NTN and Luoyang sign joint venture agreement


On 24th Dec., 2003, NTN and Luoyang Bearing Group Co.(China) signed cooperation treaty. The two Corporations would invest 600 billion RMB to develop railway bearing, new auto bearing, significant equipment precision bearing and precision machine tool guide screw etc.
In the terms, NTN would invest $2 million for the project. After it is finished, the income of sales would reach 1200 billion RNB. At the same time, NTN would take advantage of its international sale market to ensure 30% products to be exported.
Under the agreements, NTN and Luoyang will form joint ventures targeting the bearing markets in China showing the best growth prospects. Those are railway bearings, automotive-size bearings, heavy equipment and precision machine tool bearings. NTN will provide additional technical expertise and quality programs, while Luoyang will manage the physical plant and manufacturing assets.

Any new plants are expected to be built in and around Luoyang, or leverage Luoyang Bearing's existing inventory of manufacturing floorspace.

This is the latest of NTN's moves into China. In early 2002, NTN announced it would be significantly ramping up its presence in China over the next few years, at the expense of shuttering high-cost operations in Japan.

NTN and Luoyang are not strangers to each other; they are building on a relationship that saw Luoyang purchase NTN's production line for inch-dimension automotive size tapered roller bearings.

Luoyang -- LYC brand bearings -- was established in 1954 and is now China's second-largest bearing manufacturer. The company's plants cover almost 13 million square feet of production floorspace, employ over 30,000 people and produce over 70 million bearings each year. Sizes range as small as 8mm ID to over 5.5m OD. The company recently added capacity for automotive wheel hub assembly unit bearings, targeting the fast-growing Chinese auto manufacturing industry. In 2003, LYC reported it exports directly to over 70 countries around the world.

LYC was recently honored for its work in supplying bearings to China's Shenzhou-VI manned space flight mission.

The NTN-Luoyang joint venture calls for a total investment nearing USD $145 million by both companies, but Luoyang will retain full manufacturing control.

Luoyang currently produces many of the products covered by the joint venture agreement with NTN, but sales are now only $94 million. By 2009, the companies said they expect sales for these joint venture products to top $302 million.

Eventually, demand from within China is expected to account for 70% of venture's total sales. The remaining 30% NTN expects to be solely responsible for selling into export markets.





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