CLEVELAND - Mold-making-equipment supplier Incoe Corp. has opened a Hong Kong office and has its eye on opening its first manufacturing plant in China.
The Troy, Mich.-based company launched a sales and engineering office in Hong Kong in late May, said Colin James, Incoe vice president of international sales. The office, headed by James and called Incoe Hong Kong Ltd., will distribute Incoe's mold and hot-runner systems in Hong Kong and China.
The company is looking for a Chinese partner to help Incoe expand into that country later this year, James said. He was interviewed June 20 before speaking the next day at Plastics Encounter Cleveland.
China rapidly is emerging as a power in manufacturing. While much of North America and Europe are suffering the effects of an economic downturn, China's domestic growth has exceeded 8 percent during the first half of 2001.
``It's the most desirable location for Incoe's growth plans in Asia,'' said James, who recently moved from Incoe's office in Sao Paulo, Brazil. ``We have many large customers in that region. Now it's up to us to service them at a nearby location.''
James' first choice of location would be in Guangdong province, the southernmost region of China that includes Western manufacturing centers in Shenzhen and Guangzhou.
Another possibility, but a less probable one, would be to open the plant near Shanghai, James said.
The Shenzhen area, near Hong Kong, has become a major port city for many U.S-based electronics, telecommunications and appliance companies.
Incoe plans to start with a small, joint venture plant and expand later. Competitors such as Madison Heights, Mich.-based D-M-E Co., where James worked for more than 20 years, have facilities in China. Incoe also runs an Asia-Pacific operation in Singapore.
The heady growth of China has disturbed some U.S.-based mold makers and molders, concerned over the amount of business lost to their Chinese counterparts.
China has made a charge in the amount of imports to the United States. According to Census Bureau statistics, 19.5 percent of imported products, or about $2.5 billion in goods, came from China to the United States last year.
``There's been a move from Taiwan and Japan to China,'' Michael Paslawskyj, director of economic research for Livingston, N.J.-based CIT Group Inc., said at Plastics Encounter. ``In China, labor is about as dirt-cheap as it can be.''
Molds are made quickly in China by some good shops, James said. They can be completed in 30 days or less in some cases, through good project management and a large work force.
Still, North American companies should not lose too much sleep - not yet, anyway - over business moving to China. For one thing, the exodus has not hit every industry hard. Automotive mold work for U.S.-sold vehicles still primarily is done on Western shores, said Pete Mozer, president of Auburn Hills, Mich.-based Delta Tooling Co.
And those customers going to China also face some hidden costs and difficult issues, some of which could drive them back to North American companies, James said. A company has to know with whom it is working or it could get burned, he said.
``We've heard of molds arriving in pieces or falling apart,'' James said. ``It then can cost $10,000-$20,000 to repair a mold coming from Asia. You have to find a quality mold shop in Asia before you give them work.''
And even if an Asian company signs a letter of credit, that does not mean it will honor commitments, James added. It is best to work through a middleman in Hong Kong or Singapore to find the right shop before moving ahead, he said.
Yet that situation should improve as Chinese mold makers learn the trade, he said. It is an area to watch but not one to cause undue worry, he said.
``Be prepared to be very patient,'' James said. ``Just like in the U.S., you sometimes get what you pay for with a cheap mold.''