U.S. molder Applied Tech Product Corp.'s cosmetics packaging unit is buying one of its Chinese suppliers, as part of a plan to expand production and solidify its China presence.
Radnor, Pa.-based ATP said Sept. 17 that its Health and Beauty Care unit is buying the factory, in Kaiping, and plans to add 100 injection presses in the next three years, more than doubling capacity there.
ATP also has negotiated an option to buy a majority stake in a second molding plant nearby, from another Chinese supplier. The U.S. molder said it sees growing opportunities making compacts, jars and caps for Estee Lauder Cos., Avon Products Inc., L'Oreal and other cosmetic makers, both for export and for the domestic China market.
ATP has had an exclusive supplier relationship with both Chinese plants for several years, and promoted them as partners on its Web site, labeling one ``ATP Asia'' and the other ``ATP China.'' But it did not have any ownership stake in the operations, causing such customers as Estee Lauder, and others, to express supply chain concerns. To erase those concerns, ATP decided to purchase both firms, said Jack Jiang, vice president of China operations for ATP China's Health and Beauty Care unit.
The U.S. firm purchased the ``ATP Asia'' operation, also known as Guangdong Kaiping Guanxing Health and Beauty Care Packaging Ltd. It was owned by Hong Kong businessman Thomas Wong. Terms were not disclosed.
Jiang said ATP also has an option to buy a 51 percent stake in Kaiping Mali Health and Beauty Care Packaging Ltd., which is owned by Hong Kong businesswoman Mabel Wong. ATP has not exercised that option but intends to, Jiang said.
Thomas and Mabel Wong are not related, he said.
Both facilities are similar in size, each with about 40 injection presses, capabilities for secondary operations like painting, screen printing and hot stamping, several hundred employees and about 215,000 square feet of production space, he said.
ATP expects to expand production of the ATP Asia factory to about 100 presses in three years. ``We are confident we can grow the business fast,'' Jiang said.
The majority of its cosmetic and health-care packaging products are exported to the United States and Europe, but the firm is looking to hire a China market sales director to tap into the domestic market, Jiang said.
Recent product quality scares from China have not impacted ATP because it imports its raw materials, mainly glycol-modified PET, ABS, polycarbonate and styrene acrylonitrile, from Sabic Innovative Plastics and Dow Chemical Co., Jiang said.
ATP's HBC unit inherited the relationship with the two Chinese plants from its acquisition of Tri-Molded Plastics Inc. in Bay Shore, N.Y. ATP closed Tri-Molded's manufacturing plant several years ago and shifted its work to China as a cost-saving measure, Jiang said.
ATP's HBC unit also has U.S. production in Stratford, Conn. It said on its Web site the HBC unit has a total of 120 presses, ranging from 40-600 tons of clamping force, in China and the United States, plus thermoforming capabilities.
The company's other division, its Engineered Rubber and Plastics Group, said in June it was negotiating with another firm in South China to set up a medical device manufacturing joint venture. Jiang said those talks continue.