HUSCO receives $500 million in new contracts, builds new factory in China, and significantly expands Whitewater, Wisconsin factory.
WAUKESHA, Wisconsin, Agustin A. Ramirez, HUSCO International's Chairman and Chief Executive Officer, announced today receipt of numerous multi-year contracts and commitments expected to be worth in excess of $500 million in sales over the term of the agreements. The contracts are for programs in each of HUSCO's major divisions and subsidiaries which are Industrial Products which serves construction and material handling equipment markets, the Agricultural Products Division, the Automotive Products Division, HUSCO's European Operations, and HUSCO's China Operations. These new programs will create over 200 jobs as the programs are put into production, over half may be located in Wisconsin.
New Facilities Completed
In anticipation of substantial new business, HUSCO has expanded its facilities by approximately 50,000 sq. ft. in Whitewater, Wisconsin in 2003 and built a new 30,000 sq. ft. facility near Shanghai, China in 2002. The major new programs will be produced in the expanded facilities and existing facilities in Waukesha, Wisconsin and Runcorn, England.
The new operation in China will provide access to the fast growing China market and will help HUSCO lower component costs in its other facilities. Additionally, the Chinese operation will also provide low to medium technology products to markets outside of China served by HUSCO.
HUSCO Penetrates New Automotive Markets
The new automotive programs are very exciting as they represent a fundamental expansion of HUSCO's business. The recently developed products will serve the new and rapidly developing market for electrohydraulic controls to improve automotive engine fuel efficiency and power while lowering exhaust emissions.
According to Mark Sefcik, Vice President and General Manager of the Automotive Division, "In the past year HUSCO has penetrated automotive markets for CAM profile switching, cylinder deactivation and high pressure fuel injection controls, markets which are expected to expand rapidly in the near future."
HUSCO's initial automotive business development efforts resulted in a $100 million contract in 1996 to provide electrohydraulic controls for Mercedes high performance suspension systems as part of a DaimlerChrysler developed technology called Active Body Control or "ABC." Expertise developed from this five year clean sheet of paper product development effort allowed HUSCO to develop products for the engine management controls market. Four new automotive commitments have been received by HUSCO, two are for European customers and two are for North American customers. Manufacturing for these programs will be done at HUSCO's newly expanded facility in Whitewater, Wisconsin. According to Ramirez, "Developments in engine management controls will drive a high rate of growth for HUSCO's Automotive Division for the next five to ten years. The automotive market is very challenging to serve, but HUSCO's facilities are world class, and its proprietary products are highly engineered and provide superior performance." Major Off-Highway Contracts HUSCO has also secured over one dozen major new commitments in its traditional off-highway market resulting in a substantial expansion of electro-hydraulic controls product sales for agricultural tractors, off-highway suspension, material handling equipment, and construction equipment.
One of the most exciting new markets is off-highway suspension products which are a derivative of technology developed by the automotive division. This new technology substantially increases the productivity of equipment such as farm tractors where greater speed and a smoother ride results in higher productivity. Ramirez said, "Even though our non-automotive markets were weak in 2003, the new contracts, when combined with other commitments expected later this year, will drive substantial off-highway business growth during the next three to five years. Ramirez expects 2004 sales to increase approximately over 20% followed by a similar sales increase in 2005.
Jim Gannon, HUSCO's CFO and Executive Vice President, said "The difficult currency situation which had been detrimental to US and UK companies during 1999-2002 required HUSCO to substantially lower its costs to maintain competitive advantage. Although the currency situation reversed in 2003, we believe the major R&D and facilities investments and our global sourcing initiatives will help us reach our objective of being the low cost and high technology provider in each of our markets regardless of exchange rates."
Major Success for New Technology
Several of the many patents in process are software patents which take advantage of the unique system topology described above. The beauty of the INCOVA™ system is that the increased cost of the EH controls are largely offset by cost reductions in hosing, fittings, and vehicle structure. Substantial increases in vehicle productivity, controllability and fuel efficiency provide major performance advantages to INCOVA™ outfitted machines.
HUSCO International, a global market leader in providing hydraulic and electrohydraulic controls for automotive and off-highway applications, is a privately held enterprise employing 750 associates worldwide and is headquartered in Waukesha, Wisconsin.
Lastly, and most exciting, has been HUSCO's ability to secure major commitments for its new, highly proprietary and industry changing technology called INCOVA™. HUSCO has secured 13 patents for this new technology and 24 are in process. Ramirez said that within 10 years he expects the sales of INCOVA™ products technology to the off-highway markets to substantially exceed $100 million per year. Although HUSCO will spend over $20 million to develop this technology before initial production in 2006, it believes INCOVA™ will be a major contributor to long-term sales and profitability growth.
The new INCOVA™ technology is drastically different than traditional off-highway controls. Currently, most mobile equipment is controlled by one or two valve assemblies centrally located in the vehicle. In the INCOVA™ system, the proportional poppet valves and integral electronics and sensors are located near the work function. This type of system topology minimizes hoses and fittings and allows for simplification of structural members to support and accommodate hydraulic hoses. Hoses and fittings can be high maintenance and can also be a source of hydraulic oil leaks. INCOVA™ distributive valves are coordinated/controlled by an electronic system coordinator that interfaces with the machine master controls. A typical INCOVA™ system will include electronic joysticks, the distributed valves and electronics, sensors, a master electronic controller, and vehicles specific software. In many cases, the performance of pumps, motors and cylinders can be improved by modifying them to take advantage of the INCOVA™ technology which is unique in its ability to provide independent meter-in/meter-out capability.
