TTS establishes new JV in China

TTS Marine ASA has entered into agreement with Dalian New Shipbuilding Heavy Industry (DNS) to establish a joint venture company for supplying cranes to new ships being built in Chinese shipyards. This agreement is a milestone in TTS efforts to enter the expanding shipbuilding market in China.

The agreement to establish TTS Bo Hai Co. Ltd. was signed in Dalian and both parties will own 50 % of the company which will be located in Dalian. This agreement follows the same model as for the joint venture company TTS Hua Hai Ships Equipment Co. Ltd, which is based in Shanghai.

Recruitment of new employees will start when the registration of the company has been formally completed in March. According to the plan, a total of 23 engineers, sales representatives, fitters and administrative staff should be in place in a factory building of 4.500 square metres by the end of the year.

Each party invests approximately NOK 10 million as share capital in the company, and TTS will try to finance its share through a loan. Johannes D. Neteland will become chairman in TTS Bo Hai, and the company will have local staff with Li Dali as General Manager. The agreement entails that the result should be divided equally between both parties. In addition, TTS will receive a royalty for the use of technical licenses, and will also handle the after-market activities.

The total market for ships cranes in China was approximately NOK 500 million in 2004. This is expected to triple within 2015. In the joint venture company, TTS intend to expand the product specter to include also smaller cargo cranes and service cranes.

TTS Marine Cranes division’s build-up in China will strengthen the basis for the division?s entities in Europe where the focus will be to manage the first and the last activity in the company?s value chain ? namely sales, product development and after sales. These activities, handled from Bergen, Kristiansand and Lübeck, will maintain the division?s customer contact and the highest level of crane expertise.

As a consequence of increases in the level of competition over the past 2 to 3 years within the marine cranes market, and as a preparation to meet the challenges of establishing two independent crane entities in China, TTS has chosen to specialize each of it?s Norwegian entities. The consequences of this specialization is that a majority of the crane deliveries and development activities in the future will be handled by the Bergen organisation, while the focus for the Kristiansand organisation will be look handle after-sales services and deliver industry products and a selected range of crane products. This change and other cost cuts implemented in 2004 have led to lay-offs both in Kristiansand and in Bergen. TTS now has approximately 60 and 50 employees in Bergen and Kristiansand, respectively. The ongoing build-up in China, will strengthen the basis for its operations in Norway, both as a result of the need for development of new products and solutions, and because more deliveries to new ships will increase service and after-sales.

By establishing in China, TTS sees its role changing from being solely a crane supplier to also function as a product development and solution provider for the entities organised under the Marine Cranes division. Product development is therefore expected to increase and be a significant activity for its European organisation in the future. Recent development of the cylinder-luffed cargo cranes is also expected to be important for TTS?s Norwegian organisation ? not only for supply of new cranes but also with respect to providing after sales services for our clients.