Tornos in Chinese joint venture to develop mid-range products for the world

This development signals the end of the contractual arrangement that Tornos has had with Japan's Tsugami and which saw mid-range products manufactured under this alliance offered in Europe only, unlike the worldwide reach of the new initiative. The relationship between Tornos and Tsugami will come to an end in 2014, under terms that have yet to be defined. Based in Xi'an (Shaanxi Province), the new company, Tornos Xi'an Machine Works Co, Ltd., in which Tornos holds a 70% stake, designs and manufactures sliding-head lathes. The remaining 30% stake is held by an industrialist who is the founder and majority owner of the machine tool manufacturer XKNC. The set-up will allow Tornos to develop its own machines for the mid-range product segment. XKNC has many years' experience working with Japanese manufacturers and successfully produces high quality products, says the Swiss company. This will allow it to offer new mid-range products worldwide, which are able to compete on both quality and price, it adds. The first such product is due to be unveiled before the end of the year. Tornos also cooperates with XKNC's sales organisation in China, which gives it extensive access to customers in this type of product segment, it is offered. The news comes on the back of a fall of 32.2% in orders booked during the first quarter of the year, compared to 2012. That said, Asian customers made major investments in replacement equipment, following the natural disasters that hit the region, and this had a positive impact on the Group's activities in Q1. Owing to a weak order backlog at the end of 2012, gross sales in the first quarter of 2013 amounted to CHF 34.9 million (£23.9 million) versus CHF 51.0 million (£34.9 million) a year earlier, a 31.5% decline in comparison with the previous year's quarter, with this sales volume below the minimum required to break even. The company commenced a strategic reorientation last autumn, which, it says, is delivering significant results in terms of reducing costs. Although volumes remained weak in the first quarter of 2013 and despite an unfavourable change in the company's product mix, Tornos is continuing to expand its activities in the mid-range machines segment, hence the China development. Measures to streamline cost structures at Swiss sites have had a positive impact, with efforts to reduce overheads now paying off, the company reports. Further action to optimise both structural and process costs will also be a priority over the coming months, in an effort to counter the growing pressure on prices, adds Tornos. Image: Courtesy Google Maps