Local production success - Volvo

AUSSIE MADE: Volvo sees value in having a local production facility.
AUSSIE MADE: Volvo sees value in having a local production facility.

THE 46 countries within the boundaries of Europe support a population of more than 800 million people.

It's a powerful block that would easily outmuscle the United States economically, if only national arrogance and the occasional punch-up could be overlooked.

With a largely excellent road network, the continent's goods warehousing is mostly contained in tautliners and refrigerated vans that are constantly on the road, delivering essential supplies within hours of them being sold and used by consumers.

The truck market is therefore very healthy, and it is served by seven major truck manufacturers.

Volvo Group estimates that 220,000 trucks will be delivered in Europe this year, meaning each manufacturer can look to a healthy volume of sales to pay for the enormous expense of production facilities.

But it's still not enough volume per brand to reach most efficient production costs, which is why the builders all seek export markets with great enthusiasm.

In Australia the picture is starkly different. We have four truck plants, Volvo/Mack in Wacol Queensland, Kenworth in Bayswater Victoria, Iveco in Dandenong Victoria and the CAT Truck production line, which has completed its build program and is now just handling major modifications of plant stock.

Together, they sold into a heavy-duty (15,000kg GVM plus) market size of just 9766 in 2011. But of that number, just under half, 4831 units were built here in Australia. (VFACTS December 2011). The rest were simply a case of write the order, take the cheque, and get it off the wharf.

A recent visit to the Volvo/Mack plant in Wacol unveiled a paradox. On the surface, local production at those volumes is illogical, if not wildly expensive. But because of the high level of customisation and the high content of engineering mods necessary to handle high ambient temperatures, high load times on engines and transmissions and poor road surfaces, it remains a whole-of-life efficiency premium that a savvy operator is prepared to pay.

So this year Volvo Group is celebrating the 40th anniversary of its Wacol plant, and at a press function in Brisbane, managing director Arne Knaben made it clear that local production of both Volvo and Mack trucks is here to stay.

Year 1972 was a big time for the Swedish manufacturer. A leap of faith from a few Australian operators that the rest of the market took notice of, as well as a solid parts and service back-up, paid off.

In 2002, after the Volvo buyout/rescue of Mack Trucks in the US, another production line was added to the plant for the Mack truck brand.

We spent some time with Kurt Beirnaert, the general manager of production, who provided us with some hard numbers. The plant has a capacity of 16 trucks per day and is presently building 12 a day in 1.3 shifts. It takes 10 days to take a truck from starting on the production line to delivery to the dealer.

About 85% of the trucks built are custom modified on the line, a figure which is far higher than any of Volvo's other production facilities around the globe. About 30% of the value of each truck is sourced locally.

Our walk through the plant showed a hands-on build process with no automation at all. Apart from some plasma cutting of rail sections and bending for engine mount location, it's assembly only.

On the Mack side, an all-Mack driveline is now available in every model, enabling every customer to opt for Mack engine, transmission and axles and be rewarded a gold version of the iconic bulldog bonnet ornament fitted as the truck leaves the plant. The special mascot is brought out of a locked cabinet for about 14% current production, a dramatic increase from a paltry 1% in 2009.

Big Rigs

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