Norsk Hydro Invests $52 Million in Precision Aluminum Auto Part Plants in China and Mexico

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Researched by Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). Norsk Hydro (NYSE:NHY)(Oslo, Norway) is implementing a global plant building strategy to secure and develop the company's position as a world leader in aluminum precision tubing for the automotive industry. A $22 million plant under construction in Suzhou, north of Shanghai in China, will produce precision drawn tubing, multi-port extrusions, and extruded tubular profiles used in automotive heat transfer applications, as well as other high value components. A similar line of products will be produced at the company's new $30 million plant in Reynosa in northern Mexico on the U.S. border.

The Chinese plant's extrusion press is scheduled for installation this month and production will begin in the third quarter. The plant will supply heat and fluid transfer clients, such as Behr, Calsonic, Delphi, Denso, Valeo, and Visteon, all of which have plants near the Suzhou Industrial Park, where the NHY plant is being constructed. Products that have up to now been imported will now be made available locally from the new plant.

The plant will be NHY's first fully-owned automotive components plant in China. The company already has a nearby joint venture, Hydro Aluminum Wuxi, which serves the Chinese precision tubing market, and it also owns a 31.8% share of Suzhou Huasa Plastics plant. NHY also operates a wholly-owned magnesium alloys plant in Xi'an.

In Mexico the Reynosa plant will feed strong growth in the automotive heat transfer applications market when it comes into production at the end of the third quarter of 2005. The multi-port extrusions (MPEs) are applied in condensers, evaporators, radiators and charge air coolers. Drawn tubes are used in fluid lines, air conditioning systems, and other automotive applications. As in China, most of the top customers are located in the same region, which will allow lower transportation costs, reductions in lead time and inventory, as well as improved service. The Reynosa plant will be a state-of-the-art manufacturing facility based on technology from the company's plants in Tonder, Denmark, and Rockledge, Florida.

NHY will be setting up its plant in a strong market. In 2002 the automotive industry represented 20% of the country's total manufactured exports - I.7 million vehicles were produced, and 80% of this production was exported. Mexico is Latin America's top motor exporter, the world's tenth largest producer of light vehicles and the second largest importer of U.S.-made auto parts.

The country's automotive industry has created substantial sales opportunities for U.S. companies. Mexico's 1,350 direct Tier I, II, and III suppliers imported $22.8 billion in materials, equipment, and parts in 2002, representing 7% of the country's total imports. Also, in 2002 the automotive industry accounted for 3.5% of Mexico's GDP and 19.3% of its total manufacturing output.

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