New opportunities for Tognum with new plant in USA

09/03/2010

In order to make its production network more international, the specialist for propulsion and power solutions Tognum is setting up a new engine assembly and manufacturing plant for its MTU brand in Aiken County, South Carolina (USA). Replacing the existing assembly plant in Detroit, the new plant will enable Tognum to develop new markets, respond more flexibly to changing market requirements and to produce engine parts in the US dollar region. Production is scheduled to begin at the end of 2010.

Strategic investment.
In the fall of 2008 the Tognum Group had announced its plan of expanding its presence in the USA, but the plan was initially shelved due to the global economic crisis. It has now purchased an existing building and the associated premises for this purpose from the drive component manufacturing company SKF. The final contracts were signed a few days ago in the USA. The company will benefit from the currently favourable price levels on the industrial property market for this strategic investment. In addition to the assembly of engines, the plant will be used for the manufacture of engine components such as cylinder heads and high-volume engine attachments and fittings.

Reasons behind the move
Explaining the reasons behind the move, Volker Heuer, Chairman of the Executive Board and CEO of Tognum AG,said: “For a global group like Tognum, a global production network is absolutely essential, and the plant in Aiken has an important role to play. By manufacturing parts in the USA, we are less vulnerable to exchange-rate fluctuations between the US dollar and the euro, have production facilities located close to the customer, fewer parts in an advanced stage of manufacture to be transported from Europe to North America and will subsequently reduce high import duties. The higher value added in the USA also increases our chances when competing for public contracts offered by U.S. authorities."

Crisis as opportunity
As early as fall 2008, Tognum had announced that it would be looking for a new location in the USA, but shelved the idea due to the effects of the global financial and economic crisis. “We have promised on a number of occasions that we will exploit the opportunities offered by the crisis. And we are doing precisely that now. Due to the drop in price levels for purchasing industrial sites, the new plan is cheaper than building a new plant on a greenfield site as originally envisioned,“ said Dr. Ulrich Dohle, Member of the Tognum Executive Board for Technology & Operations, who will be presenting details of the new location today in Aiken.

Federal subsidies
In the medium term, the Tognum Group will be investing some 45 million US dollars (around 33 million euros) in the 100 acres (40 hectare) site, which includes a 270,000 square foot (25,000 square meters) production building, and in assembly, inspection and production facilities. The U.S. State of South Carolina, Aiken County and state authorities are supporting the development of the new location with subsidies, tax relief, and the donation of an additional site. The sales organization, management and the entire office staff of Tognum’s North American subsidiary MTU Detroit Diesel will remain in Detroit in the U.S. State of Michigan.

About Tognum
The Tognum Group currently has over eleven manufacturing and assembly sites worldwide, two of which are located in the USA. Just recently, in the fall of 2009, production of cylinder liners went into operation in Istanbul (Turkey). In the summer of 2010, the joint venture with the Chinese Norinco Group will start production of emergency power gensets in Datong in northern China.

Source: tognum.com


More Business Information

Related Articles

• Volvo Ocean Race 2011/12
• boot Düsseldorf 2012: Expectations fully Met
• Canoeing around Sagres - famed for its stunning coastline