PENANG: Tong Herr Resources Bhd (THRB), one of the world’s leading specialist manufacturers of stainless steel fasteners, is allocating about US$5.5mil (RM29mil) for the setting up of a plant in Thailand this year.
Group managing director Tsai Ming Ti said in an interview that the business in Thailand would be a joint-venture exercise, involving the participation of an overseas partner.
“A new company will be registered in Thailand soon to manage the plant. THRB will hold a 50% stake in the company, while our partner holds the remainder,” he added.
Tsai said a seven-acre property in south eastern Thailand had been identified as the site of the plant.
“Construction work for the new plant will begin later this year. It is scheduled for completion in the third quarter of 2005,” he said.
Tsai said the rationale for establishing production operation in Thailand was in line with the group’s objective to increase sales of its products to the United States.
“Currently the US imposed a 8.6% import duty on our products from Penang. Because of this, THRB exports only about 2% of its yearly output to the US.
“The US, however, does not impose import duty on stainless steel fasteners from Thailand. This means that the group can export more to the States from Thailand,” he said.
At present, Japan and Europe consume 43% and 33% of the group’s products respectively, while the rest of the world absorbs the remainder.
Tsai noted that geographically, Thailand was also closer to Myanmar and Vietnam.
“Our presence in Thailand will facilitate the group’s penetration into these markets, which currently obtain their supplies of stainless steel fasteners from Taiwan and China.
“Our expansion into Thailand is also justified by the fact that the domestic market for stainless steel fasteners is three times the size of Malaysia and we have strong marketing networks over there,” he said.
For the 2004 first quarter ended March 31, the group generated a turnover of RM50.2mil, an increase of 72% from the RM29.5mil achieved for the corresponding quarter a year ago.
The group also made a pre-tax profit of RM15.3mil, compared with RM5.5mil for the previous year’s corresponding quarter.
“The good performance was due to the increase in the global demand for our products and selling prices.
“The outlook for 2004 looks good and we expect to register double-digit growth again this year,” he said.
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