Webinar: Car Manufacturing with Chinese Partners: the Corona Challenge 4 December 2020
December 8, 2020 Category Past events, Weekly
The Flanders-China Chamber of Commerce, the China Platform of Ghent University, the Province of East Flanders, the City of Ghent, and North Sea Port organized a webinar with Mr. Geert Bruyneel, Head of Global Production Operations at Volvo Cars on the topic Car Manufacturing with Chinese Partners: the Corona Challenge.
Mr. Stefaan Vanhooren, Chairman of the Flanders-China Chamber of Commerce, welcomed the participants to the webinar and introduced the speaker. He also mentioned that the speed and efficiency with which China has tackled Covid-19 is really impressive. Today, the biggest challenge for companies doing business with China is the fact that they cannot go to China as no visas are issued for Belgian travelers because of the high number of Covid-19 infections in Belgium. This is of course temporary. China has almost no infections anymore and if there are, immediately strict actions are being taken with quarantine, efficient contact tracing and mass testing. Meanwhile, China is booming again and life is almost back to normal. The Chinese economy has recovered from its first lockdown and economists now believe that China will be the only country with a positive growth this year. According to the IMF, Chinese growth will be 8.2% in 2021, the highest in 10 years. Foreign investments in China have increased in the first nine months of the year by 5.2% and recorded a significant increase in the service sector by 15% and in the high-tech sector by 25%. This year, e-commerce has become very important, especially in the second, third and fourth-tier cities. China will be one of the main drivers of world growth next year, especially for the G20 emerging countries.
Prof. Luc Taerwe, Director of the China Platform at Ghent University and Chairman of the Association of Engineers, presented the China Platform, one of the five regional platforms at Ghent University and one of the oldest. It was established in 2006, and next year will celebrate its 15th anniversary. Mrs. Inge Mangelschots is full-time coordinator and Mr. Zhang Chi is the representative in Beijing, who is also the representative of the Province of East Flanders. The strategic partners of the China Platform are the Province of East Flanders, North Sea Port, the Flanders-China Chamber of Commerce and the City of Ghent. The China Platform is a center for information and expertise on China and a contact point for students and staff members as well as for external partners. It is organizing visits, seminars and missions, facilitates mobility in education and research, and organizes joint activities with external stakeholders. The Platform also stimulates and facilitates cooperation by identifying strategic partners, encouraging joint PhD’s, establishing links with companies through the triple helix concept and participating in networks and international platforms. The China Platform also does branding and marketing for Ghent University in China and has a WeChat account. There is also a strong involvement of the alumni network with four chapters in Beijing, Shanghai, Chengdu and Guangzhou. It regularly organizes networking events in China and involves the alumni in the recruitment strategy of Ghent University. The Platform has 66 cooperation agreements for students and staff exchanges with China, six agreements for exchange programs, agreements with the TechTransfer Office of Ghent University, and an agreement with the China Scholarship Council (CSC). There are also nine joint labs with Chinese partners. The number of Chinese students and researchers at Ghent University has gradually increased over the last decade to 660 last year. Due to the Covid pandemic, this year there are only 520. This webinar is organized in the framework of the China Lecture Café Series, which was established in 2012 to hold informal lectures during lunch break or in the early afternoon. In the lectures, recent evolutions in China and cooperation activities with China are highlighted. Speakers are from inside and outside the University.
Prof. Taerwe next introduced the speaker. Mr. Geert Bruyneel obtained his Master degree in chemical engineering technology in 1983 in Ghent and started working at the Volvo plant in Ghent in 1988 at the paint lab and later became Director of Engineering and Quality. In 2005, he started working in Gothenburg and in 2010 returned to Volvo Cars Ghent as Vice President and Managing Director. In 2013 he was called back to Gothenburg as President Supply, Quality and Logistics and in 2015 he became Vice President Purchasing, Manufacturing and Logistics for the Asia-Pacific based in Shanghai. Since 2018 he is head of Global Production Operations in Gothenburg.
