The world's largest maker of corrugated high density polyethylene pipe is using the global economic slowdown to bolster its business.
Hilliard, Ohio-based Advanced Drainage Systems Inc. is opening new plants, acquiring new businesses, and starting joint ventures with foreign multinationals, all in an effort to emerge from the recession an even more dominant company than it was leading up to it.
ADS recently invested undisclosed millions in projects including:
* Acquiring Hayfield, Minn.-based Century Plastics Inc., a corrugated HDPE pipe maker with 12 employees that serves the agriculture industry in Minnesota, Iowa and Wisconsin.
* Setting up a joint venture with Brazilian PVC pipe maker Tigre SA called Tuberias Tigre-ADS Ltda., which will be based in Santiago, Chile.
* Opening two plants in Canada.
The Canadian plants are part of an ADS effort to get manufacturing closer to customers, said Joe Chlapaty, ADS' chairman and CEO, in a recent telephone interview.
ADS still is negotiating for the two plant locations, and officials would not say whether they were building new factories or acquiring existing facilities.
One of the plants will be in central Ontario and the other will be near Drummondville, Quebec, where ADS already has a distribution yard. The plants will also be corrugated pipe-making facilities.
These two plants are proof that we're serious about being a Canadian producer of HDPE pipe, Chlapaty said.
The Century Plastics acquisition gives ADS more single-wall agricultural drainage pipe capacity.
It fits the roots of the company, which have been good to us, Chlapaty said by phone.
The Tigre joint venture will include existing ADS plants in Lampa and Antofagasta, Chile. The JV will extrude corrugated HDPE pipe in diameters up to 48 inches and solid wall PVC pipe up to 24 inches, beginning in the third quarter of this year.
The joint venture also will open up a new facility in Rio Claro, Brazil, in the fourth quarter.
Together with Tigre, we'll be able to bring our products to South America, Chlapaty said. There is huge potential for our product domestically and internationally.
Both Chlapaty and Tigre President and CEO Evaldo Dreher view infrastructure as an advantageous market to be in.
Throughout South America, we see funds being dedicated to infrastructure projects, such as new ones being developed in cities that will host the FIFA World Cup [for soccer] in 2014, Dreher said in a news release. Storm water projects are being designed, housing, roads and airports are being built, and commercial buildings and shopping centers are abounding. These all need our products.
Chlapaty concurred in a June 9 telephone interview.
Think about all of the infrastructure that is going to be replaced sanitary sewer, storm systems. We believe we're well-positioned to take advantage, he said.
Good business practices are allowing ADS to make strong moves in a down economy, Chlapaty said.
I say this with humility: We've been a very successful company since our inception. We have a strong financial position. Strong earnings, cash flow, balance sheet and a great relationship with the credit markets, he said.
We believe now is the time to utilize our strengths and accelerate our growth. We're more bullish than we've ever been about the future of our company and industry.