Ford-Mazda to invest more than $500M in Thailand plant

Ford Motor Company and Mazda Motor Corporation on October 9 announced plans to invest more than US$500 million in a new, highly flexible small passenger car plant at AutoAlliance Thailand (AAT) – the successful joint venture of the two global automotive leaders. Senior executives from Ford and Mazda made the announcement at a press conference in Bangkok.

The new, flexible small car plant will utilize the same automated systems and processes, and state-of-the-art auto manufacturing technologies as the Changan Ford Mazda plant that was launched last month in Nanjing, China.

AAT will begin manufacturing Ford and Mazda's respective small cars in 2009, which will compete in what the auto industry refers to as the “B-car” category. AAT will also be able to accommodate a more diversified range of products in the future, with simultaneous production of different passenger cars that extend up through the mid-size segment.

Plans for the small car production plant call for a new stamping line and body shop, new trim and final process area. A completely refurbished paint shop will utilize the environmentally friendly three-wet technology paint process, which dramatically reduces VOC and CO2 emissions and waste and improves paint quality. Additionally, warehouse storage will be expanded to handle the increased production volume, and a new employee cafeteria will be built.

Ford and Mazda have already jointly invested more than US$1 billion in the vast AAT facility. This new investment underscores the strategic role that AAT will continue to play as a regional production hub for both Ford and Mazda, as well as their confidence in the facility's ongoing success. AAT celebrated the production milestone of 1 million units earlier this year, reaching it nearly two years ahead of schedule.

"This investment reaffirms our commitment to the Thai market. It will not only allow us to continue participating in the growth of the ASEAN region, but to help drive it," said John Parker, Ford's executive vice president, Asia Pacific and Africa. "Ford and Mazda have one of the most successful partnerships in the automotive industry, and clearly AAT has, and will continue to be, a key strategic production hub for both organizations."

The total investment value will be split evenly between Ford and Mazda, and increase AAT's potential production capacity to 275,000 units from its current annual 175,000, including both complete built up (CBU) units and complete knock down (CKD) units. In addition to domestic sale, Ford and Mazda plan to export their respective small cars manufactured at AAT to markets in the ASEAN region, as well as Australia, New Zealand and South Africa.

"This new small passenger car will be a strategic complement to our product offering, both in this region and around the world. It offers a highly competitive balance between fuel efficiency and marketing viability in the global market," added Parker.

The world-class AAT plant is already one of the largest and most modern automotive manufacturing facilities in Southeast Asia, exporting Ford and Mazda pickup trucks to more than 130 markets around the world. Leveraging the collective practices of the Ford-Mazda partnership, AAT has helped set standards for auto manufacturing in the ASEAN region, through its ongoing commitment to world-class quality, standards and procedures.

"AAT has been one of our most visible global success stories, and it continues to illustrate the synergies and strengths of the Ford-Mazda partnership," said Robert Graziano, executive vice president, Mazda Motor Corporation. “This investment allows for the expansion of our ASEAN production hub, and the opportunity to leverage the expertise and strategic footprint that we've established here in Thailand with AAT.

“Beyond the increased production of Ford and Mazda vehicles, this additional significant investment in AAT will impact positively on Thailand, as new jobs are created and increased sourcing of locally-produced components generates both direct and indirect returns to the local economy."

Local economic benefits
AAT currently purchases approximately Bt.60 billion (US$1.72 billion) worth of components annually from 177 different suppliers – 90 percent of which are local, representing one of Thailand's largest domestic supply networks.

The facility currently employs about 3,600 staff, including engineers, technicians and skilled assembly workers. AAT says it will hire an additional 2,000 employees by the time the new production commences in 2009, which in turn, will result in up to 6,000 indirect jobs being created.

Initial Investment Strategy
In 1995, Ford and Mazda jointly identified Thailand as a strategic part of their investment and expansion plans in the Asia Pacific region, and laid the groundwork for AAT to establish Thailand as a global manufacturing hub to serve growing demands in both the domestic and export markets.

Following its promotional privileges grant by the Board of Investment (BOI) the same year, AAT invested more than US$500 million to build Thailand's first state-of-the-art, integrated vehicle manufacturing plant. The AAT facility currently includes stamping; body construction; paint, engine, trim & final assembly; and CKD packing facilities; covering more than 529 rai of land in the Eastern Seaboard Industrial Estate in Rayong province.

In addition to its production successes, AAT and its staff continue to be actively involved in the development of surrounding communities, participating in programs that range from donations for education supplies and equipment, to volunteering for disaster relief assistance and environmental preservation initiatives.