Significantly,
the vehicle manufacturing facility at Changshu will be alongside a state-of-the-art
research and development facility and a new engine plant that could be modelled
on the new engine plant now in the initial stages of construction in Wolverhampton,
UK to produce the ‘Hotfire’ engine range.
Chery
Automobile is China’s sixth largest car manufacturer but the country’s largest
exporter. Last year it sold 650,000
units. Total car sales in China last year was 18.5 million.
JLR
is owned by TATA Motors which has revealed plans for a £10 billion expansion plan
over the next five years; the link with Chery is part of that expansion plan.
JLR has said that the output from the plant, which in the first phase is set to
make 130,000 units a year, will be in addition to existing output – and not a
replacement for any UK production unit. It is understood that 60 per cent of
the plant’s output will be Land-Rover-badged vehicles.
JLR’s
sales to China have increased by 85 per cent in 2012 so far as sales hit 47,975
units in the first eight months of the year. The new facility is set to meet
rising demand for the company’s output of 4x4 vehicles. Most likely products
sourced from the facility could be either Defender/Freelander or Evoque models. Imported cars currently carry a 25 per cent duty. Later, Jaguar cars could be manufactured on site.
Significantly, the £.1.billion deal includes the creation of a new and separate range of vehicles which
will benefit from the expertise developed by JLR in the UK. The vehicles will
be developed by JLR and Chery and will be targeted specifically at the Chinese
market.
JLR’s
£10 billion expansion plan is set to add momentum to the company’s expansion
plans which could allow the company to double its sales by 2020. The company will
continue to focus on 4x4 sports utility vehicles – SUVs.
Executives have already pointed to 40 new JLR product launches over the next five years. Land-Rover's products are divided into luxury, leisure and utility; it is expected that in the Land-Rover-badged leisure sector there could be at least five new models.
This gives an indication of the challenges facing facilities engineering, manufacturing and product engineering in the years to come. The challenge will be about the management and implementation of change in the UK at the same time that developments will be taking place on the other side of the world. Finding the right people, in the right numbers to manage this change will be a huge challenge.
Executives have already pointed to 40 new JLR product launches over the next five years. Land-Rover's products are divided into luxury, leisure and utility; it is expected that in the Land-Rover-badged leisure sector there could be at least five new models.
This gives an indication of the challenges facing facilities engineering, manufacturing and product engineering in the years to come. The challenge will be about the management and implementation of change in the UK at the same time that developments will be taking place on the other side of the world. Finding the right people, in the right numbers to manage this change will be a huge challenge.
Notwithstanding that, the
potential market for SUVs – if they continue to expand at the present
rate – could hit 22 million by 2020 and, if the company takes three per cent of
this market that could suggest an annual production of over 600,000 a year. The
four-product range of Defender, Discovery, Freelander and Range Rover could all
be expanded.
Aluminium pressings
Significantly,
JLR is putting the finishing touches to a new aluminium press shop at Solihull,
the ‘home’ of Land-Rover. This is in addition to the Caste Bromwich press shop
with its line of Schuler presses which feed high-quality aluminium panels directly to the Castle Bromwich body shops building Jaguar cars.
Expertise established at Castle Bromwich has provided engineers at the Solihull facility
with aluminium pressings' know-how, although of course Solihull does have its own
comprehensive press shop, a left-over from its days when it formed part of the BMW family.
Both Discovery and Range Rover could benefit
from greater use of aluminium technology.
However, as already mentioned, the greatest strain in all of this will be undertaken by engineering – that includes
both vehicle and manufacturing engineering. Already the strain is beginning to show as some companies in the automotive sector have been
feeling the pinch. Not only are they losing seriously articulate and extremely competent engineers
to JLR, but these companies in the automotive supply chain are finding it hard to recruit the right calibre of engineer to replace those who have left. This in turn impoverishes the capability and the resourcefulness of the supply chain.
An added burden of the process is the wage-inflation which moves along silently and almost unseen with this migration of people within a growing industry. The wage-inflation hits small companies which then find it increasingly difficult to compete and hold their place in the supply base community.
An added burden of the process is the wage-inflation which moves along silently and almost unseen with this migration of people within a growing industry. The wage-inflation hits small companies which then find it increasingly difficult to compete and hold their place in the supply base community.
The
manufacture of aluminium panels, for example, requires particular knowledge in
terms of pressings manufacture and joining technology. This understanding by
engineers in the UK is limited to a relatively few engineers at this point.
