Spanish metal and plastic auto parts supplier CIE Automotive SA is stepping up investment in China with a new $12.1 million manufacturing campus near Shanghai. The company said it wants to focus its plastics work in China on high-end projects like in-mold decoration.
The new investment comes as company officials disclosed in a Feb. 22 interview that CIE called off its planned joint venture with Shanghai-based plastic interior trim maker Sandun Auto Parts Co. last year.
Instead, the Bilbao, Spain-based CIE said it expects to complete a 592,000-square-foot, three-factory complex in the Shanghai suburb of Nanxiang by late 2008, and is considering additional investments in Wuhan and Shenyang, said Jose Guedes, chief executive officer and president of CEI Automotive Parts Shanghai.
The new factory will be owned entirely by the Spanish firm. While CIE declined to talk in detail about ending the Sandun joint venture, CIE Deputy General Manager Dong Min said there would have been problems with profit margins and quality.
Sandun officials could not be reached for comment.
Guedes projects China could contribute $70 million in sales to the company by 2010. Last year, CIE, which has 51 plants globally and had global sales of $1.5 billion, did not have any sales from China, he said.
But the firm now is considering a rapid expansion in China, with plans to invest another $70 million, as it follows the global auto market to the East.
Guedes said it sees China as an export platform for North America, Japan and South Korea, as well as for serving China's booming domestic auto parts market, estimated to be growing 30 percent a year.
The Chinese factories do not, however, plan to export to Europe. ``We don't want to be competitors with our own companies,'' he said.
The company said growth right now is happening in the East and in new markets. Last year, it opened new plants in the Philippines, Lithuania, the Czech Republic and Guatemala.
``What we see right now, is that the materials markets [plastics and metals in North America] are in big trouble,'' Guedes said. ``European companies are in better shape, but the Asian carmakers are aggressive.
``Even in China we see some companies who will be players in the international market in the future,'' he said.
The company's China strategy right now is to focus on higher-technology applications and to avoid the cutthroat price wars in markets like simple injection molding, he said. That means working in areas like plastic in-mold decoration, insert molding and complicated, safety-critical parts such as steel seat-belt retractors, air-bag parts and steering systems, he said. It has won orders to supply interior trim for armrests made of plastic and leather for Samsung Motor Co.
``We want to focus on difficult parts, in niches of the market that need a lot of technical knowledge and experience,'' he said.
The company plans to grow its engineering team in Shanghai from 15 now to 100 by 2010, as those engineers work on parts for global orders. Now, it's working from a small temporary plant near Shanghai.
The company has been purchasing more Chinese equipment for its Shanghai operation, and finding no difference in the quality of the parts it produces, compared with its European equipment, he said.
It may have taken three years to develop the technical know-how for some projects in Europe, but the knowledge and production can be transferred to China in three months, he said.
``What we try to do just now is test how far we can get using only Chinese equipment,'' Guedes said.