Ford's China heavy truck joint venture plans take off in 2016

[kscarbel2]

Press Release / February 5, 2015

Ford’s China partner Jiangling has announced the joint venture plans to continue ramping up investments through 2015, and next year prioritize the finalization of a technology license contract for the JMC-branded J19 heavy truck project with Ford Motor, Ford Global Technology*, and Ford Otosan** as its single most important investment for 2016.

JMC will gain a technology license for the design, manufacture and service of Ford Otosan "Cargo" brand heavy trucks including chassis, cab, and related parts and components.

Under the July 25, 2014 agreement, JMC will pay Ford Otosan an initial licensing fee of 8 million Euros, plus an additional 330 to 485 Euros for each chassis constructed with Ford Otosan-licensed components, and 20 to 40 Euros for each truck completed with a Ford Otosan Cargo cab.

Background: Ford joint-ventured with Jiangling Motors Corp. (JMC) in 1997 to build European Ford “Transit” full-size vans. Ford increased its stake in JMC to 31.5 percent in 2013. Located in East China's Jiangxi Province, the JMC-Ford joint venture also builds JMC-branded SUVs, pickups, vans and light trucks (Ford also has a passenger car joint venture with Changan Automobile Co. in Chongqing).

In August 2012, the JMC-Ford joint venture acquired a small, young truckmaker called Taiyuan Changan Heavy Truck Co. Ltd. (founded in 2007) for US$42 million and renamed it JMC Heavy Duty Vehicle Co. Ltd. (JMCH).

“JMC’s acquisition represents a great opportunity to continue to expand the breadth of our business in China across vehicle segments,” said Dave Schoch, Chairman and CEO, Ford Motor China. “A strong heavy truck operation like Taiyuan will complement Ford’s existing passenger car and light commercial vehicle operations here in the world’s largest and fastest-growing vehicle market.”

“With Ford’s support, JMC will quickly introduce new products and improve Taiyuan’s (JMCH) existing truck products in order to bolster the competitiveness of Taiyuan Heavy Truck,” said Schoch. “Ford has enormous experience and world-class products and technologies, including in the heavy truck business, which can be deployed to support JMC after the acquisition.”

On April 24, 2013, JMC signed a 12-year technology license contract with Ford Otosan* to produce the latter company’s 7.3 and 9.0 liter “Ecotorq” diesel truck engines*** (JMC code-named J17) for upcoming Ford Otosan “Cargo” based heavy trucks (JMC code-named J19).

In the heavy Cargo range, Ford Otosan has been offering the 10.3-liter Fiat Powertrain Technologies (FPT) Cursor 10 engine found in Iveco trucks. Ford Otosan is now ramping up to produce the 11.1-liter Cursor 11 and 12.9-liter Cursor 13 under license in Turkey (The Cursor 11 replaces the Cursor 10). For the JMC-Ford joint venture to find success in China’s heavy truck market, these larger engines will be essential.

JMC agreed to pay Ford Otosan an initial licensing fee of one million Euros, plus an additional 150 to 190 Euros for each Ford Otosan-based J17 engine produced. JMC agreed not to directly or indirectly design or develop a competing engine to the contractual products during the contract term.

Engine production at the JMC/Ford joint venture’s new US$82 million facility is expected to launch in the second half of 2015 and initially build up to 10,000 engines a year.

The two agreements are supposed to commence with the 2016 model year, be extended every three years and have 12-year terms.

* Ford Global Technologies, LLC owns, manages and commercializes patents and copyrights for Ford Motors. The company was incorporated in 2002 and is based in Dearborn, Michigan. Ford Global Technologies, LLC operates as a subsidiary of Ford Motor Co.

** Ford Otomotiv Sanayi A.S. (Ford Otosan) is incorporated in Turkey and operates as a joint venture between Ford Motor Company and Koç Holding. Ford Otosan is currently the global heavy truck making arm of Ford Motor Company. While the Ford/Koc cooperation dates back 54 years, the relationship began when Henry Ford made the Koc family a distributor in 1928. Today, Ford and Koc Group each hold a 41 percent equity stake each, and the remaining shares are listed on the Istanbul Stock Exchange.

*** http://www.ford.com.tr/agir-ticari-araclar/ford-cargo/ecotorq

[Red Horse]

KSC I guess I finally get the picture in that the 10.3 and larger engines used in Cargo are in fact FPT products. But are in fact the 7.3 and 9.0 Ecotorqs Ford designed/built-no strings to Fiat or anyone else?

[kscarbel2]

KSC I guess I finally get the picture in that the 10.3 and larger engines used in Cargo are in fact FPT products. But are in fact the 7.3 and 9.0 Ecotorqs Ford designed/built-no strings to Fiat or anyone else?

We can say the 7.3 and 9.0 are Ford. Here's some early info on the 7.3.

Like the current Powerstroke, the 7.3 and 9.0 Ecotorq were designed for Ford Motor Company by Austria's AVL.

[Red Horse]

We can say the 7.3 and 9.0 are Ford. Here's some early info on the 7.3.

