Buffalo, New York-based Caplugs LLC is starting a manufacturing operation of plastic plugs and caps in Shanghai. The company made the expansion by acquiring the assets of an existing injection molder.
The 5,600-square-meter Shanghai facility employs about 170 and houses 37 injection presses with clamping forces ranging from 60 to 400 metric tons.
"It was always our intent to manufacture and supply products from China [for the Chinese market]," Chief Executive Officer Tony Herbert said in a telephone interview.
The company opened a sales and distribution office in Shanghai in 2007, starting to develop knowledge of the local market and then look for options to expand.
Leading the Shanghai operation -- Caplugs (Shanghai) Plastic Products Ltd. -- is General Manager Jinsheng (Jason) Lu, who joined the company in July 2007 and received training in the U.S. for several months before he went back to Shanghai and established the local team.
"Compared with greenfield development, the acquisition enabled us to start manufacturing sooner, with the machinery, molding process and tool-making capabilities ready," said Tom Valentine, vice president of sales and marketing.
The acquisition route also helps to bypass obstacles potentially caused by cultural difference, Herbert added. "It’s a very different way of doing business [in China]. By having an existing business where you acquire the skills and expertise, you really jump up the learning curve dramatically."
Last month, Caplugs completed the assets acquisition except real estate of Shanghai Jin Ding Plastics Co. Ltd., which is now the landlord of the facility.
Caplugs also has retained some of the Jin Ding business.
"Many of their custom molding clients were also Caplugs’ international customers," Herbert said. He emphasized that the Shanghai operation will mainly be the Chinese market, as well as the rest of Asia.
The tool-making division in Shanghai will spend the next two to three years building a large tooling library for Caplugs’ proprietary products.
"I firmly believe that the China presence will help and grow the existing customers of the U.S. operation," Valentine said.
While Caplugs’ portfolio in the U.S. is well-diversified across different end markets, the company primarily will target the automotive market in China in the short term. Although the Chinese auto market is already experiencing a slowdown, Herbert still sees tremendous growth potential.
"Many of our applications don’t have ready suppliers. Particularly, the larger international companies are looking for suppliers with a global footprint," he said.
Caplugs is a division of privately held Protective Industries Inc., which acquired Niagara Plastics Co. back in 2003, kept the trade name, and integrated its manufacturing with Caplugs. Protective Industries also makes chillers and temperature-control systems at its Mokon business division.
With a total workforce of 450, Caplugs runs production facilities in Buffalo; Erie, Pennsylvania; and Los Angeles, California. The company said the Erie facility just completed a million-dollar cooling system upgrade.