Hirschvogel sets up shop in Asia, investing more in the U.S.

Denklingen, Germany. German auto supplier Hirschvogel Automotive Group is expanding its presence in the United States and China.

The metal-forming company has two large projects underway. In Columbus, Ohio, it is building a new work area for a metal machining department. In China, Hirschvogel has leased 13,000 square meters of land near Shanghai and plans to begin construction on a new plant in early 2006.

"From Columbus we plan to deliver installation-ready components and are going to set up about 25 metal-working machines on about 2,000 square meters," said Manfred Hirschvogel, managing director of the family-owned company.

The plant's first project will be to make wheel hubs for the BMW X5. Hirschvogel will deliver the parts to a systems provider that produces the complete rear axle.

In China, Hirschvogel has desolved a joint venture with a Chinese supplier with an eye toward opening its own factory.

The new plant will supply Volkswagen with drive shafts and the BMW-Brilliance joint venture with machined wheel hubs. "If we go overseas, it's because we are serving our customers there and not to export our products back to Germany," Hirschvogel said.

The company is investing about $10 million in the United States.

In China, the spending will be between $7 million and $8 million for the first round.

"But in China we will be expanding the factory significantly and investing more there," Hirschvogel said. The company plans to invest a total of 85 million euros, or $105.5 million at current exchange rates, by 2007.

Investments in Brazil are still being evaluated. Hirschvogel holds a 15-percent share in a forging company near Rio de Janeiro. The German firm entered into the venture to provide Robert Bosch GmbH with injector bodies for common-rail fuel injection systems and Visteon Corp. with synchronized joint components.

"In all, we are satisfied with the course of business in 2005," Hirschvogel said. This year he is figuring on revenues of about 420 million euros, or $521 million, up 25 percent.

But the supplier has to absorb rising raw material prices. "We can pass on part of that to our customers, which accounts for some of our growth in revenues," he said. But passing on raw material increases to the Big 3 has been difficult. Hirschvogel said, "In part, we were able to achieve satisfactory solutions at mid-year."

But he noted that price increases of up to 70 percent on some steel products are being absorbed.

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