Wednesday 10 July 2013

MAG wins JLR’s Hotfire engine job

Global machine tool supplier MAG IAS has won an important contract to supply machine tools and other equipment for the manufacture of JaguarLandRover’s Hotfire four-cylinder gasoline and diesel engine family at the automaker’s i54 site near Wolverhampton. There is the potential to make three-, six- and eight-cylinder versions based on 0.5-litre/cylinder modularity.

This confirms earlier reports in this newsletter that the site would be the location of what sources in the machine tool industry describe as a ‘cut and paste’ job, whereby similar arrangements and cell layouts of MAG’s machine tool equipment it has supplied previously and might found in other engine manufacturing plants around the world could be used as the basis of the new machining and other production processes in Wolverhampton.

The contract is another important benchmark for MAG which has become a major supplier of engine component manufacturing equipment to some segments of the world’s automotive industry. MAG is, for example, a premier supplier to Ford Motor Company. However, MAG seldom announces its contracts with OEMs in the automotive industry.

Back in March, MAG created something of a stir in the machine tool world when it announced that Fives Group had entered into a definitive agreement to acquire MAG Americas, a global supplier of high-performance machining solutions and composite processing.

Part of MAG Group, MAG Americas enjoyed a unique position in the high-end segment of large and complex parts machining solutions and composite processing, where it holds a worldwide leading position. Through its track record, the company developed strong relationships within aerospace, oil and gas, mining, agriculture and off-road vehicles. In 2012, it generated a turnover of $400m, of which 67% was generated in North America.

The acquisition encompasses several business units: Giddings & Lewis, Cincinnati and Forest-Liné. These specialize in composite processing and large metal cutting machines, as well as a unit dedicated to aftermarket services. It employs about 1,000 people, located in the US, France, Canada, China and South Korea. It also has a portfolio of more than 100 patents.

The end-markets addressed by MAG Americas offer strong potential for development, notably through an increasing use of composite materials. Moreover, the North American domestic industrial markets, to which it is most exposed, benefit from strong market fundamentals.

With the transaction, Fives became a significant global player in the machine tool industry – will strongly benefit from the dynamism of the American aerospace and oil & gas sectors, which create opportunities for the machining business.

Frédéric Sanchez, chairman of the executive board of Fives, said in Paris at the time: "This acquisition marks another step forward in the development of our Group, which will add to its portfolio the innovative know-how of more than 1,000 employees located in five different countries. As a global supplier of superior and innovative technologies and products, MAG Americas perfectly matches Fives’ strategy to focus on high value-adding industries, such as aerospace. Through this combination, we are also reinforcing our exposure to a well-positioned North American industry and opening to new opportunities for development in emerging countries."

Fives Group is an industrial engineering group born 200 years ago. It designs and manufactures process equipment, production lines and turnkey plants for the world’s largest industrial companies in the aluminium, steel, glass, automotive, logistics, cement and energy sectors, both in emerging and developed countries.

In 2012, Fives achieved sales of €1.5 billion and employed more than 6,500 people in about 30 countries.

The divestment of part of its business to Fives followed an announcement in February 2013 of record sales in 2012 of €684 million compared with €561 million in 2011, of which MAG IAS GmbH contributed 86 per cent. To which MAG added comments that bookings had reached €595 million compared with €766 million for the previous year – even so, despite the dip, this was the second highest in the company’s history.

MAG expects ‘strong demand’ to continue in 2013 but to ensure continued growth MAG has ‘extended its financing agreements with its long-term partners’.     

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