Parker Hannifin Corp on Wednesday began construction of a new plant in China, as the global leader in motion and control technologies seeks to deepen its involvement in China's booming high-speed railway networks.
The plant in Wuxi, Jiangsu province, is the US-based company's 15th in China and the start of a $100 million planned investment over the next three to five years to enlarge its manufacturing and engineering capabilities.
The new high-speed train parts plant, the fifth such facility in China and with an initial investment of $20 million, will start operations by the end of this year, said Thomas Williams, vice-president of Parker Hannifin Corp.
High-speed train parts will be the main focus of the new plant, which will also produce components for windmills, motor drives and machinery, said Steven Ong, managing director at Parker Hannifin China.
Parker is a major supplier of parts and solutions to the door-opening, air-conditioning and braking systems for high-speed trains made by China North Locomotive & Rolling Stock Industry Group Corp (CNR) and China South Locomotive & Rolling Stock Industry Group Corp (CSR), China's two largest train makers.
It is currently supplying for a 220.9-billion-yuan ($33.6 billion) high-speed rail line between Beijing and Shanghai, which is expected to start operations by the middle of June.
Despite refusing to reveal the contract details with CSR and CNR, Ong said the company had achieved "huge success" as a supplier over the past few years.
And with the launch of the new production facility, the company is set to deepen its involvement in China's high-speed rail network, Ong added.
"We are extremely excited about this (high-speed) rail opportunity in China. It is probably the biggest rail project that I have had the chance to work on," said Michael Chung, president of Parker Hannifin Asia Pacific Group. "That's one of the reasons we are investing so much."
China's high-speed railway system has been expanding at breakneck speed. At the end of 2010, the network was already the world's longest at 8,358 km, of which 5,149 km were put into service in 2010.
That length will be extended to 13,000 km by 2012 and to 16,000 km by 2020.
Meanwhile, the government will invest a total of 1.8 trillion yuan by 2016 to expand the rail network.
Parker Hannifin, which has 3,600 employees in China, expects its total sales in China to reach $1 billion over the next three to five years from $600 million last year, from the planned expansion.
Sales of high-speed rail-related products are to increase at least 30 percent over the same period.