LOCAL MANUFACTURE

1st May 1964, Page 159

1st May 1964

Page 159

Page 160

Page 161

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Page 159, 1st May 1964 — LOCAL MANUFACTURE

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--a vital part of Export to Europe

By A.J.P, Wilding

A.IVLI.IVIech.E.

44 XPORT TO LIVE" is an exhortation that manu

facturers in Britain have been hearing for a very

long time now and in doing their best to increase their participation in export selling, British vehicle makers have, in common with those in other industries, turned to many methods to make their products more acceptable to particular markets, Special designs are produced to suit the local operating conditions in overseas ,countries but one of the best ways to increase sales is naturally to keep the price as low as possible. One way in which costs can be saved is in the export of chassis in a "knocked down " condition. It is not .always the reduced costs, however, which make this type of export desirable, for many countries now have government restrictions on any import of built-up chassis in order to promote the use of local labour in producing vehicles.

The term "knocked down" is now part of the English language and one that is usually used with irarious preliminary words according to the degree to which the chassis is stripped— completely, semi or partly and so on—and invariably is khown by its initials—c.k.d., s.k.d., p.k.d. and so on. The actual term used varies from maker to maker but in all cases denotes the supply of chassis in a stripped state so that some degree of assembly is required in the importing country. How much, can vary enormously; k.d. covers, for example, the shipping of chassis with all units except the axles installed down to the export of sets of parts. Reduced freight cost is an important advantage of exporting k.d.—a box of parts takes up much less space on a ship than does a chassis. The saving is largelyoutweighed in the case of cars because it is considerably more economical to make them in large, well-organized and planned factories, but with commercials such advanced production techniques are not normally the rule, and the cost of assembly in the export market is not necessarily a great deal more than when the chassis is completed in the British factory. Another point is that commercials arc. not so complicated to build as cars; components are not so crowded together and there is not the difficulty of fitting interior trim and such like.

Developed Since War

In Europe, and it is primarily with this area that this article is concerned, the export of commercial vehicles k.d. has developed -mainly since the last war and in the ease of most heavy-vehicle makers, within the past six years or so. Here freight costs naturally do not play so large a part as in exports to, say, Australia, but in some European countries there are tariff reductions when vehicles are sent k.d.—Belgium and Holland, for example. In others, such as France and Greece, there is no tariff advantage, so whilst the lower freight costs in exporting to Greece (because of the greater distance) make k.d. worth while, there is not much point in using this form of export to France. Examples of countries where government restrictions prevent the iinportath:m of vehicles unless there is local assembly are Spain and Turkey. Spain is trying to expand the commercial vehicle industrs that already exists in the country whilst.

on the other hand, Turkey has not got a vehicle industry and the aim here is to get one started. Where British manufacturers negotiate ,agreements with companies in such . countries, the agreements bring advantages to both sides;: an export opportunity is created and the economic situation in the importing country is helped. •

Very often agreements r-vith companies overseas for the assembly of chassis provide for the progressive manufacture of vehicles, using increasing amounts of local content and building the chassis under licence. This is in a way the export of "know how ", as the country gets the start of a vehicle manufacturing industry immediately and is saved the high costs of development, training designers and skilled technicians and so on, at least in the beginning. These can come later.

Links with companies on the mainland of Europe by British vehicle makers have been an increasing trend during the past five or six years and arrangements range from the supply of units for installation in the chassis made by the concern to the assembly of complete chassis from imported parts and often the production of parts under licence. An important aspect of many, if not all, agreements, which incidentally are normally with vehicle makers or bodybuilders, is that the British partner gets the advantage of a ready-made distribution network in the area concerned for his vehicles.

Spain is one country where a number of British makers are currently associated with Spanish companies in the production of commercial vehicles, as stated earlier, this being the only way open for exports. A relatively small vehicle industry existed in Spain before the entry of the British companies, which followed a government order that there should be progressive expansion. In 1961, A.E.C. Ltd. linked with Barreiros to form Barreiros-A.E.C. S.A., in which A.E.C. has a substantial interest. The basis of the arrangement is the manufacture of passenger chassis to A.E.C. design, at the moment Reliance chassis being built using certain components exported from the U.K., but using a Barreiros engine similar in dimensions and Performance to the standard unit used in this model. Goods chassis to A.E.C. design are not made by the joint company as Barreiros already produces these to its own design.

