Sister companies Battenfeld Extrusionstechnik GmbH and Cincinnati Extrusion GmbH are consolidating their production in China, moving Cincinnati's production in Dalian to Battenfeld's facility in Foshan.
The two European companies said they will keep separate brand identities in China, but will be combining production later this year as a way to control cost and boost efficiency.
Both Battenfeld, in Bad Oeynhausen, Germany, and Vienna, Austria-based Cincinnati, are owned by Triton, a Jersey, England-based private equity firm. Triton bought them in March 2007.
Peter Schuerz, formerly the general manager for the Cincinnati Dalian operation, took over Jan. 1 as head of the Battenfeld operation in Foshan. In an April 18 interview at the Chinaplas trade fair in Shanghai, Schuerz said the two companies will have a combined sales force in China, unlike the rest of the world, where they maintain separate sales organizations.
``We will only unify the production, but we will not unify the brands. The brands are independently manufactured, according to the technology of the mother companies,'' Schuerz said. ``In the course of 2008 we will unify the production and we are in the process of this restructuring.
``The reason is to have a more powerful organization in the background and have more efficient production, because we had two factories and now we have one factory,'' he said. ``Obviously you save money.''
The combined operation will be known as B+C Extrusion Systems (Foshan) Ltd.
Cincinnati established production in Dalian in 2000 in part to serve a massive contract for several hundred extrusion lines from Dalian Shide Plastic Industry Co. Ltd., a large Chinese window profile extrusion firm. Schuerz said Dalian Shide has fulfilled its contracts with Cincinnati and bought more than 300 PVC profile extrusion lines.
Schuerz said both Battenfeld and Cincinnati are facing rising costs in China and internationally, and are being hurt by the strengthening euro. ``The challenges are the high euro exchange rate and China costs increasing,'' he said. ``They are of course affecting our market position, also against U.S. and local producers.
``It is very clear that of course we have changes in the raw material costs, internationally and especially in China, and that has influence on our business plans,'' he said. ``We focused on cost-efficient production.''
But Schuerz said the companies' fundamental markets in China remain strong, including the construction industry, a major market for both firms.
The firms expect to maintain sales at the same rate as before, particularly as the domestic Chinese market demands more machines like theirs, he said.
``We can expect the same pace and we see the demand for high-quality equipment is rising in China,'' he said. ``We think we are on a good way to increase our market share in both brands.''
He said Cincinnati made 60 machines in Dalian in 2007, and Battenfeld's China subsidiary has sold more than 230 extrusion lines since it opened in 1996. At Chinaplas, held April 17-20 in Shanghai, Battenfeld exhibited its low-cost techBEX line from Foshan and presented large-diameter-pipe extrusion equipment.