With the recent opening of a second plant at its Danville manufacturing site, Indian laminated tube giant Essel Propack Ltd. hopes to make inroads into the higher-value-added seamless tube market in the Americas.
The $10 million, 120,000-square-foot facility uses technology acquired two years ago when it bought Arista Tubes UK of Stevenage, England.
``This plant will be the first extension of that business,'' said Adrian Spencer, director of business development for the Americas. He said the plant will be at full capacity early next year and will produce more than 60 million tubes a year in 2007, with most of the production for personal-care products, cosmetics and food.
He said Essel plans to add a second line at the new Danville plant in 2007 and will open a $23 million plant using Arista technology in Eastern Europe this spring. The moves will add a leg to its already-strong laminated tube business, which has an estimated 32 percent market share globally.
Mumbai, India-based Essel has 24 plants in 14 countries, making 5 billion tubes annually. Five plants in the Americas have combined capacity of 1.1 billion tubes. Sales in the Americas account for $250 million of the company's $2 billion in sales.
Spencer said that after the second line begins operating at the seamless tube plant, the company will increase Danville employment from 200 to between 250 and 260. The seamless tube plant will make 50-millimeter tubes, compared with the typical 34mm tubes made at its 100,000-square-foot laminated-tube plant in Danville that opened in 2003, primarily to supply Procter & Gamble Co. with tubes for products such as Crest toothpaste.
``We want to go into the food market and develop that,'' with tubes from the new plant, said Spencer, who was vice president of the company's Asia-Pacific region before joining the Americas operation in Danville a month ago. ``That is one reason we moved into the extruded tube business with Arista. There are a lot of food products in bottles that we think should be in tubes.''
Currently, tubes for food - sauces, cheeses and creams - are Essel's smallest-volume tube market with 80 million annually, compared with 500 million for cosmetic products such as shampoos, conditioners and gels; 400 million for pharmaceutical and over-the-counter products such as muscle relaxants, insect bites and creams; and 4 billion for oral-care products such as toothpaste and denture adhesives.
``The Americas is the core focus of our growth,'' Spencer said. ``There are a lot of gaps here that are ripe for the plucking. We are targeting 20 percent growth annually both globally and in the U.S. in an industry that is growing at 2-3 percent. We have a very aggressive expansion and acquisition plan.''
He said Essel has a market advantage because of its global presence, modern equipment and vertical integration. The Danville laminated-tube plant, for example, makes its own blown film and laminates, cuts and converts its laminates, injection molds caps and has its own graphics department and printing capabilities.
Essel is negotiating with several multinational corporations on tube contracts that could more than double its market in South America, Spencer said. One project alone has the potential to add the production of 300 million tubes annually. Essel currently makes 250 million to 300 million tubes annually in South America.
He said Essel, which has plants in Colombia and Venezuela, is looking at plants in Brazil and Argentina and possibly one in Chile.
``All of South America is in our vision,'' Spencer said. `` `Go and grow with the customer' is our philosophy. It is an expensive proposition to ship empty tubes around the world.''