VELP, Netherlands-Vredestein N.V. has created a 40/60 joint venture in Malaysia with Fung Keong Rubber Manufactory to produce pneumatic industrial tires.
Fung Keong, a subsidiary of General Corp. Berhad, has been manufacturing the tires for Vredestein under off-take license for more than a year, after Vredestein decided to phase out production of pneumatic industrial tires at its Maastricht, Netherlands, plant, according to Robert Oudshoorn, managing director of Vredestein Banden, the firm's tire division.
The new factory, erected on Fung Keong's factory grounds earlier this year, is outfitted with equipment taken from that plant and shipped to Malaysia.
Fung Keong will supply the venture with compounded rubber, but all other manufacturing processes will take place in the new plant.
The new company, named Vredestein FKR, is expected eventually to yield annual sales of $6.5 million. The partners did not reveal the cost of the investment, saying only it was a multimillion-dollar figure. The plant will employ 40 initially, and is rated at 1 million units a year.
Vredestein-brand tires will represent most of the company's output, which will be sold globally, Oudshoorn said. Vredestein, through its Vredestein Consulting subsidiary, searched Asia for a partner for about half a year before settling on Fung Keong.
When asked whether the partners were interested in broadening their cooperation to other product lines, Oudshoorn said emphatically, ``Absolutely.''
For fiscal 1994, the firm reported earnings of $2.91 million while sales fell 2.3 percent to $248.7 million, primarily because of lost sales from the engineered products division. Vredestein phased out or sold parts of the unit throughout the year after sale talks with Sweden's Trelleborg Industrie A.B. fell through.
The company expects higher sales and ``distinctly'' better earnings in 1995, thanks in part to higher selling prices and strong sales in the second half.
Heading into 1995, the company plans to launch a new tire product every six months to keep pace with market demands. The first new product is the H-rated ``Protrac'' summer tire, which already has won praise in several independent tests for its wet handling performance.
Vredestein Banden has committed itself to launch a new tire range for Europe every six months for the next two years, and has budgeted $64 million for the development of new products and production processes at the Velp plant.