British supplier GKN Driveline says it is spending 15 million pounds, or about 153 million yuan, to build a factory in Changchun in China's northeast to keep up with expanding demand. 

The plant is scheduled to open in 2011, with annual production of 1 million drive shafts. After an additional expansion, the facility will produce up to 3 million drive shafts annually starting in 2013. 

GKN next will build a factory in southern China near the GAC-Fiat Automobile Co., which is constructing an assembly plant in Hunan province. 

"We're a 100 percent supplier to Fiat in Europe, so we don't want to lose that," said Stefan Magirius, president of GKN China. "The next priority is definitely the south." 

In November the company opened a plant in Wuhan, in Hubei province, to supply automakers in the area. The plant will produce half a million drive shafts this year and will ramp up to 2 million in 2012.  

"The way to take out costs is by localizing the supply chain and also to be close to customers," Magirius told Automotive News China in an interview at the Shanghai Exposition. 

A division of U.K.-based GKN plc, GKN Driveline generated sales of 2.1 billion pounds last year, or about 21.5 billion yuan. That was down from 2.4 billion pounds, or about 24.5 billion yuan, in 2008. 

GKN Driveline has 12 plants in China with 4,000 employees.