Chinese
car maker Chery is not likely to be interested in this technology at this stage,
but it may not be long before it encroaches into this area. European press
makers like Schuler and Muller-Weigarten (part of the Schuler group) have
particular expertise in this technology and they could benefit from JLR’s adventure
into China.
From
the point of view of JLR’s engineers, most notably at Whitley and Gaydon, and
to some extent those at the Warwick Manufacturing Group (WMG), the next four
years truly will be an adventure. Even
supply-chain engine technology development companies like AVL and Ricardo,
and test equipment specialist such as Horiba Automotive, could benefit from the fall-out from
China.
In addition, the West Midlands supply chain must be hoping that they too can share in some of the action that is set to unfold in the coming years.
As with any joint venture, it is up to each party to maximise its opportunities from the participation, as well as ensure that jointly two and two make five. In this case, in which there is also a huge cultural divide, it may be a case of which beneficiary is the most shrewd that determines the eventual 'winner'. Whatever, each side has a lot to learn from the other. It could be a truly 'ground-breaking endeavour.
However, it may never be possible to quantify the real difference in 'true' cost of manufacture between the two sides for a near-equivalent product; each is coming from a different starting point.
.
In addition, the West Midlands supply chain must be hoping that they too can share in some of the action that is set to unfold in the coming years.
As with any joint venture, it is up to each party to maximise its opportunities from the participation, as well as ensure that jointly two and two make five. In this case, in which there is also a huge cultural divide, it may be a case of which beneficiary is the most shrewd that determines the eventual 'winner'. Whatever, each side has a lot to learn from the other. It could be a truly 'ground-breaking endeavour.
However, it may never be possible to quantify the real difference in 'true' cost of manufacture between the two sides for a near-equivalent product; each is coming from a different starting point.
.
New UK engine plant
Meanwhile,
JLR’s new engine plant in Wolverhampton, Staffordshire costing £355 million
will produce a new engine every 36 seconds. Steel supports for the new building
are now being put in place. Production of engines is expected to begin in 2014.
The
plant will produce 300,000 engines a year and employ 750 personnel. According
to senior purchasing manager Alan Edwards, the plant will support some 3,000
jobs in the supply chain. The total investment in the new engine programme will
be £1 billion.
Last
year JLR spent £4.5 billion in its total supply chain with some 60 per cent of
that spent in the UK and 50 per cent in the West Midlands. It is expected that
some suppliers will locate facilities nearby to supply components ‘just-in-time’.
Edwards
has noted that JLR needed to ‘take control’ of its own engine supply because
current suppliers were not able to meet its growing demand. Ford is a major
supplier of engines to Land-Rover. Ford not doubt will be adjusting its own product planning accordingly.
‘There
may be satellite engine facilities in other countries but the engine plant on
the i54 site will be the home of our engines,’ he has said.
The
frugal ‘Hotfire’ four-cylinder engines are the focus of intense research with
some of the work being undertaken in UK universities like Warwick and
Loughborough. Lord Professor Lord Kumar Battacharyya is chairman and founder of
the Warwick Manufacturing Group (WMG) which has close links with TATA Motors
and JLR.
The new engine facility will occupy 828,000 square feet and JLR has the option to take
additional space on the business park. Indeed, there is even space for a second engine
plant to the south of the present location.
A
new £36 million slip road will be constructed to link the new plant with the
M54 motorway.
According
to Dr. Ralph Speth, chief executive of JLR, the new four-cylinder ‘Hotfire’ engines
will combine higher performance vehicles with reduced emissions. Increased emphasis
on emissions for the new engine range will provide further work for Horiba Automotive, a preferred
supplier of test equipment to JLR.
The
UK-based automaker reported pre-tax profits of £1.1 billion last year on
revenues up 51 per cent to £9.9 billion. TATA Motors, controlled by Ratan Tata,
acquired the company from Ford Motor Company in June 2008 for £1.5 billion and
now employs 21,000 people. It has hired 3,000 people this year including 350
graduates. Both BMW and Ford must be wondering how, why and where they went wrong.
In
February 2012, Land Rover produced its one millionth Discovery – the vehicle
was launched in 1989. Discovery is produced at the Solihull plant which has
been the focus of much investment, including pressing facilities.
It
does not seem all that long ago that JLR was talking of closing one of its UK
plants with Solihull then the focus of attention. All that is a thing of the past
since TATA Motors has taken control. Everyone at JLR must surely hope the wind
continues to blow in a favourable direction. ∎
