The rapidly growing Indian market and an emerging business in Africa is prompting American machinery maker Milacron LLC to make investments to expand production significantly at its Indian subsidiary.
The company's Ferromatik Milacron India Ltd. unit will make at least 1,200 machines at its factory in Ahmedabad this year, more than double its production in 2008 and approaching its capacity of manufacturing there, said Jay Woerner, chairman of the Ahmedabad-based company.
“The plastics industry in India is growing very rapidly,” Woerner said in a Jan. 22 interview at the Plastivision trade show in Mumbai.
The company added assembly capacity at its factory in Ahmedabad in early 2010, then machining capacity six months ago. Now it is installing a new paint shop. The projects will help the plant get closer to production of about 1,800 machines per year — what Woerner called the likely maximum capacity of the site.
He declined to disclose financial figures for the investment.
Milacron also bought out the remaining stake of its joint venture partner in FMI, well-known Indian plastics businessman Mahendra Patel, in September. The firm now owns 100 percent of FMI, Woerner said. Patel had owned 10 percent of the operation.
In 2009, when U.S. parent Milacron LLC was in bankruptcy, Patel filed papers in U.S. courts saying he had the right to buy out Milacron from the India venture, but the two sides reached their buyout agreement before the court ruled.
Woerner said both parties resolved their differences and Patel continues to sit on FMI's board.
The growth in the India plant is driven largely by domestic demand, as India's economy grows about 9 percent a year, rather than from Indian firms investing to export. It is showing up in a range of markets, including packaging, consumer products, PVC fittings for construction and PET preforms for the bottle industry, Woerner said.
Most of the production is injection presses, with a small volume of blow molding machines, he said.
The company has also seen, for the first time, the emergence of substantial exports at its Indian factory, with the majority going to Africa, Woerner said.
The company now exports about 30 percent of its production, and last year sent about 200 machines to Africa, he said. African exports have been rising for the last 10 years and hit more than 100 for the last two years.
As with India, the African growth is driven by rising demand for basic consumer products there, with Milacron's sales network there helped by the Indian community's strong roots in Africa, Woerner said.