China:NTN Establishing More Joint Ventures in China

NTN Corp. (Japan) is establishing two more manufacturing joint ventures in China, accelerating the pace of its manufacturing expansion in that country. The moves also highlight NTN's aggressiveness in expanding production of constant velocity joints, shafts and components worldwide, while keeping them cost-competitive through vertical sourcing arrangements. NTN and Changzhou Guangyang Bearing Company (China, formerly Changzhou Needle Bearing Factory) are forming an as-yet unnamed joint venture, to be complete by February 2004. Changzhou Guangyang is the parent company of NRB China bearings, and has for many years been a major supplier of ball and roller bearings to the automobile, light truck, and heavy truck manufacturers operating in China. The company manufactures needle roller, cylindrical roller, clutch release bearings and four-point contact ball bearings. NRB also manufactures balls and rollers. Beyond the auto industry, NRB bearings are used in manufacturing and industrial equipment, textile mills, diesel and gasoline generators, office equipment and household appliances. The NTN-Changzhou Guangyang joint venture will build a new factory in Changzhou to manufacture a range of ball and roller bearings in automotive sizes. NTN will own 51% of the company and have full management control, while Changzhou Guangyang will hold 49%. NTN, Korea Flange Co. Ltd. (KOF, Korea) and an unnamed Taiwanese company are setting up a joint venture manufacturing facility outside Beijing, focusing on automotive constant velocity (CV) joints. This is NTN's third Chinese joint venture in the past 18 months to focus on CV joints and components. Founded in 1970, Korea Flange is a member of the Kia-Hyundai Motor Group, operates three major factories in Korea and is the most advanced business of its type in Korea. For the automotive side, KOF has been producing CV joints, shafts, and complete axle assemblies since approximately 1980. KOF also manufactures wheel hubs, connecting rods, ring gears, engine crankshafts, and various suspension and driveshaft component forgings. It is ISO9002 and QS9000 certified. Korea Flange will hold 51% of the venture, NTN 40% and the Taiwanese company, 9%. The facility is scheduled to come online in February 2004, with first year sales forecast to be ¥ 1.1 billion, eventually reaching ¥ 4 billion by 2006. NTN currently has three operations in China via NTN China Ltd. -- a main office in Hong Kong, and manufacturing facilities in Shanghai and Changzhou. In addition, there is NTN-Nidec in the hydrodynamic bearing business for computer disk drives. In August 2002, NTN established Shanghai-NTN Co., a 95%-owned joint venture in Shanghai, with Okaya & Co. Ltd., to manufacture constant velocity joints. That facility was built for the primary purpose of manufacturing CV joints and components for export to other NTN facilities around the world. Approximately 90% of NTN Shanghai's product is exported, to enhance, "the global price competitiveness" of NTN's CV joints and components. The plant came online in June 2003, and NTN forecasts Shanghai-NTN's sales will reach ¥ 3 billion by 2005, employing at least 300 people. In October 2002, NTN formed NTN-Yulon Drivetrain Co., Ltd. in Guangzhou, to produce CV joints. The joint venture is with Yulon Group (Taiwan), which manufactures automobiles through South East Motor Corporation and Aeolus Motor Corporation in China. NTN owns 60% of NTN-Yulon. NTN said when announcing the NTN-Yulon venture, "By making the most of NTN's technical expertise and Yulon Group's business experience in China, this joint venture company will become a base for CVJ production in China and enhance our competitiveness in terms of quality, price, delivery time and customer service. Through the subsidiary's manufacture and sales of CVJs, we will be able to respond to the local procurement needs of growing Chinese automakers and strive to further expand our CVJ operations in China." NTN has been manufacturing CV joints and components since 1963, when it established a relationship with Hardy Spicer Ltd. In the latest announcements, NTN said it expects the bearing manufacturing operations in China will more than triple their sales by 2006, to more than ¥ 23 billion.