With business growing faster than expected, blow molder Alpla Werke Lehner GmbH & Co. KG has decided to expand its Iowa City, Iowa, plant to more than twice its current size.
The company, based in Hard, Austria, opened the extrusion blow molding facility in December, one of three U.S.-based plants Alpla has launched since early 2002. But Alpla soon realized the Iowa City plant, with only 58,000 square feet of manufacturing space, was too small, said Kurt Berkmann, vice president for Alpla's U.S. arm, Alpla Inc.
``It has far more growth potential in the medium term than we initially thought,'' said Berkmann, based at Alpla's U.S. headquarters in McDonough, Ga. ``We have proven that to be true in the short time we have been in Iowa City.''
The Iowa City plant currently makes high density polyethylene bottles for hair-care and personal-care products, including shampoo and hair gels. All those products currently go to consumer-products behemoth Procter & Gamble Co., which has a plant in Iowa City.
Alpla would like to expand those product offerings, both to P&G and to other customers, Berkmann said. The company also may add PET bottle manufacturing at the Iowa City site, he said.
Alpla will add 86,000 square feet to the plant, with the work targeted for completion by Aug. 1, Berkmann said. The company will spend $3.1 million to add onto the building and make other improvements, according to information filed with the Community and Economic Development Department of Iowa City.
During the next two years, Alpla also plans to invest $9 million in new machinery and equipment, Berkmann said. Alpla has told Iowa City officials that it plans to add at least 10 people by August, although that figure might change, Berkmann said.
The city agreed March 19 to provide Alpla with five years of tax rebates for property improvements, said Steven Nasby, community and economic development coordinator. The city also will provide Alpla with $35,000 in upfront payments for site improvements that will be paid back. The company will receive a maximum of $475,000 in tax rebates, he said.
Another Iowa City bottle plant, owned by Toledo, Ohio-based Owens Illinois Inc., received similar financing when it opened last year, Nasby said.
Alpla invested more than $40 million last year to open U.S. sites for HDPE bottles. The company, a major European producer of HDPE and PET bottles, also has U.S. plants in Houston, where it shares a dedicated facility with customer Clorox Co., and in McDonough, south of Atlanta.
The company wants to add PET bottles in North America, providing a wider berth to compete for bottle business. The company also is considering sites for new U.S. plants this year, Berkmann said.
The company was ranked as the largest custom blow molder in Europe in a 2002 study by research group Applied Market Information Ltd. of Bristol, England. According to Alpla's Web site, the company recorded sales of more than 1.3 billion euros ($1.37 billion) in 2001.
Alpla would like to complete the Iowa City expansion in a fashion similarly efficient to the plant's original opening, Berkmann said. The company decided on the Iowa City site in March 2002, even before blueprints had been developed.
Worker training began in June, and the plant opened in December, he said.
``It was a record-holder,'' he said. ``We opened the greenfield site in the shortest time period for any project that I had worked on. Now, we have the confidence that we can grow that business even more.''