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VEM to open mold making plant in Bulgaria

By Steve Toloken | PLASTICS NEWS

  VEM President Marc Weinmann

Mold maker VEM Tooling Ltd. is opening a new factory in Bulgaria in a joint venture with German injection molder Mecalit GmbH Kunststoffverarbeitung and is planning additional investments in India and Thailand.

VEM, which is German-owned but has its factories in three Asian countries, said the move to Bulgaria next year is in response to European customers, including Mecalit, who want to source molds closer to home.

It is investing at least $1.5 million in the plant in Plovdiv, Bulgaria, which will be located at an existing Mecalit factory. It's VEM's first facility outside Asia.

"I do have a lot of European customers who, 10 years ago, were very excited to go to China or to Asia, who now tell me 'Ah, we'd rather be in Eastern Europe or stay in Europe,'" said President Marc Weinmann.

VEM, which has operations in China, Thailand and India, is also continuing to make more investments in Asia. Part of that is driven by what it says is a shift away from China as a source of lower-cost molds.

The company, for example, is expanding a factory in Pune, India, that it opened last year. It's doubling the floor space of the operation to 3,000 square meters by renting additional space and now has 85 employees, up from 35 when it opened, Weinmann said.

"I can still see China costs going up for the next few years, and India is a growth story itself," he said, noting demand from carmakers such as VW who want to localize production in India for cars made for the local market.

"We're going to grow no matter but it will happen in the near future that we will move some work from China to Bulgaria and to India, for our very cost-sensitive customers," Weinmann said.

VEM is also planning to open a new facility in Thailand next year, where it does both mold making and injection molding in a facility in Rayong that opened in 2010, Weinmann said.

The new Rayong plant, which is also about a $1.5 million investment, will have a clean room for medical molding. Weinmann said VEM is seeing more demand from local Thai customers, in contrast to its operations in China, which are almost entirely export-oriented.

The China plant, in the southern city of Shenzhen, is VEM's oldest and largest mold making factory, with about 200 employees.

The Chinese plant remains competitive but needs to automate and upgrade to handle China's rising costs, Weinmann said. The Shenzhen plant will lead company-wide automation planning.

"We will be automating China first, and then what we learn from China we pass on to the other factories," he said.

China will become a more technology-driven operation.

"We see shifts going away from China, and if you want to stay in China, you have to specialize," he said. "So, we will specialize in China in smaller, high-precision molds. We have to go with the flow, and the flow is away from China to Europe and India."

The company, which opened its first factory in Shenzhen in 2003, launched its current period of heavy investment with the India operation last year, Weinmann said, because changes in the industry are driving both consolidation and higher technology.

"We have to get bigger; there's no other choice but to get bigger," he said.

The company has about $15 million in annual sales now, with global production of about 500 molds, but it is targeting $25 million in annual sales in five years, Weinmann said.

Weinmann also believes that technology, like 3D printing of steel molds and more general automation, could dramatically change the mold making industry in the next five years, making low-cost labor less important and elevating capital and technology.

"Disruptive technologies are coming everywhere," he said. "It's a little like the self-driving cars, there's going to be a major change.

"Or the electric cars, to go from combustion engines to electric engines, we're going to see similar disruptions in tool making."


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