Dayco hot for acquisitions after expansion push

ERJ staff report (R&PN)

Troy, Michigan -- Dayco Products L.L.C. has completed the third of three key expansion projects the firm believes are essential to its success in the Asian market.

Now it's looking to grow further via acquisitions.

The automotive parts manufacturer recently opened a plant in Suzhou, China, that will produce timing belts, poly V-belts and tensioners, primarily for the Chinese market, according to James C. Orchard, CEO of Dayco and co-CEO of parent Mark IV L.L.C., headquartered in Amherst, N.Y.

New machinery at the factory can manufacture both the timing and V-belts using the same process, he said.

To prep for the addition of a facility in China, Dayco established a subsidiary, Dayco (Suzhou) Automotive Components Co. Ltd., in Suzhou last August to set up the Chinese manufacturing operation.

Troy-based Dayco had hoped to open the facility sooner, Orchard said. “There was some delay due to equipment deliveries.”

So far, the firm has invested $8 million in its China business. Orchard projected the Suzhou factory will turn out about 6 million belts annually.

Earlier this year, Dayco also opened two plants in India, both joint ventures. One is producing tensioners and the other manufactures dampers, he said. They are aimed at significantly bolstering Dayco Power Transmission's presence in the Indian market.

Dayco, with strong bases in the US and Europe, is concentrating heavily on the Asian market, Orchard said. The new parts factory in China and the joint ventures in India are a good start and create a strong base, but Dayco would like to add more to its Asian operation.

That's one of the reasons the company is also looking to make one or two acquisitions in the region, he said.

Dayco's plans for the next year are targeted on consolidating capacity in emerging countries, principally China, because it is projected to represent about 70 percent of the forecasted growth in the global engine market, according to Orchard.

He said he couldn't comment further on any potential deals in the region.

Dayco also is experiencing significant growth in South America, and in the latter part of 2010:

• purchased WVR Rolamentos Ltda., a maker of automotive tensioners and pulleys, located in Sao Paulo, Brazil;
• doubled the size of its manufacturing operation in the country;
• added a 75,000-sq.-ft. plant in Sao Paulo; and
• is moving WVR to the new facility, where it will triple its capacity.

From Rubber & Plastics News (A Crain publication)