SMM Weekly Review and Forecast (Nov. 29-Dec. 3)

SHANGHAI, Dec. 6 (SMM) -- As the Chinese automobile market grows, more foreign companies are expanding business in China, including Johnson Controls. On November 29th, the company began construction of its third domestic battery production base located in Chongqing, China.
According to Johnson Controls, the plant is scheduled to come online in 2012 and will have an annual capacity of 6 million batteries. Investment will total USD 120 million and expected sales turnover should reach RMB 1.5 billion per year.
Johnson Controls already has plants in Shanghai and the Changxing region of Zhejiang province producing batteries for vehicle use. Yang Shuqing, Vice CEO and General Manager at the Resource Energy Division of Johnson Controls, said the three battery plants in China will be able to produce 18 million of batteries per year. The company plans to expand capacity to 30 million/year by 2015, and will build two more plants in China in the future.
During the recent financial crisis, Johnson Controls was forced to close or merge 28 plants in North America and Europe, but its investment in China continues to grow.&nbsp; In addition to vehicle batteries, Johnson Controls also designs and manufactures automobile interior systems for seating systems, instrument panels and cockpits, and door systems.
To date, Johnson Controls has established 25 joint ventures and 38 plants in China to support its automobile interior systems business, with sales turnover expected to reach USD 3.1 billion this year. Yang Shuqing said there will be a total of 50 plants for automobile interior systems by 2012, which means Johnson Controls will build another 12 plants in the next two years.
Johnson Controls International Battery Company began construction at the third battery plant in Chongqing after completing the two plants in Shanghai and Zhejiang province. The plant in Shanghai is the first battery plant for Johnson Controls International Battery built in China. Construction at the plant in the Changxing region of Zhejiang province has now been completed and is schedule to come online in early 2011. Upon completion of the third Chongqing plant in 2012, total battery capacity will be 18 million batteries/year.
Hubei Camel Storage Battery Company has expanded production as well. Since competition within the battery market is becoming more intense, many companies are realizing the importance of improving products quality and gaining greater market share.
There are over 2,000 lead-acid battery producers in China, and SMM believes expand the scale of companies will make them more competitive. Lead demand should grow once the two Johnson Control plants in Zhejiang and Chongqing are fully operational. 
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