Quality the Key for UD Croner

By: Steve Brooks


The UD Croner is just one example of Thailand’s evolvement as an automotive manufacturing nation.

 

Thai-built UD Croner. Quality is the key

It is both a tad sad and somewhat satisfying to sample a small slice of Thailand’s automotive manufacturing industry. In this case, Volvo Group’s highly efficient Thai-Swedish Assembly (TSA) facility in the province of Samutprakarn, little more than an hour’s drive from central Bangkok.

Sad, because it is a sharp reminder of the fact that apart from the enduring exceptions of a couple of high-class truck production facilities, namely Volvo Group Australia’s Wacol (Qld) plant and Paccar Australia’s Bayswater (Vic) facility, the Australian automotive manufacturing industry is all but buried.

Holden, Ford, Toyota, Mitsubishi. All gone, while on the truck front it’s hard to believe a bountiful manufacturing future awaits a struggling Iveco at its historic, sprawling Dandenong (Vic) premises.

High standards. Helen Savmyr, head of Volvo Group’s Thailand manufacturing facility and UD operations

On the other hand, satisfying because it demonstrates the profound possibilities when business investment and government initiative find a respectable balance beneficial to both parties and those they serve. For business, shareholders and customers. For government, people and the value of an employed society.

Such a conciliatory view may seem notional, even naïve and fanciful, particularly when applied to a country which has known its fair share of government upheaval, corruption and conspiracy issues, not to mention the occasional military coup.

However, the simple fact is that the Thai automotive manufacturing industry has over the past 50 years or so evolved from a modest parts assembler to a leading producer of cars, trucks and buses, and an export hub shipping vehicles of all sorts to more than 100 countries around the world.

Australia is one of those countries, where Thai-built models like Toyota HiLux and Ford Ranger continue to achieve enviable sales success on the back of good design and critically, admirable build quality.

Gold standard. The Bangkok production plant rates at one of the highest levels in Volvo Group’s global audit

According to various reports, Thailand’s automotive manufacturing industry accounts for nearly 12 percent of the country’s economic growth and employs around half a million people in the production of up to two million vehicles annually.

Japanese makes dominate, but they’re certainly not alone. Among the car brands, for example, are Toyota, Ford, Isuzu, Honda, Mitsubishi, Nissan, Subaru and BMW while truck nameplates include Fuso, Hino, Isuzu, UD, Volvo, Scania and the Chinese giant, Dongfeng. The country is now listed as the world’s sixth largest commercial vehicle producer.

So what’s the attraction with Thailand?

For starters, it’s reasonable to suggest labour costs are substantially lower than western nations.

However, the country also has appealing tax benefits and duty exemptions to attract investors and similarly, has Free Trade Agreements with all 10 of its ASEAN (Association of South-East Asian Nations) neighbours as well as China, India, Australia and New Zealand.

Business reports suggest it is also an industry keen to expand further into new technologies, not least in production of ‘green’ vehicles through an initiative called the Eastern Economic Corridor.

Indeed, Thailand aims to become a leading manufacturing base for electric vehicles, building on a decade of experience in producing hybrid electric vehicles for the likes of Toyota, Nissan, Honda, BMW and Mercedes-Benz.

Attention to detail isn’t hard to find

Equal to Japan

Yet there’s more to Thailand’s manufacturing appeal than obvious economic benefits, says Helen Savmyr, senior vice-president of UD Trucks Operations Bangkok and managing director of Volvo Group’s Thai-Swedish Assembly operation.

The highly credentialed Swedish executive, who joined Volvo Group in 2000 after extensive experience in engineering and logistics fields, cites quality as the driving factor in Thai production.

Speaking in a training room inside the clinically clean facility, Helen insists quality "… must be at least equal to Japan. Quality of production, of the finished product, is the essence of the operation here.

UD Croner in typical Asian configuration

"At this facility we are very competitive on quality and certainly influenced by the standards of Japanese build quality."

Leading TSA for the past three years, she describes her mission as "… to secure the long-term future of the operation, develop sustainable performance and build leadership," asserting that a future leader may not necessarily be an expat Swede.

While the factory is a relatively small player in the country’s automotive manufacturing industry, it is an adamant Helen Savmyr who states, "We aim to be one of the most attractive employers in the Thai automotive business."

Commitment to those goals, she adds with obvious pride, is recognised in the plant’s ‘gold level’ status within the Volvo Production System, one of very few production facilities in Volvo Group’s global quality audit to achieve such a high ranking. By comparison, VGA’s Wacol plant is at silver status.

New UD Quester ready to start work in Linfox’s Asian operation

Built in 1976, the TSA factory has had something of a mixed history, for many years producing Volvo cars before the establishment in 2000 of Volvo Truck and Bus. It wasn’t until 2008, however, that the facility was fully acquired by Volvo, soon after the Swedish giant bought Nissan Diesel.

By 2010, the Nissan Diesel name was replaced by UD and from then on, the pace of change went up a gear or two as Volvo readied its Japanese brand for a bigger effort in the group’s future.

In 2011 the Thai facility underwent a major transformation in preparation for the production in 2013 of UD’s heavy-duty Quester followed by significant expansion of knocked-down kits for various export markets.

In 2017, UD’s new medium-duty Croner went into production followed most recently by an updated Quester sporting the latest version of UD’s Escot (I-shift) automated transmission.

Quester comes together in the clinically clean Thai plant

Nowadays, the Bangkok operation produces Volvo FH, FM and FMX models for ASEAN markets as well as several bus chassis, Quester and Croner for markets in South-East Asia, the Middle East and parts of Africa, and a wide array of knocked-down kits for many parts of the world.

With around 850 employees, the TSA plant in 2018 produced more than 4500 UD trucks, over 4000 CKD (completely knocked-down) Volvo and UD export units, 234 fully built-up Volvo trucks and 182 Volvo buses.

What’s more, most Volvo cabs for Australia are produced in the Thai factory.

Actually, Australia plays a bigger role in UD’s Thai operation than first impressions might suggest.

A Nissan Diesel on a Bangkok motorway in 2007. The brand’s standing in Thailand has improved since changing its name to UD. Photo Greg Bush

Linfox, for instance, is a sizeable player in the Thai freight industry as well as several neighbouring countries, with trucks built and painted in company colours at the TSA plant. You don’t have to travel far to see more than a few UD models in Fox’s distinctive yellow, red and black livery on Thai roads.

While UD is far from the biggest player in the Thai truck market – Hino and Isuzu are comfortable market leaders – the brand’s prominence is said to have grown steadily since 2012 after the name change from Nissan Diesel to UD and more recently, increasing acceptance of Quester and now, Croner.

"Linfox is certainly a key account for us and Volvo Group generally," said Helen Savmyr, again emphasising the quality of Thai production as one of many reasons for optimism in Croner’s future on the Australian market.

While acknowledging that Australia has high expectations and is to date the only ‘mature market’ for Croner, a confident Helen Savmyr concluded, "It was not a problem to meet Australian requirements. It was an opportunity."


PART 1: How the quest for UD Croner was an international affair


 

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