Thai template for Asean

Motoring News - Friday December 14, 2007

INTERVIEW / DAVE ALDEN

Thai template for Asean

Bangkok-based Asean unit for Ford aims to quarterback its operations and base its future products on the 1.8-million unit regional market

Dave Alden is like a tower who watches over Asean markets.

As president of Ford Asean and Sales & Service Thailand, the word "tower" fits him more than anything else despite the fact that the man easily clears 190cm and literally towers over most Asians.

Suffice to say that the writer ain't no Yao Ming - what really dwarfed me was when he spotted my trusty MP3 with the Toyota logo.

It's like waiting in front of your college professor, with eyeglasses perched on nose, as he begins to point out what went wrong with your term paper (or in my case the MP3).

Well, he pointed to the MP3 alright and said: "Toyota!"

But the show must goes on!

Shifting gears to the Ford Asean business unit which is based on the 36th floor of Lake Rajada Building in Bangkok, Alden said:

"Ford Asean has integrated its business units (Cambodia, Indonesia, Malaysia, Thailand and Vietnam) into a cross-functional entity to be able to get the scale that we need to develop the product plans that will move us forward."

This makes great business sense for Ford since it creates leverage in terms of a total Asean market of about 1.8 million vehicles. Of course it's not like getting 16 million vehicles in annual sales from North America, but the potential far outstrips such saturated markets in the long term.

"When we look at future product plans, we look at the potential. If we speak with one voice for all these markets, then we have a much stronger business case for developing future products, like our B-car, which we developed based on an Asean look at the industry."

Ford takes into consideration the different market needs and product applications on an individual basis. But Alden was referring to the same basic platform and vehicle.

"It's pretty darn similar, product strategies plus any other synergies across the market in how we operate marketing, material parts, distribution, IT and lots of back office synergies."

Along with the Asean strategy is the Ford-Mazda joint venture in Rayong called AutoAlliance Thailand (AAT).

AAT is the cornerstone of Ford's Asean strategy when taking into consideration free trade negotiations and pacts being implemented on a regional scale.

Ford is able to move its vehicles from market to market within Asean and benefit from business opportunities in sales volume are generated in the Asean market.

"We have the opportunity to sell in Asean and use AAT for sourcing either for direct import or CKD operations like we do in Vietnam."

However on the delicate issue of "personal agendas" among Asean country members in the guise of non-tariff barriers, Alden subtly put as a simple 5% duty for Ford.

"That's (5%) what we really look at in terms of business plans. The long term, as part of Asean and WTO, they'll all be part of the same basic strategy. Even today, Asean sources its Ranger and Everest into Vietnam, so we see a continuing trend from one integrated trade block into all the other countries."

Analysts claim that the Malaysia National Automotive Plan (NAP) basically shuts out foreign automakers from investing in new plants and protects its national car programmes, Perodua and Proton, the latter having just opened its distributorship in Thailand in the latter half of 2007.

"I think specifically Malaysia is the biggest challenge for Ford. Our market share is lowest in all Asean countries, although Ford has been in Malaysia uninterrupted for many years. We are most challenged because of the NAP."

Based on JD Power and Associates estimates, the Asia-Pacific vehicle market will outgrow Europe in 2009 by 300,000 vehicles on total sales of 23 million vehicles, which was a forecast that Alden couldn't agree with more.

Current Asean sales stand at 1.8 million with Singapore and smaller markets added together which is close to India; Thailand is expected to hit one million by 2012 and Indonesia 420,000. Vietnam is booming with potential with a consumer market of 82 million people.

"There are a few different legs to the growth stool here that will contribute to Asean being competitive with the overall growth in Asia Pacific."

Simply put, despite the internal bickering among regional markets and slight downtrend in Thailand, Asean has earned its place as a bonafide powerhouse among the global markets.

"If you look at Asia-Pacific, there are three powerhouses. China, India and the third leg of that stool are the Asean countries," adding on to Ford's presence within Asean.

"Ford is in the thick of it. We are planting a lot of seeds with 700 employees in Bangkok at our Asean office, a real commitment with 70-90 expats which is a huge cost, plus AAT. We wouldn't have done that if we weren't serious and you'll see a lot more when the B-car is out in the market."

Thailand's performance in Asean, according to Alden, ranks it at the top of the food chain in terms of industry, importance of Ford investment which is by far the largest. And in terms of what happens in the future, "Thailand will be a template for other Asean markets."

However, Ford's market share is another story with 2.5% of the total market which fell massively short of the 10% target goal set during the initial setup of the Ford business unit 10 years ago.

But on the bright side Alden gets to smile over Ford market share in Vietnam 8-9% (6,000-7,000 unit sales), Philippines 6-7% and Cambodia with about 33% (800 units).

Ford says the B-car segment is the most consistent and third highest volume segment within Asean based on sales of 200,000 vehicle in the industry.

Thailand is one-ton pick-up territory, while Malaysia is primarily C-segment attributed mainly to its national car programmes.

"The longer term, with the affordability of B- versus C-segment, the B-car will surpass the C-car and be more consistent in all the markets."

Thailand will absorb most of the B-car market and be its major manufacturer.

Dave Alden and Ford Asean is a testament to the company's commitment to Thailand where it sees it as the central infrastructure to develop people and human resources.

"It just makes sense for Ford Asean to be here. We can also fully integrate our total plans for China and Australia into Asia Pacific. It's the perfect location."

Bangkok Post