One year after launching its first injection press manufacturing in China, Milacron Inc. is moving ahead with plans that it hopes will lead to a larger presence in the market.
Cincinnati-based Milacron and its Chinese partner, Jiangnan Mould & Plastic Technology Co. Ltd., launched the joint venture in mid-2004, and they are moving the fledging operation into a new building on Jiangnan's manufacturing campus.
Right now, Asia amounts to about 8 percent of Milacron's worldwide sales, but the company believes it will be one-third of its business by 2010.
Milacron is seeing strong demand from China's automotive market, which is getting more sophisticated and wants Western-caliber machines with faster cycle times to reduce costs and meet just-in-time delivery requirements, said Milacron Chairman Ron Brown.
Brown spoke at Chinaplas 2005, held June 21-24 in Guangzhou.
``Manufacturers here are really bringing up the quality standards of autos in China,'' Brown said.
``They want [injection] machines that have much quicker cycle times than are here in the market now.''
A recent report in Automotive News said China's auto market is expected to double from 2.4 million cars sold last year to 5 million cars in 2010.
The venture, called Milacron Plastics Machinery (Jiangyin) Co. Ltd., is moving into a 50,000-square-foot building, where it will be able to produce about 80 large-tonnage, hydraulic, two-platen machines a year. The operation will have about 50 employees by year's end, Brown said.
The Chinese venture makes large presses for the local market, and will show its first Chinese-built Maxima machines publicly at the Asian-Pacific International Plastics and Rubber Industry Exhibition in Shanghai from July 13-16.
The company said that about 90 percent of the Chinese market is focused on small presses, with less than 500 tons of clamping force, but Milacron is going after the market for 500- to 4,000-ton presses that need to meet world standards.
The Chinese presses are the same as what Milacron would make for the auto market in the United States, Brown said, but are about 35 percent cheaper than if they were imported from America. The firm is using locally sourced components like castings to reduce costs, and wants to expand what it procures locally. Milacron is in the ``early stages'' of convincing suppliers of components that have to be imported, like controllers, to develop their own presence in China, Brown said.
Milacron believes the suppliers it is identifying in Asia eventually will supply Milacron factories in the United States and Europe, and reduce the cost of machines made there, he said.
``It's going to benefit our competitiveness,'' Brown said.
Brown said the company has no immediate plans to export the Chinese machines to its other markets, although he declined to rule that out.
``The demand is so strong here, it will be quite some time before I see a lot of exports of these machines,'' Brown said. He said Milacron needs to maintain a strong manufacturing presence in each of its major markets, and has an established manufacturing joint venture in India.
At Chinaplas, the company was showing its German- and Italian-made machines, because three-fourths of what it has sold to date in China are imports, mostly from those countries. The other 25 percent of machines have been made in China.
Milacron's entry into the mammoth Chinese market follows an unorthodox entry strategy.
Instead of partnering with an established Chinese machine maker, the firm chose a major local customer, automotive molder Jiangnan, which has substantial business with General Motors Corp. and Volkswagen AG.
While Milacron thought about whether partnering with Jiangnan would make it harder to sell to other molders, Jiangnan provides a ready-made market for the machines, and Milacron does not have to worry as much about intellectual property issues, Brown said.
So far, the venture has met expectations, he said. It's part of the company's push to have a global manufacturing platform and brand name, because its customers increasingly want the same machine and service no matter where they are, he said.
``It's important that we really try to satisfy global manufacturers, and that we support them around the globe,'' Brown said.