Power Solutions International, Inc., a producer of in emissions-certified alternative-fuel and conventional power systems, has formed a China-based joint venture with global manufacturer MAT Holdings, Inc. The partnership will enable the companies to support PSI's existing customers in Asia and better serve that region's growing market for natural gas-, propane-, and gasoline-fueled engines.
From its U.S. base of operations in Wood Dale, Illinois, PSI currently supplies engines to China’s forklift manufacturers and other material-handling equipment manufacturers. Headquartered in Long Grove, Illinois, MAT has operations on three continents—including China, Vietnam and India in Asia— and provides its customers with a range of services that includes engineering, quality assurance, logistical and distribution support, strategic warehousing, bilingual sourcing, product development and marketing.
According to Eric Cohen, PSI's COO, PSI's customers collectively comprise more than 50 percent of China's forklift market, having collected combined revenue of over US$1.3 billion in 2011. What’s more, China accounts for over 70 percent of the Asian forklift market and is reported to be the largest forklift market in the world with sales exceeding 300,000 units per year.
"PSI's existing and prospective customers have requested that we establish operations in China," Cohen said. "Our customers see a wave of demand building in China for PSI's state-of-the-art clean-fuel engines. Our JV partnership with MAT, utilizing MAT's extensive operational capabilities in China, will allow us to set up and grow rapidly in China."
PSI's leadership believes that the company's emphasis on leading-edge technologies and investments in personnel will give the joint venture a significant advantage over competing Asian businesses. Along with its existing product line, PSI will contribute engineering resources, customer service tools, and key financing to the endeavor.
The joint venture will begin by supplying 2.0-liter and 2.4 liter engines to PSI's material-handling customers based in China. The ultimate plan for the new company is to supply throughout Asia alternative-fuel engines and power systems suited to a wide variety of applications.
Current trends in the Asia market — especially in China — may favor business projects involving alternative fuels. According to the International Energy Agency's June 2012 report, China should more than double its natural gas consumption over the next five years. In addition, the country's most recent Five-Year Plan calls for a 17 percent reduction in carbon emissions by 2015.
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Edited by Brooke Neuman