CHICAGO (Aug. 23, 10:05 a.m. EDT) — New plastic lumber company Newlab Plastics Ltd. is suing its main equipment supplier, alleging it supplied faulty machinery, but the supplier is calling the lawsuit groundless.
Newlab launched the suit March 16 in St. John's, Newfoundland, against Futuresoft Technologies Inc. of Mississauga, Ontario, and its president and director, Wayne Song. Newlab is seeking about C$6.5 million (US$5.8 million) in restitution and damages. Newlab aimed to start a plastic lumber company in St. John's last year.
Newlab won a declaratory judgment in May after FTI did not respond to the initial lawsuit. FTI appealed, and a Canadian court reversed the declaratory order in late July. FTI said the case now will proceed to trial.
Newlab ordered a turnkey plastic lumber production plant from Futuresoft for about C$505,000 (US$449,000) in the spring of 2004, according to Newlab's statement of claim. Major portions of the plant were to be sourced from China, but Newlab contends that the equipment was corroded and was not new. The machines were shipped in installments.
But FTI, which has a joint venture with equipment supplier Shaanxi Qinchuan Machinery Development Co. Ltd. of Baoji, China, said in a statement distributed at the NPE trade show in Chicago in June that “all the claims in NPL's suit against FTI and Wayne Song are groundless.''
FTI said Newlab inspected the machinery before shipment, and Song said the company delivered a working system, with a capacity of 4.63 million pounds, for making wood-plastic composite materials.
Newlab argued that engineering and electrical specifications were not as agreed on, and the equipment required extensive modifications that the company had to pay for. As well, Newlab said FTI was unable to get immigration clearance for Chinese engineers to come and fix the problem.
FTI, however, contends that it found other staff to help and had four engineers on-site from April to September of 2005 to guide the installation and setup for initial production. “Quality products have been made since July 2005,'' FTI said in the NPE statement.
Newlab President Dean Payne said the company never got into commercial production after all the equipment was delivered last year. He said the equipment is in storage and now is in good working order, and he hopes to sell it if he can't find another partner to help get the business off the ground.
Song said in a June 21 interview at NPE that Futuresoft has supplied more than 40 complete wood-plastic composite systems and components to the industry for more than a decade, including to several large firms. Other companies are operating with the same equipment Newlab received, FTI said.
FTI has countersued Newlab for C$205,000 (US$183,500), alleging that it did not pay for the equipment.