TPG Plastics LLC is expanding the company's fuel container manufacturing operations to Kentucky in a $14 million project.
The blow molding company, which currently has operations in Willowbrook, Ill., said the new facility in Murray, Ky., will help with distribution and cut transportation costs for customers in the Southeast.
TPG will make gasoline jerrycans for consumer use as well as fuel systems used on products such as leaf blowers and weed whackers, according to Chief Financial Officer Pavel Smyshlyaev.
"We expect to start production in the first quarter of next year," he said. "Initially, in the first year, we expect to have about 50 people working there split between operators, material handlers [and] quality."
Some workers from the Willowbrook plant will split their time between facilities as the new location gets up and running, Smyshlyaev said.
The company expects to eventually employ about 75 in Kentucky.
TPG Group is leasing a new 62,000-square-foot building owned by the Murray-Calloway Economic Development Corp. The location has the ability to expand to 200,000 square feet. The company has the option to purchase the site after 10 years for a nominal amount.
The total value of the project, including the building and equipment, is $14.3 million, including about $7 million to $8 million in equipment.
That equipment is a combination of new machinery as well as some excess machinery not being used at Willowbrook, Ill. The company also has opportunistically purchased machinery over time at attractive prices that will now be moved out of storage and be used in Kentucky.
"It's important for a number of reasons," TPG Group President Saquib Toor said about the new facility. "I think we came into TPG Plastics with almost a mission to grow the business and really bring in the latest technology that's available globally for blow molding.
"This expansion is really important for us to implement that technology and the commitment we made to our employees and investors and our customers to have the latest technology out there, the most efficient equipment and also bring the best quality product to the market," he said.
The company's Willowbrook facility faces building design challenges that make installation of new equipment difficult. But the new Kentucky building has 40-foot ceilings that make placement easier, the company said.
TPG Plastics expects about 80 percent of the production at the new facility will be portable jerrycans used by consumers, with the remaining 20 percent fuel systems used on equipment.
Initial work will include the installation of three blow molding machines, including two already in the possession of the company and one that will be delivered next year, Smyshlyaev said.
The Kentucky Economic Development Finance Authority approved incentives that could provide up to $1 million if TPG Plastics meets employment targets and payment of average hourly wages and benefits totaling $27 per hour. The company is also eligible to receive recruitment, job placement and training services through the Kentucky Skills Network.
Both Smyshlyaev and Toor are principals at Beaconhouse Capital Management LLC, a private investment firm. Beaconhouse acquired The Plastics Group Inc. last year, rescuing the facility from foreclosure under previous ownership.
Beaconhouse also owns Alterra Holdings LLC of Seymour, Ind., which describes itself as a "fast-growing compounder with a core expertise in technical plastics compounding, elastomers and R&D."
TPG Plastics also makes kerosene and diesel fuel cans.