US: Complex Thai business gives Ford executive sleepless nights
Heinrichs said earlier that the redesigned Ranger global launch programme had gone slower than Ford would have liked
Ford has said it would soon start making money again in Asia as production gets back to normal levels.
The company has made a loss over the past two quarters but will now resume production of the Ranger pickup truck in Thailand after flooding last year caused parts shortages.
As well as the flooding, shifting government policies, currency fluctuations, employee turnover and other complications are part of doing business in the fast-growing Asian markets where Ford plans to introduce 50 vehicles and powertrains while building nine plants.
Joe Hinrichs, the automaker's's head of Asia Pacific and Africa, reckons it’s the most complex job he’s ever had. He oversees a region that incorporates three continents, 11 time zones and includes China - the largest car market and most complex country in which to do business.
Just last weekend a petrochemical plant explosion killed 12 in Thailand, the latest example of incidents to plague the supply base. The Bangkok plant makes components for a rubber compound but is not the only source of the raw material and should not affect production, Hinrichs said.
"It just takes one supplier to have a problem," he added. Also giving him sleepless nights is the money Ford has tied up in all the plants currently under construction and the huge supply base that supports the investment."
Ford is moving aggressively in China to try to catch up to leaders such as General Motors, Volkswagen and Hyundai. The company’s April sales of 54,881 vehicles were up 24% year on year, helped by 9,400 Focus sales. Ford started making the latest Focus in a new plant in Chongqing in February and has sold 176,274 vehicles there so far this year.
Hinrichs was relieved Ranger production is being ramped up. He said: “We were a couple of weeks into launch when the flooding hit last year. In the past several weeks we've started to stabilise Ranger production but the supply base is still fragile and overwhelmed."
Although the plant escaped flood damage, its supply base was hurt badly. The pickup truck line is a key global vehicle for Ford, sold in every region but North America. The delayed launch was a "significant contributor" to the US$178m combined pre-tax loss in Asia Pacific since October, the company said.
As well as coming out of the AutoAlliance Thailand plant, a joint venture with Mazda, the Ranger is also made in South Africa. Later this year, a plant in Argentina - where Volkswagen first made its Amarok rival - comes on line.
Hinrichs expects 5% growth annually in China for the next decade, up from 2.5% last year. In a market of 18.5m vehicles and growing, that means adding close to 1m sales a year.