B&S is the world’s largest producer of air-cooled gasoline engine for outdoor power equipment.
Santos said that B&S decided to pullout its production of single engine cylinder gasoline engines from B&S Chongqing in China as a strategic move to maintain the price competitiveness of the product.
B&S Chongqing was a joint venture between B&S USA and the Chinese government.
Part of the agreement is for the Chinese government to provide a manufacturing site. However, due to financial difficulties, the Chinese government gave up its share of the company and forced B&S Chongqing to rent a new plant site.
The new site that was acquired was in primary consideration of the new smaller horsepower aluminum engines that B&S Chongqing will manufacture.
If the single cylinder gasoline engines will continue to be manufactured in the new site, its price will have to go up since its shares with the cost of maintaining the new facility.
B&S USA favored moving to the Philippines the manufacturing operations for single cylinder gasoline engines under the management of AMMPI because the company has gained sufficient technical expertise of the product.
AMMPI’s sister company, Allied Motors Philippines (AMP) is currently the sole distributor of the product since 1999 while its major stockholders have been involved with marketing and selling the product since the 1970s.
The company invested P35 million which includes the value of the Asset Purchase Agreement that was made with B&S Chongqing.
Cast iron B&S cylinder gasoline engines have been in the Philippines for the past 40 years and to this day continue to be the preferred engine for fishing and farming applications.
Fishermen and farmers favor engines made of cast iron because it is not sensitive to corrosion caused by elements of the environment such as water and soil. It is also less expensive than the competing aluminum made engines.
AMMPI will be able to maintain the high quality of the product, as the designs, trade secrets, process and know-how to manufacture the product will be provided by B&S USA under a Technology License Agreement.
AMMPI’s production of single cylinder gasoline engines will be for exclusive export to B&S Shanghai for the first five years of operations. The latter will supply the required volume of the Philippine market through its exclusive and authorized distributors, which is AMP.
B&S Shanghai will also supply its various authorized distributors in the ASEAN region with these products produced in the Philippines.
AMMPI is located in General Industrial Zone of the Laguna International Industrial Park in Binan, Laguna. It will employ 88 workers at full capacity.