Light Tower Plant: 40% Uplift of Productivity
David Li said that, with the light tower plant, issues facing CIMC regarding the manpower, the environment, and the personal development of employees can be addressed centrally with new jobs created through using a large number of sophisticated technologies and more “blue-collar” employees turned into “white-collar” persons.
Walking on the streets of developed countries such as the US, UK, Netherlands, Belgium, Japan, and Australia, you will see a semi-trailer with the logo CIMC roaring past if you are careful enough. CIMC is the English abbreviation of China International Marine Containers (Group) Ltd., a company headquartered in Shekou City that is arguably a Hidden Champion in the vehicle manufacturing sector.
This giant with an average annual output of approximately RMB 60 billion has just celebrated its 35th birthday two months ago. It has been ranked No. 1 across the world for 20 consecutive years in terms of the production and sales of containers. However, it is not just a container manufacturer. CIMC Group has now effectively completed the production upgrading from simple manufacturing to systemic integration and from a single business on containers to eight segments including containers, vehicles, energy and chemicals, maritime engineering, financial services, airport facilities, modern logistics, and the integration of cities and enterprises. Besides, it is ranked No. 1 in the world regarding transport equipment such as road vehicles and boarding bridges.
So, how did CIMC which had no experience in the manufacturing of road transport equipment fight its way into this sector and maintain its position on the market as well as sustaining innovation? The reporter of Southern Daily has visited the CIMC headquarters and its plant for special vehicles in an attempt to find the secret ingredients for being the champion of the industry.
Equip Containers with “Wheels” to Drive forward the Upgrading of All Logistics Vehicles in China
Last year, while the container business of CIMC Group felt down to the bottom due to the industry cycle, CIMC Vehicles ranked the first in profitability in the Group with years of steady growth and helped the Group realize a profit in the 23rd consecutive year. During the first three quarters of this year, the Group continued its fast growth regarding road transport vehicles with the revenue of RMB 14.655 billion, increased by more than 40% year on year.
CIMC Group entered into the vehicle manufacturing sector in 1999. During the Spring Festival that year, Mai Boliang, CEO and President of the Group, spent his vacation in Australia and found that the van trailers he saw on the road looked like containers or “containers with wheels.” “They look beautiful and safe, with a sharp contrast to the trucks running on China’s expressways and dropping goods. We shall introduce advanced logistics equipment from Europe and the US to China and sell the equipment made in China overseas.”
Mr. Mai was greatly concerned about the inefficiency of China’s logistics industry. He wanted to change the situation with intermodal transportation and standardized logistics and entering the vehicle manufacturing sector was the most suitable choice. CIMC has the same path for all the segments it has entered. It would seize the best moment and quickly enter a segment through acquiring the most advanced company in that segment.
In 2002, CIMC Vehicles (Group) Co., Ltd. was officially established. During its early days, CIMC Vehicles decided on a strategy with expansion both at home and abroad. Since 2003, this young company has acquired leading manufacturers of special vehicles in China such as Yangzhou Tonghua and Zhumadian Huajun. Also in 2003, CIMC acquired and restructured Vanguard in the US and then CIMC Vehicles began its expansion overseas and accelerated its global deployment.
With conservative growth of competitors, CIMC Vehicles rapidly realized a strategically explosive growth in its business. It has been ranked No. 1 in the world in terms of capacity and scale in 2007. In June last year, the company bought out Retlan Group, the largest semi-trailer manufacturer in the UK, and entered the UK market with further expansion into Europe.
The data from ACT Research, a renowned industry consultancy in the US, showed that CIMC Vehicles had the largest share on the global semi-trailer market in 2015 and was even ranked among the top three and top five on the European and American markets respectively which had fierce competition and the most demanding requirement on the product quality. According to the relevant official of CIMC, CIMC Vehicles now has an annual sales of more than 120,000 vehicles which cover 10% of the world market and boasts the top 1 in the global semi-trailer market for a 3rd consecutive year.
CIMC Vehicles encountered a challenge after stepping onto a rapid growth. It reached the peak of its turnover in 2011 after fast growth and a potential decline was around the corner. “We want to increase our productivity and capacity and cover greater market share without the addition of employees,” Li Guiping, CEO and President of CIMC Vehicles (Group), told the reporter. Digital upgrading is imperative. CIMC Vehicles wanted to build a digital plant to comprehensively realize smart manufacturing with digital modeling, automated production, and the manufacturing execution system (MES).
“Light Tower Plant” Enables a 40% Uplift of Productivity
In the clean and neat plant rich in modern style, one can see automated IoT facilities everywhere with equipment for processes used in the production of semi-trailers such as cutting, loading and unloading of materials, welding, and spraying interconnected. Such equipment is capable of performing a number of production movements based on the information and commands it receives and timely providing feedback on its status of production.
This is what the reporter has seen in the most advanced plant for semi-trailer parts built by CIMC Group in Dongguan. It has the beautiful name “lighthouse plant” which is proposed by CIMC Vehicles under the Group with the aim of following the national strategy and the global trend and exploring the automated and digital approach to production.
