NANCHANG -- Jiangling Motors Corporation (JMC), Ford's strategic partner for the production of commercial vehicles in China, is building a new USD 300-million plant in Nanchang.
Traditionally a commercial vehicle specialist, JMC aims to use its partnership with Ford to become a world class automaker. JMC President York Chen is optimistic that the company's alliance with Ford will help the Chinese manufacturer reach its full potential.
Q. What is Ford's financial interest in JMC?
A. JMC is a publicly traded company in China and Ford's stock ownership position is 30 percent.
Q. What is JMC's product lineup?
A. JMC operates two brands, Ford commercial vehicles (Transit) and JMC's self-owned brand.
JMC is recognised as a high-quality manufacturer of light trucks, light buses and pick-up trucks. We are presently expanding our portfolio to include exciting new medium and small SUVs, including our all new self-developed SUV being launched in the fourth quarter of this year.
Q. In what areas does Ford make a significant impact on your business?
A. The Ford Transit nameplate has been a very competitive and profitable product for JMC for more than a decade, while our Cycle Plan significantly expands our Ford product portfolio. Equally important are the management systems introduced by Ford over the years, particularly in the areas of finance, manufacturing, quality and product development.
Q. We have all heard about the growth in China industry volumes to be the worldwide leader. How is JMC faring in the ultra-competitive China automotive environment?
A. The China auto industry has been very strong in the first half of this year. Despite a competitive product environment and pricing pressures we have been able to increase our market share by a full percentage point this year – despite no new product introductions.
In 2009, JMC's total sales were more than 115,000 units. Sales in 2010 are expected to set a new record of 170,000 units, with 2011 sales forecast to exceed 200,000 units.
Q. What is your present Manufacturing and Product Development (PD) footprint at JMC?
A. JMC is a vertically integrated company. We operate plants that produce frames, chassis, axles, wheels, stamped parts, castings and engines to support our two assembly operations, with a combined capacity of just over 200,000 units per year.
My manufacturing team has done a fantastic job to basically double our monthly production from a year ago. These plants supply JMC and boost their cost competitiveness by also competing for outside OEM business.
On the PD side, we have about 700 vehicle and engine engineers who selectively collaborate with Ford and some outside engineering houses to develop a wide range of vehicles and engines. Our internal PD capability has been a primary company focus and has grown rapidly over the last two to three years.
Q. Tell us about your new plant. What products will you build there?
A. The new plant (Xiaolan) is a USD 300-million investment with an initial capacity of 200,000 vehicles, which can be readily expanded to 300,000 units per year. The facility will be highly flexible to produce a diversified range of SUV and Light Bus products.
We are utilising Ford's expertise to enhance design and equipment options and taking advantage of synergies that Ford's recent assembly plant projects in India, South Africa and Thailand offer.
At the Xiaolan site we have major stamping operations and blueprints have been drawn up to construct a test track and an engine plant there in the future.
Q. You are spending about USD 300-million on the new plant. Where will you get the funds?
A. We have internal cash reserves to fund the entire project. Our profits and operating cash flows have been very strong, allowing us to operate debt free, pay a healthy dividend and accumulate reserves to support product and manufacturing growth. In 2009, JMC earned a record profit over USD 180 million – and we matched that performance in the first half of 2010!
Q. How is your relationship with your Chinese partners and do you have any interaction with the Ford joint venture in Chongqing?
A. Our primary Chinese partner, the Jiangling Motor Group, has been fantastic to work with and major supporters of JMC and Ford. Bob Graziano, Ford China Chairman and CEO, has established an excellent relationship with Mr. Wang Xigao the Chairman of JMC and the Jiangling Group.
ChangAn Group is a shareholder as well and they have been supportive to JMC and work well with them at the board level.
In China, partner relations are crucial and at JMC, everyone is rowing in the same direction.
Regarding Ford's CFMA operation, although we need to operate independently, we do cooperate in many areas, particularly process improvements and benchmarking activities. We really do not compete with each other in the marketplace as CFMA focuses primarily on the sedan business, whereas JMC concentrates on the commercial truck, bus and SUV segments.
Q. What are the biggest opportunities and challenges facing JMC in the coming years?
A. My number-one priority is to launch our first all-new self-developed vehicles and produce them at international quality levels. Quality has been at the root of JMC's success in the China market.
Second is to ensure we have enough system capacity to meet demand (our production requirements have roughly doubled from a year ago).
The third item is to effectively leverage the strength of Ford. Bob Graziano, Joe Hinrichs, Derrick Kuzak and Alan Mulally have opened the door for much greater collaboration in product development. JMC has built internal vehicle and engine development capability, but we can run much further and much faster with Ford's strong support.