Ford Motor Company president and chief operating officer Jim Padilla has said Thailand will remain a key production hub for one-tonne pickups, underscoring the importance of the Ford-Mazda joint-venture manufacturing operation at AutoAlliance Thailand (AAT).
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The facility ships Ford Ranger and Mazda B-series pickups to 130 markets outside North America. The trucks are essentially Mazda designs much newer than the ancient models of the same name built for both brands by Ford in the US.
Last month, Thailand reached a significant milestone in its ambition to become the region’s leading automotive hub – local vehicle production for the year passed the one million unit mark.
“On behalf of Ford Motor Company, I wish to congratulate the Thai government for achieving this important milestone which brings Thailand closer to its vision to become the ‘Detroit of Asia,'” said Padilla in a speech to the American Chamber of Commerce in Thailand on Wednesday (14 December).
“Thailand is no emerging market in the global automotive sector. Thailand has emerged. The one-millionth milestone foretells the latent potential for this market to grow further.”
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By GlobalDataAAT began building Ford and Mazda trucks for both domestic and export markets when the first truck rolled off the production line in July 1998 when the region was mired in the Asian financial crisis.
AAT has since contributed over 167bn baht (US$4.2bn) in export earnings to Thailand’s economy and achieved a net trade surplus of 109bn baht. In the first quarter of 2005, AAT was Thailand’s top vehicle exporter of completely built-up (CBU) vehicles, its 19,388 units accounted for a 22.3% share of CBU exports valued at 8bn baht.
With more than 80% local content in the vehicles, AAT has more than 148 local suppliers from which it buys 30bn baht worth of parts a year. This has led to the growth of an ‘upstream’ components industry which includes many local small and medium firms.
Ford directly employs more than 4,200 people in Thailand, and Bangkok has become the central location for regional headquarters for its Asia Pacific and Africa operations. It is estimated indirect employment generated from AAT’s investment and operations is between 25,000 to 30,000 jobs.
In his speech, Padilla confirmed that the 20bn baht joint investment plan announced by Bill Ford in October 2003 to support new vehicle programmes, facility upgrade and capacity expansion was fully on track. He added that AAT was on course to achieve its most successful year-to-date with capacity hitting 155,000 units for 2005 and further capacity increase expected to reach 200,000 units a year by 2008.
“The success of Thailand’s automotive industry is no surprise,” Padilla noted. Today, Thailand represents the biggest market for one-tonne pickups of its kind in the world where the segment commands over 400,000 units a year and continues to grow.
“This huge market for one-tonne pickups also translates into an intensely competitive landscape and an even more demanding customer base.”
Padilla said Thailand was an excellent success story for Ford in Asia Pacific. “Strategically, Thailand plays a key role to our growth strategy in this region. However, I would reiterate that Ford takes an integrated approach to this region. For example, our approach to an integrated manufacturing strategy in ASEAN calls for plant specialisation and complementation which promotes regional balance of trade and higher ASEAN local content.
“This business model has worked well with Thailand being our production base for pickups and its derivatives while the Philippines produce passenger cars and compact SUVs. In addition, Ford’s regional manufacturing footprint in ASEAN includes assembly plants in Malaysia as well as Vietnam for domestic production,” added Padilla.
While Ford’s outlook for the region’s automotive growth is promising, Padilla also outlined some key challenges in building a successful global operation in Asia Pacific. “The business models we have used in North America and Europe do not necessarily apply,” he said bluntly.
“As Asian governments continue to evolve and grow alongside their economies, we continue to face challenges from a broad range of export and import regulations, varied tax structures and what can best be described as a selective free trade agreements. For sustainable returns on long-term investments, it is absolutely necessary to create an environment of clarity and consistency in government policies followed by speedy and transparent implementation of such policies.”
