Akron, Ohio – VMI Group is working out of a temporary plant in Poland as it constructs a new factory that should be operational in the Eastern European country by next June.
The new project was needed because rising demand for the firm's tire building machinery was more than the company could handle at its existing production sites in the Netherlands and China, according to Harm Voortman, president and CEO of Epe, Netherlands-based VMI Group.
He and Arie Kroeze, president of VMI Americas Inc., discussed the project during the International Tire Exhibition & Conference, held 13-15 Sept in Akron.
Its largest manufacturing site is at its headquarters in the Netherlands, with the Chinese location making modules that are shipped to Epe and finished there, Voortman said. But with the amount of new plant and expansion activities in the tire business, VMI determined there was a need for another production site.
So it recently started production at a rented facility in Poland and bought an 850,000-sq.-ft. tract of land.
It is investing an undisclosed amount to build a 27,000-sq.-ft. building for the first phase of the project, the VMI CEO said.
Right now the machinery maker is employing 40 at the temporary facility and will have the staffing level up to 60 by the end of 2016, Voortman said. “Then when we move into the new building, we will quickly ramp up to at least double that size.”
The Poland site will produce modules much like the China factory does now, working in practical terms as a sub-supplier to the headquarters plant.
“It will be a quick ramp-up after we have the new facility in place,” Voortman said. “That facility will help us to shorten the delivery time of our equipment while maintaining a low-cost level. Shipping parts from China to Holland costs time, and that is on the critical path of our delivery time. So we will be able to deliver quicker and still be cost-effective. We needed the third location because we couldn't grow as rapidly as we needed at the other two production sites.”
VMI chose Poland for a variety of reasons, he said. First, the firm needed a location within two days driving of VMI Holland. Another factor was having access to good, qualified staff, so it searched for a location with enough young people, universities and technical schools nearby.
The company did receive some tax incentives from the Polish local government, but that wasn't the deciding factor because all locations in Eastern Europe would offer similar packages, he said.
Depending on business levels, the new plant easily can be expanded to accommodate future expansion if needed.
North America shines
Voortman said much of the growth VMI is seeing is from new tire plants and factory expansions taking place in North America.
There also is some uptick in Eastern Europe, while business is down in China but solid in other areas of Asia, including Japan, South Korea and Southeast Asia.
“For us as a company, what is very interesting is that our business in North America is going extremely well and that we see a lot of activity in the tire manufacturing industry,” he said. “There are new companies coming in and setting up greenfield (factories), but also companies who are responding to requests for higher efficiency for Industry 4.0 automation and increased efficiency and quality.
“This leads to replacement of machines or exchange. There is a lot of activity. Looking at the volume that is now coming onstream in the next two years, we really have to increase our presence here.”
Kroeze said VMI Americas has almost doubled its business volume in recent years, rebounding from when the firm stopped manufacturing machinery in the U.S. in 2009 because of depressed conditions during the Great Recession. Since then, Stow, Ohio-based VMI Americas has focused on service, sales and spare part replacements.
But with improved business conditions boosting its sales – the firm didn't reveal total revenue – Kroeze said it has needed to increase its staff. He said the new business volume has been split about evenly between machinery for new tire facilities and upgrades at existing sites.
“There is still a lot of two-stage equipment in existing plants in North America that is being replaced by uni-stage equipment,” he said.
Voortman said there are differing customer needs between those staffing new facilities and those adding capacity. At new factories, there must be a lot of training on how to use the tire building equipment, while at brownfields doing upgrades, there already is a lot of knowledge in place, but those firms still need servicing.
VMI Americas has a staff of about 20, but Kroeze said that's not large enough to install all of the new machines. It is actively recruiting and training new field service engineers. “What is very important is that we can support our customers the correct way,” he said.
Most of the machines for North America, Voortman said, will be sourced from the two European sites.