Jushi Group Co. Ltd. sees windmills in its future.
After 16 years of growing its business on cheap prices and exports, the Tongxiang-based fiberglass manufacturer is tweaking its strategy to include more emerging markets and focus more heavily on the environment.
The company's tactics are a response to some of the new realities of the fiberglass industry, according to Zhang Yuqiang, chairman, president and founder.
As carbon emissions and pollution standards become more and more important to China's leaders, manufacturers will be pressed to improve their processes quickly. Those who can't make the changes will be working at a disadvantage, he said.
If the company cannot control the pollution, the pollution will kill the company, said Zhang, who, in addition to government regulations, has his eyes on energy prices. Natural resources are rare in China, so we import much of our energy, he said.
In the future, he expects that energy prices will increase.
Zhang has been preparing himself for these changes for the past five years. He moved to an expanded facility in Tongxiang, a complex that employs 6,000 workers, in part because consolidation would help the company save money. He constructed a steam-recycling system that re-uses the heat initially used to melt the glass in a hot-air drying system.
By preserving the hot air, Zhang said he can save millions of yuan annually.
Jushi's new product, E6 Enhanced Glass Fiber, also boasts a process with no wastewater, no sulfur emissions and fluorine emissions well below U.S. standards, the company said.
This is also becoming a necessity with U.S. clients, said Joe Peng, president of Gibson Enterprises Inc., which is Jushi's distributor in the United States. People are more concerned with the environmental impact of what they're buying.
The improvements that Jushi has made to its Tongxiang plant are echoed in the company's other China-based facilities in Chengdu and Jiujiang.
In addition to creating more environmentally friendly products, Jushi is looking toward a future where China and emerging markets play a greater role. When the company was started in 1993, Zhang was determined to focus on the U.S., which is the world's largest consumer and producer of fiberglass.
The standards were the highest in the U.S., he said. I knew if we could sell our product there, we could take it anywhere in the world.
During the financial crisis, other parts of the world began to play a larger role in Jushi's business.
Fiberglass has a unique set of challenges when it comes to a drop in demand. The furnaces used in production are huge, and with the flow of molten glass driven by gravity, there is no way to reduce capacity without incurring huge costs.
There really is no shutdown of these things, said Ron Adams, vice president of Irwindale, Calif.-based Gibson Enterprises. You either keep them running or close them forever.
When demand dropped in late 2008, Jushi began expanding its business in China. Domestic sales have increased 20 percent in 2009, Zhang said. Our overseas sales have decreased.
Zhang expects domestic sales will continue to increase, driven by government stimulus measures in industries including automotive, construction and petrochemical. Jushi also is hoping to build its presence in the wind industry during the coming year.
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