Fresh from its purchase of the intellectual property of bankrupt plastics machinery maker HPM, China's Guangdong Yizumi Precision Machinery Co. Ltd. is moving ahead with plans for a service operation for HPM machines and for a technical center in the U.S.
Yizumi, based in Foshan, China, attracted attention in March when it bought the IP, customer lists and brand name of HPM in a bankruptcy court auction and said it planned to reintroduce HPM injection molding and die cast machines.
In an interview at the Chinaplas trade fair, held May 17-20 in Guangzhou, Yizumi CEO Richard Yan said his company plans to buy a 20 percent stake in U.S. firm Bivouac Engineering and Service Co., which will become a service center for Yizumi machines.
Bivouac owner William Flickinger is a former HPM president. Yan said the plan must be approved by the Chinese government because it is an overseas investment.
Yan said Yizumi has an option to later buy 100 percent of Bivouac, based in Marion, Ohio.
Yizumi and Bivouac now plan to recruit some former HPM engineers, and Yizumi will set up a U.S. technical center staffed with those engineers and with Chinese engineers from Foshan.
The center will probably have six or seven people on its engineering staff, and will work on combining HPM designs with Yizumi machines, and on developing new technology, Yan said. The company probably will establish the center near the former HPM factory in Mount Gilead, Ohio.
Initial development efforts will focus on die-casting machines, but will expand to injection molding machines next year. Yizumi has set up a formal U.S. subsidiary called HPM North America Inc., Yan said.
For die-casting machines, HPM has the technology to make aluminum engine blocks, something that no Chinese die-casting firm can currently manufacture, according to Yan.
On the plastics side, Yan said HPM's technology in large-tonnage presses could help Yizumi develop a better product to go after the market leader in large machines in China, Ningbo-based Haitian International Holdings Ltd.
“We need effort,” Yan said. “One important point is, we have to have the right people.”
Yan said HPM's technology and customer lists will help Yizumi significantly expand its global presence.
He said he believes one of the reasons HPM went bankrupt is that it remained too localized in the North American market and did not internationalize its operations when German, Japanese and other U.S. firms were doing that.
Yizumi's customer base is now internationalizing, as China's rising costs convince some of them to relocate operations to Vietnam and Indonesia, and Yizumi wants to be better-positioned for that, he said.
The company also wants a much stronger presence in the U.S. and some European markets, Yan said.
Yizumi claims to be China's largest die-casting machine maker and the sixth-largest injection machine maker. It also plans to analyze HPM's extrusion technology for opportunities, according to Yan.
The company is currently building an 872,000-square-foot campus in Foshan for making plastic injection presses.
That facility, which will open in 2012, will double Yizumi's capacity for molding machines to more than $153.8 million in sales annually. The company projects sales of about $84.6 million in plastics molding machine sales in 2011, with growth of about 30 percent projected for the year.
The firm saw sales of injection presses increase 70 percent in the first quarter of the year, but it has slowed considerably since then as the Chinese government has tightened credit in an attempt to slow down the economy, Yan said.
The company's plastics machinery sales grew 120 percent in 2010, while the industry average for injection molding machine makers was 62 percent.
However, that kind of growth is not sustainable, he noted. Some of it was driven by the automobile industry, but that has slowed as the Chinese government has taken away incentives for car purchases, Yan said.
The firm also still plans an initial public offering on the Shenzhen stock market, probably in 2012, he said.