B.M.C. and Leyland

A different arrangement exists with another Spanish company-Sociedad Anonirna Vehiculos Automoviles (S.A.V.A.)— and the British Motor Corporation. S.A.V.A. builds the full range of B.M.C. goods vehicles from parts supplied k.d., the aim being progressive manufacture and building chassis under licence. Leyland Motors ltd. is linked with Emprcsa Nacional de Autocamonies S.A. (E.N.A.S.A.) makers of Pegaso vehicles. E.N.A.S.A. manufactures the Pegaso-Comet, which is generally to Leyland design with a great majority of parts used made locally under licence. Leyland also supplies engines to E.N.A.S.A. for fitting to passenger vehicles and the engine used in the Pegaso Comet is also fitted in other vehicles made by E.N.A.S.A,

The most recent entry into the Spanish manu'acturing field has been by the Rootes Group which, in October last year, announced that it had made an agreement with Metalurgica de 3anta Ana for the assembly and progressive manufacture and marketing of commercial vehicles in Spain. Under the agreement, a 2-ton van based on the Commer Walk-Thris design sad named the Commer-Santana Walk-Thru. was put into production. This model is powered ay a petrol or diesel engine manufactured by M.S.A. and is marketed by a new Anglo3panish company --Rootes Espana S.A.— formed for the purpose. Spain is said to be an important and expanding market and the resActions on importation of built-up vehicles meant that British companies generally were Joing little business before the agreements made with Spanish concerns. Since making them, however, considerable increases in exports have been reported.

The import of built-up chassis is also severely restricted in Portugal and, here again, the normal path is k.d. A fairly new project is a link between B.M.C. and Industria de Montagem de Automoveis, with the Portuguese concern at the moment assembling light B.M.C. commercials with the object eventually of building a full range. Leyland .Motors Ltd. alsohas an associate company assembling its chassis in-Piartugal—Transmotor—and A.E.C. Ltd. has a link with a concern called U.T.I.C. Starting off as a co-operative of vehicle operators. U.T.I.C. was formed to make a strong and .economic buying force for its members. From this it progressed to building bodies, an vehicles an,d is now a fairly large concern. Goods and passenger chassis are imported k.d. from N.E.C. and assembled and fitted with bodies built by and, in some cases, sets of units only are purchased for fitting into integrally constructed passenger, vehicles..

Also in Portugal Commer vehicles arc built in Portugal by Sociedade Tusso de Sousa--and also assembled in that country are Bedford and Thames vehicles. In the last two cases, however, overseas manufacturing arrangements are somewhat different for Vauxhall and Ford than for purely British manufacturers, and these two concerns come into the orbit of the American General Motors and Ford International operations, respectively. In spite of this they are, in'both cases, exports of British vehicles, of course, and in Portugal. Bedfords are assembled by General Motors de Portugal Lda. and Thames vehicles are assembled by the Portuguese subsidiary company of Ford of Detroit. Thames chassis are also assembled in Spain, incidentally, by Motor lherica of Barcelona.

Although, in certain respects, Turkey is a similar market to S2ain in that bu:lt-up vehicles are not allowed to be imported. there is a slight difference in the reason for the requirement of local content; instead of expansion of the local automobile industry, the intention in Turkey is the starting up of one. Turkey was a good market with the usual exports being k.d. for assembly by local distributors but, after the country had money troubles, a decree was made that there should be progressive manufacture of imported vehicles. ,Roth B.M.C. and the Leyland Motor Corporal:kin are at present in the process of setting up assembly plants and it is interesting that in the Leyland case it will be a group plant. Thames commercial vehicles are also produced in Turkey, assembly being carried out by Otosan A.S. of Istanbul, and Commer vehicles are also assembled in the Turkish capital, in this case by a concern called Verdi Brothers.

Holland and Belgium

Coming nearer to Britain's shores, both Holland and Belgium have for a long time been good markets for British commercials and a number of British manufacturers have assembly arrangements with concerns in these countries. Concerns in the Leyland Motor Corporation are well represented; A.E.C. has a Belgian company—A.E.C. Continental S.A.which was formed about five or six years ago in conjunction with the previous A.E.C. distributor for the area and now assembles all types of chassis from parts supplied k.d. In Holland, A.E.C. has two set-ups. N.V. Auto-Industrie Verheul builds passenger chassis from k.d. parts and also uses A.E.C. running units in integrally constructed coaches and buses. Verheul is primarily a bodybuilding concern and A.E.C. has a controlling interest in it. At one time goods as well as passenger chassis were assembled by the company, but now goods chassis are assembled by another concern, Stokvis, again from k.d. parts.

Leyland has a subsidiary company in Holland—LeylandTriumph (Holland) N.V.—and an associate company in Belgium—Brossel Freres S.A.—both of which assemble Leyland chassis, including goods and passenger. Brossel Freres also takes Leyland units for installation in vehicles of its own manufacture, and another Leyland export to Holland is engines to Netherlands railways for fitting in integral passenger vehicles which are built by various bodybuilders.

