Arista Tubes to build £12.9m plant in US as part of expansion
Arista Tubes is to build a $24 million (£12.9m) manufacturing plant in Danville, USA, as part of a massive global expansion strategy aimed at grabbing a 25 per cent share of the world plastic tubes market.
The Stevenage firm’s ambitious move is an attempt to replicate the huge success of owner, Essel Propack, the Indian laminate tubes manufacturer that acquired Arista in August 2004, which is also driving the expansion.
While Arista holds a leading position in the UK plastic tubes market with a 30 per cent share, Essel is world number one, commanding around a third of the global laminate tubes market.
The expansion will be undertaken in two phases with the first expected to create 145 new jobs for the Virginia city at a former Dan River facility on River Pointe, scheduled to begin operations by this summer.
The state of Virginia successfully competed with New Jersey and Pennsylvania for the project and has already approved an incentive package of at least $600K (£322K) to support it.
Once the first phase of the Danville expansion is bedded down, Arista will set up a fourth facility – it already has one in Mumbai, India – in an as of yet undisclosed territory.
Virginia State Governor Timothy Kaine, said: "It is gratifying to announce 145 new jobs in Danville at a time when the community is facing the prospect of job losses due to Dan River’s downsizing.
"Essel Propack, a corporate partner in Virginia since 2002, acquired Arista Tubes, and encouraged the company to bring its business to Danville."
Ashok Goel, vice chairman and managing director of Essel Propack, said: "This is a major step in our strategic plan for growth in plastic tubes globally and for growth in the US market.
"Plastic tubes is our second horizon for growth, after laminated tubes. We foresee a great future in plastic tubes."
Arista Tubes managing director, Jeremy Paul, said: "Essel started to make laminate tubes in 1984 and it now has about 32 per cent of the world market. We want to do the same with plastics.
"The worldwide market for plastic tubes is at around 7m compared to between 13 and 14bn for laminate tubes, which Essel services from 19 global manufacturing sites. We would need to be similar to the laminates."
Other sites are being investigated, with an unnamed Eastern European country favourite to be next.
Paul said: "We would expect at least one another to be in Europe, most probably in a lower labour cost economy, which we would announce in the next few months."
While a global expansion would grow Essel’s profits, Arista can not afford to sit back, particularly with a nearby manufacturer.
However, a combination of investment and the nature of plastic tube transportation should hold the Herts employer in good stead.
Paul said: "Stevenage will stay competitive. We have just installed a new line to expand in the UK, giving us an extra 50 per cent manufacturing capability and because of the large amount of air carried inside the tubes, long distance, overseas, carriage is expensive."
Arista was founded in the 1920s and is the UK’s leading manufacturer of extruded plastic tubes used in the consumer and personal-care products industry.
It employs about 150 people at Stevenage and an additional 50 in Mumbai.