Buffalo, N.Y.-based Caplugs LLC is starting a manufacturing operation of plastic plugs and caps in Shanghai. The company made the expansion by acquiring the assets of an existing injection molder.
The 60,000-square-foot Shanghai facility employs about 170 and houses 37 injection presses with clamping forces from 60-400 metric tons.
``It was always our intent to manufacture and supply products from China,'' Chief Executive Officer Tony Herbert said in a telephone interview.
The company opened a sales and distribution office in Shanghai in 2007 to begin developing knowledge of the local market, and then looked for options to expand.
Leading the Shanghai operation Caplugs (Shanghai) Plastic Products Ltd. is General Manager Jinsheng (Jason) Lv, who joined the company in July 2007 and received training in the U.S. for several months before he returned to Shanghai and established the local team.
``Compared with green-field development, the acquisition enabled us to start manufacturing sooner, with the machinery, molding process and toolmaking capabilities ready,'' said Tom Valentine, vice president of sales and marketing.
Acquisition also helps to bypass obstacles potentially caused by cultural difference, Herbert added. ``It's a very different way of doing business [in China]. By having an existing business where you acquire the skills and expertise, you really jump up the learning curve dramatically.''
Last month, Caplugs completed the acquisition of all assets except real estate of Shanghai Jin Ding Plastics Co. Ltd., which is now the landlord of the facility.
Caplugs also has retained some of Jin Ding business. Herbert emphasized that the Shanghai operation will mainly the Chinese market, as well as the rest of Asia.
The tool-making division in Shanghai will spend the next two to three years building a large tooling library for Caplugs' proprietary products.
While Caplugs's portfolio in the U.S. is well-diversified across different end markets, the company will primarily target the automotive market in China in the short term. Although the Chinese auto market already is experiencing a slowdown, Herbert still sees tremendous growth potential.
``Many of our applications don't have ready suppliers. Particularly, the larger international companies are looking for suppliers with global footprint,'' he said.
With a total workforce of 450, Caplugs runs production facilities in Buffalo; Erie, Pa., and Los Angeles. The company said the Erie facility just completed a million-dollar cooling system upgrade.