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Ford Lio Ho Motor Company

Can NT$4B Buy a Comeback?

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Can NT$4B Buy a Comeback?

Source:Kuo-Tai Liu

Its days as Taiwan’s automobile sales leader long past, Ford Lio Ho is now investing NT$4 billion in manufacturing upgrades. Can these efforts bring back the glory days?

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Can NT$4B Buy a Comeback?

By Liu Kuang-ying
From CommonWealth Magazine (vol. 618 )

Signs of Ford Lio Ho Motor Company’s former glory are immediately apparent upon entering its 35-hectare facility in the Taoyuan satellite city of Chungli. During its heyday in the late 1980s, the company was Taiwan’s automobile sales leader, and one out of every four cars on the country’s roads was a Ford.

In stark contrast, with sales of just under 20,000 vehicles last year, Ford’s meager market share of 4.5 percent was just one-fifth of that at its peak. Meanwhile, only around 700 salaried employees remain at the facility, just a quarter of the workforce of its heyday. Consequently, the automobile industry has been abuzz with talk about the possible closing of the Ford Motor production line in Taiwan after a 45-year run.

However, the actions of Tim Chu, president of Ford Lio Ho Motor Co., would seem to contradict such rumors, as Ford plans to invest NT$4 billion in plant refurbishments over the next five years, incorporating smart production practices.

Why is Ford prepared to make such sizable investments?

Training School

“Due to the constant poaching of our personnel, we (Ford Lio Ho) had no choice but to step up our training efforts (since 1995),” says Frank Chuang, director of manufacturing for the company’s Asia Pacific Manufacturing Division. Such major automobile industry figures as Luxgen Motor president Hu Kai-chang, and Jack Cheng, CEO and co-founder of the Chinese electric vehicle company NextEV, are both veterans of Ford Lio Ho. “We’re like a training school for the automobile industry,” he says.

Chu spent time as a CFO at Changan Ford in Chongqing, China, while Chuang served as deputy director of manufacturing at Ford in India and director of manufacturing at Changan Ford.

However, a combination of poor sales and corporate policy have contributed to Ford’s steady decline. In 1996, the company’s Detroit headquarters adopted a central authoritarian approach to company operations, and car models and marketing approaches introduced to Taiwan were out of touch with the local market. These miscues opened the way for competitors Yulon Motor and Toyota Kuozui to blitz Ford from both sides.

Ford’s introduction of the Mondeo in 1997 was a shot in the arm for the company in some respects. However, the model’s European styling, interior appointments, and performance and handling did not appeal to Taiwanese consumers, who consequently began to lose confidence in Ford Lio Ho.

Taiwan’s entry into the World Trade Organization (WTO) over a decade ago, sending tariffs tumbling and making imported cars increasingly affordable, has also hurt Ford Lio Ho, which is a domestic manufacturer, especially hard.

Hal Chiu, sales representative of President Tokyo Auto Leasing Corporation, is a Ford Fiesta driver. Although he notes that the car is not especially cheap, it offers the kind of cost/performance ratio he is looking for. “In terms of specs, safety, and handling, it’s the best in its price class,” he relates.

Yet Chiu’s admiration of Ford’s cars is rare among his peer group. “I got a lot of grief from my friends when I was looking into cars. They said, why bother thinking about getting a Ford when you can just get a Toyota?” Chiu says that although Ford makes good products, their marketing and services are not what they should be. For instance, when the Mondeo line had issues, the public relations office failed to respond quickly enough to assuage consumers’ fears, leaving a bad impression and giving Ford Lio Ho the dubious distinction of being the most heavily criticized company on various Chinese-language Internet automotive forums.

Japanese carmakers have a knack for grasping consumers’ needs and wants. Chiu, a veteran of various brands’ repair and service centers, relates the strong impression Lexus made on him. “As soon as you walk in, you’re met with a Starbucks coffee, Belgian waffle, and ice cream, and there’s a ball pool for kids,” he says. In contrast, the comparatively spare appointments of Ford service centers contribute little to keeping the customers around.

“Taiwanese car owners need to feel cared for,” admits a senior Ford sales representative.

Can Ford Lio Ho turn things around?

Known by just his English name “Tim” by employees, sporting a financial analyst background and American style, Chu knows Ford’s past struggles very well. “Our guiding principle moving forward is to continue fostering our operations in Taiwan. We have a lot of strong feelings for Taiwan, and we hope that consumers will notice and appreciate the sincerity we invest in our products and after-sales service,” he says. 

Manufacturing Upgrades, Enhanced Services

Chu stresses that the newest Escort model, well-positioned for consumers as a mid-size car, will be manufactured in Taiwan this year. “We’re very confident in this product,” he says.

Next up is the company’s sizable investment in the retooling of the production line. “Before, we used to do a lot and say very little, whereas now we talk about whatever we do,” says Chuang. Now in his 36th year with Ford Lio Ho, stretching from the company’s peak through the present, his hair has gone completely gray. As we enter the body assembly plant, a worker with a welding gun on his back welds frames for a Kuga SUV and Focus sedan, sending sparks shooting several meters.

Chuang says it will be a completely different scene in the second half of the year as Ford Lio Ho begins its five-year facility refurbishment, a key aspect of which is production automation and mixed production.

Beginning in May, Ford Lio Ho will take delivery on more than 20 robotic arms from German company ABB Robotics. Incorporation of this technology will raise the automatic welding component of the production process from 40 to 60 percent, while making welds more precise and sturdy, saving energy, and greatly reducing sparks. Robotic arms will also be used extensively in the assembly and painting of automobiles. In addition, the facility will also begin using ABB’s Gate Framer, which enables the rapid flexible configuration of gates for the production of different car models on the same production line.

Although as director of manufacturing for Greater China operations, Chuang spends the bulk of his time at the Changan Ford facility in Chongqing, China, he will spend considerably more time in Taiwan this year overseeing production upgrades. In addition to robots for automated production and transport, such tasks as filling oil and coolant, and headlight brightness testing will also be highly automated, raising precision and efficiency throughout the production process.

Nevertheless, recapturing its former glory will surely be an uphill battle for Ford Lio Ho. Ray Wu, chairman of Toucher Integrated Marketing Co. Ltd. and a seasoned automobile marketing consultant, believes that the announcement of an investment of NT$4 billion over the next five years is a tall task for Ford Lio Ho given its poor current profitability. However, “This declaration is more meaningful as a confidence booster across the supply chain,” he says.

Translated from the Chinese by David Toman

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