international crystal federation - xvii technical exchange conference telfs-buchen, austria – 8 th...

International Crystal Federation - XVII Technical Exchange ConferenceTelfs-Buchen, Austria – 8th-11Th October 2005

Setting up a factory in Asia


Setting up a factory in AsiaPurpose :

• Glass industry development has followed all other industrial activities developments in China.– Flat glass.– Hollowware.– Tableware, giftware.

• China has always got an anchored craftsmen tradition in glass and crystal.

• Food service is drawing Art of Table industry.• As an international major group in this business,

Arc-International has decided to invest in this growing market. "China One" has been its first industrial action.


Setting up a factory in AsiaWhy a plant in China ? (1)

• Our position in Asia before 1998 :– Rep. offices in Japan, China, Hong-Kong, Singapore…

• Be able to serve the local and surrounding markets.– Manufacture near the consumer

• Some internal markets already well developed are dragging collaterally:

– Food service, housing property are dragging housing and art of table markets.

– Be able to support sales development with locally produced volumes.

• Local production costs.– Be competitive on those local markets.– Be able to promote our quality standard.


Setting up a factory in AsiaPartnership ?

• When our project started, it was very difficult to work without any local partner ( Nowadays it is legally conceivable.)

• Different potential partners :– Financial.– Inside our field of activity.– Administration (local, province…).– J.V. with another foreign company.

It depends on the project, but what is shared (capital, assets, knowledge, brands, market, representatives, management, objectives….) has to be clearly defined.


Setting up a factory in AsiaWhere ?


Setting up a factory in AsiaNanjing

• A local industrial glassware manufacturing partner.• A promising development of infrastructures :

– New, modern and well located Industrial zones.– Important node on transport and energy networks.– Industrial and technological level.– University and training well established in different

skills.• A "proactive" welcome of local administrations.• Seems to be at that time the optimum socio-

economic and geographic "center" between the great towns of the East coast and the under equipped "Far West"


Setting up a factory in AsiaThe A.G.N. J.V.

• The administrative "run".– Letter of intention.– Feasibility study.– National, provincial or local ratification :

• Level of investment.• Type of activity : encourage, controlled…

– J.V. Contract and other linked contracts.– Business license.

=> Official existence of the J.V. as a company.


Setting up a factory in AsiaSetting and running the first facility

• Rent on a development zone of existing buildings• Installation of "cold end" processes :

– Packaging,– Decoration, sand blasting…

Objective : Learn how to run a production business in China :- Chinese industrial culture knowledge, hiring manpower, training…

- Purchasing, transports, logistics.

- Distribution networks, customers organization and practices.

- Circuit of money (investments, customers, providers…), banks.

- Learn how to work with a partner inside a J.V.

- Learn about administrations (national, provincial, local…).


Setting up a factory in AsiaChina One – Decision / Objectives

• Mid 2001 decision to launch "China 1" project– A modern glass factory with an industrial furnace.– Be able to produce for the Chinese and Asian

markets glass item down Arc International brands within our quality standard.

– Facility to be operating beginning 2003.– Maximize contribution of local providers in the project.– Rely a maximum on the existing A.G.N. local team.– Engineer an evolutionary and modular project.


Setting up a factory in AsiaChina One – Land choice and purchasing

• Inside or outside an industrial zone ?• Functions of the industrial zones.• Principle of land acquisition in China.

– Right usage for a certain period.• Land availability and cost evolution.• Our decision :

– Inside NETDZ one of the most recent zones in Nanjing.

– On a new lot development.– Non leveled (leveling started January 2002).


Setting up a factory in AsiaCH1 – Land preparation - NETDZ


Setting up a factory in AsiaCH1 – Project engineering

• Specification for the plant done by AI engineering and future users.– A.P.S. Advanced Specification to launch biddings.– P.R.D. Detailed Specification ; basis of the contracts.

• This final organization took several months to be set up and work efficiently with AI engineers.


Setting up a factory in AsiaCH1 – Understanding engineering way to do

• Understanding Engineering Chinese organization and targets in such a project :– Specific structure gathered around a project leader

made of numerous teams (civil work, electrics, piping..?).

– More motivated at the beginning to capture know how than to enter inside the project itself.

– Used to work with heavy standards (GB) and promote their solution as a standard.

• After 3 months we got a much better level of mutual trust and work became very productive.


Setting up a factory in AsiaCH1 – Environmental impact study

• Very complete environmental impact file :– Urbanistic aspect, traffic and people

migrations.– Air pollution.– Water pollution.– Noise– Security and safety

• To be on an Industrial zone make more easy.

• Involvement of the Nanjing Environmental Science research Institute.


Setting up a factory in AsiaSelection of providers and sub-contractors

• Selection of providers :– Non process equipments (compressors, batch

system, power generators…).– Specific building parts (roofing and siding…).– Process equipments out of A.I. delivery (lehrs,

handling lines and machines, shelves system in warehouses, forklifts…).

• Selection of subcontractors :– List and references is part of the answer to bidding.– No access to their contracts.– Difficult to manage second level of contractors.


