November 11, 2015 Updated 11/11/2015
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Simon Robinson
Urethanes Technology International
Sinomax Group LTd. From left: Eric Cheung, CEO Sinomax Group; Tenn. Gov. Bill Haslam; Frank Chen, CEO Sinomax USA; Lam Chi Fan, Sinomax chairman; Nashville Mayor Megan Barry; Randy Boyd, commissioner of the Tennessee Economic Development Commission.
Sinomax Group Ltd., a Hong Kong-based flexible foam, mattress and upholstered furniture maker, has announced plans to build a $ 28 million factory in La Vergne, Tenn.
It will create around 350 jobs at the 505,000-square-foot factory which will include flexible foam production and furniture manufacturing, the company said. The new plant, on the site of a former Whirlpool facility near Nashville, is scheduled to go into operation in the summer of 2016.
“We are thrilled to open our first U.S. manufacturing facility in the state of Tennessee,” President and CEO of Sinomax USA Frank Chen said. “We anticipate significant growth as demand for localized manufacturing continues.”
Its first half report said a U.S. facility would help Sinomax “capture different market segments and shorten lead time.”
“The group has been successful in developing its business in the U.S. market. However, the group is facing strict U.S.-only buying guidelines or retailer preference for U.S.-made products which restrict our growth in the U.S. market,” the half year report states. Sinomax continues that it had “OEM purchases of around $ 70.8 million in the U.S. in the first half of 2015.”
Sinomax currently sells memory foam mattresses, mattress toppers and pillows in the U.S., including ones licensed under the Sharper Image and HoMedics brands. The plans for the manufacturing site follows an October move by Sinomax USA, a wholly-owned subsidiary of the Hong Kong group, to invest in Dormeo North America LLC, a Winchester, Va.-based mattress maker. Dormeo also has launched an expansion in Virginia.
In the first six months of 2015 its sales were HK$ 1.38 billion (US$ 178 million) up 11.8 percent on the same period in 2014. Polyurethane sales were HK$ 488 million in the period and saw 16.8 percent growth.
Export sales were HK$ 599 million down 4.2 percent from the first half of 2014 as a result of changes to U.S. buying policies, according to the half year results.
Sinomax was listed on the Hong Kong Stock Market in July 2014. Its initial public offering generated net proceeds of HK$ 127 million, 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$ 7.6 million from the IPO to acquire or set up a U.S. subsidiary in its half year figures. The report shows it spent HK$ 17.8 million to buy and upgrade production equipment and new production facilities in Donggun, Guangdong and Jiashan, Zhejiang, China. A further HK$ 5.1 million 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 51.6 million yuan ($ 6 million) in sales in the first six months of the year. This is driven by increasing demand for comfort products in China, the company said.
