Japanese blow molding machine supplier Nissei ASB Machine Co. Ltd. sees India becoming a more significant part of its future. So, the firm is boosting investment at its Mumbai, India, factory and looking at using that plant to expand into new businesses, such as manufacturing components for other machinery makers, including those in the plastics industry.
Nagano, Japan-based Nissei ASB has seen sales from its Indian operation grow by 75 percent in the last three years, to more than 5 billion yen ($63.4 million), even as corporate sales are still down — about 15 percent, to around 17 billion yen ($218.6 million) — from where they were before the 2008 financial crisis, said President and CEO Kota Aoki.
Nissei ASB said earlier this year that it would spend $22 million to double the size of its Mumbai factory, but now the firm plans to invest about $25 million, mainly due to the extra purchasing power that comes from the strong Japanese yen, Aoki said in an interview at the International Plastic Fair in Tokyo.
The company said it is shipping more units of completed machines from India, for reasons of both cost and quicker lead times.
Nissei ASB first set up in Mumbai in 2000 as a low-cost manufacturing spot. The move has given the firm an alternative as it and other Japanese manufacturers struggle with rising domestic costs and weakened export competitiveness from the strong yen, which is hovering at near post-World War II highs.
“Growth in Japanese manufacturing now is difficult because of the yen,” Aoki said. “Of course we're not going to go bankrupt but it does mean we cannot grow as planned.”
The India plant serves two purposes for the company: Beyond building complete blow molding machines, it manufactures lower-cost machine components that are shipped back to Japan for final assembly into Nissei ASB's Japanese-made equipment.
It's that second capability the company thinks it can build on to branch out beyond blow molding machines into supplying components to other industrial equipment firms, including injection press makers or other plastics-related firms.
Nissei ASB hopes to leverage its 11 years manufacturing in India and the cost advantages in the country, where a skilled machine setter will earn just 10 percent of what their counterparts earn in Japan, said Paul Atkin, a member of Nissei ASB's sales coordination team in Nagano.
Aoki stressed that the firm is studying the possibility of expanding into that business and has made no final decision about it. However, Nissei ASB was touting that capability, called its “India Manufacturing Program,” with dedicated staff answering questions in its sizable booth at the IPF, which was held Oct. 25-29.
The company will make a final decision after assessing market reaction, executives said.
About 2 billion yen ($25.7 million) of the Indian factory's sales come from the domestic market, the company said.
With China's costs rising, Japanese manufacturers are searching for alternative locations, but they remain leery of India, Aoki said.
“Many Japanese companies are afraid of investing in India,” Aoki said. “The biggest reason is the infrastructure is still not up to their requirements and expectations.”
But Atkin said Nissei ASB has adapted to operating in India and no longer sees infrastructure limitations; instead, it sees benefits from a skilled workforce there.
At IPF, the company also discussed future technology developments and unveiled new designs.
For example, Nissei ASB plans to introduce next year what it calls its next-generation single-stage blow molding machine — targeting smaller two-stage machines making small-neck bottles for beverages, shampoo and household products, Aoki said.
It also showed for the first time a version of its ASB 12N/10 machine that now does both injection blow molding and injection stretch blow molding. The machine is currently undergoing trials, Atkin said.
Nissei ASB also showed a commercialized version of technology it introduced at last year's K show in Düsseldorf, Germany. That technology can convert a machine making 5-gallon polycarbonate water bottles into one capable of making 5-gallon PET bottles.
It features add-on equipment to existing lines that provides a “double-blow reheat system,” allowing for the manufacture of reusable, washable PET bottles, which previously was a hurdle for PET in that market.
The add-on equipment allows the continued use of existing blow molding machines so manufacturers do not have to buy new equipment if their customers decide they no longer want to use PC because of health concerns over bisphenol-A.
Atkin said the PET bottles from the machines have now passed all the trials from “major end users,” including filling, transportation and critical drop tests.
“If the market suddenly says no, you can't use PC anymore, they need an option to switch to,” Atkin said.