Setting up a factory in AsiaCH1 – Furnace Engineering and construction

• Original engineering from AI :– Scope: furnace, civil work and networks linked to furnace.– Drawings provided by our own furnace engineering.

• Drawing converted in Chinese standard by BCEL :– Standard conversion.– Detailed drawings (networks, metallic structure…).

• Purchasing in and out of China :– Maximized Chinese refractory (AGN prospecting).– Some imported from France and machined in China.

• Assembly by a Chinese specialist (Baosteel).


Setting up a factory in AsiaConstruction great steps

• Leveling, preparing the land and roads :– January to May 2002.

• Soil treatment and basement construction :– May to August 2002 (Picture 1).

• Building erection :– July to January 2003 (Picture 2).

• Installing the process and furnace :– November to March 2003 (Picture 3)

• Setting and trying the networks :– January to end of march 2003.

• Furnace pre-heating : – March 15 2003.


Setting up a factory in AsiaCH1 – Trials and reliability process

• Process equipments :– Mainly imported from A.I.– Installed by local contractors supervised by A.I.

specialists.• Networks mounted by Chinese companies:

=> Need for a formal and detailed trial period :– Match between networks and equipments.– Debug engineering and mounting defects.– Train and get the teams to reach a satisfactory level

of performance.– Get trained to the emergency procedures.


Setting up a factory in AsiaCH1 – Manpower and H.R. aspect (1)

• Despite the existence of glass factories, no really skilled people available in the area.

• Main key employees were hired at the very beginning 3 to 4 years ago.

• Most of the primary production manpower has been hired 4 to 6 months before the production start up.

• Production people has participated to the installation of the process and the trial and reliability period.

• The factory started to produce with more than 600 persons => need for social structures (logging, buses, canteen, lockers, medical care…).


Setting up a factory in AsiaCH1 – Manpower and H.R. aspect (2)

• Basic salaries lower than in Europe (~1/10)• High percentage of charges :

– Social legal taxes.– High rate of company benefits.

• Transmission from SOE's to private companies (Chinese or Foreign capital).

• Turn over could become a serious problem :– High rate of "modern companies" development.– Chinese executives may "negotiate" their

"international" skills.– Round the clock factories are less attractive.


Setting up a factory in AsiaCH1 – Start up production

• Production started on April 7 2003 :– First day 2 lines out of 8.– First week 6 lines out of 8.– First week able to package some items under the AI

brands (Arcoroc, Luminarc), quality standards where ratified by A.I. Quality management.


Setting up a factory in AsiaCH1 – Production and yields ramp up

• First 6 months :– Despite interruption during 2 months of heavy

technical assistance the factory has followed the targeted ramp up plan mainly based on :

• Machine operation and failure yield.• Tonnage production.• Quality and management organization involving more and more

Chinese people, and diminution of expatriates structure.

• Second year :– Production extension– Improvements of yields

• Improvement in organization and production costs.• Development of our local collection.


Setting up a factory in AsiaCH1 – Picture (1) Soil treatment and foundations


Setting up a factory in AsiaCH1 – Picture (2) Buildings erection


Setting up a factory in AsiaCH1 – Pictures (3) installing process and furnace


Setting up a factory in AsiaPictures (4) setting and trying process and

networks


Setting up a factory in AsiaPicture (4)

A.G.N. April 2004


Setting up a factory in AsiaLead Crystal main producers in China (1)

• MeiYing Glassware (Zhejiang) Co. Ltd – 2 Electric Furnaces : 8 T / 24h + 15 T/ 24h (start at Sept 2005)

– 24%PbO Crystal

– Hand-made process + semi-automatic process

– Vase , Astray, Tumblers, craftworks etc .

• Shandong Hua Peng Glassware Co. Ltd – 1 Heavy oil Furnace : 3 T/ 24h

– No PbO Crystal

– Automatic blowing process

– VAP (main products ), Tumblers

• Guangdong JiaRong Glassware Co. Ltd– 1 heavy oil furnace : 50 T/ 24h + 1 pot furnace : 2 T / 24h

– No PbO Crystal

– 2 Automatic Line + 1 Semi-automatic Line

– Perfume Bottles , Wine Bottles


Setting up a factory in AsiaLead Crystal main producers in China (2)

• DaLian ShengDao Glassware Co. Ltd – 1 Electrical Furnace : 10 T/ 24h

– 24%PbO Crystal

– Hand-made process + Semi-automatic Line

– VAP ,Vase, Astray , Tumbler, Craftworks • ChangChun AoPu Optical-Electrical Co. Ltd

– 1 Electrical Furnace : 10 T/24h

– K9

– Domestic Market

• Chongqing BeiBei Glass Factory – Pot Furnaces

– Colored Glass (Soda Lime)

– Hand-made process

– VAP, Vases, Tumblers, Craftworks

international crystal federation - xvii technical exchange conference telfs-buchen, austria – 8 th...

Documents

asia slide

local markets

local partner

local ratification

asia nanjing

asia purpose

administration local

asia partnership