BAT's Mexico Auto Production Expands to Third Plant in Sinaloa
22 January 1999
BAT's Mexico Auto Production Expands to Third Plant in Sinaloa Order for 2000 Small Commercial Power Generators from Y2K Superstore
Will be Added to Production
CHULA VISTA, Calif., Jan. 21 -- BAT International's
(OTC Bulletin Board: BAAT) subsidiary, Southern States Power Co. (SSPC) and
its partner, Environmental Process Advanced (EPA) are expanding production of
the "Rhino," a composite shell mini-hummer, by setting up an additional auto
plant in Sinaloa, Mexico to produce "Rhinos" for the Mexican market. The
existing two plants in Otay Mesa will concentrate on assembly of Rhinos for
U.S. sales, manufacture a new pickup truck, and enter into other Mexican
Maqueladora production opportunities.
Sinaloa, a state in the interior of Mexico, has been chosen as the first
site for expanding auto production for a variety of reasons. Production costs
are much lower, especially buildings, infrastructure and labor. Sinaloa has
also offered significant economic development incentives for locating the
plant in the region including reduced taxes, deferred leases and other
benefits. The site is also strategically located near major rail lines for
easy shipment of materials and finished vehicles.
One of the greatest assets of initial investments in the auto production
effort in Mexico is its people. Management, engineering and floor production
labor are highly trained, motivated and loyal. Ten engineers and management
staff and their families from the 40 person staff in the Otay Mesa plants have
already moved to Sinaloa to assist in transferring technology and production
experience to the new plant. About thirty people have already been hired in
Sinaloa and initial equipment installation & start-up is underway.
The first five "Rhino" vehicles completed in Otay Mesa are being delivered
to strategic U.S. buyers. Product literature on the "Rhino" vehicle for sale
in the U.S. has been posted on BAT's web site (http://www.baat.com). The initial
target price of the U.S. vehicle will be $15,900, with Mexican prices slightly
lower. Various specialty vehicles such as a bulletproof "Rhino" are under
development.
Manufacturing of a new pickup truck is also planned for the Otay Mesa auto
plants. As stated in previous releases, BAT has terminated its relationship
with Worldstar for a variety of reasons, including lack of customer acceptance
of numerous design features. The company has already completed a final model
of a new production pickup truck based on new technology innovations and
specific customer requirements. Production of this pickup truck will begin
once testing of the first vehicle is completed in February. BAT anticipates
strong market interest in this new pickup model and plans first deliveries for
March, 1999.
In a separate development, SSPC has secured a purchase order for 200
commercial generator sets from Y2K Superstore, an Internet-based provider of
emergency supplies (http://www.y2ksuperstore.com). Propane generators will be
assembled at one of the Otay Mesa plants using Volkswagen engines now used in
the "Rhino." SSPC has chosen to diversify production activities to include
generators in order to increase the volume of engine purchases and further
reduce component costs. The same fuel injected engines are now being
purchased for the "Rhino" model vehicle and higher purchase volume will lower
unit costs. The Otay Mesa plant will be converting engines to propane and
coupling generators and fuel tanks. Diesel generator sets will also be
offered by Y2K Superstore that may provide similar benefits to SSPC in
relation to diesel engine unit costs once these engines are incorporated in
future vehicle models.
SSPC will deliver the 200 generators over the next 120 days, with an
option to extend the contract every sixty days for the next year. If all
options are exercised by Y2K Superstore, the total contract amount will be
$3.2 million. There is a shortage of 5 to 15 kW generators on the market as a
result of consumer fears of power outages from the "millenium bug," prior and
when the year 2000 arrives. Competition is limited and pricing high, with
waits as long as eight months for purchasing generators from most companies.
SSPC can source a large number of generator components at a very low cost as a
result of business contracts it has established in Mexico and worldwide. This
provides significant profit potential per unit that could significantly
enhance profitability of auto manufacturing activities.
The Y2K Superstore chose to purchase generator sets from SSPC because of
the engine chosen for the generator package. Over 50 million VW engines have
been built over the past 35 years so that spare parts are readily available
from a variety of suppliers all over the world. In addition, running the VW
engine on propane fuel at 1800 RPMs will result in a long service life due to
the air cooling system and other engine features. Y2K Superstore is also
negotiating to purchase other BAT products including electric bicycles
recharged with solar panels and deep cycle batteries for home backup
electrical needs during power outages.
BAT International is organized as a holding company with major ownership
positions in a set of subsidiary companies now commercializing advanced
automotive and energy technology products developed by BAT over the last six
years, including anti-friction metal treatment, electric vehicles,
super-efficient or high power engines, advanced batteries and power
electronics, electric bicycles & scooters and electric power generation, (for
more information on BAT Int., see BAT's web site at http://www.baat.com).
This press release contains forward-looking statements that should not be
used to make an investment decision. Please refer to our web site & other
sources for more detailed Company information or call the corporate offices at
(619) 409-8977.
