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Low costs and salary levels roughly 50% of those in Beijing, Shanghai and other popular industrial zones around China prompted Swedish car maker Volvo to move the company's production of passenger vehicles to Chongqing in the centre of the Middle Kingdom. In an effort to further reduce costs Volvo has its cars produced on contract by Ford at a large plant jointly owned by the American juggernaut, Japanese Mazda and the Chinese carmaker Changan.
Having four major international car manufacturers churning out vehicles at the same production line could easily result in logistical snafus of nightmare proportions, but rigorous supervision and an intricate organization of each car brand based on different colours (Volvo being green) keeps production flowing true and steady. No less than 200,000 cars are assembled at the plant annually, every twentieth of which (7,000-8,000) are Volvos.
All in all the Swedish carmaker's move to Chongqing has been very satisfactory for Volvo, according to production and quality-assurance manager Lennart Larsson, who has been stationed in the city for the last three years. Cheap labour costs and continuous investments from the Chinese central government – Beijing is desperate to attract foreign investments to the neglected centre of the country – have made production in Chongqing profitable, but there are problems.
Traffic in and out of this the world's largest city – 30 million inhabitants and counting – can only be described as "wild", and China's booming growth has generated a shortage of barges to transport necessary supplies along the Yangtze River. The result is constant logistical delays that are hard to fix in the current environment of headlong Chinese growth.
But all in all Volvo is satisfied with its production facility in Chongqing. And especially because of the young and ambitious workforce that is readily at hand in the massive city: "It's like a nuclear power plant. There's an enormous energy around here, but there's a constant risk of meltdown if you can't control it," says Lennart Larsson. "That's why it's important to give workers good advice and encourage them to ask questions. They must have faith in us and abandon the old system of exaggerated respect. And for us it's all about not being too authoritarian or act too European."
Full story in Swedish
News category: Sweden
Published on this site: Jun. 3, 2008
Source:e24.se
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