(Yicai Global) July 24 -- Allied Machinery, a Chinese maker of high-precision mechanical parts, plans to build a new production base in Mexico to better serve its North American clients.

Allied Machinery will set up a project company in Monterrey to invest in, build, and operate the new factory, the Hangzhou-based company announced on July 21.

The project’s first phase, estimated to cost USD56.6 million, will have an annual production capacity of 380,000 precision parts, including 20,000 compressor parts, 10,000 engineering machinery parts, and 8,000 farm machinery parts. Construction will take two years.

The project will bring Allied Machinery annual sales of USD29.7 million before taxes, it said. The payback period will be nine and half years, including construction.

The new production base will deepen the ties between Allied Machinery and its overseas clients and help it master development trends in the downstream segment and client needs, the company pointed out.

Johnson Controls International, Ingersoll Rand, Carrier Global, McQuay International, and Caterpillar are among its main clients in North America, according to the firm’s most recent annual financial report.

Shares of Allied Machinery [SHA: 605060] fell 1.8 percent to close at CNY28.24 (USD3.93) today. The wider Shanghai market dipped 0.1 percent.

Editor: Futura Costaglione