After a long period of uncertainty, the former STA factory should have two MDF and two particleboard lines up and running very soon.
As a result of a joint approach between M P Particleboard of Thailand and Evergreen Fibreboard of Malaysia, in which MP was the lead company, a buyout of these four lines from the receivers of STA Group was completed in February 2004.
Evergreen Fibreboard has two MDF (a calender press and a Dieffenbacher continuous press) lines and a furniture factory in Johor state and a particleboard line in Segamat, as well as two veneering works in Pasir Gudang, also in Johor.
This company, under the leadership of the Kuo family, has grown dramatically from a small veneering operation to its present size in Malaysia, with much of that growth having taken place in the last five or six years.
The growth has been rapid, but measured, with chief executive Mr JC Kuo having put his plans for the second MDF line on hold when he saw the financial crisis of the late 90s approaching, finally realising his plans for a continuous line in 1999.
In the meantime, he founded a knockdown furniture business which has since mushroomed onto a total of 30 acres on six sites in Johor, including the two MDF lines.
In 2002, Mr Kuo opened his first particleboard line, a secondhand plant from Europe centred on a Bison press, in Segamat, Malaysia.
One of the reasons for building particleboard rather than additional MDF capacity was that the wood raw material would be easier to source in Malaysia.
However, there are abundant supplies of rubberwood in neighbouring Thailand.
When a long-standing friend in the panel industry approached Mr Kuo with a proposal to take over an existing MDF factory in Thailand, he was thus very interested.
Everybody in the South East Asian panel industry – and beyond – knew that the former STA particleboard, MDF, plywood and furniture manufacturing operations were up for sale. Everyone also knew of several unsuccessful attempts to purchase parts of the business since it went into receivership in 1997.
“In fact I first visited the Hat Yai factory in 1997, unannounced, when it came under the control of the banks,says Mr Kuo. “I was interested in the machinery but was not allowed into the factory. One of the MDF lines was half-finished and I wanted to buy the machinery and take it back to Malaysia but the bank only wanted to sell the whole operation, which was too big for me.
“About three years ago, I started thinking about STA again and perhaps finding a partner to go into it with us.
“Then at the end of 2001, I called Ms Amporn, managing director of MP Particleboard of Thailand, and coincidentally she was negotiating with the banks and looking for a partner.”
Ms Amporn’s company was only interested in the two continuous-press particleboard lines.
“I visited Hat Yai with Ms Amporn and was surprised to find how bad a condition MDF line two was in. All the exposed parts were in a bad state and the machinery which was indoors had been raided for spare parts for the identical line one,says Mr Kuo.
All four continuous lines at Hat Yai employed Siempelkamp ContiRoll presses and were supplied as complete line projects by Siempelkamp.
“For most people, the effort would not have seemed worth it, but we felt we could do something with the MDF lines so we made a bid for them through MP Particleboard,says the 41-year old ceo.
It was lucky Mr Kuo was dealing with someone he trusted implicitly as he admits that he could not read a word of the legal papers which were all in the Thai language, which he does not speak or read.
“It all seemed unreal, like a dream,remembers Mr Kuo. “It was only after two months of working here that it seemed as if it was really our company.We effectively took control at the end of February last year and we now own 75% of the two MDF lines, while MP owns the other 25%.”
At the time when Mr Kuo’s company took over the MDF operations as Siam Fibreboard Co Ltd, which he established as a Thai company, there was one MDF line running. It had been producing around 6,000 to 8,000m3 a month since 2000, under the control of the receivers.
Unfortunately it had largely been kept running by using the other line for spares. Thieves had also broken into the 250-acre site during receivership (a very difficult site to police) and stolen everything copper from line two – and quite a few other things besides.
The elements had taken their toll on anything which was not housed undercover, too.
“The energy plant was a disaster when we started and wasn’t equipped to burn sander dust – it is now. The drum debarker was also a wreck and was a poor quality job from the beginning.We’ve fixed it for now but will be replacing it,says Mr Kuo.
“Since March 2004, we have been producing around 10,0000m3 a month and now [December] we are almost up to 15,000m3 a month, or 600m3 a day.”
The ceo points out that the design capacity was 350m3 a day. “So we have almost doubled that figure by improvements to efficiency and I think there is still room to grow to maybe 700m3 a day with investment in some new ancillary equipment.”
Mr Kuo has no plans to extend the Siempelkamp continuous press.
Line two is a rather different story, although its planned output is similar to line one when its restoration is finished in the first quarter of this year.
“The energy plant was unusable and the press was unfinished, although most of the mechanical parts were intact,he explains. “Line one had an accidental fire in 2002 and a lot of parts were taken from line two – particularly from the infeed area of the press.With that and the other mechanical and electrical parts which have been ‘borrowed’, some for the particleboard lines which use common parts, our job has been like trying to put a jigsaw together.”
Much of this piecing together has been carried out by Mr Kuo’s own staff, buying parts locally and from German suppliers. The internet has helped in sourcing some computer control cards thought to be obsolete and unobtainable; it takes a lot to stop Mr Kuo.
He has only brought one member of staff from his Malaysian company, continuing the employment of the former STA staff, and has no intention of bringing in any more Malaysians. “This company will have a Thai identity. After all this is Thailand!says Mr Kuo.
His general manager at Hat Yai, Mr Meechai, used to work with Dr Kitti, who is now technical development director at the Hat Yai Panel operations for MP and has been involved with the site from its start as STA.
Future plans include roofing over the gap between the adjacent buildings for lines one and two and installing a short-cycle press line there, bought secondhand from MP. The area will also provide additional warehousing. In fact, that work is probably already complete as you read this.
Resin manufacturer Dynea is to set up a resin plant on the Hat Yai site as a joint venture with Evergreen Fibreboard and MP Particleboard. Boards are currently produced to E1 standard and E0 is planned.
