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Swiss Auto Parts Giant Settles Down in Suzhou


Plant of Georg Fischer Automotive (Suzhou) Co., Ltd. in SIP

Georg Fischer Automotive (Suzhou) Co., Ltd. was formally established on Oct. 26. A manufacturer of cast and molded metal parts, the company has invested 10 million Swiss francs (approximately 72.9 million yuan RMB).

12 years ago, when Georg Fischer first entered China in 1993, Arch Group (the predecessor of this Swiss Group) built its first joint-venture enterprise in China to manufacture numerically controlled arc machining equipment.

Part of products of Georg Fischer Group

As one of the Fortune 500, Georg Fischer Group was founded in 1802, consisting of three core enterprises: Georg Fischer Automotive Group, Georg Fischer Piping System Group, and Georg Fischer Machine Tool Group, which an annual sales revenue of 3.5 billion Swiss francs. The plants of Georg Fischer in Germany, Austria, the US, and China turn out over 100 million components annually. In China alone, the 14 subsidiaries hit a sales revenue of 240 million Swiss francs (the equivalent of 1,750 million yuan RMB) in 2004.

Though not the very first plant built in China by Georg Fischer Group, it is the first automotive manufacturing enterprise invested by this Swiss group.

15 million Euros have been invested in the Suzhou plant, the premises of 560,000 square meters according to master plan, in which 10,300 sq.m. of Phase 1 is near completion.

Martin Hubert, Chairman of Georg Fischer Group, told reporters:"When we voted for the resolution to build the plant in Suzhou Industrial Park, we were not counting those in favor, but those who opposed it. The result was none against it."

In the spring of 2004, the members of the board made the first field survey China to decide whether or not to invest in an automotive plant in China. These decision makers visited their overseas customers in China, and a number of industrial zones as options for  their production base, and SIP was one of them.

George Fischer Group bought over the old foundry works in Zhangjiagang in 2003, but its output remained at only 2,000 tons a year, and the transportation was not convenient. The Group had to look for new opportunities.

"Meanwhile, the Group had to consider whether our customers in Europe welcome our supply of components in China, and the answer became clear last year, which was affirmative. The promises of customers are a guarantee of our sales volume." So said Sietman, President and CEO of the Group.


Ground breaking ceremony on Sept. 28, 2004

A decision was made a year ago by Georg Fischer to invest in manufacturing in China.
Some say that, in comparison with other international automotive enterprises, Georg Fischer seem to have come a little late.

Sietman had a different view: "You can't say we're late comers." What he considers important is not whether you come early or late, but whether you are in at the right time. He explained to the reporters, "Automobile industry is in primary stage of development in China, while it grew into today's scale in Europe after 100 years' development. It is a matter of only 2 or 3 years since the auto market eruption in 2002 in China. Therefore, this is the time of demand from whole-car manufacturers for large-scale localization of auto parts, and these enterprises have made it clear that they prefer sourcing of hi-tech auto parts within China."

Had Georg Fischer entered China earlier with huge investment, much of its manufacturing capacity would have lied idle, for it takes only one month to meet the demands of its big customers like BMW in China. Besides, a transition is taking place for traditional materials to switch to hi-tech new materials for auto parts, as is the case in China.

"This is just the right time," said Sietman, "since our Western customers now wants us to provide high-quality auto parts in China."

When the high-level plant in Suzhou goes into operation, the production capacity of Georg Fischer Group in Asia will be doubled to achieve the aim of 150 million yuan RMB sales revenue annually.

Martin Hubert said: "Our ultimate goal is to build plants in 4 phases with 24 foundry lines so that we can double our sales volume within four years, to which our China business will make the main contribution."

The sales revenue of Georg Fischer Automotive Group in 2004 reached 1,7 billion Swiss francs (equal to 12.4 billion yuan RMB), and by the same rate, the sales revenue in 2008 will amount to 3.4 billion Swiss francs (24.9 billion yuan RMB). It is learned that the expected gross profit rate for Georg Fischer is set at 8% in 2006. In the first half of 2005, the gross profit rate for the Group is 6.6%, in which auto business is 6.2%, piping business 8.7%, and machine tool 5.7%. The business revenue of auto business comprises about half of the total of the Group.

The business of Georg Fischer in China is of vital importance to both sales planning and sales profit. The Group plans to complete one phase of construction in every 2 years, and prior to that, the third R&D center will be set up in China. The China business of Georg Fischer will be controlled by its senior managerial body in China instead of in Switzerland.

The key to Georg Fischer's success in competition is the superior high technology.

Main customers of Georg Fischer -- OEM and suppliers.

At present, the main customers of Georg Fischer are auto parts suppliers for whole-car manufacturers abroad, such as Delphi and Wilstone. The main products are cast magnesium parts, safety parts for Ford and Volkswagen, and related components for auto parts suppliers.

Ferdinand Stewards, President of Automotive Group, expressed with confidence: "There are few competitors of Georg Fischer even in Europe and America. Our competitors in light metal products are mostly in Spain and Germany, and so are those in cast iron parts. But unlike our competitors who usually produce one or the other, we manufacture both magnesium alloy parts and other forged and cast alloy parts." The implication is that Georg Fischer is in a leading position in auto parts technology with the widest coverage in the world.

In China, Georg Fischer hardly finds any substantial challenge in the market of high-level products. Since there are mostly small-sized pressing and foundry works and some dozen relatively large enterprises in China, Georg Fischer will find a much space for hi-tech performance and business growth.

Nov. 2, 2005

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