Hayes Lemmerz to Formalise Russian JV

Hayes Lemmerz International Inc plans to transform its technical alliance for the licenced manufacture of passenger car steel wheels in Russia into a formal joint venture over the next couple of years.

Last year Hayes Lemmerz’s German subsidiary, Hayes Lemmerz Holding GmBh, signed a licence agreement with the Russian Tolyatinkiy Zaved Stalnih Kolynos (TZSK), Togliatti, as a strategic means of entering the Russian market.

“Eventually, our alliance in Russia will go beyond a technical agreement. We have formed this to enter the Russian market since we had no presence there,” stated Fred Bentley, COO and president, Global Wheel Group (GWG), Hayes Lemmerz. He added they will wait and observe the venture’s progress before taking any further steps.

Unlike most market participants with global aspirations, Hayes Lemmerz has no presence in China and does not even sell in the Chinese market. Mr Stephenson explained that the aluminium wheel market in China is already facing an over-capacity. “For the next two years, we do not intend to go to China,” Mr Stephenson remarked.

The company has been undergoing a period of restructuring, and Mr. Bentley believes it will take some time to complete the entire restructuring process. At present the company is in the process of separating itself from its non-wheel business.

Hayes Lemmerz reported a net loss of US$26.9 million for the second half of 2006, ending July 06, and the company has admitted that they are finding it impossible to compete in terms of cost with Chinese aluminium wheels that are imported into the US.