Umeco establishes Chinese venture for vacuum bag manufacturing

Umeco and its distributor Shanghai Leadgo Technology Co. Ltd. have created Shanghai Umeco Composites Co. Ltd. to manufacture vacuum bagging films for the fast-growing Chinese wind energy market.

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Umeco plc (Leamington Spa, U.K.), an international provider of supply chain services and advanced composite materials primarily to the aerospace and defense industries, has announced that its Process Materials business has entered into a joint venture (JV) with its Chinese distributor Shanghai Leadgo Technology Co. Ltd. The joint venture agreement is subject to approval from Chinese authorities. It is anticipated this will be granted within the next two months.

The joint venture company, to be named Shanghai Umeco Composites Co. Ltd., will be 51 percent owned by Umeco Composites Ltd., with Leadgo having a 49 percent stake. The JV will establish a facility in Shanghai to manufacture vacuum bagging films for the rapidly growing Chinese wind energy market. The new facility should be fully operational by the end of 2011.

Umeco currently manufactures the films supplied to Leadgo for the Chinese market at its facility in Italy. Umeco expects that the global growth in the wind energy market will allow IPM to back-fill its production capacity once production for the Chinese market moves to the JV.

Umeco estimates its total investment in the JV will be RMB 28 million ($4.1 million USD). Leadgo will also make a similar investment and provide a similar loan. At the outset, the JV will have no other assets. IPM will receive a technology royalty from the JV following the commencement of production.

The JV is forecast to be profitable shortly after production commences; in the start-up period, costs are expected to be modest.

Clive Snowdon, CEO of Umeco, stated, “The continued growth of the global wind energy market, despite the economic downturn, reflects the on-going transition to generating power from renewable sources. This joint venture represents another important step in building Umeco’s capability in the world’s largest wind energy market.”