13/10/05 Homegrown GPac injects S$25m to expand production (By Jeana Wong)

GPac Technology is spending S$25 million to up its production capacity in Singapore.

The homegrown manufacturer has developed a technology and process to turn wood waste into a packaging material that is space-saving and eco-friendly.

And it is anxious to expand quickly to cater to multinational companies' demand in the region, especially China.

The company's product is the world's first lightweight packaging material made of recycled wood that can decompose and be moulded according to customer needs.

It took GPac engineers in Singapore more than 3 years and S$3 million to develop the technology.

And the company is now focused on expanding quickly so as to cash in on its patented invention.

But it says being first in the market brings a different set of challenges.

Wong Teck Tin, Chief Operating Officer, GPac Technology, said: "The most important thing we're looking at is roll out our capacity in the shortest, possibly time. For big multinational companies to convert to use our type of material, our product, if we're the one and only one making it, they always fear that they may be held to ransom so that part, we have to find a way to see how to tackle this problem."

GPac says its biodegradable pallets can be sold at a premium and still be price-competitive with existing pallets made of wood or plastic.

That's mainly because the finished product can be stacked and stored more compactly to save logistics costs.

It is injecting S$25 million into its Singapore factory to bring its fleet of customised machines to 45 sets.

That will increase its production capacity by tenfold to reach 300 thousand pallets by September next year.

The global pallets market is worth some US$63 billion.

Backed by parent group, Hong Leong Asia, GPac is also looking to build another factory in China, either in Shanghai or Shenzhen.

Philip Ting, Group CFO, Hong Leong Asia, said: "We have the correct formula now, we have the technology, I think we can quickly duplicate that requirement into our Chinese operations. We have identified a potential joint venture partner already in our future China set-up. It is also a Singapore-listed company, a very large company which is, in a way, already involved in warehousing, transportation and logistics in China, in many key cities in China."

Mr. Ting says he expects talks with its Chinese partner to conclude by March next year.

GPac says global players in Singapore's petrochemical and consumer electronics sectors are in the process of approving its pallets for their worldwide business.

But no contracts have been inked as yet. - CNA /ch