Chinese-Canadian wood-plastic composite maker Shenyang Grace World Composite Materials Co. Ltd. said it plans a massive 1.3 billion yuan (US$191 million) expansion that, if fully realized, would make it one of the largest such manufacturers in the world.
The company, based in Shenyang, said it plans to use money from U.S. and European investment banks to build three mega-factories in China by the end of next year that will give it a capacity of about 661 million pounds a year.
Shenyang Grace World, a joint venture of Canada Kind Corp. in West Vancouver, British Columbia, and Chinese state-owned oil company Sinopec, currently has production capacity of just 13.2 million pounds, at one factory in Shenyang.
With the expansion, the company said its capacity would be in the ballpark of Trex Co. Inc. of Winchester, Va.
Grace World plans to build the factories in Shenyang, Wuhan, and Gaoyou, said General Manager Fang Bao Min in an interview at the China International Forum on Wood Plastic Composites, held Oct. 10-11 in Shenyang.
Some industry executives at the forum privately questioned whether the company realistically can move ahead with all of the massive expansion, given the downturn in the U.S. building market, signs of a slowdown in exports from China's wood composite industry, and the uncertain world economy.
Without commenting specifically on Shenyang Grace World, one Chinese executive at the forum said that since wood composites is an industry favored by the government, it can be easier for companies to hold on to land if they say they will be putting in a wood-plastic composites factory.
But Fang said the firm plans to push ahead. Speaking through a company-provided interpreter, he admitted, though, that economic conditions might delay the project. The firm had earlier hoped to launch the project this year, but now targets the end of next year for completion, he said.
``The only possibility is to slow us down,'' Fang said. ``It won't stop it.''
The company appears to be banking on continued rapid growth in China's WPC industry.
Some estimates at the conference said WPC use in China could jump from about 330.7 million pounds of production this year to 551.2 million pounds by 2010, fed in part by China's building boom.
Grace World's expansion roughly will double the current production of China's entire wood composites industry.
The Shenyang plant will have capacity of 132.3 million pounds, and cost 320 million yuan (US$46.9 million), while the other two factories will have capacity of about 264.6 million pounds and cost 500 million yuan (US$73.2 million), the firm said.
Fang said the industry has not seen any significant slowdown, because it's still new in China, with tremendous growth potential. China's wood-plastic composites market remains only 20 percent of the size of the American market. The market is favored by the government as an environmentally preferred industry because it uses wood, agricultural and plastic waste to make its products.
Fang said the company plans to put about 15 extrusion lines in each factory, five Cincinnati Milacron models and 10 Chinese-made extruders.
Company officials said they are targeting the expansion at both domestic and overseas markets, with a growing focus on domestic markets.
Company officials did not disclose much about their market plans, but said among the applications targeted are cases and packaging to transport military missiles, as well as some unspecified applications for Chinese state-owned oil companies Sinopec and PetroChina Co. Ltd. of Beijing.
Grace World manufactures pallets, outdoor flooring, packaging and products for automotive and military applications, with some of it exported to the United States and Europe.
The firm's majority owner, Canada Kind, has four other wood composite joint ventures in China with government-controlled companies.
Two of the factories are in Guangdong and are also with Sinopec. In Shandong, it has a venture with a state-owned power company, and in Xinjiang it has a joint venture with an army construction unit.
Canada Kind owns only about a 25 percent stake in each of those four ventures, but owns about 80 percent of Shenyang Grace World, company officials said.
Canada Kind was set up in 1994 in Ontario, and according to its Web site, manufactures and sells medical equipment and machinery used in recycling.
Fang declined to name the company's outside investors in the expansion but said they are American and European banks and other investors. About 15 percent of the funding for the expansion will come directly from Canada Kind, he said.