Ford on Tuesday said it planned to invest US$10m to increase annual production at Ford Vietnam’s Haiduong assembly plant by 35% though its local manager warned of a possible sales slowdown as the economy cools.
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The expanded capacity of 9,500 units is expected to be available by mid-year. The plant was developed and designed as a flexible facility, and the expansion will allow production rates to be increased or adjusted to meet “real-time customer demand”, Ford said.
Haiduong currently assembles the Mondeo and Focus cars, Everest and Escape SUVs, Ranger pickup, and the Transit van.
The automaker expects to add up to 130 direct jobs with the expansion, and increase its overall direct and indirect employment in Vietnam to more than 4,500 – including its locally-based supply network.
Ford Vietnam will provide skills training for the additional workforce as part of its ongoing programs to develop human resources and provide employees with career advancement.
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By GlobalData“The new investment reaffirms Ford’s commitment to developing and implementing an aggressive growth strategy in Vietnam, and the expanded production will make [our] local assembly operations one of the biggest among the country’s foreign direct investment (FDI) auto makers,” Ford said in a statement.
“This additional investment highlights the growing significance of Vietnam in our continued expansion and overall strategy for the Asia Pacific and Africa region. We’re very optimistic about Ford’s long-term potential in Vietnam,” added Ford ASEAN unit president David Alden.
“Our Vietnam strategy is aligned with our resources and operations in the region, and will allow us to continue delivering high quality… products that are built for ASEAN, and specifically Vietnamese consumers.”
Ford Vietnam boosted sales last year 165% to a record 5,975 vehicles, the automaker said.
“Today’s investment underscores the commitment of [Ford] to Vietnam and our confidence in a strategy to expand our local assembly operations,” said the unit’s general director Michael Pease.
Ford established operations in Vietnam in 1995, with an investment of about $100m and remains the largest FDI automaker in the country. It also claims to be one of the largest US investors in the country, with an accumulated tax contribution to the state budget of nearly $250m so far.
Ford Vietnam plans on further expanding its network of 22 dealerships and outlets in 2008 this year.
Despite the optimistic expansion announcement Pease told a press conference that, despite Ford also more than doubling its local sales in the first quarter, an economic slowdown could affect the country’s car industry in the second half of the year.
He told Reuters the automaker, competing against Toyota, GM Daewoo and Honda [who all also operate local assembly plants], sold more than 2,200 vehicles in the first three months, a Q1 record.
“We remain very confident in the first half performance of the industry in Vietnam,” Pease told the news agency. “In the first two months of the year we saw very strong year-on-year growth and we are confident this growth will continue in the second quarter.”
Ford Vietnam sold 1,345 cars in January and February, up from 713 units in the first two months of 2007, while sales of the entire industry nearly tripled to 21,004 cars, Reuters said, citing industry reports.
Reuters noted that Vietnam’s economic growth in the first quarter slowed to 7.43% from 7.73% a year previously while the government has cut its full-year growth target to 7.5% from an initial goal of 8.5-9%.
“For the second half of the year the economic outlook is a little less clear,” Pease told the news agency.
“As we look at global indicators and also government actions to address inflation and the trade balance, there may be some slow-down in the industry,” he said.
He did not give a figure forecast for the annual growth of the industry which saw sales nearly doubling last year to 80,392 cars as many consumers switched from motorcycles, Reuters said, citing Vietnam Automobile Manufacturers Association data.
“However overall we see 2008 growing and we remain very confident in the medium and long-term outlook of the Vietnam auto industry,” Pease told the news agency.
