Applied Tech Products' Engineered Rubber and Plastics Group opened its first joint venture in China, with Hong Kong-based Wellmei Industrial Co. Ltd.
Wellmei is a $40 million-per-year injection molder with manufacturing sites in Guangdong and Shanghai.
The venture, ATP-Wellmei (HK) Co. Ltd., will injection mold parts and assemblies, primarily for the North American market. The firm has a 35,000-square-foot site in Dongguan that is to quadruple in size in a few years.
Carlton Harris, ATP group executive, said the venture has promise because of the differences between the two partners' end markets.
``Wellmei Industrial has specialized in high-volume electronic applications, while ATP Engineered Rubber and Plastics has focused on consumer, medical and unrelated lower-volume electronic applications,'' Harris said. ``This gives ATP-Wellmei specialized knowledge and expertise in three growth markets.''
ATP, a Radnor, Pa.-based custom injection molder, expects to benefit from low labor costs with the joint venture. ``We anticipate 25-50 percent lower manufacturing costs in select programs,'' Harris said.
Harris expects ATP-Wellmei to reach $20 million in sales within five years, ``with only 10 percent of that in program transfers from the USA, the rest coming from incremental sales.'' His partner, Tsai Chang Le, owner of Wellmei, said the goal for the first year is $2 million.
Tsai said the venture will add 40-50 employees in the first year, and will employ 800 in the project's second phase.
Wellmei, with more than 3,000 employees, does injection molding, metal stamping, electroplating, lens making, painting and assembly. ATP was a customer prior to the joint venture.
``ATP helps us explore the North American market and also brings in advanced technologies and management skills,'' Tsai said. ``We are very interested in ATP's experience in the medical market.''
Most of the venture's machinery is produced in Asia, Tsai said.
ATP has a 51 percent equity position in the venture, as it does in its other two Chinese joint ventures, which are part of ATP's Health and Beauty Care Group.
ATP expanded the scope of its engineered plastics group in 2003 to include rubber and silicone molding. The Rubber and Plastics Group concentrates on precision custom injection molding of both rubber and plastic engineered components. Its main markets include consumer and industrial products, electronics, and medical devices and pharmaceutical packaging. In addition to the Chinese joint venture, the Rubber and Plastics Group has four sites in the United States, said Ji Mu, the group's marketing specialist.