New Venture Gear, the US producer of driveline products, will invest up to $500 million in a new plant in Germany in a bid get more of Europe's transfer-case market.
Europe is 'one of the biggest growth markets' for transfer cases, said Richard Sullivan, vice president of European operations.
Transfer cases enable vehicles to convert from two-wheel drive to four-wheel drive. New Venture Gear believes Europeans will follow Americans and buy more 4x4 light trucks and sport-utility vehicles.
Formed in 1990, the Troy, Michigan-based company is 64 percent owned by DaimlerChrysler and 36 percent by General Motors. Its main competitors in Europe are Borg-Warner and Visteon.
New Venture Gear's plant in Roitzsch, near Bitterfeld in the German state of Saxony-Anhalt, will produce 260,000 to 300,000 transfer cases a year when it reaches full production at the end of 2001.
The plant will supply transfer cases to Volkswagen and a second European manufacturer that Sullivan would not name. It will also assemble manual transmissions for Volkswagen.
Through some outsourcing and new approaches, the Roitzsch plant will become a 'a model for lean manufacturing at NVG,' said Sullivan. New Venture Gear's operations in North America have organizational legacies from the group's origin as an in-house operation for Chrysler and GM.
Sullivan said New Venture Gear looked at 18 sites before deciding on Roitzsch. Roitzsch was closer to customers than other locations, he said, and offered a good infrastructure and incentives.
Production will start at the end of 2000, with pre-production beginning in the first quarter of that year.
NVG is the leading producer of transfer cases in North America. It reported sales of $1.5 billion in 1998.