Hong Kong-based plastics processor Ace Corp. Holdings Ltd. has established a joint venture with a Mexican injection molding company, part of a strategy to establish a global presence and to lessen its risk from rising costs in China's coastal manufacturing zones.
Ace has acquired 50 percent of Monterrey, Mexico-based Isgo Manufacturing SA de CV, which has two factories in Mexico and more than 50 injection molding machines targeting the automotive, home appliance, packaging and electronics markets.
This is the first move outside China for Ace, which had announced a partnership in Ireland in 2008 with Irish mold maker Avenue Mould Solutions Ltd., but did not complete that venture.
Isgo does about US$20 million in annual sales. For the much larger Ace, the move will help it serve its mostly global customers in the North American market, and add capabilities for providing larger parts, an area where Isgo is strong, said Ace CEO Jack Yeung.
This is a big step for us, Yeung said in a Sept. 17 interview at the Asiamold trade fair in Guangzhou. Our customers are very global. They are satisfied with our work in China and there are opportunities to do more in Mexico for them.
I can see the growth in manufacturing in Mexico, he said.
More and more of Ace's customers want to broaden their sourcing base, being wary of depending too much on one country for manufacturing such as China and the risks of costs rising from rising currency and wages, Yeung said.
Ace has expanded globally in recent years, establishing an engineering and design office in the United Kingdom and, last year, an office in India.
Yeung said the firm is interested in manufacturing in India, but he did not suggest any imminent move.
India is a place I really want to grow, he said. I'm waiting for the right opportunity.
The Isgo investment also includes a design and engineering office in Detroit.
Isgo employs about 350 in factories in Monterrey and San Luis Potosí, Mexico, and has 53 injection molding presses of up to 1,200 metric tons of clamping force. It also does blow molding, toolmaking and assembly.
The company supplies parts to four of the world's largest appliance makers and five automobile brands, according to its website. A predecessor company, Polienvases SA de CV, was founded in 1967, and Isgo was formed in 2002.
Isgo's larger presses will complement the smaller range of Ace machines, which tend to top out at about 500 metric tons. The wider range, for example, will let the firms supply larger auto parts in Mexico and still be able to ship smaller components from China, Yeung said. He said the global expansion is part of a two-pronged strategy for Ace, with the other half focused on China's domestic market.
Ace recently announced plans for a new manufacturing plant in China's Anhui province to focus on the country's internal market. The firm's manufacturing right now is heavily focused in South China, an area that has seen factory closings and relocations in recent years.
Ace will have total annual sales of about US$100 million with the Isgo joint venture. The company is one of Hong Kong's larger custom molding and plastics manufacturing firms but that sector has been hard hit by the slowdown in North American and European markets. Most of Hong Kong's other plastics firms have taken a much more cautious approach on investments than Ace.
But Yeung said Ace has been financially stability, benefiting from good customers that committed to us with long-term projects.
He added that he believes other Chinese plastics firms will step up their pace of overseas investment. I think this is the moment for the Chinese to go out, he said.