|Lingyan Li (L) GBC Director-Business Development, and Liu Jingshi, Mayor of Rugao City, at the contract signing.|
IN LATE DECEMBER 1999, GENERAL BEARING Corporation acquired a controlling interest in Jiangsu General Ball & Roller Company, Ltd. This new company is comprised of the operations of the Jiangsu Lixing Steel Ball Factory (Group).
Jiangsu Lixing Steel Ball Factory (Group) is a manufacturer of rolling elements for bearings. Located in Rugao City, its products are sold under the "Li Xing" brand in China and internationally. Founded in 1989 as Rugao Steel Ball Factory, it has grown to become the leading manufacturer of steel balls in the Peoples Republic of China.
Commenting on the acquisition, General Bearing President David L. Gussack said, "Jiangsu is a well-established producer in the region and is perfectly positioned to meet the growing demands for high quality steel balls and rollers in Asia, Europe and the United States."
Gussack continued, "An important segment of General Bearing's strategy is the production of various bearing components for supply to the world's bearing industry. This acquisition will support the "rolling elements" portion of this strategy. Additionally, General Bearing's Asian-based bearing production has been growing steadily. A controlled and reliable source of high quality rolling elements will enhance GBC's ability to increase its production of the highest quality bearing products."
At the time, Gussack added, "Jiangsu has a history of profitability. This acquisition will be accretive to earnings immediately."
Then, on January 14, 2000 General Bearing Corporation, NN Ball & Roller, Inc. (Nasdaq: NNBR), and Jiangsu Lixing Steel Ball Factory (Group) announced the addition of NN Ball & Roller as a partner in its newly established joint venture company to manufacture steel balls and rollers in Rugao City, Jiangsu Province, China. The new venture, Jiangsu General Ball & Roller Co., Ltd. will produce high precision steel balls and rollers serving the worldwide bearing industry. The new company will supply both Chinese domestic and international customers.
General Bearing and NN Ball & Roller will equally share a 60% interest inthe joint venture company through their respective ownership in a separately established holding company. General Bearing and NN will collectively contribute $6.0 million in cash in exchange for the 60% interest in the joint venture company. The remaining 40% of the joint venture will be owned by Jiangsu Steel Ball, a Chinese company, which will contribute its ball operations located in Rugao City.
General Bearing President, David L. Gussack, said, "We are excited to be partnering with NN which has an excellent reputation for expertise in marketing and manufacturing of precision steel balls and rollers. Their expertise coupled with General Bearing's years of experience operating in China will enable Jiangsu General Ball & Roller to build upon its leading position in the Chinese market and emerge as a world class component supplier."
Roderick R. Baty, President and Chief Executive Officer of NN Ball & Roller, stated, "We are delighted to have the unique opportunity to partner with both General Bearing Corporation and Jiangsu Steel Ball Company, companies that have in-depth experience operating in China. Through its four joint venture companies and wholly owned Quality Center, General Bearing has been manufacturing a wide variety of bearing components and products in China for over 15 years. Jiangsu Steel Ball, operating for over 10 years, is the largest independent ball producer in China with an estimated 10% share of the Chinese market. Total sales in 1999 were U.S. $27 million with exports representing 50% of total revenue."
Mr. Baty went on to say, "Strategically, this new venture enables us to expand our global manufacturing reach, broaden our product offerings, and establish a presence in the rapidly growing Asian marketplace."
Mr. Shi Xiang Gui, General Manager of Jiangsu Steel Ball, said, "This joint venture is an excellent opportunity for us to strengthen our leadership position in the domestic Chinese market and take advantage of the tremendous opportunity to expand our export business. We look forward to working closely with the management of General Bearing and NN as we implement our growth strategies."
GBC President, David Gussack concluded, "Rarely have I seen as perfect a partnership as the one just established between GBC, NN and Jiangsu. This will be a highly successful project."