Deutz AG and Shandong Changlin Machinery Group Co., a Chinese manufacturer of agricultural machinery and construction equipment, have this week signed an agreement to set up a joint venture for engine production.
The venture, which will be known as Deutz (Shandong) Engine Co. Ltd., will manufacture engines for the highly successful million-selling 2011 series at the beginning of 2013. The engines will be used in construction equipment, agricultural machinery and industrial applications. By producing these engines with capacities of less than four liters, Deutz is scaling up its applications in China, where the Deutz (Dalian) Engine Co. Ltd. joint venture has made Deutz-branded four- to eight-liter engines since 2007.
Deutz AG holds a 70-percent stake in Deutz (Shandong) Engine Co. Ltd., which will be based in Linyi in Shandong province. Shandong Changlin owns 30 percent. The plant will be designed with an annual capacity of about 65,000 engines.
“The Chinese market offers us the greatest potential for growth in Asia,” said Dr. Helmet Leube, chairman of Deutz AG’s board. “By starting to produce engines with capacities of less than four liters in China, we are therefore making a logical and beneficial addition to our existing operations in a region where we have been building larger engines for many years. Deutz has gained a reliable and experienced partner in Shandong Changlin Machinery Group. This publicly traded company has been manufacturing construction equipment and agricultural machinery for the past 30 years and is one of the organizations that already benefited substantially from the stellar growth generated by this region to date.”