HILLIARD, OHIO (Aug. 29, 9:55 p.m. ET) — Advanced Drainage Systems Inc. is spending $10 million to boost production at its Midwestern factories that make corrugated polyethylene pipe and other drainage products.
ADS Chairman and CEO Joe Chlapaty said the investment covers all 14 factories in the region — 13 in the Midwestern United States and one in Ontario, Canada — but much of it is centered at plants in North Dakota, Illinois, Minnesota and Iowa.
The $10 million total includes three plants ADS has already announced: in Hampton, Iowa; Buxton N.D. and Heidelberg, Ontario.
“This capital expansion will significantly increase production capacity and add operating efficiencies to our operations,” Chlapaty said. The investment includes several new production lines — new extrusion lines and downstream equipment such as corrugators — and upgrading existing lines, he said.
Specific details were not available about the new equipment. According to Plastics News' ranking data, ADS runs an estimated 150 extrusion lines.
Advanced Drainage Systems, based in Hilliard, Ohio, is the largest maker of corrugated plastic pipe. The company also makes StormTech-brand underground stormwater chambers and Nyloplast drain basins.
Chlapaty said sales should be about $1 billion, for the fiscal year that will end March 31, 2012.
Chlapaty, in a telephone interview Aug. 29, cited growing demand in the Midwest for agricultural drainage pipe and pipe and related products for infrastructure projects such as highway drainage and sanitary sewers. One of Advanced Drainage's newest products, Sanitite HP polypropylene pipe, comes in dual-wall or triple-wall, with a smooth interior, is designed for sanitary sewer use.
ADS needs more production capacity to serve the agriculture market, where buried corrugated PE pipe is used for field drainage. More grain planting to meet the worldwide shortage, and ethanol production boosting corn prices are factors that have increased demand for both new farmland and more efficient existing farms, Chlapaty said. For example, to boost crop yield, farmers are adding more lateral drainage pipes to improve their current fields, he said.
“We're experiencing market share penetration with these products, along with the agricultural demand, and it has created a strong market for us in that Midwest area,” he said.
Tighter government budgets are slowing infrastructure spending. But Chlapaty said ADS has picked up market share there as well, by explaining to public officials that corrugated plastic pipe has a lower cost to install than competitors such as concrete pipe, including labor cost.
ADS runs 53 domestic and international plants for all products, including 43 pipe extrusion factories, according to Chlapaty.
He said ADS will continue to expand its production capabilities and add new plants in all geographic areas. According to a list of Midwestern plants provided by the company, ADS has four factories in Ohio, three in Iowa, two on Minnesota and one each in Illinois, Indiana, Michigan, North Dakota and Ontario.
“Our goal is to increase manufacturing, enhance local inventory and expedite deliveries,” Chlapaty said.
