Asian partnerships get specific
Like their customers, control system suppliers in the U.S. are increasingly outsourcing higher level assembly, system, and functional testing to countries around the globe. (See “Automation Industry Looks to Asia,” in the February 2007 issue of Control Engineering.) But companies are not just chasing cheap labor.
Like their customers, control system suppliers in the U.S. are increasingly outsourcing higher level assembly, system, and functional testing to countries around the globe. (See “Automation Industry Looks to Asia,” in the February 2007 issue of Control Engineering.) But companies are not just chasing cheap labor. They're seeking marketing and sales partners who can position them in growing economies—sometimes for partnering, sometimes for outright acquisition. Among recent moves, Belden and system integrator Advanced Automation announced significant partnerships that promise to expand their businesses in Asian markets.
Cable manufacturer Belden, based in St. Louis, acquired a Hong-Kong-based cable manufacturer for approximately $195 million in cash. The company signed a definitive agreement to purchase LTK Wiring Co. Ltd., which it says is among the largest manufacturers of electronic cable for the Chinese market, with reported 2006 revenues of approximately $220 million.
John Stroup, Belden CEO, said the acquisition “propels us toward one of our stated objectives: expanding our presence in faster growing emerging markets. It adds another prestigious brand to our portfolio, and better positions us to compete effectively in China.” LTK Wiring employs about 2,000 in three manufacturing plants in China and maintains offices in Japan, Taiwan, Korea, Singapore, and Thailand as well.
Stroup called LTK Wiring a valued cable supplier to companies manufacturing consumer electronics, telecom equipment, white goods, automobiles, and other OEM products in China, and noted that the purchase positions Belden to better serve its Asia customers.
(This is Belden's second acquisition in as many months. Read more about the Belden's plan to acquire Hirschmann Automation and Control at www.controleng.com .)
South Asia partnership
Systems integrator Advanced Automation announced a partnership with a Pakistan-based company which is already a leading provider of technology solutions to manufacturers in North America. EIAL—Engro Innovative Automation (Pvt.) Ltd. is a global provider of industrial automation and engineering support products and services. Its joint venture with Advanced Automation will help the Exton, PA,-based integrator provide local support to its major Fortune 500 clients and others that do business globally. Robert Zeigenfuse, formerly president and CEO of Advanced Automation Associates Inc., will serve as president and CEO.
“In today's world,” Zeigenfuse said, “having a global presence is a business necessity for major manufacturers as well as the companies that support them. For Advanced Automation, it is absolutely critical that we put in place the resources that ensure service consistency.”
Zeigenfuse said Advanced Automation will continue to provide “the same level of manufacturing technology solutions, support, and service—in control systems, manufacturing execution system (MES) deployment, and technology support services—in the U.S. that has been a hallmark of the company for more than two decades and earned us [ Control Engineering ] 2007 System Integrator of the Year honors.”
Globally, Advanced Automation personnel will support Engro Innovative Automation in its sales and support activities in Europe, the Middle East, China, and Southeast Asia in offices formerly maintained solely by EIAL.
Renee Robbins is editorial director. Reach her at email@example.com
Market access draws investments
According to the U.S. National Association of Manufacturers (NAM), U.S.-based companies are investing billions of dollars abroad. If cheap labor was the driving force behind foreign direct investment (FDI), then low-wage nations should be the primary receivers. The opposite is true, says NAM, because access to large and growing markets, rather than inexpensive labor, attracts investment. More than 75% of U.S. manufacturing FDI went to high-wage countries in 2004 (most recent data available), with the bulk (51%) going to Europe. U.S. FDI in China (including Hong Kong) was about 3% of the 2004 total, says NAM.