(From the May 30, 2011, issue of Rubber & Plastics News)
WARSAW, Ind.—Flexaust Co. Inc. is planning to move into a new facility it purchased just down the block from its main manufacturing location in Warsaw to facilitate continued growth.
The maker of flexible hose and ducting will invest about $3 million during the next two years to purchase the building, refurbish it and add production equipment, according to Michael Harvey, Flexaust vice president and general manager. “We just got to a point where we were out of space,” he said.
While the subsidiary of German firm Schauenburg GmbH doesn't reveal sales, Harvey said Flexaust showed strong growth in 2010, and 2011 so far is ahead of last year. The company even held its own with a little bit of growth during recession-plagued 2009.
As Flexaust continued to grow, company officials realized it would need to expand its manufacturing footprint, and the 53,000-sq.-ft. building was available in view of Harvey's office. It previously was used by a company that made furniture and cabinets for recreational vehicles but the firm shuttered the unit in 2008.
Harvey said Flexaust bought the nearly 30-year old structure for $700,000 and will put another $600,000 into renovations.
He said it needed much work, including a new roof, siding, a new parking lot, and grading and drainage work. Flexaust also is reworking the dock area and brought additional power to the building so it could handle the extrusion and injection molding machinery it will install.
The ducting firm hopes to be in the new facility by Aug. 1, according to Harvey. It will house the Day-flex-brand product line, which basically consists of smaller-diameter hose products used in industrial floor-care applications.
The line was purchased from Dayco in 1999 and utilizes such materials as urethanes, thermoplastic rubbers, polyethylene, polyvinyl chloride and polypropylene.
New machinery will include vertical injection molding machines used to overmold cuffs onto hoses, along with several new extruders to replace some of the firm's older equipment.
About nine of the 135 employees at Flexaust's current 115,000-sq.-ft. plant will relocate down the block, and the firm plans to hire up to 25 additional workers for the plant as well.
Logistically, the new location is ideal, he said, noting that Flexaust had considered a building about 7 miles away.
But the building also will be used as warehouse space for some of the raw materials used in the main facility, making transfer simple, and quarterly meetings of employees will be simple to set up.
“From a management and continuity perspective, it just made more sense to be this close instead of across town,” Harvey said.
It also was logical to locate the entire Dayflex line in the new plant because that product typically is made to order and customers for those products normally don't order other Flexaust lines.
By contrast, other sectors of Flexaust's business may have seven or eight separate products on a single order, the executive said.
The main factory will continue to manufacture five different product lines, and Harvey said the company will make capital expenditures of about $1 million there within the next 18 months.
It will add more extrusion and hose-making lines to handle growth in its larger-diameter TPR, PU and PVC products.
Flexaust received a good deal of government aid to convince it to locate its additional capacity in Warsaw, according to Harvey. The manufacturer will receive a 10-year tax abatement on equipment purchases and plant improvements; a two-year property tax credit; employment tax credits for the 25 positions that will be added; some state assistance on employee training; and a separate abatement on the $1 million capital investment that will go into the current factory.
The hose and ducting firm also had considered expanding its El Paso, Texas, unit instead.
“We talked to both states and Indiana really stepped up and didn't want us to move anything out of here,” Harvey said. “They also really wanted someone to refurbish that building because it was getting to be an eye sore.”
He said Indiana was much more helpful this time around then when Flexaust put a 15,000-sq.-ft. addition on its Warsaw plant in 2006. “When we approached them, we could tell it was a much different attitude,” he said.
Besides Warsaw and El Paso, Flexaust has manufacturing sites in Amesbury, Mass., and North Las Vegas, Nev.
The 20,000-sq.-ft. Las Vegas location was moved there last year from Rancho Cucamonga, Calif., because of environmental laws in California related to an adhesive used in one of Flexaust's products. Harvey said the firm also was able to afford a building twice the size in Nevada than California because of lower lease rates.
The Amesbury site was expanded to 20,000 square feet last year by taking over more space in the existing building. He said that allowed more manufacturing and warehousing space, along with an increase in the size of the research and development laboratory located there.
Looking to South America
Flexaust also is actively pursuing distributors in Brazil and Argentina, initially for its Flex-Thane LD polyurethane hose used in woodworking dust collection applications.
“For us, it's a new market,” Harvey said.
He thinks U.S. ducting manufacturers haven't done a good job yet in trying to sell into the South American market, which he sees as still having a European influence.
Harvey said Brazil's economy is similar to that of the U.S., not in terms of size but in the various markets and how they operate. Doing business there today is similar to what it was in the U.S. 25 years ago, when relationships and loyalty meant something.
“It's one of those markets where it's difficult to get in (with a customer), but once you're in it's difficult to lose them unless you just really screw up or betray them,” Harvey said.
Flexaust eventually will look to market its full line of products there, with manufacturing in South America a possibility at some point in the future if business warrants, he said.