Monday, November 3, 2008

Ford executive talks about operations in Thailand

Lara Wozniak, 3 November 2008 Read this article online at: http://www.financeasia.com/article.aspx?CIID=127038
As the industry looks more likely to consolidate, we check in on Ford's operations in Thailand.

As General Motors and Chrysler carry on talks about a merger that could turn the Big Three of Detroit automakers into the Big Two, the other player, Ford, remains a major employer in Asia.FinanceAsia talks to John Parker, executive vice-president Asia-Pacific and Africa, about operations in Thailand. Parker has responsibility for all of Ford’s businesses and partnerships within the Asia-Pacific and Africa region.

The auto industry in Thailand has become a significant export contributor to the economy over the past 10 years; how did it develop so quickly? The Thai government was very proactive in driving the development of its automotive industry. The “Automotive Industry Master Plan” presented both a highly attractive climate for foreign investors to set up large-scale production hubs, and identified the one-tonne pickup as a 'product champion'.

Global automakers including Ford, as well as a large network of international suppliers, took advantage of the available incentives and skilled workforce to launch substantial operations with volume production to support export programmes. We currently send Ford Ranger pickups, built at our AutoAlliance Thailand production facility in Rayong, to more than 130 markets around the world.The overwhelming success of the master plan is reflected in the continual and significant overall growth of the auto industry, driven in large part by growth in exports.

Over the last 10 years, AutoAlliance Thailand has been one of the country's largest exporters, accounting in some recent years for more than one-fifth of all vehicles exported from Thailand. Now that the global economy is on the rocks, what's the outlook for the auto market in Thailand? Given the current internal and external factors impacting the Thai market, it would be extremely difficult at this point to accurately predict the outlook for the domestic auto market. However, analysts are forecasting the overall industry to increase by approximately 10% next year to 1.5 million units which would point to continued strength in exports.

How does that impact the type of production Ford does in Thailand? We're still on schedule to produce 175,000 units this year, and have current plans for the same production levels next year, while we continue to build out our small car manufacturing facility, which will begin production next year.However, we will continue to assess our production mix and volume to ensure that we're responding in real time to any changes in demand across our export markets. Indeed, there is speculation that the auto industry in the US will contract – that one of the big three will go belly-up, or be swallowed up by a Japanese competitor or someone else in a merger – how does that impact the way you do business in Asia? Are you facing concern by the government or people in Thailand that you might close?We remain fully committed to and focused on a future growth strategy for our Asia-Pacific and Africa region, which includes Thailand. Last year we announced an additional $500 million investment to increase annual capacity to 275,000 units, including production of our new global small car, Ford Fiesta. Our plans and strategy related to this investment have not changed. On a lighter note, but one that is key to staying competitive, what are your intentions for developing a car for the hybrid market in Asia?Our current product strategy in Asia-Pacific includes several vehicle technologies that are both affordable and available and that are aimed at improving fuel economy and reducing environmental impact. These include our E20 flex-fuel vehicles, which are currently available in Asean markets; EcoBoost engine technology that uses direct injection and turbo charging to improve fuel economy by up to 20%; and PowerShift transmissions which use a dual-clutch technology that helps improve fuel economy by up to 10%.

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