Dalian grows its distributor network.

China has led the world in machine-tool consumption for each of the last seven years. That voracious appetite led to high levels of imports--growing at over 40% per annum between 1999 and 2005--but it also buoyed the country's domestic builders of machine tools. Now both Shenyang and Dalian are ranked among the top ten builders in the world in this publication's "Machine Tool Scoreboard" revenue roundup.

Over the last several years, Dalian Machine Tool Group (Dalian, China) has been building its distribution lines in order to sell equipment outside its home market. Its subsidiary, DMTG North America (Rockford, Ill.) was formed last year to sell Dalian-built lathes, machining centers, and other metalcutting machines in the U.S., Canada, and Mexico.

At this September's International Manufacturing Technology Show in Chicago, DMTG NA will present 27 machines in two adjacent booths (A-8369 and-8363) that total 15,000 sq. ft. The space will be shared with specialty transfer-machine builder Ingersoll Production Systems, which DMTG acquired in 2002.

Since its launch (see M.I.R., 3/12/07), DMTG NA in addition to building its own staff has been using the facilities and personnel of Ingersoll Production Systems to assist it in importing and configuring Chinese-built machines for American customers. Among set-up tasks is certifying controllers; Dalian machines may be ordered with Fanuc, Fagor, or Anilam controls, and a DMTG-built electronics package will be available in the future.

Part of the puzzle in establishing Dalian-built machines as a fixture in the Americas is setting up a network of local dealers, and that has been the primary task of Robert B. Mlakar, DMTG NA's general manager. Mlakar, who last year was recruited to the post through Ingersoll Production Systems' president Jeff Kimberly, has a career's worth of experience in the machine-tool-distribution business, including serving as 1993-94 chairman of AMTDA: Starting with the Cleveland-area distributor company, Methods Machinery Co. Inc., that his father founded in 1955, Mlakar also has been associated with Tennessee-based Excel 2000 Machine Tools; Indianapolis' Machine Tool Corp.; and service unit Intercore Resources Inc.

"We're looking to cover the whole of North America with exclusive distributors," says Mlakar. But, he says, his team is building that infrastructure in a rational manner. "There's a huge availability of product, everything from manual lathes to CNC horizontal-spindle machining centers in standalone versions or in systems. We've made an important business decision to promote only what we can support.

"Moreover, we're looking for full-service distributors, "says the former chairman of the industry's national trade association. Among the outlets that have signed on in advance of IMTS, Mlakar lists ASI Automation Solutions, Inc. (West Chester, Pa.), KAR Enterprises Inc. (Brighton, Mich.), ACI Machine Tool, L.L.C. (Lawrenceburg, Ky.), and Brooks Associates (Norwell, Mass.).

The process of wooing already-successful outlets to join with a brand that's new to the market is a delicate one, to say the least. Mlakar is quick to admit that he's building on friendships within the community in order to get his message heard. He says he understands that ongoing relationships with competing brands might preclude some deals from coming about. But "we're continuing to make presentations, because Dalian has some very interesting prospects to talk about." He's referring to the low-cost capital assets of Dalian and the experience level of its Ingersoll Production Systems subsidiary. "Imagine what we can do together."

The network-building process is complicated by opportunistic relationships set up before Dalian's official North American subsidiary was founded. For example, Sino-America Machine Tool (see M.I.R., 6/11/07), the 2006 subsidiary of long-time importer Carney Machinery Co. (Wilmington, Del.), continues to offer from its inventory new machine tools that bear the DMTG logo, but its Web site refers to generic models.

Meanwhile in China, DMTG continues expansion. In a recent interview published in China Daily, Dalian vice president Jiang Huaisheng noted that "output value was about 1l-billion yuan [about $1.45-billion] in 2007 and CNC machine tool products accounted for approximately 45% of it." Jiang said that virtually all his company's products are independently developed, and that "we put about 400-million yuan [$53-million] into researching CNC machine tools."

For Dalian's European market, DMTG is building on long-standing relationships. This week The 600 Group (W. Yorkshire, U.K.) announced it signed a sales joint-venture agreement with DMTG through which the Dalian range of machine tools will be sold throughout Europe exclusively by 600 Group companies and distributors. Center of the sales operation will be Parat Werkzeugmaschinen G.m.b.H. (Stuttgart, Germany), a wholly owned subsidiary of 600 Group. (The U.K. builder, importer, and distributor company has also had a production agreement with DMTG, building products for 600 Group's Clausing unit.)

Dalian Machine Tool Group Co. Ltd., Dalian, China 86-411-3637-761.

DMTG North America L.L.C., Rockford, III. 815-637-8500.