Amcor is building a second glass furnace on its existing wine bottle facility in Gawler, South Australia, in a move that will double its current production capacity.
The new furnace will cost $125 million (€70m) and the first output from the new facility is expected to start by mid 2005. It will have a capacity of 200 million wine bottles per annum with production phased in to match contractual supply agreements. The company says that the new investment reinforces its commitment to this fast-growing industry sector.
With the construction of the second furnace, the site will be producing 400 million premium wine bottles per annum with bottle shapes and colours that cover over 88 per cent of the total market.
The company also claims that operating costs will be reduced through lower overheads and better asset utilisation. The working capital to sales ratio is also expected to be reduced through greater manufacturing flexibility.
Strong customer demand for Amcor's premium wine bottles has enabled new long term supply agreements to be both extended and upgraded, underpinning demand for the new furnace.
Amcor's managing director, Russell Jones, said: "The existing wine bottle plant commenced production in May 2002 and has been an outstanding success.
"The wine industry continues to be one of the fastest-growing industries in Australia with export growth last year of 26 per cent and future growth expected to remain strong.
"Strong industry support, including long term supply agreements, underpin volumes for a second furnace. Having a two furnace facility delivers a lower cost base and improved manufacturing flexibility that will further enhance customer service and value.
"The existing plant was profitable in the first six months of operations and is on target to deliver a 15 per cent return on investment. The long-term supply agreements that support the second furnace will ensure a return in excess of 15 per cent is achieved for this new investment. With the building of the second furnace, Amcor will be a substantial supplier of wine bottles in Australia.
"The plant is located in the heart of the major wine producing region and its modern technology and high production efficiencies ensures it is Australia's low cost producer."
Amcor is the largest packaging company in Australasia. In New Zealand, the company operates 11 manufacturing facilities producing a diversified range of products including beverage cans, corrugated boxes, cartons, food cans, closures and PET