HOUSTON (April 14, 10 a.m. EDT) — Some plastics processors might view the Chinese market as a threat, but it's been more of an opportunity to Cincinnati-based Ampac Packaging LLC, a maker of blown film and plastic bags.
The firm launched production last month at a 20,000-square-foot plant in Nanjing, China. Currently, the site is only converting finished bags, but future plans call for the installation of extrusion equipment with more printing and conversion capability, Ampac President and Chief Executive Officer John Baumann said at Chemical Market Associates Inc.'s World Petrochemical Conference, March 26-27 in Houston.
The expansions at the site will increase its employee count from its current total of about 35 to more than 200. The Chinese government built the plant to Ampac's specifications in an attempt to win foreign business.
Ampac has a $16,000 annual lease at the site, which is northwest of Shanghai and only 500 yards from a port facility.
“This was a global move, driven by lower costs and proximity to our customers,” Baumann said. “Our customers — companies like Gap, Finish Line, Old Navy and Nike — have choices. Many of them are retailers of clothing that's made overseas and are familiar with bringing products in from overseas.
“They're not parochial about where their bags are produced and they want to know if Ampac will stand by them with their product.” That is because of rising finished-good costs brought about by increases in the cost of plastic resin and natural gas.
New equipment will be installed in Nanjing when the site meets Ampac's targets for base-load sales and training of personnel, Baumann said. Almost all of the Nanjing plant's bag output will be shipped back to North America.
CMAI estimates that 100 billion plastic bags were imported into the United States in 2002, with 40 percent of that amount coming from China. Those bags represent more than 1.4 billion pounds of polyethylene resin consumption.
“The [North American film] industry will still be here, but in a different way with lower volume,” Baumann said. “We'll do more value-added products like stand-up pouches, while higher-volume, simpler products will continue to go overseas.”
A sizable expansion of Ampac's Cincinnati site also is under way. The firm added a three-layer co-extrusion line in August and already has installed three new bag converting machines this year. A six-color press was added in 2002 as well. The new equipment is part of a three-year, $8.5 million expansion project, which is expected to create about 30 new jobs at the Ohio site.
Ampac, which also produces paper packaging, expects to post sales of more than $100 million this year.
The firm does about 75 percent of its work in retail packaging such as shopping bags.
Another 15 percent is in security packaging such as cash deposit bags.
The remaining 10 percent is in consumer packaging, such as multilayer films for food and meat.
In addition to Cincinnati and Nanjing, Ampac operates plants in Mobile, Ala.; Walden, N.Y.; and Tulsa, Okla.