Russell Johnson was what you might call an early adapter to China. He signed his first contract there back in 1980 with a state-owned shipbuilding company to make food-processing equipment for export, and has maintained close ties since.
Fast forward 27 years, and again he considers himself an early adapter in one part of the Chinese plastics industry: He recently opened an injection molding plant in Wuhan. But rather than focus on the low-cost stuff China's known for, he's targeting high-performance, hard-to-handle resins like polyetherimide and polysulfone.
His company, Pittsfield, Mass.-based China Array Plastics LLC, opened its small, 15,000-square-foot factory late last year, with just one injection press. He said his experience sourcing those high performance plastics in China over the past decade has convinced him the market for local molding of plastics like polyetheretherketone, which can require unique engineering skills, is ready to grow.
``People are saying they are getting a lot of pressure from customers to move production to China, but in the high-performance area, they aren't sure how to do it,'' Johnson said.
He said the new company has assembled a team of managers and consultants in the U.S. and China, including some with a background in product development engineering from places like GE Plastics in Pittsfield. Their goal is to tap into smaller product manufacturers, those with annual sales between $50 million and $200 million.
Those companies are looking for a way to test China as a place to cut costs for some of their more sophisticated parts, he said, though they are worried about finding good quality and protecting their intellectual property. Because China Array is U.S.-owned, it can be taken to court in the U.S., helping to protect their IP, he said.
His company assures its customers that if they move production to his firm, they get U.S.-quality engineering support and quality control, and ``we keep our mouths shut,'' Johnson said.
For now, the operation remains in its infancy, and Johnson said he wants to be fiscally conservative, growing production to 25 or 30 injection presses in five years, funded by internal growth. He also wants to develop a mold shop.
The company currently breaks even because it brought molding it used to outsource in-house, Johnson said.
Most of the firm's work is targeted at global manufacturers that are exporting to the United States and Europe, although China Array is working on its first program to make an engineering performance product for the Chinese market, and hopes to start production of that later this year, said Carl Olson, vice president sales and marketing and former longtime GE Plastics development engineer.
The company sees its Wuhan location in central China as an asset, even though Johnson said it is far from the coastal cities where most of the multinational firms congregate.
Its location in Wuhan is part happenstance: Johnson started doing business there in 1980, simply because that was the base of his Chinese partner, China State Shipbuilding Corp., then one of the few firms allowed to do business with the West.
As business deepened, Johnson helped a local government in Wuhan start a factory that made his stainless-steel food-processing equipment. Since then, China Array has shed its other businesses but kept plastics.
One of the reasons the company remains in the city is because much of its staff is from that area, including General Manager Li Qinren, who has worked with Johnson since Li was a CSSC official in 1985.
Wuhan has some advantages for recruiting, Li said. Its strong universities have made it relatively easy to find professional talent, particularly Wuhan natives who left to pursue work in the coastal areas but now want to return home as the city develops, Li said.
While the company would not talk specifics, it also said Wuhan's labor costs are probably two-thirds of those in coastal cities like Shanghai and Shenzhen.
Wuhan also is home to one of the country's largest carmakers, Dongfeng Motor Group Co. Ltd., its joint venture with French auto- maker PSA Peugeot Citroen and suppliers such as Lear Corp. and Valeo SA.
But Olson said China Array at the moment is not focused on the ``overly competitive automotive sector,'' preferring instead to look at markets such as medical, electronics, fluid handling and aerospace.
Johnson said it could take the domestic Chinese companies five to 10 years to have the kind of deep skill base needed for the application engineering and resins he is focused on. One key for China Array will be building its own talent base in China, he said.
``Those engineers are so critical,'' Johnson said. ``We hope to develop that. Our future will be turned on how well we develop that.''