Milacron Investing $30M In Second India
Satnam Singh Milacron CEO Tom Goeke and Mahendra Patel, vice
chairman of Milacron's India operations, at Indiaplast 2019.
Greater Noida, India - Milacron Holdings Corp. plans to
invest at least $30 million in a second plastics machinery factory in India in
the next two years to handle growth there, the company's top executive said at a
recent trade show in the country.
Currently, the Blue Ash, Ohio-based company operates a plant
in the city of Ahmedabad, in the western Indian state of Gujarat, where it makes
about about 2,400 injection and blow molding presses annually. But that site is
nearing capacity, Milacron CEO Tom Goeke said.
"The existing site could produce up to 3,000 presses yearly
with some more investment. The Gujarat plant could handle the demand up to the
next two years only," Goeke said, adding that "capacity would likely be utilized
fully by 2020 and a new production facility is required in 2021."
He spoke in an interview at the Indiaplast 2019 show, held
Feb. 28-March 4 in Greater Noida, near New Delhi. Milacron was showcasing its
range of presses at the fair.
"The new site involves an investment of between $30
million-$40 million over a period of three years," Goeke said.
The company, which opened the Ahmedabad factory in 1995,
would likely put it close to the current factory to capitalize on existing
"India's evolving dynamics fits in to our growth strategy as
there is a market opportunity to grow, availability of local talent to support
the growth and passion among the people to make that happen," he said.
The second plant would likely be spread over more than
320,000 square feet and add capacity of 2,000 presses annually, ramping up the
cumulative capacity of two Indian plants to 5,000 units yearly. The new plant
could add more capacity over time, he said.
"We are evaluating all options as it would either be
greenfield or a brownfield facility which may involve buying out an existing
operational site," Goeke said.
The company's existing India factory makes injection presses
from 50-3,200 tons and exports about 35 percent of its production.
The company said it supplies about 1,700 presses in the
domestic market and exports about 700 to neighboring countries in the South Asia
Association for Regional Cooperation bloc, such as Bangladesh and Sri Lanka,
along with the Middle East, Africa and the United States. About two-thirds of
its exports go to Africa.
Goeke said India's economic growth and expanding plastic
processing industry drives the investment.
"With India's GDP surging at around 7.5 percent yearly, the
plastic business could go up at 8-10 percent annually as plastic consumption
grows," he said.
In January 2018 Milacron announced it would close a factory
in Malterdingen, Germany, a year ahead of schedule, and said it was evaluating
shifting that work to its plants in the United States and India.
The new plant in India would design and build next generation
all-electric injection molding presses, the company said.
Goeke said the new site would employ about 1,000. The company
currently employs about 1,000 in Gujarat, and another 400 at its Mold-Masters
hot runner subsidiary in Coimbatore, in southern India.
Goeke said the ongoing trade tiff between the U.S. and China
has started to negatively impact the company's sales.
"Negotiations between both the countries are going on. We
will see if it goes longer or is settled by March [or] April," he said. "But we
are anticipating it to be resolved by March."
He said the trade spat impacts the company's China operation,
with slower orders specifically for the Mold-Master business.
"Our equipment business is small, around 350 in China, which
has also become slower," he said, without sharing the exact number.
Milacron posted revenue of $1.2 billion in 2018, with the
India business growing by more than 10 percent and contributing about 10 to 15
percent of the company's total revenue.
At last year's Plastindia 2018 trade fair, Milacron said it
would invest $8 million in expanding existing operations in Gujarat to bring
that plant's capacity up to 3,000 injection presses.