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Johnson Controls to build 4 battery plants in China
Johnson Controls Inc. is building four new factories in China to produce as many as 30 million batteries a year by 2015.
The Milwaukee-based company – the world's largest producer of car batteries – is betting on China's fast-growing auto production and also the rapid expansion of aftermarket demand.
The supplier already has one plant in Shanghai, a former Delphi Corp. factory. That factory produces more than 3 million lead-acid car batteries per year – not nearly enough to meet current demand.
The Shanghai plant is operating at maximum capacity, says Kim Metcalf-Kupres, Johnson Controls' vice president of global sales and marketing.
So Johnson Controls has to ship roughly one million batteries annually to China to keep up with demand from customers like Shanghai General Motors, Shanghai Volkswagen, Ford Motor Co. and others.
And that's one reason why Johnson Controls is expanding so quickly. "Batteries are pretty expensive to ship because they are heavy," said Metcalf-Kupres. "We are importing them to support the growth of our customers, which is why we feel it's urgent" to expand.
The first of the four new plants is under construction in Changxin, about two hours west of Shanghai. That factory should launch production late this year, Metcalf-Kupres said.
Johnson Controls is in the final stage of site selection for the second new plant, to be located west of Shanghai. The company is still in the early planning for the other two new factories.
The four plants will cost a total of $500 million to build, but JCI is confident that China will generate a much bigger portion of its future revenue.
In part, that's because China's aftermarket demand for replacement car batteries will grow sharply in a few years. Currently, the aftermarket accounts for only 40 percent of JCI's battery sales in China, while sales to automakers account for 60 percent.
By contrast, the aftermarket accounts for 80 percent of Johnson Controls' global battery sales. By 2015, Johnson Controls expects its aftermarket-original equipment sales mix in China will mirror the rest of the world, Metcalf-Kupres predicts.
What else is in store? Johnson Controls and joint-venture partner Saft have brought a team of engineers to China to study the potential market for lithium-ion batteries.
"We see it as a significant opportunity," said Metcalf-Kupres, "but we don't have anything concrete to announce today."
The Milwaukee-based company – the world's largest producer of car batteries – is betting on China's fast-growing auto production and also the rapid expansion of aftermarket demand.
The supplier already has one plant in Shanghai, a former Delphi Corp. factory. That factory produces more than 3 million lead-acid car batteries per year – not nearly enough to meet current demand.
The Shanghai plant is operating at maximum capacity, says Kim Metcalf-Kupres, Johnson Controls' vice president of global sales and marketing.
So Johnson Controls has to ship roughly one million batteries annually to China to keep up with demand from customers like Shanghai General Motors, Shanghai Volkswagen, Ford Motor Co. and others.
And that's one reason why Johnson Controls is expanding so quickly. "Batteries are pretty expensive to ship because they are heavy," said Metcalf-Kupres. "We are importing them to support the growth of our customers, which is why we feel it's urgent" to expand.
The first of the four new plants is under construction in Changxin, about two hours west of Shanghai. That factory should launch production late this year, Metcalf-Kupres said.
Johnson Controls is in the final stage of site selection for the second new plant, to be located west of Shanghai. The company is still in the early planning for the other two new factories.
The four plants will cost a total of $500 million to build, but JCI is confident that China will generate a much bigger portion of its future revenue.
In part, that's because China's aftermarket demand for replacement car batteries will grow sharply in a few years. Currently, the aftermarket accounts for only 40 percent of JCI's battery sales in China, while sales to automakers account for 60 percent.
By contrast, the aftermarket accounts for 80 percent of Johnson Controls' global battery sales. By 2015, Johnson Controls expects its aftermarket-original equipment sales mix in China will mirror the rest of the world, Metcalf-Kupres predicts.
What else is in store? Johnson Controls and joint-venture partner Saft have brought a team of engineers to China to study the potential market for lithium-ion batteries.
"We see it as a significant opportunity," said Metcalf-Kupres, "but we don't have anything concrete to announce today."