There is a tariff advantage in exporting k.d. to Belgium and Holland, as staled earlier, and in Belgium B.M.C. vehicles are built up by A. and J. Pans Garages Ltd., whilst Commers are assembled by Ets. Camerman. There is also a General Motors company in Belgium—General Motors Continental S.A.—where Bedford vehicles are assembled, and in Holland there is a company coming under the Ford International set-up it is located in Amsterdam) where Thames vehicles are built up from k.d. parts. Thames used to be assembled in Belgium but now vehicles built in Holland are exported to that country.

Also built in Holland are semi-trailers to British design, by York Trailer Europa N.V., which like the British York Trailer Co. is a subsidiary of York Transport Equipment Ltd. of Toronto, Canada. The Dutch concern was established in 1962, being located near Rotterdam, and, apart from establishing a sales centre in Europe for York products, provides also a service depot for British operators 'running to the Continent; being near Rotterdam it is well placed for the most popular ferry. Some local parts are used in the assembly of semitrailers, although the running gear and main frame members are sent out from the U.K. With the popularity of artics for transcontinental operation, York gets other advantages from having an associate company on the mainland of Europe, mainly in that first-hand knowledge of European needs is obtained. There is another incidental advantage for British operators using York units in running to the Continent in that "type approval" .obtained for semi-trailers for use in Holland also applies to units built in the U.K. and when these arc taken abroad there can be a reduction in the forms and formalities required when crossing borders.

France France is a country where very little business was done by British vehicle manufacturers until recently, when three British companies—A.E.C., • Leyland and B.M.C.—formed associations with French vehicle manufacturers. Only two French firms are involved, • A.E.C. and B.M.C., both working with Ets. Willeme S.A., whilst Leyland only last year signed an agreement with Hotchkiss to form a joint company—HotchkissLeyland S.A.—for the manufacture and sale of basically Leyland vehicles in France. Willeme builds a full range of B.M.C. models, but only Monarch four-wheelers for A.E.C. The main business by A.E.C. is in supplying engines for fitting into the range of vehicles made by Willeme, these being supplied at the rate of about 1,000 a year. This is an example of a Continental manufacturer linking with a British one to extend his range, the B.M.C. and A.E.C. chassis involved being lighter than those normally made by Willeme. Hotchkiss-Leyland has

(324 only being importing k.d. chassis since earlier this year, and is at present taking about 20 chassis a month. There is some local content in the chassis produced, including batteries. tyres, some brake parts and some cab fittings, running units all being of Leyland manufacture.

There is not the same degree of entry by British manufacturers in other European countries, compared with those already covered. Leyland has an associate company in Denmark—Dansk Automobil Byggeri, a concern which is probably the major bodybuilder in Denmark and assembles Leyland vehicles from k.d. parts and also buys units from Leyland for fitting in integral passenger vehicles. Also taking units for integral passenger vehicles is a concern in Sweden which is normally known in Britain by its initials—A.S.J.—as its full name is rather unpronounceable here, this being Aktiebolaget Svenska Jamvagsverkstaderna. Another recent Leyland agreement in Europe covers the supply of engines to O.A.F. in Austria for fitting in heavy goods vehicles, whilst Leyland has recently signed a manufacturing agreement with a business association in Yugoslavia for the local assembly and eventual manufacture of goods and passenger chassis. The, concern is "I.T.V.", which stands for Industrija Transportnih Vozina, and simply means, in English, transport vehicle industry, and is an association of nine companies including FAP, FAMOS and Ikarus. Initially, engines and gearboxes for goods chassis will be supplied and output is scheduled to start around the end of 1964.

Germany

B.M.C. 1.5-litre engines are supplied to Hanomag, W. Germany and the other British concern represented in Germany is the Routes Group, which established towards the end of last year a joint sales and service organization with Henschel Werke A.G. The agreement does not cover the assembly of vehicles but the joint selling of Henschel, Commer and Karrier vehicles in Germany, France, Italy, Belgium, Luxemburg, Switzerland and Austria, The full ranges of Cornmer and Karrier vehicles are involved and these are exported built-up.

The only British vehicle manufacturer having links with a company in Italy is A.E.C., which is at present supplying AV.690 diesel engines for fitting in an eight-wheeled chassis. The business is small at the moment but export to Italy is as difficult as to France from the tariff point of view and it is considered that the export of engines could develop in a similar way to the Willeme agreement in France.

Completing the picture Bedford vehicles are assembled in Denmark by General Motors International A.S. and it is interesting that this plant was opened by the American company as long ago as 1924 for the local assembly of its products.

It will be seen that the extent of British exports of vehicles to the Continent of Europe under local assembly agreements is a very large part of the total export effort. In fact, about 80 per cent of the Bedford and B.M.C. commercial vehicles exported to all parts of the world left this country in boxes. The figures for Europe are very similar and prove the importance of k.d. in promoting exports.