MUMBAI, INDIA — China's rapidly rising labor costs are proving to be an opportunity for some — Taiwanese plastics equipment maker Forwell Precision Machinery Co. Ltd. is building a new factory and looking at an initial public offering to tap what it says is growing demand for more automated mold equipment.
The company is investing US $10 million in a new 36,000 square meter manufacturing and research facility in Huai'an, Jiangsu province, which it expects to open in mid-2014, and plans to follow that with a stock offering to raise money for additional expansion.
“Because the labor costs are going up [in China], factories have to go for more advanced systems for the future,” said Victor Lim, Forwell's acting general manager, in a Dec. 13 interview at the Plastivision trade show in Mumbai.
The company makes equipment for automating mold changes, and plans for the new China factory to focus on developing more automated mold storage and repair systems for the China market, Lim said. It has factories in Changhua, Taiwan, and Ningbo, China, and employs a total of 160 in the two facilities.
The demand for more automation led to Forwell sales globally rising about 10 percent in 2012, with projections that it will be close to the 15 percent target it's set for this year, said Lim.
The slowdown in the growth rate in mainland China has hurt business, he said, although market conditions are improving in the current quarter.
It's not been decided how much money the company would plan to raise in the IPO, which is likely to be on a stock exchange in China, Lim said. The listing would happen after the new factory opens and the company has stabilized operations there, he said.
The Huai'an factory will employ about 200 people. About 60 percent of Forwell sales are in the plastics injection molding area, with the remainder in metal forming, but the plastic part of its business is growing faster, Lim said.
Its new mainland China factory will focus on the domestic China market, while its Taiwan operation handles that market and global exports, he said.