Umeco winds up for Chinese joint venture

AEROSPACE and defence group Umeco has announced a new joint venture worth almost £3m with a Chinese business involved in wind energy.

The Midlands based group, which provides supply chain services and advanced composite materials to the twin sectors, said its Process Materials business had had entered into a JV with distributor Shanghai Leadgo Technology Co.

The deal is subject to approval from Chinese authorities but this is expected to be granted within the next two months.

The JV will be called Shanghai Umeco Composites Co and will be 51% owned by Umeco Composites Limited, with Leadgo having a 49% stake.

The partnership will establish a facility in Shanghai to manufacture vacuum bagging films for the rapidly growing Chinese wind energy market. The new facility should be fully operational by the end of 2011.

Umeco currently manufactures the films supplied to Leadgo for the Chinese market at its IPM facility in Italy.

The group said it expected that the global growth in the wind energy market would allow IPM to back-fill its production capacity once production switches to China.

Umeco estimates its total investment in the JV will be £2.67m, comprising a cash investment and shareholder loan facility.

Leadgo will make a similar investment and provide a similar loan. At the outset, the JV will have no other assets. IPM will receive a technology royalty from the JV following the commencement of production.

The new collaboration is forecast to be profitable shortly after production begins. Costs in the start-up period are expected to be modest.

Clive Snowdon, chief executive of Umeco, said: “The continued growth of the global wind energy market, despite the economic downturn, reflects the on-going transition to generating power from renewable sources.

“This joint venture represents another important step in building Umeco’s capability in the world’s largest wind energy market.”