German injection press maker Demag Ergotech GmbH has identified its Chinese manufacturing partner: Ningbo Haitian Corp. Ltd.
The joint venture, Demag Haitian Plastics Machinery, started production this month in the city of Ningbo, China. Demag Ergotech becomes the third major German plastics machinery supplier to build machines in China. Earlier joint ventures include a Shunde extruder factory by Battenfeld GmbH/Chen Hsong Machinery Co. Ltd.; and a blow molding machine plant, also in Shunde, between Chen Hsong, Fried.Krupp AG and Shunde Sunny Group Corp.
For the past few years, Asian manufacturing has become a hot topic among German plastics equipment executives. Local plants are seen as preferable to shipping machines to Asia from Germany, which is saddled with high labor costs.
This year's economic meltdown in Asia did not slow down Demag Ergotech, according to Wolfgang von Schroter, Demag's executive managing director. China's economy has kept growing even as other Asian countries fall, he said in June at a pre-K'98 news conference.
By 2000, capacity at Demag Haitian Plastics Machinery will be 300 injection molding machines a year. Demag Ergotech owns 60 percent of the joint venture; Ningbo Haitian holds 40 percent.
Demag Haitian has built a factory with 5,280 square feet of assembly area in Ningbo. The plant will employ about 60.
Full production began this month. At first, the venture will build 110-ton machines, but eventually, it plans to build machines with clamping forces of 55-363 tons.
Demag Ergotech, headquartered in Schwaig, Germany, is a partner of
Strongsville, Ohio-based pressbuilder Van Dorn Demag Corp. Each firm sells the other's presses in its home markets.
At K'95, when Asia was the world's fastest-growing region, several German companies said they were looking to manufacture there. This year's Asian economic crisis may change some minds, but China remains a tempting, gigantic market.
According to Demag Ergotech, one out of every four injection molding machines sold worldwide in 1997 went to China. Demag Ergotech said its partner, Ningbo Haitian, employs 500 and turned out 1,000 presses last year. The machines have clamping forces of 27-2,750 tons.
Meanwhile, Battenfeld, a Demag competitor in injection presses, also has a long-term strategy to manufacture in Asia. Battenfeld has boosted its ownership stake, to about 10 percent, in its Asian partner, Chen Hsong Holdings Ltd. of Hong Kong, according to Battenfeld executive Helmut Eschwey.
Battenfeld has a long-term strategy to manufacture injection presses in the region, possibly using components from Chen Hsong, Eschwey said.
Battenfeld bought more Chen Hsong shares when the Hong Stock market dropped this year, Eschwey said during the company's June pre-K news conference in New York.
Asian economies will remain weak for at least the next two years, said Eschwey, a member of the managing board of SMS AG, which owns Battenfeld of Meinerzhagen, Germany.