Saturday 19 January 2013

Mini destined for VDL Nedcar

At least one variant of BMW’s Mini will be built at the VDL Nedcar plant in Born, production home of the Mitsubishi Charisma and the Volvo S40. The site is the only large-scale car-making facility in Holland.

Founded in 1967 as Van Doorn’s Automobiel Fabriek (DAF) the facility built Daf passenger cars, noted for their belt transmission – Daf 33, 44, 55, and 66. Van Doorne also developed a continuously variable transmission (CVT).

Production continued after its takeover by Volvo in 1972 (with the Volvo 340/360, 440/460 and S40/V40), but in August 1991 a joint venture was established between the Dutch government, Volvo and Mitsubishi Motors Corporation of Tokyo, Japan.  

Not until 1999 did the name change from Volvo Car BV to Netherlands Car BV or NedCar BV. In 2001, the business became 100 per cent owned by Mitsubishi Motors. Production since then has included Carisma and Colt, Space Star and Outlander. But last year, Mitsubishi announced it would shutter production of the Colt (which it has made since 2004) and Outlander (made since 2008) at the end of the year, when Dutch bus and coach building group VDL Greop declared it would take over the plant for a nominal sum. The plant produced its millionth vehicle on 4 October 2000.

VDL Greop, with head offices in Eindhoven, produces semi-finished products, buses and coaches. It latest contract is for the construction of 22 automated guided vehicles (AGVs) for the ECT Delta Terminal. First delivery begins this year with options for a further 62 AGVs. Each AGV can transport a container of 72 tonnes.

In 2011, VDL Greop had sales €1.575 billion and profits of €66 million. It has a workforce of 7,135, suggesting sales/employee of €220,000.

From the first of this month the contract assembly business became known as VDL Nedcar, an independent car manufacturer. Its first contract is with BMW for the manufacture of a variant of the Mini. Following conversion of the production lines at Born,  production will begin in second-half 2014.

Meanwhile, all 1,500 employees will receive unemployment benefits, supplemented by VDL to ensure employees receive 100 per cent of their former pay. All employees are therefore guaranteed the retention of their jobs and their pay, although they may be required to work at other VDL plants. Production will be ramped up in stages as the processes are put in place.

Born can build 200,000 cars a year on two shifts using highly automated production processes that includes over 700 robots.

Senior BMW executive Harold Kruger claims that as the Mini family grows, the company is running out of space at the former Rover plant in Cowley, Oxford. He claims there is no room to expand and the assembly plant is close to capacity.

But the Cowley plant is part of a trio of BMW plants all linked to produce Mini: the Hams Hall engine plant, the Swindon pressings facility and the Cowley assembly plant.

Last year, worldwide sales of Mini reached a record 301,526 units with US at 66,000, the biggest single market. UK followed with 51,000 followed by Germany at 37,000. Sales in China reached 23,000.

Plant capacity for the Oxford facility is "280,000 in the medium term", according to company sources.

Kruger, responsible for both Mini and Rolls-Royce in the UK, said production of some models will be moved to Born. He claims the company has yet to decide which models the contract assembler will build. However, executives will by this stage have a good idea of which models are strategically best suited to be sub-contracted.

Kruger admits that contract assemblers give BMW the necessary flexibility to adjust production levels of various models to meet market demands. Production capacity is something that BMW monitors continuously, especially in these days of fast-changing market conditions.

By the same token, in declining market conditions, contract assemblers can be the first to suffer. BMW will be anxious not to make the same mistake as Honda Motor Manufacturing UK of Swindon which, after announcing fresh employment months later had to impose 800 redundancies.

BMW will be anxious that production quality levels established over many years at Cowley can be successfully transferred across to Born. This applies particularly to body-in-white manufacture, the paint shop and maintaining high levels of 'fit and finish'. In this respect, BMW will not have the same level of authority and control that it has enjoyed at Cowley where it can at will impose its high German standards of manufacturing consistency.

On the plus aside, NedCar workers are familiar with the Japanese work ethic and shop floor practices, including continuous improvement and Just-in-Time manufacture.  


VDL Greop is the second independent contract vehicle builder that BMW has lined up. Mini has already started overseas production of the Countryman and Paceman versions of the car at Magna Steyr factory in Graz Austria. Lessons learnt at Magna Steyr will, no doubt be passed on and absorbed by the new regime at Born.

Magna is well known as the former production site of the Aston Martin four-door Rapide. Production of this car has been transferred to the UK at a stated cost of £2,750,000, but insiders reckon the true cost of this misguided venture was much more than that.

The real reason why the company sited production of the Rapide in Austria remains a mystery, though insiders have their own views. On the face of it, the decision to place an entirely new and prestige product in the hands of a contract assembler might be seen as a strategic error on the part of Aston Martin chief executive Dr. Ulrich Bez and his fellow board of directors. Only they know why they chose Magna Steyr.

Late last year, the beleaguered Aston Martin declared a much-needed £150 million cash injection from European investment group Investindustrial, which is taking a 37.5 per cent stake in the business.

This new money will allow Aston Martin to invest £500 million in new models and technology over the next five years.

This year, the company celebrates its centenary and the board will no doubt be hoping that, backed by new finance, Aston Martin can rise phoenix-like from the ashes of 2011 when it posted a pre-tax loss of £33.1 million compared with a pre-tax profits of £6.9 million in 2010.

Adjusted operating profits for the first nine months of 2012 was £40 million – down from £56.3 million in 2011.

Perhaps one area in which Investindustrial will be able to apply pressure could be in reducing the time delay in which Aston Martin publicly reveals its financial figures.

Dr Bez claims: ‘Ours is the coolest luxury car brand on the planet and I’m looking forward to our second century of building the world’s most desirable sports cars.’

Not all aspects of the company’s business quite live up to this creditation.