TONGXIANG, CHINA (Oct. 23, 12:25 p.m. ET) — Tongxiang-based fiberglass manufacturer Jushi Group Co. Ltd plans to start construction on a new manufacturing plant in the United States within the next six months as it looks to build a stronger presence in its largest overseas market.
The location of the plant is being kept confidential as the plans are still subject to approval by the parent company, state-owned China National Building Materials Group Corp., and its shareholders.
Zhang Yuqiang, chairman and president of Jushi Group, announced the plans at a news conference at the company's 18th International Conference on Fiberglass, a three-day annual event hosted at the company's fiberglass factory in Tongxiang.
The proposed new plant would add to the company's existing plants in Tongxiang, Jiujiang and Chengdu, while construction is underway on another plant outside of Cairo in Egypt, to bring the company's production base closer to its European customers. Zhang said the Egypt plant was on track to begin operations in the third quarter of 2013.
The U.S. plans are part of the 19-year-old company's broader bid to strengthen its brand internationally, where it commands a market share of around 18 percent but competes with much older names such as Owens Corning and Johns Manville.
“The setting up and improvement of Jushi's international marketing and sales networks shall be one of the key tasks in 2013,” Zhang said.
Jushi already has sales subsidiaries in Canada, France, Spain, Singapore, India, South Africa, Japan and South Korea.
Alan Gardiner, the chief operating officer of Jushi USA and the president of Jushi Canada, said that Gibson Enterprises, its California-based distributor, had been successfully integrated since being acquired by Jushi in July 2011. Renamed Jushi USA, it was “helping to get the logo in front of customers” by expanding its global subsidiary network.
“We will really focus on the internationalization of this company. We have built a very strong Chinese company but now we want to do the same but on a global basis,” Gardiner said. There were “plenty of acquisitions in the thought process”, he added.
Currently Jushi has the capacity to produce around 1 million metric tons of fiberglass annually and has board approval to extend this to 1.5 million metric tons, with all future growth to be carried out outside of China.
The company had experienced a slowdown in demand in the past year compared with 2011, owing to falling growth in emerging markets and a weakness in the wider global economy, Gardiner said. The fiberglass industry expands at a rate faster than GDP growth, but magnifies a downturn by a factor of up to ten, as consumers hold off from buying discretionary items such as boats and construction projects are put on hold.
“We see a softer market than we saw in the past decade. China was growing double digits, India was [growing at] 7.5 percent and there was 15-20 percent growth in the composites industry. You're not seeing that any more,” Gardiner said.
Fiberglass sales have been affected by a decline in the renewable energy market in the past year, in particular wind turbine blades, led by a collapse in demand from China. However, prospects were brighter in the automotive sector where there was “pent up demand” for cars after people who had put off purchasing vehicles during the financial crisis began buying again, Gardiner said. Regulations to increase cars' mileage capacity are expected to increase the industry's use of composites in building lighter-weight cars.
Jushi is continuing to switch its focus away from its well-established open mould business, which caters to the truck, bathtub, or marine markets, for example, to developing its product lines in thermoplastics.