The September 12, 2012 signing ceremony in Liuzhou, China for ZF and Liugong's second joint venture.

The September 12, 2012 signing ceremony in Liuzhou, China for ZF and Liugong's second joint venture.

ZF and Liugong have signed a new joint venture to develop and manufacture axles for the Chinese construction machinery market. It is the second joint venture between the two companies, but whereas their 1995 agreement was to build axles and transmissions for use solely by Liugong in its equipment, this deal will see axles marketed to other manufacturers.

ZF Liuzhou Axle Co. Ltd will be based in the southern Chinese city of Liuzhou, where Liugong has its headquarters, at the existing Liugong-ZF joint venture factory. It is expected to employ 190 people and have a production capacity of 30,000 wheeled loader axles per year. The axles will be used by Liugong as well as other OEMs.

Liugong chairman Wang Xiao Hua said, "The new venture will benefit from the many successful years of cooperation between Liugong and ZF and by further extending this beneficial cooperation, we will continue to set many things in motion of the fiercely competitive construction machinery market."

"Our cooperation with Liugong strongly shows the 'Design to market' strategy which has been consistently followed by ZF, especially in the field of off-highway systems. Together with our partner Liugong, we have developed a product which exactly matches the requirements of the Chinese market," said ZF Board member Wilhelm Rehm.

ZF CEO Dr Stefan Sommer added, "More than half of the wheeled loaders in the world are produced in China. A considerable amount of machines are also exported abroad from there. The impressive export rate, in particular, represents a big challenge since it frequently leads to market fluctuations. With the new joint venture company, ZF will continue its growth in China."

According to ZF, a team of Liugong and ZF engineers have been working since October 2011 to update the design of the existing axles the current joint venture produces. This has led to the development of a modular design allowing dry disc brake (Basic Line) and wet multi-disc (High Line) versions to be produced from a large number of common parts. The company said the use of common parts will reduce production costs.

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