The parts for producing a finished vehicle will be sent to various places and be assembled flexibly based on the needs of different markets around the world after being manufactured in a modularized way. Frank Sonzala, CEO of CIE in the US, always says to his customers, “Look, the products made by the lighthouse plant of CIMC are unparalleled in terms of features such as the cutting precision, the gloss of the topcoat, and the warranty period.”
According to Gao Chengwen, General Manager of Dongguan CIMC Special Vehicles Co., Ltd., the light tower plant which originated from the Light Tower Project in 2014 was completed and put into trial production in July 2016. It is an important production base of CIMC Vehicles for high-end parts. This plant has a leading production line in the industry and uses world-leading technologies, with productivity significantly enhanced by 40%.
The reporter of Southern Daily found a fish pond by the plant with a dozen fish swimming in the clean water which is actually the wastewater released by the plant. So, how does the plant make the water clean? Gao told the reporter that the wastewater containing heavy metal discharged from the plant could be reused after being treated by the sewage treatment station built by the company itself based on relevant standards, with zero emission of VOCs eventually achieved. The wastewater containing no heavy metal will be treated by another sewage treatment station which was also built by the company based on the standard on Type IV grade surface water and then discharged.
Dr. Derek Li, leader of the light tower project of CIMC Vehicles, explained the three “pillars” supporting the lighthouse plant, namely the module industrial design, the automated IoT equipment, and the information system connecting them both. “Simply put, it is to develop and design modules that can meet various demands on the product for flexible combinations based on the deep insight on the manufacturing of semi-trailers,” said Li. Currently, the module design for eight sets of products has been developed by CIMC which can effectively meet the needs of all container chassis on the American market.
“The production by robots has the advantage of immobilizing the experience and the processes to reduce randomness and relieving people of heavy and dangerous working conditions,” said Li. He added that the entire lighthouse plant was like a totally transparent, automated, and digital workshop with all production processes visible on the computer of the managers and any problem can be traced to its root cause and solved in time.
David Li said that, with the lighthouse plant, issues facing CIMC regarding the manpower, the environment, and the personal development of employees can be addressed centrally with new jobs created through using a large number of sophisticated technologies and more “blue-collar” employees turned into “white-collar” persons. “These are common issues facing Chinese companies. Digital models can accelerate the iteration of design in the future and make cross-industry design and multi-national manufacturing easier,” said David Li.
Targeting the Potential Markets in the Future and Building a Global Operation Platform
Since July 2016, products made in the lighthouse plant have been sent to the US continuously and people from countries such as the US and Japan where “worship of technology” exists have come to visit the plant. In 2016, the total investment in research and development by CIMC Vehicles (Group) reached RMB 238 million. By the end of that year, CIMC Vehicles (the domestic part) had a total of 826 patents among which 216 were patent for inventions.”
However, CIMC is not satisfied with such achievement. Jiang Qiwen, General Manager of Shenzhen CIMC Special Vehicle Complex, said, “The US is just an existing market and the target of the lighthouse plant is the potential markets in the future, including Europe which has the most rigorous standards in the world, and even the entire global market.”
David Li told the reporter of Southern Daily that the three “magic weapons,” namely the management of the global supply chain, the cross-industry design, and the multi-national manufacturing, are required to reach this goal.
“The approach we adopted is to continuously optimize the global operational efficiency, rely on a global supply chain with ‘Made in China’ as the basis and take full advantage of a global manufacturing network and the wisdom of our employees of maritime transportation and our technicians around the world to perform cross-industry design.” Li Guiping explained that not all of the products sold by CIMC Vehicles in the US were produced in that country. “More than half of the parts might have been made in China and sent to the US to be assembled into finished vehicles.”
In fact, a company cannot rely only on acquisition and merger for its sustainable development. What is important is to proactively roll out its planning on the global operation. For David Li, the global operation does not just exist geographically. The advanced globalization of the company requires the reasonable deployment of excellent global resources. In a word, it means the “global operation with the wisdom of local employees.”
David Li said, “Global operation means that CIMC will integrate all its resources to enhance its position on the market and take advantage of consolidated collaboration. Take the purchase of core parts by CIMC Vehicles as an example. The company has proposed to open the centralized purchasing business in its global supply chain to the suppliers so that agreements with favorable terms were signed. The wisdom of local employees means that the management teams of the overseas subsidiaries under the Group are mostly local people so that the advantage of local operation can be fully exploited.”
Now the company has a total of 29 production bases and R&D centers across the globe with 3,000 overseas employees. The “global operation with the wisdom of local employees” is the foundation for Chinese companies, including CIMC Vehicles, to expand overseas and achieve growth independently. During the first half of this year, North America, Europe, China, and other emerging markets have become the centers for CIMC Vehicles to increase its revenues and profits, with a dynamic balance realized across the world and the opportunities to grow in various markets seized.
Column coordination: Dai Xiaoxiao, Southern Daily