Milacron Inc. expects its joint venture plant in Jiangyin, in China's Jiangsu province, to break even next year.
Jay Woerner, the company's vice president of Asia operations, said: ``We took a lesson from our India operation,'' which also broke even in the fourth year after startup. The pace to profitability in China is on plan.''
Milacron set up the manufacturing joint venture north of Shanghai in 2004, and the plant started exporting in 2005. Currently the joint venture is quoting projects on three continents. Sales reached $6 million in 2005, Woerner said at the Plastics News China Forum, held Nov. 14-15 in Rosemont.
The China plant currently makes hydraulic and hybrid injection machines with clamping forces in the range of 500-3,000 tons. Customers include automotive and packaging molders.
The product line may extend to small-tonnage presses and new models of large machines. Woerner said in an interview that the decision will be made in six months.
``All-electric machines will be our next study,'' he said.
Another lesson Milacron may transfer from its more established Indian facility to China is ownership. The company has raised its 50 percent share in the plant in Ahmedabad, India, to 90 percent.
Milacron's majority share in the 70-30 Chinese joint venture is not locked in, Woerner said.
``Our partner has expressed willingness to back away from it,'' Woerner said. ``An increase [of our position] is possible.''
Milacron plans to create additional export channels for its Asian operations. For exports to emerging markets, including the Middle East, Central America, Eastern Europe and Latin America, production will ``selectively transition from North America and Western Europe to Asia,'' he said.
Milacron now exports small presses, with clamping forces of 30-910 tons, from its Indian facility to 40 countries, mainly in Africa and the Middle East. With $25 million in 2005 sales, the Indian plant added blow molding machinery in 2006 and will add extrusion equipment in 2007.
The Cincinnati-based company also is discussing whether to bring its extrusion technology to China. After a five-year noncompete agreement between Milacron and SMS AG expired in late 2004, Milacron's worldwide strategy is to resume extruder production.
``North America and Western Europe are declining markets,'' Woerner said, although sales from these regions still represent 70-80 percent of Milacron's global revenue. He said the company will go after growth opportunities for parts and service in North America and in Western Europe, which houses a large installed fleet. The aftermarket services also require production, he said, so factories in these regions will not be affected.
Woerner anticipates the same pattern to repeat in new markets in the future.
``They are still growing and expanding. But after they reach the peak, the model will also change [from installing new machines to aftermarket services].''
Milacron currently has about 100 employees in China and 400 in India.