HANOVER, Germany—ContiTech A.G. has plans in the works to construct a new hose production facility in China that ultimately will replace an existing, nearby plant.
It signed a memorandum of understanding with officials from Qingdao, China, on July 18 to build a Greenfield factory in the province, primarily to produce automotive hoses. The company estimated the size of the plant at about 161,500 square feet.
ContiTech said it will invest more than $22 million to cover the first phase of the construction project. Because it's still in the early stages, the estimated work force at the facility has not been determined, according to a company spokeswoman.
Further expansion of the structure is possible within the next five years, the company said. All phases of the project likely are to be completed by 2020, it said.
The new, larger hose factory ultimately will replace a heating and cooling hose facility located a short distance from the planned structure. Once construction of the new site is complete, the spokeswoman said, heating and cooling hose lines will be relocated from the older site to the new plant in Qingdao.
In addition to those lines, she said, it is possible additional machinery will be added at the factory if it's expanded. That will depend on the way the market develops for the firm in the region.
She said the existing facility “has only limited space and capacity, which means that further expansion at the plant is currently not possible. That's why we looked for a new site where current activities and expansion plans can be brought together.”
It has not been determined what will happen to the present factory, the spokeswoman said.
A division of tire maker Continental A.G., the company is following its strategic approach to localize its global operations further with the addition, Hans-Juergen Duensing, ContiTech CEO and a member of the Continental executive board, said in a statement. “We want to meet our customers' needs and requirements more effectively.”
By building a larger plant that can be enlarged, he said the Hanover-headquartered firm is committing to expanding production capacity in the growing market of China and across the Asia-Pacific region in response to increasing hose demand.