Eaton expands in China: New automotive joint venture; new hydraulics business and four Cutler-Hammer branch offices

Mon Apr 6, 1998 -

SHANGHAI, PRC ... Alexander M. Cutler, Eaton President and Chief Operating Officer, today announced several business developments that will expand the company’s presence in China. Eaton has formed a new automotive joint venture, established a hydraulics distribution, service and assembly business and opened four new branch offices for Cutler-Hammer® products.

Cutler said that Eaton has received approval from the People’s Republic of China for its joint venture with Shanghai Pudong Valve Factory and Asian Nittan Pte Ltd. The new joint venture will manufacture and sell automotive and motorcycle engine valves and hydraulic valve lifters for the Chinese market. The products will be manufactured in an existing 42,000-square-foot facility owned by Shanghai Pudong Valve Factory in the Pudong Area.

The venture will be named Shanghai Eaton Engine Components Company Ltd., (SEECO). It will be 55 percent owned by Eaton. The project is capitalized at approximately $15 million, of which Eaton is providing $8.6 million. Manufacturing is expected to begin immediately. If current forecasts hold, SEECO expects to have sales of $26 million by its third year of operation.

Cutler said, "We look forward to participating with our partners in the automotive market in China. We believe Eaton’s expertise in engine valve and lifter technology and manufacturing will be beneficial to the development of this market."

Cutler also announced the formation of Eaton Hydraulics (Shanghai) Ltd., which will facilitate the expansion of Eaton-designed medium and heavy-duty hydrostatic transmissions, hydrostatic steering control units and other hydraulic products into China.

Cutler explained that this new wholly owned venture will serve as the master distribution point throughout China for imported hydraulic and hydrostatic products from Eaton. It will serve as the country’s service and warranty center for these products, he said. The new operation will also assemble Eaton-designed products for existing global customers that are establishing manufacturing operations in China. Eaton hydraulic products are typically used in products such as combines, harvesters, transit mixers and skid steer loaders.

Eaton Hydraulics (Shanghai) Limited will be located in a portion of a new, 100,000-square-foot facility owned by Eaton Truck and Bus Company (Shanghai), Limited, which was announced in August 1997. Operations are expected to begin later this month and sales are projected to grow to approximately $10 million within five years.

Cutler also announced that Eaton’s Cutler-Hammer business unit has expanded its presence in China with the opening of four new branch offices. The offices are located in key regions that represent substantial growth opportunities for Cutler-Hammer’s comprehensive line of electrical distribution and automation equipment. The new facilities are located in Guangzhou in Guangdong Province; Tianjin; Shenyang in Liaoning Province and Chengdu in Sichuan Province.

Cutler-Hammer first came to China in April 1996 with the formation of a joint venture with the Suzhou Electrical Apparatus Group Company in Jiangsu Province, to manufacture and sell electrical circuit protection devices for the Chinese market. That same year the company opened its first Cutler-Hammer branch office in Shanghai. A second office was opened in Hong Kong in July 1997.

Cutler said, "The opening of our new branch offices is the next step in our plan to develop a broad base of customer-focused facilities in China, and we intend to continue this expansion in the future.

"We believe there is a significant need in the Chinese market for our technology, and we believe the solutions we can offer to solve customer problems are unmatched anywhere in the world."

Cutler concluded, "Expansion of Eaton’s investment in China is a critical part of the company’s long-term growth strategy. We are committed to achieving 10 percent annual growth, on average, in sales and earnings, and intend to achieve $10 billion in sales and $8 earnings per share by the year 2000."

With the addition of Shanghai Eaton Engine Components Company Ltd. and Eaton Hydraulics (Shanghai) Ltd., Eaton currently has five operations in China and a holding company, Eaton (China) Investments Company, Ltd. located in Shanghai. Eaton Truck and Bus Company-Shanghai, a wholly owned heavy-duty truck transmission company, was announced in August 1997. In April 1996, the company formed a joint venture agreement with the Suzhou Electrical Apparatus Group Company to manufacture and sell electrical circuit protection devices. In 1993, Eaton and Jining Hydraulics Company of Jining City, Shandong Province, formed a joint venture to manufacture low-speed, high-torque hydraulic motors, primarily for agricultural and construction equipment.

Eaton Corporation is a global manufacturer of highly engineered products that serve industrial, vehicle, construction, commercial and semiconductor markets. Principal products include electrical power distribution and control equipment, truck drivetrain systems, engine components, hydraulic products, ion implanters and a wide variety of controls. Headquartered in Cleveland, the company has 49,000 employees and 145 manufacturing sites in 28 countries around the world. Sales for 1997 were $7.6 billion.



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Renald Romain


William Hartman, vice president, Investor Relations