Grafton and PCH team up in Chinese venture

DANCING DRAGONS and delighted officials greeted building materials group Grafton's launch of a massive warehouse facility in Shanghai yesterday, part of a co-operation agreement with supply chain group PCH to streamline product supply from China to core markets in the West.

The alliance of two Irish companies at the world's second biggest port is a first, and it's all about warehousing in a way to make it possible to enable timely deliveries in a streamlined way to Grafton's markets in Ireland and Britain, said Grafton chief operating officer Leo Martin.

"We always believed we needed to get to the source on our products. We've been bringing in products in 40ft containers, say taps for example, but that's a lot of taps! We don't have major warehousing in the UK or Ireland, so we needed a solution. This obviates the need for huge centralised warehousing," said Mr Martin, who added that it should translate into 30-day guaranteed delivery from time of order.

Yangshan is the kind of area that can only exist in China - the size of a small Irish county, with a local government willing to provide whatever would-be tenants need and access, via a 32.5km bridge, to Yangshan port, an astonishing facility which has been created from nothing into the second busiest container port in the world. The local government is building capacity here at a rapid rate - to get there you pass through a city bigger than most Irish cities, with scores of skyscrapers, shops and other facilities waiting for the millions of Chinese fighting to be allowed to live and work there.

Grafton's landlord is the Singaporean group Mapletree, which has a proven record at dealing with the Chinese way of doing business in this area.

Within the industrial estate there are doubled-up plants, with roads going up to second-storey factories to make the movement of goods easier.

Mr Martin said a punishing tour of manufacturing facilities in China, witnessing how other companies were taking advantage of the high level of quality manufacturing, including some competitors, had swung the deal.

The new warehousing facility will allow Grafton to take its supplies into a central warehousing facility, and then divide the goods into "stillages", basically large pallets, before being shipped to specific markets in a speedy and efficient way. "This way we take out the middleman in a very traditional way," said Simon Bird, from Grafton in the UK.

Grafton, which had turnover of €3 billion last year, has been sourcing 480 million yuan (€48 million) of goods with 150 Chinese suppliers in the past few years. "We can increase this to over one billion yuan (€100 million) in the next three years. This is a substantial investment that will result in new jobs in China, the UK and Ireland. It's a unique investment that meets all our supply chain needs," said Mr Martin.

Launching the facility with a speech in faultless Chinese, something the assembled officials clearly appreciated, Irish Ambassador Declan Kelleher said: "It's appropriate that two of Ireland's most successful companies should come together her to co-operate in this fast-growing area."

Leo Martin also made part of his speech in Chinese to the delight of the audience. "This is all about making sure that supply chain and logistics are not the bottleneck to providing good product and value for money," he said.