New factory in China: investing in our future success
A vast market with many opportunities
The Chinese market offers us substantial potential. Since its founding in 2005, Kendrion China has grown exponentially. Kendrion China’s share of group revenue has increased from less than 4% in 2015 to 10% in 2022 with revenue of around EUR 50 million. Our confidence in our ability to continue this growth is reflected in our ambitious target for 2025: to double this revenue to EUR 100 million.
In industrial, we expect to double our current turnover. For the next five years, we particularly see room for growth in wind power, elevator and escalator, robotics, forklift, electrical motor, crane, hoist and AGV applications. To better meet the needs of local Chinese customers, the factory will focus on expanding its R&D capabilities in industrial brakes and industrial actuators and controls.
In automotive, the global market for electrical vehicles is forecast to grow at an astonishing 67.09% CAGR by 2030, with Asia Pacific as the largest market. With our new Automotive ‘E’ organization, we can dedicate more resources to game-changing automotive technologies - including sound design, sensor cleaning and active damping.
We also see great opportunities for cross-selling. We’re already working with an international brake system manufacturer to use an industrial product — the permanent magnet brake — in commercial vehicles destined for the Chinese market.
Smart factory meets local needs
With the brand-new smart factory we can increase local manufacturing, which delivers greater supply chain security as well as lower costs for raw materials, labor, and production.
The factory will boast a capacity 10 times that of our first Suzhou factory, but it will also deliver cost efficiencies. By bringing the two current plants together in one location, we realize savings by centralizing product lines, automation costs and functions.
The location – Suzhou Industrial Park (SIP) – is a strategic choice. SIP is one of China’s most popular investment locations, placing us amongst the other advanced, foreign manufacturing companies in the automotive and industrial sectors, including several Fortune 500 companies.
A two-phased approach
We are building the factory in two phases. Phase I, initiated in November 2021, includes the construction of the offices, warehouses and a first production area, totaling 28,000m². This part of the factory will be up and running in the first half of 2023.
If the growth we anticipate is realized, we will move on to Phase II in 2025, which will make another 12,500m² ready by 2026. The increased production and turnover of the new factory will support our business growth up to 2030, and there is further room for expansion within a 10km radius. All Kendrion automotive and industrial products will be manufactured in the new plant, which will be ‘home’ to some 300 employees.
Smart and sustainable
The new state-of-the-art factory will be fitted with the most advanced technologies, including artificial intelligence, robotics, and smart warehouse logistics. To give some examples: 70% of the warehouse will be a fully automated, 22-meter-high area, and solar panels on the roofs will provide 550,000 kWh of renewable energy per year. In addition, we will recycle water for the industrial brake washers, and inspire employees to use electric cars by providing EV charging stations. Other sustainable initiatives are being explored.
Competing in the Chinese market is a challenge for EU- and US-based companies, which generally export products engineered at higher labor and production costs in their home countries. The new factory allows us to design, customize and manufacture our products locally and at local cost, yet with German-quality engineering. As we extend our reach into China and ramp up production, we will expand our R&D department and start designing products specifically for the Chinese market.