Posts tagged ‘manufacturing’


No surprises from Ford Australia, but it sends the wrong message for manufacturing

23.05.2013

Ford’s announcement today that it will end car production in Australia is no surprise, with the closures of Broadmeadows and Geelong. It was always a case of when, not if.
   The official excuse is that no one is buying big cars any more, and the Australian dollar being too strong.
   However, the real reasons are more to do with Ford’s own share price, globalization, and consolidation, a process that began years ago.
   My comments, as well as those from Australian members at the AROnline Facebook group, have constantly targeted Ford for intentionally under-marketing its Falcon sedan, and I made the bolder step of saying it was a plan to shut the plant.
   There is a nugget of truth in the Ford claim. Falcon sales have been trending downwards. But whereas Falcon was once a very extensive range, the current one consists of sedan and ute body styles. The economies of scale are not there, while rival Holden is able to keep the Commodore in the top 10 of passenger car sales in Australia with plenty of models off the same platform.
   Upgrades to Broadmeadows would have cost a huge amount for Ford, and even now, there are aspects of preparing the bodyshells that are outsourced abroad that have proved uncompetitive.
   The Falcon is not a big car by modern standards. It’s smaller in most dimensions (excepting overall length) than the Mondeo. It’s no surprise that there isn’t room for a car with a large engine to fit in between Focus and Mondeo. Big car sales aren’t exactly down—because people are lapping up offerings from Japanese brands (like the Mazda Atenza, or 6) that have the sort of space Falcon has. And having a single two-litre Ecoboost Falcon, with an engine half the usual size for fuel economy reasons, was a half-hearted response (where’s the marketing for that?).
   The changes in leadership at Ford were also a sign that things weren’t going well.
   And have you visited a Ford dealer … lately? I’ve been taking photos over the last year at Capital City Ford on what is on their forecourt, to prove my point. Last week was the first time I had seen a Falcon in the main new-car lot in that time (top photo). True, there were always Territorys, but a visitor would have got the impression that Ford is the Fiesta, Focus and Mondeo company. If you don’t push the cars in marketing, and at point of sale, then naturally the numbers will go down.
   Why did I have confidence in taking my position? Simple: Ford’s very predictable. The same technique of under-marketing was used to kill the Contour and Mystique in the US, a car which buyer trends would have told you would sell really well. Ford is very political and head office has suffered from NIH (not invented here). Things have improved under Alan Mulally, but Falcon never fitted in with those long-term plans. We’ll likely see an LWB Fusion as a Falcon replacement—there’s life in the CD platform yet—but the impact on the Australian economy is going to be pretty huge.
   It might slow the brain drain here given the multiplier effect in the Australian economy, but overall, news this big doesn’t send a good signal to the public about manufacturing Down Under—when in fact the statistics, even here in Wellington, show that manufacturing remains a viable industry, if it can be done smartly.
   Holden has managed to do reasonably well with its export programme, so the idea is that one should work more smartly. However, I doubt the Australian motoring and business media are going to focus much on the positives today.

Tags: , , , , , , , , , ,
Posted in business, cars, globalization, leadership, marketing, media | No Comments »


