Frankfurt, Germany — Tristone Flowtech Group GmbH has acquired Anhui Zhongding Rubber Hose Co. Ltd. from Anhui Zhongding Sealing Co. Ltd., expanding its presence in China's automotive sector.
With a manufacturing plant in Ningguo, China, and a work force of nearly 550 employees, the acquired company produces engine cooling, battery cooling and air charge hoses for original equipment manufacturers in the country.
Tristone will continue to operate the plant with the facility's present staff, according to Guenter Froelich, president and CEO of Tristone.
Tristone purchased the hose maker from its own parent company, Anhui Zhongding Sealing. Financial details of the transaction were not disclosed.
Products currently manufactured at the Ningguo facility "as of today are rather simple hoses and not complex hose assembly systems designed by Tristone as a development partner of the OEMs," he said. "We will realign and strengthen the company with our structure and competencies."
Frankfurt-based Tristone eventually plans to rename the acquired company, which had 2019 sales of a little under $38 million, to Anhui Tristone Flowtech Ltd. The company expects Anhui Tristone's sales to grow about 10 percent to about $42 million in 2020, Tristone said.
Froelich said the purchase was made to strengthen Tristone's engine, battery cooling and air charge systems core activities in China, and to gain a stronger position in the local Chinese OEM automotive passenger car market.
"Tristone Group's historical customers in China are global automotive OEMs — such as Ford China, Volvo China, BMW China and Fiat Chrysler China — but not yet local Chinese OEMs like BYD, Great Wall, Geely, Cherry, SAIC and FAW," he said. "Those local OEMs already are customers of the acquired business."
Froelich said the acquisition gives Tristone three hose manufacturing factories in China, two in Ningguo and another in Suzhou, the latter of which the company added in 2015. All three make products strictly for the Chinese market and do not export to other regions, he said.
With those plants, he said, Tristone will be in a position to offer a broader product portfolio to the markets it serves, allowing it to be a full-system supplier and design partner to its global OEM customers in China.
"Our product portfolio will include not only cooling hose systems but also air charge hose systems, wrapped turbocharged hose systems, plastic PA pipe systems and plastic surge tanks," Froelich said. The firm's next step in the country will be to produce plastic quick connectors, plastic ducts and cooling hoses.
Tristone prefers to operate local manufacturing facilities to produce its goods for the regions it serves. Imports call for companies to add costs for transport, import duties and other expenses, Froelich said, "and this is not a business model that is working any more."
In addition, OEMs in the markets Tristone serves expect local production close to customers for the logistic advantages, he said. Overall, the company has 12 manufacturing operations in Europe, the NAFTA region, India and China.
Tristone, which specializes in fluid applications for motor and battery cooling as well as air charge systems, said it expected sales growth of 5 percent in 2019 to about $340 million. In 2020, it forecast sales growth of 20 percent to $405 million, not including the latest acquisition in China. The increase will be driven primarily by ongoing start-ups based on booked business with global OEMs in the regions Tristone serves, despite the weaker economic conditions in some markets.
When the acquired company is factored in, overall revenues could increase to about $445 million in 2020. Tristone has a total work force of more than 3,400.