Precision Castparts Corp. acquired a 49% equity interest in Chinese producer of seamless extruded pipe, Yangzhou Chengde Steel Tube Co. Ltd. The value of the all-cash investment was not released.
Portland, OR-based PCC has two business units, manufacturing investment castings and forgings. Its customer markets include aerospace, power generation, automotive, and general industrial and other markets.
While the China investment adds a new regional and manufacturing (extrusion) dimension to the portfolio, PCC chairman and CEO Mark Donegan characterized the move as an extension of some current product lines.
"Over the past several years, Wyman-Gordon (a PCC subsidiary) has been a major player in providing large-diameter, interconnect pipe for coal-fired power plants and has built a strong market presence. However, we lacked the manufacturing capacity for seamless boiler pipe, and we have been forced to walk away from this significant market. Through Chengde, PCC gains immediate access to the boiler pipe market in China, and we will use Wyman-Gordon's distribution capabilities to pull their products around the world,” Donegan explained.
Chengde manufactures seamless, extruded pipe for boiler applications in coal-fired power plants, as well as pipe and tubing for other energy-related applications, such as compressed natural gas. It operates a 6-million ft2 plant in China’s Jiangsu Province.
"Chengde's founder Zhang Huaide has built a very impressive manufacturing operation, and we are excited to partner with him going forward," said Donegan. "The strategic fit of the two companies will provide a long runway for continued earnings growth in PCC's power generation business.”
Donegan said Wyman-Gordon and Chengde will “attack” power generation opportunities worldwide, offering of boiler pipe, interconnect pipe, and fittings. He also suggested that Chengde's processing capabilities could be used to expand the energy pipe capabilities of another PCC subsidiary, Special Metals Corp.