Volvo unveils its China strategy

26.02.2011

Volvo press conference

Volvo has announced that it will build a plant in China, and seeks approval for a second, in what it calls its second home market.
   It was inevitable, though for the long-term survival of the brand, it’s not a bad idea.
   Through Geely’s acquisition, it can potentially leapfrog other foreign car brands inside China by having more than a domestic partner: a domestic owner.
   There won’t be much toing and froing as Geely can call the shots with Communist Party authorities.
   The company already has a technology centre in Shanghai to deal with design, purchasing and manufacturing decisions.
   The new Chengdu plant, says Volvo, will only build Volvo cars—there will be no Geelys going through there.
   Volvo also says it will not affect jobs in Europe, which can be believed at this stage: the plant should be sufficient to deal with growth in China and the eastern hemisphere, where Volvo could be a lot stronger.
   While Volvophiles won’t be upset about most of the developments above, there will be one that will concern them.
   The company says that Volvo Car China’s new-product development will be done in Shanghai, not Göteborg. Göteborg will take the lead on hybrid and electric cars globally.
   Given the volumes involved—Volvo is targeting 200,000 cars per annum by 2015 in China—I’m not sure if it means that China will get its own range of cars. The likely scenario is that there will be a single, global range at these numbers.
   So how will the balance of global Volvo NPD be shared between Göteborg and Shanghai?
   Volvo suggests that HQ remains in Sweden on one hand, but, according to Freeman Shen, senior vice-president and chairman of Volvo Cars China Operations, says, ‘The Volvo Car China Technology Centre in Shanghai will develop into a complete product development organization on an international level. It will have the competence and capacity to work together with the HQ in Sweden, participating in Volvo Car Corporation’s work process for developing entirely new models,’ says Freeman Shen.
   I’m not criticizing Geely’s competences because if you look at its latest models, the company has certainly come a long way. Chinese designers, if nothing else, are fast learners, and knock-offs are becoming things of the past if 2010’s new models are anything to go by.
   And as a Swede is heading over to China to help set up the plant, one envisages that similar training in the Volvo design and creative process will be in the offing.
   Otherwise, there won’t be much separating Volvos from other car lines with the exception of a grille with a diagonal bar.
   But the press conference still leaves questions unanswered about how the NPD process will work.
   Nevertheless, allowing Volvo to pursue innovation is good news. Ford permitted it to happen but so much platform development was done elsewhere. Volvo remained in charge of global safety for Ford models, and gave the old S80 platform to a variety of cars, including the current and previous Taurus.
   The difference is, the parent company’s platforms weren’t half bad to begin with. I’m not so sure about Geely’s.
   I do, however, like the idea of an innovative, world-first Volvo that can get its new developments in safety and alternative energies out to the market before the competition. No more will the firsts be moderated by Dearborn.
   Innovation has not deserted the company—it has announced a V60 diesel plug-in hybrid—but we will not know what the new Volvo will look like till a model, with no Ford heritage, surfaces in a few years. That will be an interesting development.
   Geely chairman Li Shufu says, ‘We continue to uphold our principle that Geely is Geely and Volvo is Volvo. A more globalized, more focused luxury brand will turn our vision of a growing and profitable Volvo Car Corporation into reality. The company will continue to contribute to the development of the global automotive industry by introducing world-first innovations that make an outstanding brand win in the market-place.’

That doesn’t really settle it though.
   I have some concerns with Mr Li’s market positioning, because there are Swedes, indeed many Europeans, who don’t see Volvo as a luxury brand.
   Thanks to Ford, Volvo was edged upmarket to avoid competition with its own models—but it means its market share at home has been severely reduced.
   Earlier this century, most Swedish taxicabs were Volvos—today Mercedes-Benz and Toyota serve a proportion of the local market as Volvo could not offer the smaller models it once did.
   And if its home market share continues to decline, never mind how China goes: Volvo will be increasingly inaccessible to first-time car buyers in Sweden. Its need, then, to retain brand values might be weakened.
   Speaking hypothetically, if these world-first innovations are created merely for luxury models, then how long will they take to get to the everyday market?
   I remember an era when Volvo didn’t skimp on safety and innovations for even its lowliest models. And Volvo-as-luxury seems to fly in the face of that.
   The reality is, if Volvo is going to find more volume in the orient, then the luxury positioning will be more dominant.
   It’s going to be easy to foresee Volvos going all over the east from the Chinese plant, to allow for greater profits. Renault and Peugeot are sourcing from plants in Korea and Malaysia to serve the eastern hemisphere, and as far afield as eastern Europe, at more reasonable prices. It would not be a bad idea for Volvo to follow suit: it’s not in the hallowed realms of BMW, and its pricing needs to reflect that.

Tags: , , , , , , , , , , , , , , , , , ,
Posted in branding, business, cars, China, culture, design, marketing, Sweden, technology | No Comments »


Glimmers of hope for the people of Christchurch

24.02.2011

As jobs are vital to any economy, there is, at least, a glimmer of good news from Christchurch’s manufacturing sector.
   Tait, Sanitarium, and Steel & Tube appear to have escaped major damage, says The New Zealand Herald.
   It’s not much solace to those who have lost everything from homes to limbs to family members, though I console myself by saying that it’s better some things have been left standing than the destruction having been, literally, total.
   Hopefully these engines of commerce will begin turning, at least bringing back a little life into the local economy. Those who work there, I’m hoping, might recover some semblance of normality—I know my solution has tended to be to keep busy, even in situations when life feels emptier than usual.

Earlier on Thursday, I delivered bags of Farmbake Cookies and eight litres of water as part of my first contribution to Arise Church’s charity drive.
   The Church is sending down containers of supplies from Wellington to Christchurch on a truck, and tell me that it is repeating the feat on Friday.
   So for those of you who missed today’s two containers, head to 44 Wigan Street (off Taranaki, one down from Abel Smith) between 9 a.m. and 5 p.m. on Friday.

Tags: , , , , , , , , , , , ,
Posted in business, culture, media, New Zealand, Wellington | No Comments »