News Article

New manufacturing facility and new joint venture continue GKN’s China growth

November 2006
Auto China, Beijing, 17th November 2006 – GKN continued its expansion in China today with the announcement of a new automotive manufacturing facility and a new automotive joint venture.

The two announcements, which were made at Auto China, Bejing - one of Asia's leading motor shows - follow yesterday's announcement of the acquisition of a leading Chinese manufacturer of wheels for the off highway sector.

New manufacturing facility GKN Driveline Torque Technology is to establish a new manufacturing facility in Shanghai's Kangqiak development zone, with an initial investment of RMB 34 million (£2.25 million).

Grame Walford, Managing Director of GKN Driveline Torque Technology: "We are experiencing rapid growth in demand for our torque technology products in China. This is in part due to the dramatic growth of the vehicle market here, but it is also a reflection of the technological leadership we are proud to be able to offer our customers."

GKN Driveline Torque Technology will initially be manufacturing a range of geared components at Kangqiao, from differentials to final drive units, power transfer units and advanced torque management devices as the market demand for these products matures. The new facility has been located conveniently for the company's major customers and suppliers. Initial production will start next year.

New Joint Venture GKN Driveline has exchanged contracts to form a new driveshaft manufacturing joint venture, GKN Driveshaft (Chongqing) Limited ("GDC") in Chongqing, central China to supply driveshafts to China South Industries Motor Company Limited (CSIMC) in China, the country's third largest OEM.

GKN Driveline's 50% joint venture, Shanghai GKN Drive Shaft Company Limited ("SDS") based in Shanghai, owns 51% of GDC and will consolidate its financial results. The remaining shareholders in GDC are CSIMC with 40% and GKN Driveline with 9% directly. Together with its direct and indirect shareholding in SDS, GKN Driveline owns 34.5% of GDC.

By forming GDC, GKN Driveline will ensure it remains close to CSIMC's key OEMs which include its 50% owned ChangAn Suzuki passenger car manufacturers as well as its 100% owned in-house brand, Chana.

GKN Driveline's existing 50% owned driveshaft operations, based in Shaghai and Jilin, will remain independent of GDC and will supply components to GDC to maximise synergies across the three operations.

GDC is forecast to employ 155 people. The capital investment will be approximately €9m Euro, funded locally. Total investment in registered capital is RMB 50m or €4.8m Euro, of which GKN Driveline's direct 9% share is €0.4mEuro. SDS and GKN Driveline will fund their investments through current cash resources.

GKN has operated in China for 18 years and currently employs some 2,800 people across its Driveline, Sinter Metals and Off Highway operations. Current plans envisage the Group's China workforce increasing to around 6,000 within four years. This would make China the third largest concentration of employment within the global GKN Group.

Editor's notes: GKN Driveline is a global enterprise with 21,000 people working at more than 40 locations in over 30 countries. The company recorded sales of €3 billion in 2005. Recognised as the auto industry's leader in the design and production of driveline components, GKN Driveline provides driveline csolutions from the smallest front-wheel-drive vehicles up to the most sophisticated fur-wheel-drive models. The company has a commanding share of the global market for CVJ (constant velocity joint) sideshafts and also is a leading global producer of all-wheel-drive PTUs (power transfer units) and torque management devices.

GKN Driveline was the first automotive component company to establish a joint venture in China in 1988 - Shanghai GKN Drive Shaft (SDS). In 1996 a second joint venture was formed with Jilin GKN Norinco Drive Shaft (JDS).

Company contact:
Paul Dinwiddy
GKN Driveline Headquarters
p: +44 1527 533 646
m: + 44 7801 077 523
e: paul.dinwiddy@gkndriveline.com

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