resin prices hurt all its U.S. operations, as they did the housewares industry as a whole.
``That was hard to swallow,'' he said.
Another factor in the delay was an attempt by the company to do a 1031 exchange in which a company can take the proceeds from the sale of one facility and invest those in a new plant.
``It represents a significant amount of capital gains savings,'' said Laich. ``We wanted to do that, but it became too complicated for us at this point, and we needed to get started'' on the Phoenix facility.
Laich owns the 25,000-square-foot manufacturing plant in Rancho Dominguez, and also leases two warehouses. The company plans to sell the manufacturing building.
All of the molding equipment will be moved to Phoenix, and 80 jobs will be created at the new facility.
Although Laich said the business climate in California has improved somewhat over the past couple of years, the company already has committed itself to moving.
The Phoenix facility will continue to serve the California and Mexico markets, as well as Canada and the southwestern United States. In addition to a Cleveland facility, the company also operates a 100,000-square-foot molding facility in Ottawa, Kan.
Construction this summer represents the first phase of a three-phase project that eventually will give the company 300,000 square feet of warehouse and production space.
Completion is scheduled for Dec. 1, with production to follow by the end of the year.