Hong Kong – Sinomax, a flexible foam, mattress and upholstered furniture maker, has announced plans to build a $28m factory in La Vergne, Tennessee.
It will create around 350 jobs at the factory which, will include flexible foam production and furniture manufacture, the company said. The new plant, on the site of a former Whirlpool facility, is scheduled to go into operation in the summer of 2016.
“We are thrilled to open our first US manufacturing facility in the state of Tennessee,” president and ceo of Sinomax USA Frank Chen said. “We anticipate significant growth as demand for localised manufacturing continues,” he added.
Its first half report said a US facility would help Sinomax “capture different market segments and shorten lead time,” the half year report states.
In the first six months of 2015 its sales were HK 1.38bn ($178m) up 11.8% on the same period in 2014. Polyurethane sales were KH 488m in the period and saw 16.8% growth.
Export sales were HK599m down 4.2% from the first half of 2014 as a result of changes to US buying policies, according to the half year results.
“The group has been successful in developing its business in the US market. However, the group is facing strict US-only buying guidelines or retailer preference for US-made products which restrict our growth in the US market,” the firm’s half year report states. Sinomax continues that it had “OEM purchases of around $70.8m in the US in the first half of 2015.”
Sinomax was listed on the Hong Kong Stock Market in July 2014. The IPO generated net proceeds of HK 127m, and at the date of the first half results a portion of this money was on deposit with a number of Hong Kong banks, the company said.
Sinomax allocated HK 7.6m of flotation proceeds to acquire or set up a US subsidiary in its half year figures. The report shows it spent HK 17.8m to buy and upgrade production equipment and new production facilities in Donggun, Guangdong and Jiashan, Zhejiang, China. A further HK 5.1m were allocated to that project but not spent at the half year, the firm said.
In China, Sinomax PU foam is sold under the Tung Ah brand on a wholesale basis to furniture makers. Sinomax also bought Shanghai Luen Tai Polyurethane in January 2015 at a total cost of HK 44.8m. That business contributed about RMB 51.6m ($6m) in sales in the first six months of the year. This is driven by increasing demand for comfort products in China, the company said.