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Eaton Forms Joint Venture in China

25 June 1998

Eaton Forms Joint Venture in China to Manufacture Viscous Fan Drives for the Automotive Market

    CLEVELAND--(AutomotiveWire)--June 25, 1998--Eaton Corporation and Shenglong Group Co., Ltd., a Chinese automotive supplier, announced today at the Beijing Automobile Show that they have formed a joint venture to produce viscous fan drives (VFDs) in China for the domestic truck and automobile market. Eaton owns 70 percent of the new business.
    Shenglong Group, which is privately owned, is China's largest VFD producer. The new venture, Eaton Shenglong Co., Ltd., consists of Shenglong's former First Automotive Group Viscous Fan Division. Sales in the first year are expected to be about $4 million (USD) and, if current forecasts hold, accelerate to $25 million annually over the next five years. Major OEM customers include China's First Auto Works (FAW), Shanghai VW and Jiangling.
    Eaton is providing product engineering and manufacturing technology support and Shenglong has contributed its existing manufacturing facilities and equipment. The venture will operate from a former Shenglong manufacturing site in Ningbo, Zhejiang Province, which is located about 100 miles southeast of Shanghai. It will employ about 130 people. Luo Yulong, the founder of Shenglong, will serve as Chairman of the joint venture. Heinz Wollmann, formerly manufacturing manager for Eaton in Markdorf, Germany, will serve as general manager.
    Eaton President Alexander M. Cutler said, "We are fortunate to have someone with the experience of Mr. Luo to lead this new joint venture. Our new relationship with Shenglong will permit us to provide the latest in automotive fan drive and fan technology to important customers in China's growing automotive industry. It is further evidence of Eaton's commitment to invest in, and grow with, the Chinese economy."
    David Chen, president-Eaton/China, said, "We have solid expectations from this joint venture. The Chinese automotive industry has excellent growth prospects. We believe the design and manufacturing expertise of this joint venture will make it an active participant in that robust growth."
    Earlier this year Eaton announced other new business initiatives in China: a joint venture to manufacture automotive and motorcycle engine valves and hydraulic valve lifters; a wholly owned hydraulics distribution, service and assembly business-both in Shanghai-and the opening of four new branch offices for Cutler-Hammer(R) products.
    With the addition of Eaton Shenglong, Eaton currently has six operations in China and a holding company, Eaton (China) Investments Company, Ltd. located in Shanghai. Shanghai Eaton Engine Components Company Ltd. and Eaton Hydraulics (Shanghai) Ltd., were announced in April 1998. Eaton Truck and Bus Company-Shanghai, a wholly owned heavy-duty truck transmission company, was announced in August 1997. In April 1996, the company formed a joint venture agreement with the Suzhou Electrical Apparatus Group Company to manufacture and sell electrical circuit protection devices. In 1993, Eaton and Jining Hydraulics Company of Jining City, Shandong Province, formed a joint venture to manufacture low-speed, high-torque hydraulic motors, primarily for agricultural and construction equipment.
    Eaton's sales in China are forecasted to reach $100 million in 2000. As a corporation, Eaton's strategic goal is to achieve $10 billion in global sales and earnings of $8 per share by the year 2000 through new product introductions, increased international expansion and strategic acquisitions.
    Eaton Corporation is a global manufacturer of highly engineered products that serve industrial, vehicle, construction, commercial and semiconductor markets. Principal products include electrical power distribution and control equipment, truck drivetrain systems, engine components, hydraulic products, ion implanters and a wide variety of controls. Headquartered in Cleveland, the company has 49,000 employees and 143 manufacturing sites in 26 countries around the world. Sales for 1997 were $7.6 billion. The Internet address for Eaton is: http://www.eaton.com/