The Timken Company (USA; NYSE: TKR) and Xiangtan Electric Manufacturing Co. Ltd. (XEMC; China; website) have formed a joint venture manufacturing company in China.

The venture will invest at least USD $38 million to build a greenfield manufacturing facility in Xiangtan, Hunan Province. Timken owns 80%, and XEMC 20% of the venture.

The plant's focus will be to manufacture ultra-large-bore bearings for the main rotor shafts of large, high-output wind turbines.

Groundbreaking is set for later in 2008; when the facility is fully online, it will employ approximately 110 people.

Attending the announcement ceremony was U.S. Secretary of Commerce, Carlos Gutierrez. Mr. Gutierrez said: "Timken's partnership in China will provide $100 million in exports, while also helping China expand alternative energy, wind power, which helps the planet."

Roger Lindsay, Timken Senior VP for Asia, said: "Timken has continued to invest heavily in China since entering this country in 1992, and the joint venture with XEMC is the latest example of our commitment to meet the needs of Chinese customers as they participate in one of the most important economic expansions the world has ever witnessed. We believe our collaboration with XEMC will contribute to Chinese economic growth while also advancing the use of sustainable energy to the benefit of us all."

Founded in 1936, XEMC brings to the table the ability to leverage its existing market position in China's heavy equipment and large electrical component manufacturing industry. Timken brings expertise in alloy steels, bearing and power transmission system design and engineering, and precision manufacturing knowledge. Combined, the two hope to be able to design and build more durable, reliable, high performance designs for China's fast-growing wind power industry.

The focus on wind energy opportunities in China comes from the country's government. Last year, China's central planners announced it will pursue an energy path designed to address the country's inability to meet fast-growing energy needs via traditional power generation technologies. China has become particularly aware that the pollution caused by simply building more low-cost traditional power generation facilities is unacceptably high.

Instead, the government is promoting the establishment of a strong power generation substructure involving locally-oriented wind power facilities.

The central government has established a goal that, by 2020, wind turbines will be providing at least 30 million kilowatts of electrical power.

A majority of these new wind power generators are expected to be small, low-tech, domestically designed and manufactured units similar to those already available. But moving to higher output wind generation facilities requires several leaps in technology. Extremely precise, highly engineered components, instrumentation, and advanced electrical control systems are required -- technologies which have matured in other parts of the world but are not yet well developed in China.

And because these systems and technologies are not yet well developed in China, wind energy and related precision electrical component manufacturers from the U.S. and Europe have been quick to move and take advantage of China's long-term government-mandated market opportunity.