New Investments, Agreement for GKN

UK based manufacturer of automotive and aerospace components, GKN, is taking its expansion within the Chinese market one step further following the acquisition of one of the country’s leading manufacturers of off-highway wheels. GKN has also announced details of a new investment and joint venture.

GKN has purchased the Liuzhou Steel Rim Factory in Liuzhou City, Guangxhi province. The Liuzhou factory, which in 2005 had sales revenues of £9 million, employs 550 people and produces wheels for agricultural and industrial vehicles. It is anticipated that a large proportion of the wheels produced in the factory will be destined for export markets.

A new manufacturing facility will also be established in Shanghai’s Kangqiao development zone, with an initial investment of £2.25m. Graeme Walford, managing director of GKN Driveline Torque Technology, said demand for the company’s torque technology products in China was growing fast in China due to dramatic growth in the country’s vehicle market.

A range of geared components will be made at the Kangqiao plant, including differentials, final drive units, power transfer units and advanced torque management devices. Production at Kangqiao will begin this year.

GKN’s third China deal centres on a joint venture agreement for the supply of driveshafts to China South Industries Motor Company Limited (CSIMC), China’s third largest manufacturer of cars. The joint venture company, GKN Driveshaft (Chongqing) Limited (GDC), is to be 51 per cent owned by Shanghai GKN Drive Shaft Company Limited (SDS) and 40 per cent by CSIMC, with 9 per cent directly owned by GKN Driveline. Together with its direct and indirect shareholding in SDS, GKN Driveline owns 34.5 per cent of GDC.

Through the formation of GDC, GKN Driveline will have the means by which it can remain close to CSIMC’s key OEMs, which include its 50 per cent owned ChangAn Ford and 51 per cent ChangAn Suzuki passenger car manufacturers, as well as its 100 per cent owned in-house brand, Chana.

GKN Driveline’s existing 50 per cent owned driveshaft operations, based in Shanghai and Jilin, will remain independent of GDC. Overall, GKN plans to increase the company’s total China workforce to around 6000 within four years. This would make China the third largest concentration of employment within the worldwide GKN Group, which employs 40,000 people in over 30 countries.