SaarGummi invests millions on 4 new plants, upgrades

REMICH, Luxembourg—CQLT SaarGummi Technologies S.a.r.l. is bolstering its manufacturing capabilities in North America and Asia by adding four plants worldwide, each set to be operational in mid-2015.

Each facility's primary focus is EPDM and thermoplastic sealing systems for the automotive industry. SaarGummi said its automotive business accounts for about 90 percent of its sales, which were about $537.3 million for its latest fiscal year. The remaining 10 percent comes from industrial applications.

The firm's total investment for 2014 is about $67.1 million, but that is for all 2014 upgrades ranging from facilities, to capital upgrades and other projects. The firm would not disclose how much it had invested exclusively in the four plants.

“We continue to focus on becoming a global, international sealing supplier while we're executing CQLT's long-term strategy of growth and implementation of our technical innovations,” CEO Larry Johnson said. “And it really shows CQLT's commitment and support of SaarGummi.”

SaarGummi Group eventually will create more than 1,600 jobs worldwide when the four facilities are operational. The firm currently employs about 4,000 at 14 production plants and three technical centers in Europe, North America, South America and Asia.

“It's a very busy time for us, there's no question about it,” Johnson said. “It is very exciting to be on a positive growth strategy and to have a shareholder that's been very supportive and help us achieve these objectives.”

The firm will open one facility in North America—located in Saltillo, Mexico. SaarGummi will lease a building of about 118,000 square feet for automotive production and create about 150-200 jobs. Johnson said the plant's estimated timeframe for operation is the end of 2014, beginning of 2015. He said the firm is presently finalizing negotiations.

SaarGummi will open a similar site in Ahmedabad, India, and is targeting Sept. 29 for the grand opening of the new facility, which is about 118,000 square feet. Michael Lorig—vice CEO and chief operating officer—said it will consist of about four extrusion lines and have a mixing plant onsite, which will support all of the facility's products except special chemicals.

The company projects to create between 300 and 400 jobs at the plant. It will begin equipping the building in October and hopes to have it operational in May 2015.

SaarGummi's two Chinese facilities in Hechuan and Yingkou will be of similar size—about 215,000 square feet—and are projected to employ about 600 each. The plant in Hechuan will replace the firm's existing production footprint in the city, which consists of another sealing company under Chongqing Light Industry & Textile Holding Group Co. Ltd.'s umbrella—parent company of the SaarGummi Group.

Lorig said the firms both will integrate into Hechuan, which is slated to have extrusion in place in the beginning of 2015 and to be operational in either June or July 2015. It will consist of its own mixing center—SaarGummi's first Chinese plant to include one—and an engineering/technical center to serve as the Chinese hub for technical support.

Hechuan will support SaarGummi's non-automotive business, with a focus on the Chinese construction market.

Yingkou will follow a similar timeframe as the company's India facility, with construction scheduled to be finished in late September or early October and operational in May 2015.

SaarGummi owns significantly bigger land areas in China, which gives it room for further expansion.

“Typically we don't tend to oversize plants,” Lorig said. “We place them in regions where we have good access to customers. We follow our customers, and we're really looking for proximity in terms of logistics to ease their cost situation.”

Johnson said SaarGummi received grants and subsidies on a regional basis from all four plant locations, and that each community was very welcoming of SaarGummi's desire to join those areas.

SaarGummi was part of RAG Saarberg A.G. until 2005, when it was acquired by Orlando Management GmbH. Under Orlando, the firm made a number of acquisitions to strengthen its global presence, notably Continental A.G.'s sealing branch.

Orlando sold SaarGummi to Berlin-based Odewald and Compagnie—another private equity firm—in 2007. In the wake of the automotive recession, SaarGummi filed for insolvency in 2010 and in 2011 was purchased by CQLT.

Lorig said that was the starting point for restructuring. Since the takeover in 2011 through 2014, SaarGummi has expanded worldwide with the opening of a facility in Russia, a mixing plant in the Czech Republic and a technical center in Plymouth, Mich.

“The background of a Chinese state-owned shareholder gave us a financial backbone to really consolidate our global footprint. The ownership and shareholder structure really turned the SaarGummi Group into a true global organization,” Lorig said.

“We have a global footprint, we're very innovative, we have very good processes and product technologies, and we have a really strong customer base that helps us implement these technologies,” he added.