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November 13, 2018 01:00 AM

Toyoda Gosei grows in China with acquisition

Chris Sweeney
Rubber && Plastics News
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    Toyoda Gosei Co. Ltd.
    Hubei Rock Rubber and Seal Technology Co. Ltd. make both rubber and thermoplastic vulcanizate seals.

    Toyoda Gosei Co. Ltd. is purchasing a majority stake in plastics and rubber auto seal maker Hubei Rock Rubber and Seal Technology Co. Ltd. to strengthen its auto parts business in China.

    The deal is expected to be complete in December, according to an Oct. 30 news release. Toyoda Gosei said it will pay about $7.12 million for a 60 percent stake in Hubei Rock from its parent company Hubei Zhengao Automotive Accessories Co., which will hold the remaining 40 percent as a minority joint venture partner.

    "TG is a top class global supplier of weatherstrips," a company spokesman said in an email. "Its abundant expertise in product development and quality improvement of the product will help Hubei Rock meet needs from auto makers and thereby support its growth in the region."

    Based in Shiyan, China, Hubei Rock is an independent supplier that provides both EPDM and thermoplastic vulcanizate-based weatherstrips, mainly to Dongfeng Motor Corp., which Toyoda Gosei described as one of China's "big three" auto makers. It employs 281 people at its 465,000-square-foot facility and generated $11.8 million in sales in fiscal 2017.

    The company also supplies to Dongfeng's joint venture companies with Japanese and other foreign manufacturers, including Dongfeng Honda Automobile Co. Ltd. and Dongfeng Peugeot-Citroen Automobile Co. Ltd.

    The spokesman said that Toyoda Gosei received requests from auto makers, most notably Honda, to expand further into the region. Honda operates a manufacturing company jointly with Dongfeng in central China.

    Dongfeng represents a new customer for Toyoda Gosei. The spokesman said Hubei Rock's partnership with Dongfeng and other auto makers in the region was what made it so attractive.

    "Needs from auto makers were for higher quality and production capacity increase of weatherstrips," the spokesman said. "In order to meet these needs, Hubei Zhengao decided to cooperate with TG. On the other hand, TG did not have a plant in the region. For greater presence there and expansion of its business in China overall, working with Hubei Zhengao was a good option for TG."

    With this partnership, Toyoda Gosei's production network in China will expand to four locations: TG Star Light in northern China, Foshan TGR and Fu-Yue in southern China and now Hubei Rock in central China. Toyoda Gosei said it considers China a crucial market and will continue to strengthen its development and production networks there.

    The official name of Hubei Rock will change to Hubei Toyoda Gosei Zhengao Rubber and Seal Technology Co. Ltd.

    It is TG's second acquisition of a Chinese weatherstrips producer in 2018, acquiring TG Star Light — formerly Tianjin Star Light Rubber & Plastic Co. — in March. At the time, TG said the firm employed 994 people with about $75 million in sales for 2017. Its only manufacturing facility, based in Tianjin, spans about 462,800 square feet. It produces EPDM weatherstrips for opening trims/doors and TPV weatherstrips for glass-run systems to local original equipment manufacturers on a Tier 1 basis.

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