• Plans include new South American joint venture, plus North American purchase and expansion plans
HILLIARD, OH, June 8, 2009 -- Advanced Drainage Systems Inc. (ADS), the world's largest producer of corrugated high-density polyethylene (HDPE) pipe, today announced several growth initiatives, which again demonstrates its well-established reputation for leadership in the drainage industry.
ADS has entered into a joint venture agreement with Tigre S. A. (Tigre) for the South American market. Tigre is the premier manufacturer of PVC pipe and fittings in Latin America.
In North American, ADS' expansion efforts will generate the opening of two new state-of-the-art manufacturing facilities located in Canada, plus the purchase of Century Plastics Inc. of Minnesota.
"In spite of the recent economic environment, we have experienced solid growth as the civil construction industry has embraced the substantial features and benefits of our N-12® and N-12 HP pipe, fittings and structures," said Joseph A. Chlapaty, Chairman and CEO of ADS.
"In the past year, N-12 pipe from ADS has received approval from Florida Department of Transportation (FDOT) for a 100-year service life designation. More recently ADS has also entered into agreements to market FLEXSTORMTM Inlet Filters and BaySaver Technologies® stormwater treatment units. These additions truly reflect our commitment and enthusiasm to grow the industry," stated Mr. Chlapaty. "There is no other pipe company in the world with our expertise, who can deliver a proven product line and first class customer service through nearly 70 points of distribution. Along with the strong support of our independent distributors around the world, ADS provides unbeatable service."
New South American Joint Venture
Creating a new company called Tuberias Tigre-ADS Limitada will combine ADS corrugated pipe and Tigre's mining, solid wall pipe to expand sales of both products in South America. The financial arrangements of the new joint venture were not disclosed.
"ADS and Tigre have products that complement each other," stated Mr. Chlapaty. "Both companies are comparable in size and culture. Each firm has similar core values, financial strengths and substantial worldwide reputations. By joining together, ADS and Tigre will be in a position to develop successfully the HDPE pipe business in South America. We are also looking forward to focusing on other opportunities together."
"Tigre is well known for having the most complete line of PVC pipe and fittings in the world. We have 14 manufacturing locations throughout South America and the USA," stated Evaldo Dreher, President and CEO of Tigre. "But it is truly our people who make the difference. Our 5,400 employees are passionate about their products. We are proud that Tigre is the leader in South America. Our brand has been recognized first in consumer surveys for the past several years. This new venture with ADS will certainly increase that favorable recognition."
The two existing plants owned by ADS in Lampa and Antofagasta, Chile will continue operation and be transitioned to Tuberias Tigre-ADS Limitada following the joint venture closing. Products manufactured by the new venture will include corrugated HDPE pipe up to 48" (1200mm) in diameter. A solid wall pipe offering up to 24" (600mm) is scheduled to be available in the third quarter of 2009.
The joint venture will maintain headquarters in Santiago, Chile and employ sales, technical support and distribution centers throughout South America. The joint venture anticipates a new facility, located in Rio Claro, SP Brazil to begin manufacturing corrugated HDPE pipe starting in the fourth quarter of 2009. Additional manufacturing facilities are planned for other South American countries in the near future.
"Since ADS started in 1966, it has always been our goal to design and make superior products that meet the needs of the industry and the end-user," stated Mr. Chlapaty. "Today, our ADS N-12 corrugated HDPE pipe is the standard-bearer for the industry. Together, with Tigre we'll be able to bring our products to South America."
With infrastructure expansion and water-related projects being planned around the region both companies believe this is the right time to establish the joint venture. "Throughout South America, we see funds being dedicated to infrastructure projects, such as new ones being developed in cities that will host the FIFA World Cup in 2014," observed Mr. Dreher. "Stormwater projects are being designed, housing, roads and airports are being built, and commercial buildings and shopping centers are abounding. These all need our products."
North American Expansion Plans
ADS also announced plans to open two new manufacturing facilities in Canada, one in Ontario and one in Quebec. "We are making this significant investment in these two plants to capitalize on the growth opportunities we see in Canada," stated Mr. Chlapaty. "We realize that to be considered a major player in the drainage pipe business, we need to be producing our pipe locally, and these two plants are proof that we are serious about being a Canadian producer of HDPE pipe.
"The facility in Central Ontario is strategically located and will serve both the agriculture and storm sewer segments of our business," Mr. Chlapaty continued. "This area has an excellent work force. We expect 25 jobs will be created initially once the plant is opened, and that will grow as product demand increases. Naturally, during construction there will be more people employed by the various contractors."
Plans for the Quebec operation, located in the Drummondville area, where the company currently has a stocking distribution yard, call for a pipe manufacturing plant and setup similar to the Ontario facility.
Both plants will produce the full line of single and dual wall corrugated HDPE pipe. ADS will operate its internal fleet of dedicated trucks to service both rural and metropolitan areas. Both facilities are scheduled to open this summer and will immediately expedite job-site delivery time. There will also be more ADS area engineers on-site to assist project designers and contractors coordinating with design engineering and customer support departments.
Century Plastics Acquisition
ADS also announced that it has reached agreement to acquire the assets of Century Plastics Inc. of Hayfield, MN. Century manufactures corrugated HDPE plastic pipe used mainly for agricultural drainage systems. "Century has a very strong and loyal employee and customer base," said Mr. Chlapaty. "Purchasing Century will give ADS a turn-key operation that includes manufacturing, local inventory, delivery capability and most importantly, Century's dedicated people who know the area, as well as the needs of agricultural purchasers, including how to install a tile system to get the best yield for a particular crop. ADS' origins are deeply rooted in the agriculture market, so the addition of Century is a natural fit that will help us to better serve this area."
"For more than 35 years we've been helping farmers and others with their drainage needs," stated Mike Dahlen, General Manager of Century Plastics. "We have a very strong regional customer following especially near our headquarters in the Minnesota, Iowa, and Wisconsin triangle."
"We at Century are excited to have access to additional resources that will enhance our manufacturing outputs and customer service," observed James Becvar, Sales Representative of Century Plastics.
Advanced Drainage Systems Inc. (ADS) is the world's largest producer of corrugated HDPE pipe. Founded in 1966, it serves the stormwater drainage and on-site industry through a global network of 42 domestic and international manufacturing plants and more than 30 distribution centers.
Tigre is a Brazilian multinational, leader in the manufacture of PVC pipes, fittings and accessories in Latin America.
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