GRAND RAPIDS, Minn.-Rubber track components maker ASV Inc. plans to meet future growth by doubling capacity at its Grand Rapids production facility by the end of the year.
The project will add 120,000 square feet to the existing 100,000-sq.-ft. plant, and will cost between $5 million and $5.5 million, said Lisa Walsh, ASV director of investor relations. The company will break ground within the next month, and expects to complete the addition by the fourth quarter, she said.
The expansion will build on its processes at the site-including the manufacture of rubber track loaders, undercarriages and accessories. The current facility had housed all aspects of the Grand Rapids operation, such as production, parts, materials, inventory and logistics; the new building will house production only, and will make room for completed machines and future capabilities, Walsh said.
It is the second expansion at the plant, which originally was built in 1995, Walsh said. The first expansion was done in 1997.
"Once completed, we feel this new addition will improve the overall flow of our current production processes and provide the capacity needed to support our growth in the future," said Gary Lemke, ASV chairman and CEO.
Last year was a strong year for ASV and the rubber track loader market, Lemke added. The company´s net sales for 2005 were $245.1 million, up from $160.9 million in 2004. In this year´s first quarter, ASV had net sales of $64.9 million and net earnings of $6.9 million.
ASV had said it expected the current site to support up to $400 million of annual sales; it estimates the new addition will at least double the company´s total sales capacity. The firm is projecting revenues of $300 million to $320 million for 2006, Walsh said.
The 23-year-old company did not say how many employees will be added to its work force as a result of its expansion, but Walsh said ASV would "continue along the same path of hiring, which will be dictated by the demand for our product."
ASV employs 264 among its sites in Grand Rapids; Cohasset, Minn.; and Casselton, N.D. The company acquired the Casselton plant back in 2004 as part of its purchase of rubber track maker Loegering Manufacturing Inc.
The expansion is the latest in a continuing series of activities for ASV. In November, the company extended its ongoing relationship with construction equipment giant Caterpillar Inc. with a five-year agreement to supply rubber track undercarriages. Caterpillar owns about 23 percent of ASV´s stock.
At the end of 2005, the firm announced it will be the exclusive supplier of undercarriages for Vermeer Manufacturing Co.´s utility trenchers and other products. In January, the company introduced its new undercarriage and machine technology via the launch of the SR-70 and SR-80 rubber track loaders.
And in April, ASV co-founder Lemke, 65, announced his retirement, effective June 2. Richard A. Benson, a 35-year Caterpillar veteran and former president of Caterpillar Global Mining, will assume the positions of chairman and CEO.
Benson has been an ASV director since 1999.