2nd September 2009 - TMD Friction Reforms its Joint Venture in China

TMD Friction, the world’s leading OE automotive brake friction manufacturer, is today concluding an agreement to streamline the structure of its two Joint Ventures in China. A share transfer agreement will be signed with Hebei Taihang Machinery Industries Company (HTM), a subsidiary of China North Industries Corporation (Norinco), and Hangzhou Hangcheng Friction Material Company (HFMC).

The new structure with HTM as sole J.V. partner will significantly improve TMD Friction Group’s China operations. TMD Friction will hold 70% and HTM 30% of the joint venture. Till today, TMD Friction’s Chinese facilities were operating under two different J.V. partners in China - HTM in Shijiazhuang and HFMC in Hangzhou. Now HFMC is selling its entire equity (35%) in the Hangzhou plant to TMD Friction (5%) and HTM (30%).

This will enable TMD Friction to further consolidate its position as the leading supplier of OE friction in China. Derek Whitworth, CEO & President of Germany-based TMD Friction Group is signing the contracts in today’s ceremony. “I’m extremely pleased that we can reinforce our co-operation with HTM/Norinco. From today on, TMD Friction in China will have one face and voice to our customers and is now in a strong position to further improve our service in this vitally important market. HTM/Norinco has been a steadfast partner for more than a decade in the development of our Shijiazhang facility and I now look forward to extending this cooperation to all our activities in China.

This agreement comes at a particularly opportune time following the recent new business awards from VW and GM. Many thanks to everybody involved in supporting this consolidation process, which has been completed in a very short time,” comments Whitworth.

Jiao Kaihe, Deputy General Manager and Cao Runshan, Deputy Director Asset Management of Norinco join the official ceremony, which is hosted by Dr. Roman Milczarek, Chairman of TMD Friction in China and Xiuzhan Zhu, TMD’s General Manager in China. “The discussions in preparing the deal had been very constructive, open minded and absolutely goal oriented,” says Milczarek.

Li Jun, Chairman of HTM, adds: “I am very confident about the new agreement. TMD Friction is a global major player in the production of brake friction materials. We are happy to further support the company’s growth in China.”

About TMD Friction

TMD Friction Group is the world's leading manufacturer of brake friction materials in the original equipment market for passenger cars as well as commercial vehicles. Its product portfolio comprises disc brake pads and drum brake linings for passenger cars and commercial vehicles together with brake pads for racing cars and friction materials for rail and industrial applications. With locations in Germany and five other European countries, as well as the US, Brazil, Mexico, China and Japan, TMD Friction generated a turnover of €639 million in 2008. TMD Friction Group employs approximately 3,800 people worldwide.

About Hebei Taihang Machinery Industry

Located in Shijiazhuang city (capital of Hebei province), Hebei Taihang Machinery Industry Co., Ltd. (HTM) is a large-scale machinery manufacturing enterprise, which is affiliated to China North Industries Group Corporation (Norinco). The company’s total capital in 2008 is eight hundred million Yuan. HTM employs 1580 people and was established in 1968 as a manufacturer of textile machinery.