East Penn in China

A Pennsylvania battery company makes its first foray into China.by Virginia A. HulmeEast Penn Manufacturing Co. Inc. began to explore investing in China in the early 2000s, drawn in part by new opportunities and customers that had made the move already. For several years, the company studied major China markets—logistics, supply chain, and other customers—and talked with possible partners and investment zones. In 2006, the company settled on Wujiang, Jiangsu, just outside the major commercial hub of Suzhou, as the location for its wholly foreign-owned enterprise (WFOE), East Penn International (Wujiang) Batteries Co., Ltd.

From start-up to major manufacturer

East Penn, a privately held, family-owned company headquartered in Lyon Station, Pennsylvania, was founded by DeLight Breidegam Sr. and his son, DeLight Breidegam, Jr., in 1946. They began by recycling old car batteries collected locally and reselling them back to local service stations. Within a few years, they had outgrown their original location in an old creamery.

Since those early days, East Penn has expanded tremendously. It has nearly 100 warehouses, distribution centers, and subsidiaries in the United States and Canada. The company has set up joint ventures in Austria, Brazil, India, and Mexico and established a presence in China. From the beginning, it has been a vertically integrated company that makes several types of lead-acid batteries for hundreds of applications. It has on-site recycling facilities, which recycle old battery components for use in new batteries. Its self-sufficiency extends to its own laundry services, machine shop, construction and maintenance crews, wire and cable plant, trucking fleet for distribution, and fleet maintenance facility.

An environmental leader

Each day at the Lyon Station headquarters, East Penn’s recycling center breaks down more than 20 truck loads of old batteries a day into primary components—lead, plastic, and acid—and recycles each into raw materials for new batteries. East Penn holds patents for an acid-reclamation process that produces millions of gallons of clean, reclaimed acid for new batteries. This closed-loop system even traps sulfur fumes, which are turned into liquid fertilizer and shipped to fertilizer manufacturers. Wastewater is also treated and reused in manufacturing, saving over 100,000 gallons of groundwater per day, and no wastewater is discharged into the environment. Even the heat generated from a furnace is used to warm other areas of the building in cold weather.

East Penn’s products

East Penn makes lead-acid batteries and accessories for starting, lighting, and ignition (SLI) markets, such as automotive, commercial, farm tractor, marine, deep cycle, lawn and garden, and power sports. The company also serves industrial markets with a full line of batteries for motive power, mining, and railroads, as well as stationary applications such as telecom, uninterruptible power systems, and renewable energy.

In China, East Penn’s stationary batteries are often used for uninterruptible power systems or in subways, data centers, cell towers, and power station switchgear applications. The company’s motive power batteries are used for underground electric-powered mining vehicles and forklift trucks. Forklift batteries are one area in which East Penn sees potential growth. As vertical storage becomes more common in China, demand for forklifts and the batteries that power them will increase.

The Wujiang facility

Over the decades, East Penn has become a major supplier to multinational corporations (MNCs). Like other suppliers of MNCs that set up extensive operations in China, East Penn wanted to be able to serve its long-time MNC customers in China as well as it serves them in the United States. The company also began exporting batteries to Chinese customers in the mid-1990s, selling its products through distributors and resellers, which provided after-sales service. As sales to China rose, however, so did the demand for after-sales service, and East Penn decided it needed a presence in China to better serve its international customers.

Thus, in the early 2000s, East Penn began to explore the idea of investing in China. To keep tight control over its engineering and other processes, the company settled on the WFOE structure and chose to locate the facility in the Wujiang Economic Development Zone. Because the development zone views sealed valve-regulated lead-acid batteries (see Box) as high technology, it granted East Penn tax and customs advantages for plant construction. Production started in April 2007.

“The WFOE serves as a logistical launch pad to expand our international service,” explained Tom Minner, vice president of Global Sales and Business Development. East Penn will continue to expand its China operation as necessary to serve its customers throughout the Asia-Pacific market. This facility may eventually provide after-sales services to customers throughout the Asia-Pacific region.

East Penn’s China venture had fewer than 100 employees in late 2009, but expects to hire more in the coming years. The company has sent employees from US headquarters to train China staff, and some Chinese employees have traveled to Pennsylvania for further training.

