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Exhaust manifolds: Ningbo's logistical strength sustains line

The thriving domestic car industry, well-entrenched ports and stable materials supply firm up the Zhejiang city's sourcing hub status.

Ningbo's exhaust manifold segment is benefiting from the subprovincial city's proximity to sources of key manufacturing inputs and strong logistical support.

Situated in Zhejiang province where some of China's major steelmakers, including Ningbo Baoxin, are based, local manufacturers enjoy relatively stable procurement costs. Stainless steel pipes and tubes are among the primary parts used in exhaust manifold fabrication.

Further, the city is regarded as one of the country's premier economic and trade centers, having been commercially oriented for more than 100 years.

The Beilun harbor, currently the second-largest deepwater seaport in China, is the centerpiece of Ningbo's logistical advantage. The dock accommodates major shipping lines that transport goods overseas. It has a handling capacity of 10 million tons of cargo.

Ningbo connects directly to Shanghai via the Hangzhou Bay Bridge, reducing the distance between both cities by about 120 kilometers. The infrastructure is a 36-kilometer cable-stayed b that carries six express highways.

The hub is also an important manufacturing base for other car parts and accessories, rolling out more than $4.6 billion worth of products annually.

These advantages have firmed up Ningbo's status as a key sourcing center for exhaust manifolds in China.

Ningbo has been producing the line for more than 30 years. In the early 1990s, the segment got a boost from the robust domestic car manufacturing sector, propelling it to major industry status.

Overseas sales have grown by as much as 40 percent since 2005. Although the line began to slow in 2008, it still managed to post positive CAGR, which is currently estimated at 10 to 15 percent.

In 2009, leveraging its 100-strong supplier base, Ningbo accounted for 10 to 20 percent of China's shipments of exhaust manifolds worth about $300 million.

North America and the EU were the major destinations, absorbing 40 and 20 percent of shipments, respectively. Japan ranked third with 14 percent. Deliveries to these markets helped sustain the industry through difficulties in 2008. Local makers such as Fenghua Kerui Auto Parts Co. Ltd and Ningbo E-Way Manifold Exhaust Co. Ltd even registered a 10 percent increase in overseas sales that year.

This upturn has attracted new players into the line, increasing the supplier base by about 5 percent.

Ningbo Yinzhou Moxin AutoParts Co. Ltd entered the sector in 2008 and earned more than $1 million from overseas sales that year. Revenue rose over 80 percent in 2009 and is expected to grow 100 percent in 2010.

Challenges & opportunities
Industry profile
Challenges & opportunities

Interviewed suppliers are upbeat about the line's future despite uncertainties in the world economy in general, and the global car industry in particular. Companies believe continued growth is possible since Ningbo exhaust manifolds are targeted more at the aftermarket and the thriving domestic car manufacturing sector.

Fluctuating material costs, meanwhile, remain a major challenge for local manufacturers. Last year, stainless steel rates increased by more than 10 percent, leading to higher outlay for pipes and tubes. To keep quotes stable, makers had to reduce their profit margins by about 5 percent.

Suppliers, however, see an opportunity to stave off rising material costs in a recent world trade resolution.

In December 2009, the US International Trade Commission ruled against China steelmakers in the antidumping issue filed by US manufacturers. The decision calls for the imposition of duties from about 10 to 16 percent on future imports of China-made oil and gas steel pipes. Insiders are wary that more steel products may face restrictions in the future.

Early this year, the US government had already imposed over $300 million in preliminary anti-dumping duties on wire decking from China. Tariffs of between 40 and 300 percent will be levied and collected until a final determination is made on the case.

These sanctions have compelled China steelmakers, including stainless steel pipe manufacturers, to look domestically for business. Ningbo exhaust manifold suppliers are optimistic that this emphasis on the local market will push down costs eventually, allowing them to source materials easily.

Low-end and midrange exhaust manifolds from Ningbo are in 304 and 316 stainless steel and can withstand temperatures of less than 1,200 C.

Upscale versions, meanwhile, come in 409, 410L, 436L, 441, 439 and SUS304 stainless steel tubes and operate in temperatures exceeding 1,200 C. These are manufactured according to TS 16949 standards.

Typically, basic models go for less than $100 and midlevel versions are from $100 to $300. High-end exhaust manifolds are priced upwards of $300.

In terms of product development, makers are strengthening their ability to customize designs for luxury vehicles such as Audi 5, Porsche 997 and Nissan 350Z.

Industry profile

Small and midsize enterprises make up 60 and 35 percent of Ningbo's entire exhaust manifold supplier base.

The rest are large companies that generate more than $10 million annual sales and operate factories exceeding 10,000sqm. They have over 800 workers, including in-house design and development teams capable of releasing upscale models such as ceramic versions. About 30 QC inspectors ensure that products meet various international safety standards.

Midsize makers turn out 30,000 to 100,000 units a year, registering about $3 million to $10 million in annual revenue. They run 2,000 to 10,000sqm plants with 100 to 800 employees and five to 30 R&D personnel. QC procedures are conducted in-house by a five- to 30-man inspection team.

Small players have less than 2,000sqm factories with about 100 full-time workers and fewer than five QC personnel. Most do not have R&D capability, relying primarily on customer-specified designs.

Some Ningbo makers also offer tail pipes and other exhaust system parts, and forged components for mining machines.

This article "Exhaust manifolds: Ningbo's logistical strength sustains line" is originally posted in Global Sources.

Note: All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.

Disclaimer: All product images are provided by the companies interviewed and are for reference purposes only. Those product images featuring products with trademarks, brand names or logos are not intended for sale. We, our affiliates, and our affiliates' respective directors, officers, employees, representatives, agents or contractors, do not accept and will not have any responsibility or liability for product images (or any part thereof) which infringe on any intellectual property or other rights of a third party.

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