Wärtsilä' Starts Prop Production in China

Thursday, June 03, 2004
The joint venture company set up by Wärtsilä and CSSC (China State Shipbuilding Corporation) in China to design, manufacture and deliver Fixed Pitch Propeller (FPP) packages has officially started operating at the beginning of June 2004. The new company, called Wärtsilä-CME Zhenjiang Propeller Co. Ltd, is 55%-owned by Wärtsilä and 45%-owned by Zhenjiang CME Co. Ltd (CME), the latter being a wholly owned subsidiary of the CSSC. The move comes at the right time for Wärtsilä as the focus of the world's shipbuilding industry shifts heavily to Asia, notably South Korea, Japan and increasingly China. In 2003, for example, Asian shipyards attracted orders to 1400 new vessels compared with 400 in Europe.

The start-up of propeller manufacturing in China marks a significant step for both Wärtsilä and the Chinese party. It brings Wärtsilä close to its Asian customers, which will help the company serve these customers better. Wärtsilä will also gain from low-cost manufacturing and higher business volume through a local manufacturing. Similarly, local propeller manufacture brings the globally recognized high quality of the Lips brand within reach of Asian shipbuilders.

The joint venture will commence operations in CME's premises in Zhenjiang some 220 km west of Shanghai. The Chinese party is providing the plant's production equipment and personnel, while Wärtsilä's contribution will be the design and manufacturing expertise. The new company will have approximately 260 employees.

Wärtsilä-CME Zhenjiang Propeller Co. Ltd will produce Lips- and Kaida-brand FPPs initially up to a weight of 75 tons but this will be increased to conform market requirement as production equipment is upgraded. FPPs are used in 75 - 80% of all new-build vessels in the world today, typical applications being bulk carriers, container vessels and tankers. The production volume will start at around 1000 tons of propellers a year, growing gradually to an estimated 4000 tons after 10 years.

The joint venture will begin selling in China and through Wärtsilä Sales Network in Asia, its eventual goal is worldwide coverage. Wärtsilä-CME Zhenjiang Propeller Co. Ltd's board of directors has seven members, four from Wärtsilä and three from CME. Mr Richard Wiefelspuett has been appointed Managing Director by Wärtsilä.

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