Trying to keep pace with what it said is strong growth in China, Swiss plastic pipe maker Georg Fischer Piping Systems Ltd. is spending 100 million yuan (US$14.1 million) to set up a new factory in Beijing this year.
The Schaffhausen, Switzerland-based company said the Beijing plant will double its capacity in China and let it better tap the market for polybutylene and polyethylene raised-temperature plumbing and heating pipe in homes in north China.
It also will free up capacity in its existing Shanghai facility for additional markets, including heating systems in other parts of China, and end markets such as industrial piping for semiconductor factories and wastewater treatment plants, said Daniel Fink, president of GF Piping Systems Asia Pacific Ltd. He spoke in a March 12 telephone interview.
Fink declined to disclose production capacities of the new factory.
On its Web site, the company said it has about 300 million yuan (US$42.2 million) in annual sales from the Shanghai operation, with growth over the past decade averaging 57 percent a year. It also said the Beijing plant will alleviate four years of capacity bottlenecks in its China operations.
Fink said the company does, however, expect a moderating of growth in China's macroeconomy and some of GF's business sectors this year, but said it still expects strong growth.
Parent company Georg Fischer AG reported Feb. 26 that the GF Piping Systems unit worldwide saw sales grow 10 percent in 2007, to 1.09 billion Swiss francs (US$1.06 billion), and profit margins in the unit rose four-tenths of a percentage point to 11.5 percent. That growth offset disappointing results in its GF AgieCharmilles - which makes electric discharge machining and milling machines - and GF Automotive units.
GF Piping said a 21 percent increase in sales in China, a figure that includes some joint venture pipe making operations, was a key factor in driving growth in the piping systems unit.
The company said globally, its piping sales slowed down slightly in the second half of the year, particularly from a slowdown in the European real estate market, but Fink said China did not see the same slowdown.
Fink said the new Beijing plant will let the company shift more of Shanghai's resources to the heating and plumbing markets in Central and Eastern China.
He said GF will also target the semiconductor and wastewater treatment industries in China, and the company said it is also seeing more demand for piping for solar cell systems globally, which it said is a strategic fit with its semiconductor segment.
Fink said the Piping Systems unit has also recently established a small production plant in Malaysia, in part to help it open doors for government contracts. The company also said it has started to make piping components for gas utilities locally in India.