Its 110,000-square-foot plant in Nanjing, China, won't be fully operational until Aug. 1, when film operations begin. But Clear Lam Packaging Inc., a $170 million manufacturer of specialty flexible and rigid plastic packaging for food and personal-care products, expects its Chinese investment to boost annual sales by $40 million in its first full year.
The plant is the company's first outside the U.S. Its three-plant headquarters complex in Elk Grove Village, Ill., has 660,000 square feet and more than 600 employees.
``We have made a strategic decision to invest in the Chinese market,'' said Roman Forowycz, executive vice president of corporate sales and marketing, in a May 23 telephone interview. ``The investment allows us to produce additional economies of scale for our North American customers and opens up for us the ability to deliver products to our multinational customers to various places around the globe.''
He said the plant is producing thermoformed PET and polylactic acid containers primarily for baked goods, produce, deli items, meal kits and candy, with all of the plant's output going to U.S. grocery chains and food processors. But the privately held company hopes to start selling products in China in late 2008. He said PET accounts for 90 percent of the production.
The plant began operations in December. Clear Lam held a grand opening of the site May 17.
When film operations commence, thermoformed containers will account for about 70 percent of the plant's output and 30 percent will be film packaging, according to Forowycz. Currently 140 work at the plant, but employment will reach 350 when the site is fully operational.
Long term, he said, Clear Lam's intention is to have separate plants for thermoforming and film operations.
``We will probably put together a separate plant for film operations within the next three years,'' he said.
Forowycz said the China plant was not built to shutter capacity in the United States. ``Our manufacturing capacities in North America must remain at the levels they are at,'' he said. ``We must be able to back up our capacity in China. We see this as a dual-distribution opportunity and having different manufacturing bases for our customers.''
Unlike others that have opted for a partner or joint venture when moving into China, Clear Lam felt it would be advantageous to move into the market by itself.
``We felt we could have better control over quality and that it would be easier to implement systems'' in manufacturing, he said. ``We are moving into China because of the ability to control costs and because it ties in with our customers' plans over the next decade. Our largest customers are looking at consolidating purchases worldwide.''
Also, he said the China operation will allow Clear Lam to enter new geographic markets and do custom runs that do not lend themselves to mass-production operations at its Illinois complex.
Clear Lam China will have mass-production capabilities and the ability to do specialty custom runs of 250,000 or 500,000 for the ``many products in the food industry that are regionalized in the United States'' and for seasonal items.
The China plant includes extrusion and thermoforming equipment, tool and die equipment and computer numerically controlled machines. Forowycz said the film operations will have printing presses, laminators, coaters and slitters.
General Manager Jane Zhang and Michael Drozek, president of the Clear Lam thermoforming division, will oversee the Chinese operations.
``We are focusing on value-added product lines and items and sustainable packages made from renewable resources'' for perishable goods, foods, pharmaceuticals and personal care, said Forowycz. ``That trend has gained tremendous momentum in the last year. This is firmly entrenched in all the Fortune 500 companies in North America.''
Clear Lam makes containers from PLA for the Newman's Own Organics, Del Monte Fresh Produce and for fruit, vegetable and produce containers sold at retailers such as Costco Wholesale Corp. and Wal-Mart Stores Inc.
Forowycz said about 80 percent of film applications are for food, such as prepared meats, snack kits, meats, cheese, pasta and produce. Clear Lam said it has commercialized the only material capable of sealing to PLA containers, even through water and fat contamination.
The demand for sustainable, recyclable and renewable-resource packaging is here, said Forowycz. ``Its growth is dependent on raw material supplies,'' which so far have been limited, he said.