Like the current Powerstroke, the 7.3 and 9.0 Ecotorq were designed for Ford Motor Company by Austria's AVL.

thx for info

[thomastractorsvc]

I wonder if the the trucks will be all mechanical and adaptable to a military platform. Seems to me that with everything that is going on with China and the PRC Army this would be a non starter at this level. Look what is going on with the Alibaba.

http://www.wsj.com/articles/alibabas-beijing-burden-1423179893

And since foreigners (Ford) cant own a company in China how is this supposed to work.

http://thediplomat.com/2014/09/no-one-who-bought-alibaba-stock-actually-owns-alibaba/

[carlotpilot]

I wonder if the the trucks will be all mechanical and adaptable to a military platform. Seems to me that with everything that is going on with China and the PRC Army this would be a non starter at this level. Look what is going on with the Alibaba.

http://www.wsj.com/articles/alibabas-beijing-burden-1423179893

And since foreigners (Ford) cant own a company in China how is this supposed to work.

http://thediplomat.com/2014/09/no-one-who-bought-alibaba-stock-actually-owns-alibaba/

steer clear of this mess

[kscarbel2]

I wonder if the the trucks will be all mechanical and adaptable to a military platform. Seems to me that with everything that is going on with China and the PRC Army this would be a non starter at this level. Look what is going on with the Alibaba.

http://www.wsj.com/articles/alibabas-beijing-burden-1423179893

And since foreigners (Ford) cant own a company in China how is this supposed to work.

http://thediplomat.com/2014/09/no-one-who-bought-alibaba-stock-actually-owns-alibaba/

I assume you mean mechanically injected engines. That era ended with Euro-2. These common rail electronically controlled engines will be Euro-4 with the ability to reach Euro-5.

The Cargo will be for the commercial truck market. They already have purpose-designed tactical trucks (if that's what you mean) and an abundance of MilCOTS vehicles.

Foreign car and truck makers can "own" up to 50 percent of vehicle-producing joint ventures distributing in China, and can own 100 percent if the plant is purely producing for export. Every country has some form of protectionist policies in the vehicle business. We have Lyndon Johnson's Proclamation 3564 (the chicken tax) that puts a 25% tariff on every imported truck from pickup to class 8. And we create our emissions regulations apart from the rest of the world which has universally adopted the Euro emissions standards.

[james j neiweem]

The big picture is that once the joint ventures are over, China will be able to construct and manufacture any thing. The west will be kicked out and we will have created

a Communist manufacturing monster.

[TeamsterGrrrl]

China is a double edged sword- On one hand it's half the world market for big trucks, so you can't afford to ignore it. On the other hand, you pay a fortune to buy not quite half a Chinese manufacturer, then they often just steal your technology and you get peanuts.

[Red Horse]

China is a double edged sword- On one hand it's half the world market for big trucks, so you can't afford to ignore it. On the other hand, you pay a fortune to buy not quite half a Chinese manufacturer, then they often just steal your technology and you get peanuts.

Can't argue with that. Your stealing technology comment takes me back to an old guy I knew who years ago told me about being at ConExpo and seeing all these Japanese guys swarming over the equipment with their cameras.

What's that they say about ..."imitation is the best form of flattery?"

[kscarbel2]

Can't argue with that. Your stealing technology comment takes me back to an old guy I knew who years ago told me about being at ConExpo and seeing all these Japanese guys swarming over the equipment with their cameras.

What's that they say about ..."imitation is the best form of flattery?"

Having spent many years in the global market, my mindset on this subject has expanded a bit. The European and American vehicle manufacturers spent many decades "swarming over" each others wares. They still do..........and it's normal business for them to do so.

Speaking of the Japanese and Koreans, they started out emulating American car designs. When the Japanese were doing particularly well in the US car market during the 1970s and 1980s, it was for two reasons. High quality innovative product, and a low point in quality and innovation at US carmakers (We've since come back strong, Ford being a case in point). The Korean carmakers are now standing solidly on their own two feet and are a force in the global car arena to be reckoned with.

FYI: I can tell you first hand that General Motors copied the sliding door on the VW Transporter (VW bus) in order to make that feature available on their own vans.

In general, I hold that it is valid to study another company's technology, so long as you through innovation realize a different and superior design........a leap forward.

[Red Horse]

Having spent many years in the global market, my mindset on this subject has expanded a bit. The European and American vehicle manufacturers spent many decades "swarming over" each others wares. They still do..........and it's normal business for them to do so.

Speaking of the Japanese and Koreans, they started out emulating American designs. When the Japanese were doing particularly well in the US market during the 1970s and 1980s, it was for two reasons. High quality innovative product, and a low point in quality and innovation at US carmakers (We've since come back strong, Ford being a case in point). The Korean carmakers are now standing solidly on their own two feet and are a force in the global car arena to be reckoned with.

FYI: I can tell you first hand that General Motors copied the sliding door on the VW Transporter (VW bus) in order to make that feature available on their own vans.

In general, I hold that it is valid to study another company's technology, so long as you through innovation realize a different and superior design......a leap forward.

Good points- I guess its just cyclical? Like say Komatsu "studying" Cat designs in early 60's to them being a world player now. And no doubt, these "copy cat" situations can ultimately lead to a reverse role-like I'm sure you will find Cat paying attention to latest Komatsu design as the Japanese industry has matured.