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December 13, 2004 01:00 AM

Overseas push

Bruce Meyer
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    The rubber industry isn't slowing in its efforts to pursue China.

    >From equipment makers to material suppliers to tire makers and auto parts producers, all areas of the industry continued to look at opportunities in China-both as a source for low-cost labor and as a place for potential future business.

    ``You should look at China as the single biggest opportunity, not only to grow but to reduce costs,'' Jack Perkowski, CEO of Asian Strategic Investments Corp., told an audience of automotive industry officials early this year.

    Although the China factor isn't strictly limited to automotive, that is definitely where the biggest impact is expected. Chinese exporters shipped $2.8 billion worth of auto parts to the U.S. in 2003, a 27-percent jump from the prior year, according to U.S. Commerce Department data.

    And the rubber industry is a big part of the Chinese equation. The list of rubber-related projects involving the Asian nation this past year included:

    * Cooper Tire & Rubber Co. said it would source about 1 million entry-level passenger radials from China this year. That announcement followed the firm's late 2003 revelation it and Kenda Rubber Industrial Co. Ltd. will build a $200 million radial passenger and light truck tire factory in China. Thomas A. Dattilo, Cooper chairman, president and CEO, said he wants his company to become the largest tire maker in China in five years with sales topping $1 billion.

    * Cooper-Standard Automotive, which Cooper Tire is in the process of selling, formed a sealing joint venture; will begin construction of a permanent factory by year's end to make noise, vibration and harshness control systems, after starting production at a temporary facility; and opened a wholly owned business for its fluid systems operations.

    * Continental A.G. and Pirelli S.p.A. put plans in place to establish tire manufacturing joint ventures there, with Qingdao Doublestar Tire Industrial Co. Ltd. and Aeolus Tyre Co. Ltd., respectively.

    * Jason Industrial Inc. and Italy's Megadyne S.A.S. teamed with Taiwan's San Wu Rubber Mfg. Co. Ltd. to form a rubber belting joint venture.

    * Tenneco Automotive Inc. said it would seek more joint venture partners in China, looking to introduce its elastomer business and increase its ride control business in the nation.

    * Eaton Corp. planned a joint venture to produce hose and tube assemblies for Volkswagen A.G.

    * Rogers Corp. scheduled the closing of its Windham, Conn., plant by year-end and will shift production of molded polyurethane materials and nitrile rubber floats to its facility in Suzhou, China.

    Among suppliers to rubber product makers, Bayer A.G., BASF A.G., Farrel Corp., Cabot Corp., Crompton Corp. and Noveon Inc. all took steps to add capacity or expand business opportunities in China.

    Of course, not everyone is preaching a ``full speed ahead'' approach. A number of firms related problems with protecting technology and intellectual property.

    ``It's difficult to protect your product,'' said Dean Armstrong, president of Roller Equipment Manufacturing Co. ``The possibilities to succeed in China can't be ignored, but a common sense of decency has to extend there like everywhere else.''

    Edward W. Hill, a professor at Cleveland State University, said firms looking to produce a large volume at low prices are the most likely to benefit from sourcing from China, but he cautioned: ``Do not join the lemming-like stampede. A foreign investment must make strategic sense.''

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    Rubber News wants to hear from its readers. If you want to express your opinion on a story or issue, email your letter to Editor Bruce Meyer at [email protected].

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