NINGBO, China—Amsted Seals and Forming has acquired a shaft and bearing seal facility in Ningbo from Clark Seals L.L.C.
While Amsted said the move will allow it to cater toward the global aftermarket truck industry, Tulsa, Okla.-based Clark Seals said sale of the 128,000-sq.-ft. facility eases the pressure on its resources.
Financial details of the sale, finalized in November, were not disclosed.
The advanced facility in northeast China has the capacity to house 96 presses and produce both large and small seals. The site will be renamed Amsted Seals Ningbo, according to Tony Hatton, director of sales at Amsted.
"For Amsted it was more about the appropriate opportunity," Hatton said. "We have been looking to expand, both domestically and in other markets, not just in Asia. And in looking at our options in China, we found it was the right time for (Clark Seals) and for us."
Scott Zahn, director of business development at Clark Seals, said Clark now will focus solely on its Tulsa facility, engineering and manufacturing seals for the oil and gas industry and producing testing and quality control systems.
"We're a smaller, detail-oriented engineering company," Zahn said, adding that the high rate of shaft seal production at Ningbo "was really sapping our resources."
The facility, located in Zhejiang Province, was built in 2012 under the leadership of Henry Zahn of Clark Seals.
Besides shaft seals, Clark Seals produces bearing seals and other sealing products for the rail, heavy duty truck, appliance, automotive, agriculture, construction, and outdoor power and recreation industries, according to Clark.
Shaft seals, also known as lip seals, are used with rotating, reciprocating and oscillating shafts to contain fluids and exclude contaminants, according to Clark Seals.
Bearing seals, also known as grease seals, are used to protect tapered, spherical, cylindrical and double-row bearings from excess grease loss and contamination.
"This (acquisition) allows us to expand our capabilities, in particular our smaller-size capability," Hatton said. "Our key targets will be the aftermarket truck industry and the general seal business, producing the smaller seals at a little bit lower cost."
Such smaller seals are sold in the automotive, oil and gas, home goods and other markets, Hatton said. Amsted's primary large seal production facility is in Petersburg, Va., for the freight, oil rig and steel mill industries, among others.
Amsted Seals and Forming-a Chicago-based producer of oil, grease and bearing seals and a division of Amsted Industries-said it will use the existing equipment at the Ningbo site and look to purchase more equipment there. Hatton said the company also will look to increase personnel at Ningbo in the coming years.
About 130 people worked at the Ningbo facility under Clark Seals, including 10 seal engineers, according to the firm.
"We are definitely planning on increasing equipment and personnel," Hatton said.
Hatton said Amsted will export to the U.S. from the facility, and that tariffs continue to be an issue.
"We're targeting local markets in Asia as well," Hatton said. "But there's no way to get around the issue of tariffs, though it's not something I'm at liberty to discuss."
Michael Carter, president of Amsted Seals and Forming, said in a statement that Amsted is "excited to welcome the Ningbo facility into our worldwide networking of manufacturing excellence."
"(Amsted is) better positioned to respond to our customers' needs in the most cost-efficient manner," Carter said.
Amsted Seals and Forming does not own any other Chinese properties, Hatton said, though Amsted Industries does.
Commercial agreement established
Although Clark's manufacturing presence will disappear in China, its global and varied customer base will not be adversely affected, thanks to a 10-year commercial agreement reached between Amsted and Clark Seals as part of the Ningbo facility negotiations.
"Clark will retain its customer base," Hatton said. "The agreement we reached will be to their benefit and ours, and help maintain some stability. It's not an exclusive agreement, but it does help both sides."
The agreement will keep Clark as the primary distributor of Amsted's Seals Ningbo products in the U.S.
A Clark Seals purchasing director will work out of Amsted Ningbo as a liaison and to source new suppliers, Zahn said.
"The end result was that we established a supplier partnership," Zahn said. "Although we will be competing, it will not be in same markets. It will be rail and truck for Amsted, with Clark primarily in appliance markets and high-volume, low-price point markets."
Zahn said there are a handful of accounts that may be pursued separately.
"But separate markets means no overlap in many ways," Zahn said. "Clark will be the primary distributor in the U.S., and we will stay out of rail and trucking ... and they will stay out of our niche markets. It's a very good relationship."
Clark officials said the Ningbo plant-capable of producing 40 million units annually-incorporates cutting-edge equipment in manufacturing, testing and quality control systems, a legacy of Zahn's father, Henry.
"It's a fantastic factory, as good as anywhere in the world," said Scott Zahn, director of business development at Clark Seals and the son of Henry Zahn.
Scott Zahn said the facility is unique in its versatility, producing many sizes and types of shaft and bearing seals, and for its ability to produce smaller seals at a lower price.
"There were two purposes when my father built this plant in 2012," Zahn said. "One was to cut costs and the other to improve consistency."
At the time the plant was built, about 85 percent of Clark's production focused on shaft seals, primarily in the automotive and agriculture industries, Zahn said.
"Since the 1960s we imported shaft seals from Taiwan, Japan and throughout Asia," he said. "We saw an opportunity to reduce costs by constructing in China. When my father did build there, he spent all of his time bringing in the highest quality equipment and implementing the most stringent quality control procedures."
Just a few years after the plant was built, however, Clark began to look to expand outside of shaft seals.
Zahn added the plant is geared toward large-volume customers. "When buying in Asia, consistency is key, and just a handful of manufacturers can maintain that consistency," he said.
And Clark believes that Amsted can handle such volume and consistency.
"We can use their size and expertise," Zahn said. "They have such a strong core to their company."