The acquisition of the KraussMaffei Group by the China National Chemical Corp., first reported by Reuters, is an important development for one of the storied names in plastics technology that was in very serious financial shape as a result of the global recession of 2008-2009. At the beginning of 2008, KM was the largest producer of plastics and rubber processing machinery in the world and had a record backlog. Orders plunged from €140 million per month to €30 million per month.
China National looks like it might be a long-term home for KraussMaffei, which had bounced around between venture capital funds since the group (which then included Mannesmann Demag) was sold by Siemens in 2002.
China has long looked with envy at the high-end technology of the central European plastics machinery industry. Haitian, the largest injection molding machine manufacturer in China, tried to develop advanced technology organically through the hiring of former Demag chief Helmar Franz, who led the introduction of an advanced electric line of machinery. The acquisition of KraussMaffei by a state-owned company gives China an immediate entry into high-tech machinery. KM had entered the Chinese market with a small production plant in Haiyan. The company’s manufacturing presence in China is sure to grow dramatically as China strives to raise the level of its overall manufacturing capability by 2025 as part of a national initiative.
The result will be significant improvements in China’s technical manufacturing capabilities in the automotive and packaging markets.
China National Chemical, known as ChemChina, formed a consortium with Guoxin International Investment Corp. and AGIC Capital to pay $1.1 billion for KraussMaffei. “With ChemChina, we have found a strategic and long-term oriented investor who has been interested in our Company for many years,” said Frank Stieler, CEO of the KraussMaffei Group, which will continue to operate in its current corporate structure, a model that has worked well for Swedish car maker Volvo, which was purchased in 2010 from Ford by Geely Auto of China.
Jianxin Ren, Chairman of ChemChina, said: “We are investing in the Company’s strong management team and its technological expertise, which we believe will benefit our Chinese subsidiaries and position the chemical machinery business of ChemChina, which build and sell equipment for the rubber and chemical industry, to become a pioneer in achieving the “Made in China 2025” program which aims to enhance Chinese industry. The growth potential of the KraussMaffei Group is tremendous, especially through improved access to the Chinese market, which we can make possible. We expect trends in the automotive industry towards advanced manufacturing and lightweight components will provide a huge development opportunity for the high-end plastic injection molding industry.”