A. O. Smith, Fagor Partner on Boiler Company In China
Jun 15, 2007
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U.S.-based water heater and electric motor maker A. O. Smith  (Milwaukee, WI) and Spanish appliance OEM Fagor Electrodomésticos (Arrasate) will form a joint venture to produce residential wall-hung gas combination boilers in China.

Fagor-A. O. Smith (Nanjing) Combi Boiler Co., Ltd., will occupy a facility in Nanjing close to A. O. Smith's existing water heater operations. The venture will manufacture "combi" boilers that provide both potable water and space heating for residential applications. Production will begin in 2008.

A. O. Smith Corporation will invest in the venture, through its wholly owned subsidiary A. O. Smith (China) Investment Co., with Fagor Electrodomésticos S. Coop., which is one of Europe's biggest appliance OEMs, with 2006 sales of €1.7 billion (approx. US$2.3 billion).  The Chinese company will initially go to market with products based on existing Fagor designs, but the partners plan to develop an engineering function to design and develop new products for the China market. Fagor makes gas-fueled combi boilers in Spain for a number of global markets. The combi boilers will be sold by each company's sales organization in China under the A. O. Smith and Fagor brands.

"The addition of this product line will enhance our position as one of the leading water heater manufacturers in China," Ajita G. Rajendra, president of A. O. Smith Water Products Company, observed. "We have enjoyed considerable success in designing residential water heaters for Chinese consumers and anticipate similar success with this new venture."

"We are excited to partner with Fagor, which is one of the European Union's leading appliance manufacturers," Paul W. Jones, chairman and chief executive officer of A. O. Smith Corporation said. "The combi market is growing rapidly in China, and this venture will enable our two companies to offer products that meet the specific needs of Chinese consumers."

The new company will be a Wholly Owned Foreign Enterprise under Chinese law. The partners expect to obtain required Chinese governmental approvals for the establishment of the new company within the next 60 days.

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