DEXTER, Mich.—Jyco Sealing Technologies is investing about $2.5 million in a Chinese joint venture with Japan´s Inoac Corp. to tap demand for automotive weatherstripping in the world´s fastest growing car market.
The venture will start production of thermoplastic vulcanizate sealing systems this summer at a $5 million factory in Shanghai, China, said Sam Jyawook, Jyco´s president, CEO and majority owner. Jyawook said he expects annual sales from the 35,000-sq.-ft. Shanghai plant to reach $10 million in five years.
"We foresee it as a good-sized business," he said. Jyco, based in Dexter, Mich., and Inoac, headquartered in Nagoya, Japan, are talking about adding at least two more facilities, Jyawook said.
Jyco will own 49 percent of the venture and provide the technology to manufacture TPV weatherstripping, he said. Inoac, with a 51-percent stake, will run the plant, Jyawook said.
Jyawook, ex-president of the former Thona Corp., founded Jyco in 2001 to produce TPV seals and compete with makers of traditional EPDM weatherstripping. He said the advantage of TPV over EPDM is that it is 100-percent recyclable, weighs less and is less expensive.
"Many auto manufacturers are looking to keep their sticker price down in China,´´ said Erich Merkle, a senior automotive analyst for consulting firm IRN Inc. in Grand Rapids, Mich. "Wherever there´s a place to reduce costs, that´s very important in a market like China.´´
CSM Worldwide, an automotive consulting company in Farmington Hills, Mich., forecasts that annual light vehicle production in China will more than double by 2010 to 7.71 million cars and trucks from last year´s 3.61 million. That increase, the biggest among all countries, would push China past France and Germany as the world´s third largest vehicle producer behind No. 2 Japan and the U.S., according to CSM.
Jyco supplies North American auto makers, including DaimlerChrysler A.G., General Motors Corp. and Ford Motor Co., from three plants in Sherbrooke, Quebec, that employ 150. Jyawook wouldn´t disclose the privately held company´s annual sales.
The joint venture´s first product will be an existing glass run channel for a current Jyco customer that now needs the same part in China, said Jyawook, who declined to identify the auto maker. Jyco has no plans to ship parts from the Shanghai factory to North America, he said.
The venture will employ about 50 at the Shanghai facility and likely will be the first producer of TPV automotive weatherstripping in China, Jyawook claimed.
Jyawook said Jyco will work exclusively with Inoac in the Asian market but is considering other possible joint-venture partners for other markets. He declined to be more specific.