06-05-13 PVAXX Launches Dubai Pallet Plant, Plans For Expansion (by Rick Leblanc)

PVAXX Ltd has big plans when it comes to plastic composite pallet production. With the launch of its inaugural $25 million plant in Dubai, United Arab Emirates, it is projecting a capacity of 1.5 million pallets per year, and has further plans to invest a further $100 million to increase capacity to another 10 million units annually. Eventually it plans to ramp up to 75 million units annually through expansion and licensing programs. Just to add perspective to the magnitude of the initiative, current North American plastic pallet production is likely less than 10 million units per year. We recently tracked down Jan Bak, PVAXX vice-president, sales and marketing, who provided the following interview:
In the world of pallet manufacturing, which has been very fragmented to this point in time, PVAXX’s ambitions seem huge. In a nutshell, how did the idea of PVAXX come about and evolve to where it is today?
PVAXX has always been the type of company that has never been willing to settle for the status quo. Starting off as a material science and technology company we were always keen to explore new options and pave the way for revolutionary developments. PVAXX’s evolution into the pallet industry happened in quite an unusual way. We started by developing our patented material Siluma® which is a very strong and durable composite of polyethylene and silica sand. Once we had developed our material we started to look at different applications for it. We settled on the pallet industry because our research showed that the latent demand for high quality, strong, durable pallets was very high and quite poorly catered for. We were then faced with challenge of designing a pallet that could fulfill the high requirements we had set for ourselves, being a high strength, highly durable, low cost and environmentally friendly pallet. Through the help of some of the world’s best product designers and engineers we managed to fulfill these expectations and create our revolutionary product.

What has the role of Dr. Nugent been in developing the product?
Dr. Nugent, our Vice President Technical, has been a key player in allowing us to develop the technology which allows us to manufacture our pallets in such a cost effective manner. The PVAXX pallet is manufactured using a state-of-the-art rotational molding machine which we have developed. The PVAXX ‘Revolution’ can automatically produce 8 pallets or 16 platforms every 20 minutes, a previously unheard of advance in production for rotational molding technology

Tell us about your first production plant. How close are you to beginning production?
We have set up our first production facility in the Jebel Ail Free Zone (JAFZA) in Dubai. It consists of an eight machine production line which will be able to manufacture 1.5 million pallets a year. It will also be our demonstration, training and R&D facility. We expect to be fully operational by the end of June this year.
Why is the pilot project in Dubai and not in more established pallet markets? What markets will you successfully serve from Dubai?

There are a number of reasons we decided to set up our first production facility in Dubai. Firstly we are based virtually in the centre of the world, in a free zone, in a place that imports a huge amount but exports relatively low volumes. This means that our freight rates are extremely competitive. Secondly the cost our raw materials, polyethylene and silica sand, is very low and available in large volumes. And lastly being situated in Dubai provides us with a very economical supply of gas and electricity, labor and land.
Please talk to us about your product mix. What sizes will be offered, and in what grades? Your website indicates that different PVAXX pallets will eventually compete in various segments, such as single trip export, multiple use, etc.
The product mix consists of a combination of 55% polyethylene and 45% silica sand bound together using our patented Unifier® formula. At this stage we will only be producing the standard 1000mm x 1200mm pallet and platform designed to be used in a closed loop system of distribution. However in the future we will be manufacturing different sizes of pallets along with looking at diversifying into manufacturing other products.

What advantages does the PVAXX product have versus other plastic or plastic/composite pallets on the market today in terms of performance, durability, weight and pricing?
The combination of the polyethylene and silica sand produces a material that is significantly stronger and more durable than pure plastic. The pallet will hold up to 4500kg on the ground and we are confident will last significantly longer than current plastic pallets. Also due to the advanced manufacturing techniques, the unique two part design, and the fact that 45% of the product is sand we are able to produce very competitively priced recyclable product.

What has been the response of prospective pallet buyers to date?
The response from prospective buyers to date has been very encouraging. We recently participated in exhibitions in Dubai, Australia and Singapore. In all of these locations customers were drawn in by the durability and load bearing capacities of the product and were often amazed by the price of it.

I guess I would be remiss if I didn’t ask you about RFID. How is PVAXX approaching this emerging customer interest?
There is no doubt in our eyes that RFID technology is extremely important for the future of the pallet industry. We are currently looking a having the technology molded directly into the pallet. This will mean that there will be no chance for the chip to be damaged or tampered with.
Longer term, the website indicates that licensed manufacturers will be sought in other parts of the world. How soon might it be, for instance, before we see PVAXX pallets in North America or Europe?
We are confident our territory manufacturer and distributor program will ensure licensed production Europe and the US in the later part of this year.