CHENNAI, India—Freudenberg Group plans to expand sealing production in India.
The firm has disclosed the intent to add a $16.8 million facility spanning about 200,000 square feet to address growing demand from the country's automotive market. Construction on the Chennai site will begin this fall and will produce seals and other automotive products.
Georg Graf, Freudenberg's regional representative in India, said in an email that the investment will span multiple phases. The first is to localize production of seals for the automotive industry, but the site will sit on a 602,000-sq.-ft. patch of land, giving Freudenberg room for further expansion as demand dictates.
He added that it's too early to state how many jobs will be created through the expansion. Freudenberg intends to begin construction in the fall of 2017, with the site becoming operational in early 2019.
"The Indian car manufacturing market has evolved over the last few years with a wide range of cars on offer, including electric and premium segments," Graf said. "As an international technology company that supplies leading-edge products and solutions, we believe we are the right partner for a multitude of automotive requirements."
Freudenberg expects to see growth in India's automotive sector with production increasing in the commercial vehicle, passenger vehicle and two-wheel segments, Graf said. New standards recently put in place for pollution controls also lend themselves well to Freudenberg's businesses. The executive said the firm already is working with OEMs to improve efficiency, reduce pollution and improve passenger comfort.
He added that the Indian Government plans to make a major policy push toward promoting e-vehicles.
"This year is expected to be a significant year for the automotive industry, which is witnessing increased regulatory activity and some bold decisions by the government and judiciary, battling high pollution levels in Delhi and other metro areas," Graf said.
India's automotive market has been growing in recent years. According to Freudenberg, a total of 4.1 million new vehicles were produced in 2016, an 8.9 percent increase compared to 2015. The firm projects production to increase by about 5.2 percent to more than 4.3 million vehicles in 2017.
Overall, India's automotive market is expected to experience a more broad-base recovery. Graf said it is projected to grow at about 10-15 percent to reach $16.5 billion by 2021, up from about $7 billion in 2016. Freudenberg added that the market has the potential to generate up to $300 billion in annual revenue by 2026, creating 65 million additional jobs and contribute more than 12 percent to India's gross domestic product.
Freudenberg's joint venture Sigma Freudenberg-NOK operates several sealing production sites throughout India. With manufacturing sites in Mohali and Basma, the firm produces radial shaft seals, valve stem seals and shock absorber seals serving such customers as Suzuki, Mahindra, Tata, Toyota, John Deere, JCB and Renault, among others.
Beside SFN, Freudenberg's Vibracoustic, Freudenberg Chemical Specialties (Kluber Lubrication, Chem-Trend and SurTec), Freudenberg Filtration Technologies and Freudenberg Performance Materials business groups all have a presence in the region.
Freudenberg said its total sales in India grew 20 percent in 2016 to about $230.8 million. The seven business groups in the country employ 2,475 people at about 50 locations—with six research and development centers and 14 production sites. The increase largely was attributed to the acquisition of its Vibracoustic joint venture with Trelleborg A.B.
The firm chose Chennai for its new site because of its strong automotive presence, referring to it as "India's Detroit." Graf said the city has become the capital of India's automotive industry with more than 40 percent of the country's automotive production occurring there, and almost 90 percent of the automotive supply industry located in the area.
"Freudenberg is the global market leader in the field of sealing technology," Graf said. "With this investment we will be best positioned to serve our customers, precisely in India's strong automotive hub of Chennai."