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June 18, 2008 02:00 AM

Machinery makers set up shop in China

Bill Bregar
Senior Staff Reporter
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    (June 16, 2008) — Machinery makers across the globe have set up manufacturing in China to grab a piece of the world's fastest-growing economy. But European and U.S. machinery manufacturers with Chinese operations have another big advantage over their purely domestic competitors: real-world relationships with Chinese suppliers. They can get lower-cost components for their machines built in places like Batavia, Ohio; Munich, Germany; or Bolton, Ontario.

    When it comes to China, the numbers are always amazing. About 50,000 injection molding machines are sold each year there. The U.S. market? Around 3,000.

    During the Chinaplas trade show in April, three machinery executives talked about the trend.

    Cincinnati-based Milacron Inc. set up a factory in 2004 in Jiangyin, China, with partner Jiangnan Mould & Plastic Technology Co. Ltd. Milacron had hired Jay Woerner the year before as head of global manufacturing. He said the company had already starting sourcing some parts from China before he joined.

    Having a plant in China makes you build stronger ties with suppliers, Woerner said. “We had already been through and identified primary sources for principal component parts of a machine, because we didn't want to start our manufacturing in China until we had a rather sizable part of a machine and the sourcing identified for local components,” Woerner said.

    Milacron ships a number of parts to factories around the world, including raw castings, machine bases, strain rods and bearings, AC motors, and basic valves and cylinders.

    Krauss-Maffei AG also gets China-made components, such as castings and some machine bases, which are shipped to its European factories that assemble injection presses and extruders, said Karlheinz Bourdon, managing director of KM's injection molding machinery division.

    The Munich-based company runs a factory in Jiaxing, near Shanghai. As of now, the factory assembles only extruders, but officials are studying whether to add injection presses.

    “You create another level of cooperation with the suppliers. It's one thing if you have just a factory in Europe and have them here as a supplier base. It's another thing if you produce here. So it's much tighter,” Bourdon said.

    Husky Injection Molding Systems Ltd. of Bolton also has developed bonds in China with suppliers of forgings, castings and raw plate steel.

    Husky runs an injection press factory in Shanghai and another plant, making hot runners, in Shenzhen.

    Milacron's Woerner said the collapse of the U.S. market caused all the machinery suppliers to rethink their business models.

    So a local presence to serve customers in China makes sense. But these days, if you're a molder in Erie, Pa., the next injection press you buy stamped “German made,” “Austria made” or “Made in U.S.A” probably will contain parts from China. The impact of globalization will only accelerate as the U.S. economy stagnates.

    Bregar is a PN senior reporter based in Akron, Ohio.

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