Aerospace parts factory expected to generate US$100m revenue in 5 years
By CONRAD TAN
NORELCO UMS Holdings, an equipment manufacturer for the disk-drive and electronics industries, is to invest US$20 million in a new plant at Changi to make parts for the aerospace industry.
The 80,000 sq ft factory is expected to generate US$100 million in annual revenue in five years. Construction of the new facility is scheduled to be completed in the second half of next year, with operations expected to start in January 2008.
It will initially employ 30 people, and eventually expand to 180 by 2012, comprising mainly technical staff. Norelco will lease the factory for an initial period of eight years from Boustead Projects Pte Ltd, a unit of engineering group Boustead Singapore, which is building the facility.
'This investment is part of our concerted effort to extend our core competencies in precision machining into the aerospace industry, which has robust growth potential,' said Norelco UMS chairman and chief executive Andy Luong at the groundbreaking for the plant yesterday.
'It is also part of our group's strategy to expand into higher margin, value-added businesses. We are not new to the aerospace industry as we are already working with first-tier aerospace suppliers such as Hamilton Sundstrand and Honeywell Aerospace.
'We expect the new plant to contribute to our bottomline in 2008. Together with the semiconductor industry, the aerospace business will be a key growth driver going forward. The current worldwide supply shortage of aerospace parts and components coupled with Asia expecting to double its fleet of aircraft by 2015, means the aerospace industry is set to fly even higher,' he said.
The expansion into aerospace manufacturing is also expected to make the company less vulnerable to downturns in any one industry, he added. 'Aerospace contracts last from one to five years and earnings from the aerospace business are more predictable. Our company will enjoy a more stable income stream.'
Last month, the company reported a 15 per cent increase in revenue for the third quarter, to $43.9 million. Excluding a $7.9 million gain from disposal of its recycling business, its core earnings grew 70 per cent to $5.2 million. The company was formed in 2004 through a merger of listed Norelco Centreline and privately-owned UMS Semiconductor.
Its share price closed unchanged at 45 cents yesterday.
