A. O. Smith and Fagor Electrodomesticos Form Company to Manufacture Combination Boilers in China

MILWAUKEE, June 14 /PRNewswire-FirstCall/ — A. O. Smith (China) Investment Co., Ltd., and Fagor Electrodomesticos, S. Coop. have signed an agreement to jointly invest in a new company to manufacture residential wall-hung gas combination boilers in China.

The new company, Fagor – A. O. Smith (Nanjing) Combi Boiler Co., Ltd., will occupy a facility in Nanjing close to A. O. Smith’s existing water heater operations. The venture will manufacture what are popularly known as “combi” boilers that provide both potable water and space heating for residential applications.

A. O. Smith and Fagor plan to begin production in 2008. The new company will be a Wholly Owned Foreign Enterprise under Chinese law. The partners expect to obtain required Chinese governmental approvals for the establishment of the new company within the next 60 days.

A. O. Smith (China) Investment Co. is a wholly owned subsidiary of A. O. Smith Corporation (NYSE:AOS) , a leading manufacturer of residential and commercial water heaters and electric motors. Fagor Electrodomesticos S. Coop. of Arrasate, Spain, with 2006 sales of euro 1.7 billion is a diversified manufacturer of a wide range of consumer appliances including water heaters and boilers. Fagor is part of the Mondragon Corporation Cooperative, Spain’s seventh largest company.

“We are excited to partner with Fagor, which is one of the European Union’s leading appliance manufacturers,” Paul W. Jones, chairman and chief executive officer of A. O. Smith Corporation said. “The combi market is growing rapidly in China, and this venture will enable our two companies to offer products that meet the specific needs of Chinese consumers.”

“Combi boilers are very popular in Europe, and European companies are generally acknowledged to be the technology leaders in this industry,” Jones noted.

Initially, the company will produce combi units using Fagor’s existing designs, but the partners plan to develop an engineering function to design and develop new products for the China market. Fagor currently manufactures gas-fueled combi boilers in Spain for a number of global markets.

The combi boilers will be sold by each company’s sales organization in China under the A. O. Smith and Fagor brands.

“The addition of this product line will enhance our position as one of the leading water heater manufacturers in China,” Ajita G. Rajendra, president of A. O. Smith Water Products Company, observed. “We have enjoyed considerable success in designing residential water heaters for Chinese consumers and anticipate similar success with this new venture.”

A. O. Smith Corporation, with 2006 sales of $2.2 billion and headquarters in Milwaukee, Wis., is a diversified manufacturer serving customers worldwide. The company is one of the world’s leading suppliers of water heating equipment, offering a comprehensive line featuring the best-known brands in the industry. It is also one of North America’s largest manufacturers of electric motors, with an extensive line of hermetic, fractional horsepower, and integral horsepower motors for residential, commercial, and industrial applications. A. O. Smith employs approximately 19,000 people at facilities in the United States, Mexico, China, Canada, and Europe.

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Source: A. O. Smith Corporation