Hose extruder Tek-Tube LLC is leaving Las Vegas and sharing space with PVC compounder Roscom Inc. in the Philadelphia area, as of Jan. 1.
The move partly was spurred by high shipping costs, according to Nick Lynch, president and part owner of both companies.
``We were shipping raw material from Philadelphia to Las Vegas, and then shipping hose back to our East Coast customers,'' Lynch said in a Dec. 19 telephone interview. ``It was ridiculous, because 40 percent of our business is on the East Coast.
``For products shipping to California, we were paying $3,800 to send a truck from Philadelphia to Vegas to California, when shipping the hose direct from Philadelphia would have been $1,800,'' he said. ``We also were seeing price increases of 30-40 percent on our raw materials, and you can't get that kind of increase in the spa market.''
Tek-Tube first moved four extrusion lines from Las Vegas to Roscom's 84,000-square-foot site in Croydon, Pa., in 2006. The remaining six lines made the move Nov. 4, and the firm will resume production Jan. 1. Lynch has leased Tek-Tube's 88,000-square-foot Las Vegas plant to Rainaid Inc., a maker of plastic parts for irrigation. Tek-Tube had operated in Las Vegas since being founded in 1999.
The move has created 23 new jobs in Croydon, with another five spots to be added by the end of 2008. On an annual basis, Lynch said the move will save more than $1 million.
Roscom supplies Tek-Tube with the flexible PVC compounds used in its hose, amounting to 65 percent of Tek-Tube's raw material needs. Roscom, which employs 55 and operates five twin-screw compounding lines, posted sales of $44 million in 2007, with Tek-Tube checking in at $13 million.
Lynch said sales at both firms were up in 2007, but sales volumes in pounds were down because of a slowdown in the building and construction market. Tek-Tube also is a major supplier to the pool and spa market.