Currently, the WFOE provides the final finishing stages to batteries that are exported to China and manufactures batteries using lead plates that are shipped from the United States. The company sells Deka Unigy I and II, Deka Unigy High Rate, and Deka Solar gel batteries in China. Deka Unigy batteries come in a single, 12-volt monobloc offering or in a module-type system. They are sealed lead-acid batteries specifically designed for telecom, uninterruptible power systems, and other back-up power applications. In China, the Deka Solar battery offering consists of sealed gel batteries that are designed to deliver the deep-cycle performance necessary to capture energy from renewable energy sources, such as solar and wind.

East Penn exports gel products to China, which are given a finishing charge and labeled in the Wujiang facility. Depending on customer requirements, 12-volt AGM batteries are either sent directly to the customer or shipped to China without acid. At the China facility, they are then filled with acid, activated, and finished.

Deka Unigy II 2-volt products are assembled in China using fully formed plates, separators, terminals, and other components exported from the United States. The plastic cases and sulfuric acid are purchased in China. Batteries are then assembled in Wujiang, filled with acid, activated, and finished.

Environment, health, and safety in Wujiang

The Wujiang facility is home to an analytical and battery testing lab, which not only tests East Penn’s products, but also inspects incoming materials and conducts environmental testing, research and development, and quality assurance checks.

The Wujiang facility follows all of the same workplace and safety regulations as the Pennsylvania plant: Employees are provided with uniforms, safety eyewear, and steel-toed safety boots. The facility has on-site showers and locker rooms so that workers may shower and change at the end of their shifts. East Penn tests the blood lead level of each new employee and performs these tests every six months to ensure continued health and safety.

East Penn has also replicated its environmental practices in its China facility, which has its own wastewater-treatment, ventilation, and air-pollution-control systems, including a scrubber system to remove acid fumes and prevent them from reaching the environment. But whereas East Penn’s Lyon Station facility operates its own battery recycling center and lead smelter, battery recycling in China is handled by a third-party recycler that is certified to ISO 9001, ISO 14001, and OSHA 18001 standards.

Poised to charge up the China market

China’s rapidly growing economy and drive toward clean energy offer huge opportunities for companies such as East Penn. China wants world-class transportation, communications, and utility systems. It also wants to attract high-tech and knowledge-intensive investments that require uninterrupted power supply, such as data centers. To East Penn’s advantage, US brands, especially for technical items such as batteries, are highly valued in China. East Penn has found that Chinese companies are increasingly prepared to pay for quality and technical support. With some East Penn products designed to last 10 to 20 years, and a new presence in China to provide support and service, the company is well positioned to benefit from that demand.

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Lead-Acid Battery Basics

A basic lead-acid battery has five main components: a plastic case and cover; positive and negative plates; separators; a solution of sulfuric acid and water (known as electrolyte or battery acid); and lead terminals to connect the battery to what it its powering. Lead alloy grids are covered with a special paste to make plates, and the negative plate’s paste contains “expanders” to preserve its chemical state. Separators lie between positive and negative plates to prevent short circuits. The plates and separators are grouped together to form cells and inserted into partitions in the battery’s plastic case. The cells are then welded together through the case partitions to allow current to transfer throughout the battery. After that, the cover is adhered to the case, and the lead terminals are welded on. Finally, the battery is filled with electrolyte, electrically formed, and prepared for shipping.

Flooded and sealed batteries

This basic type of flooded lead-acid battery has been made since 1859, with changes as new technologies and materials were invented. In a flooded battery, the electrolyte flows freely throughout the battery.

In recent decades, sealed valve-regulated (SVR) batteries have been developed. There are two main kinds of SVR batteries: gel and absorbed glass mat (AGM). In a gel battery, the sulfuric acid is mixed with a silica additive, which turns the electrolyte into a gel. In an AGM battery, the electrolyte is absorbed into a mat of fine glass fibers, which presses tightly against the plates. East Penn makes both flooded and SVR batteries.

One of the main advantages of SVR batteries is that the electrolyte cannot spill out, which makes it a safe choice for applications where there is a chance the battery could be moved or turned over. SVR batteries are used frequently in wheelchairs, marine applications, power sports vehicles, and most recently in autos and commercial trucks. They not only provide dependable power to start these vehicles but also have power and extra durability needed for electronic accessory loads and deep cycle service.

These batteries excel in stationary applications such as those used for uninterruptible power systems. SVR batteries in these applications usually have a much longer design life, need significantly less maintenance, and provide more power than flooded batteries.

—Virginia A. Hulme[/box]

[author]Virginia A. Hulme is editor of the CBR.[/author]