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ABC-NACO Inc. Aug. 7 agreed to form an equity joint venture with Zhuzhou Rolling Stock Works of Hunan Province, China, which would enable the Chinese company to manufacture and sell ABC-NACO's Swing Motion® trucks in China.
ABC-NACO would own 40 percent of the joint venture, which both companies expect to formalize within 60 days.
Zhuzhou Rolling Stock Works plans to use its existing steel foundry to manufacture the swing-motion suspension systems. The company anticipates that 75 percent of new Chinese rail cars ultimately would use ABC-NACO's Swing Motion trucks.
ABC-NACO plans to produce Chinese-ordered trucks until Zhuzhou is ready to begin manufacturing the suspension systems sometime next year. ABC-NACO in October would deliver an initial 300 car-set order to the Chinese market; potentially, the order could rise to 1,000 car-sets.
The Zhuzhou agreement is ABC-NACO's second Chinese equity joint venture; several years ago, the company formed a joint venture with Datong Locomotive Works in China's Shanxi Province to produce rail-car wheels.
"In a little more than two years, the joint venture has about 50 percent of the total freight car wheel market," said Vaughn Makary, ABC-NACO president and chief executive officer, in a prepared statement.