Deutz to sell engines from China … Komatsu, Hitachi construction alter European operations … Hitachi to launch new transmission company - International Report

Diesel Progress North American Edition, May, 2003 by Mike Mercer

INFORMATION FOR THIS REPORT IS TAKEN FROM INDUSTRY SOURCES AND DIESEL PROGRESS INTERNATIONAL EDITION. FOR UP-TO-THE-MINUTE INTERNATIONAL NEW, AS WELL AS NEW PRODUCTS AND TECHNOLOGY VISIT THE SOURCE - DIESEL PROGRESS ON-LINE. www.dieselpub.com

Deutz AG announced plans to begin engine exports from China after 2005 through a new licensing agreement with First Auto Works Group Corp. (FAW). The deal will enable Cologne-based Deutz to expand its market presence in China, as well as provide a platform to sell FAW-made diesel engines under Deutz license in other regional markets. The plan calls for FAW to produce 80,000 to 100,000 engines a year in a new manufacturing facility in Dalian, with part of that production possibly being sold back to Deutz for export, according to the company. The FAW plant will be operational by 2005.

The plan is the second phase of a 10-year technology cooperation and licensing agreement signed by the two companies in October. In the first phase, Deutz will sell 120 to 295 hp engines for FAW's 7 to 16 metric ton trucks. Based in the northeast city of Changchun, FAW is China's largest commercial vehicle maker and the world's fifth-largest truck producer. FAW also has an auto manufacturing joint venture with Germany's Volkswagen AG.

Komatsu Ltd. and Hitachi Construction Machinery Co. announced plans to strengthen their European marketing operations for construction machinery. As of April, Komatsu planned to centralize its marketing operations, which were dispersed among three factories. Marketing functions will be consolidated at Komatsu Europe International NV, which is in charge of overseeing operations in the European region. In addition, three of Komatsu's European production facilities -- a hydraulic excavator factory in the U.K., a wheel loader facility in Germany and a small construction machinery plant in Italy -- will have an in-house product development program. Hitachi Construction Machinery has taken a 30 percent stake in its U.K. sales agent and a 20 percent interest in its Italian agent. Last year, Hitachi dissolved a merger with a Fiat SpA construction machinery group and established new sales agents in 13 European countries.

Hitachi Industries Co. will take over the transmission operations of Niigata Engineering Co., which is undergoing restructuring, and launch a new firm to handle the business, the company said. The new subsidiary, to be located in Saitama, Japan, will be a wholly owned unit of Hitachi Industries. The company, capitalized at $3.7 million, was to begin operations on April 1, producing and selling midsize transmissions for boats and construction equipment. The new subsidiary has targeted sales of $84.6 million in fiscal 2003. Hitachi Industries currently produces large transmissions for use in thermal power generators. In the future, all transmission business is to be concentrated in the new firm.

Denso Corp. announced the establishment of a new wholly-owned holding company Denso (China) Investment Co. Ltd. which will function as a regional headquarters in China and will be located in Beijing. Currently, Denso operates six manufacturing companies in China that produce automotive products for the Chinese auto industry, including car air conditioners and electric components. Ownership of the six companies will be transferred to the new company by the end of March 2004. The six companies are: Yantai Shougang Denso Co. Ltd., Yantai, Shandong Province; Tianjin Denso Engine Electrical Products Co. Ltd., Tianjin; Chongqing Denso Co. Ltd., Chongqing; Tianjin Denso Electronics Co. Ltd., Tianjin; Tianjin Denso Air-Conditioner Co. Ltd., Tianjin; and Tianjin ASMO Automotive Small Motor Co. Ltd., Tianjin.

Poclain Hydraulics announced the addition of two new subsidiaries in Asia and the Nordic countries, bringing the global total of wholly-owned sales subsidiaries to 11. The company has consolidated its presence in China with the creation of the sales subsidiary in Peking which opened last December. The company has also captured the Swedish market with its new sales subsidiary in Sweden, Poclain Hydraulics AB. This facility will cover all the Nordic countries, Sweden, Finland, Denmark and Norway and also Iceland.

Scania has sold 65 Scania 0mni-City city buses to the cities of Paris and Amiens in France. This is the first time Scania buses are being used in Amiens. The company has also announced that it has no intention of leaving the Brazilian truck market.