Mr. Geert Bruyneel presented some practical insights on how the corona crisis was managed at Volvo Cars. China has been the basis for the measures and approach in Europe and the U.S. He first presented Volvo Cars. Volvo has experienced a remarkable growth since it came under Chinese ownership. Despite very different cultures, Volvo achieves to bring out the best of two worlds with respect for each other. Volvo has the freedom to design and develop cars based on its heritage and core values and to become the brand that it wants to be. Volvo Cars is more Swedish than ever before. Besides making Volvo brand cars, the company has 50% ownership of Polestar and 30% of Lynk & Co. Zenuity, now called Zenzia, is a software developer 50% owned by Volvo. The company is active on three continents. In China, Volvo has an engine plant in Zhangjiakou, and car plants in Daqing, Luqiao and Chengdu. The company has about 600 suppliers in China in four clusters: Beijing, Daqing, Chengdu and Shanghai. About 60% of suppliers are in the Shanghai area. About 40% of supplies into the car plants is “just in sequence”. The inbound material supply is organized through three cross docks in Taicang, Changchun and Chongqing, making the connection with the four supply clusters. From a sustainability point of view, Volvo is trying to use returnable packaging. Volvo is producing cars in China with the same quality, standards and processes as in the Gotheborg and Ghent plants. There is horizontal cooperation between the production plants globally to share best practices. To be able to quickly share experiences has also been important in the corona crisis.
The corona crisis has accelerated the change in consumer demand. Consumer behavior is driven by factors like convenient mobility, direct digital relationship with car brands, environmental concerns, and the nature of urban mobility. Volvo’s technology strategy is clear and outspoken: the future is electrified and in 2025 Volvo is expected to sell at least 50% of electrified cars, while by 2030 Volvo Cars might not produce combustion engines anymore. Volvo strongly beliefs in electrification. Investments in electrification, autonomous driving and connectivity continue to represent a large part of the financial efforts to approach the emerging business opportunities in the automotive industry. Mr. Bruyneel said that in his 30-tear career at Volvo he has never seen such fast moving turbulence and dynamics. As to strategic principles, reducing CO2 is the highest priority in the company’s sustainability strategy. By electrifying cars, working with suppliers and addressing global operations, Volvo is targeting carbon neutrality in line with the Paris agreement. The company is focussed on raw materials to make the right choices, for example banning leather.
Confronting the corona crisis in China, there were three periods. At the beginning of the outbreak in January-February, there was a rapid response. After Chinese New Year the company faced the challenge to restart production and in the second quarter was already going to a normalized management. After the outbreak, a very rapid response was needed as it coincided with Chinese New Year when many people were going back to their families. In all sites in China, Volvo launched crisis management teams, with four sub-groups: personal protection equipment supply, human policy, medical technical support, and communication. The first priority was the health and safety of the employees. Employee health information, as well as that of their family members, was collected daily through a WeChat app. This included contractors and suppliers. It allowed Volvo to track the availability of its employees and was crucial in planning production again. Many employees were staying with family, not in their normal place of residence, but the company could follow this up through the app to know who was sick and unavailable to come back to the job. Three things were very important to restart production. First of all was the availability of the employees, because if absenteeism is too high, you cannot restart production. Second was the availability of materials, without which production is impossible. A third element that was assessed daily was sales. Concerning people, one of the key things was communication, giving daily updates and giving people the opportunity to ask questions. The company made special bus arrangements to bring people back to work because many modes of transport were not available. Arriving back at the plant, everybody’s temperature was checked. The production lines and robots were also disinfected.
Most critical at the start-up phase was the supply chain, which was not localized around the plant. Volvo needed to understand the capability and availability of the suppliers. Several hundreds of people have been involved in risk and constraints management. There was also a lack of transportation due to a lack of trucks and drivers, who were also subject to the green code and quarantine measures. The health code made the resumption of work more orderly and scientific. It is based on real-time data and is automatically changed through big data. The QR code was used as an electronic voucher for individuals to get in and out of local areas. Volvo also undertook its social responsibility by for example raising money for medical equipment.
After resuming production, the company entered the phase of normalized management to live and work together as normal as possible. “Normalized” does not mean “back to normal”. There is still daily follow-up with travel and health advice and health measures such as wearing masks are still followed. The good practice of going to plants everywhere for a review can’t be done anymore, so the company switched to a remote simulation of the shop floor experience. This concept of remote performance reviews has been a good experience, so the crisis has given the company also some new opportunities. This successful concept is here to stay, reducing traveling time and expenses, enabling instant best practice sharing on a global level, and improving shared learning with open and transparent cross functional dialogue. Even when the corona crisis is over, Volvo plans to continue the remote performance reviews. Comparing retail deliveries in China in 2019 and 2020, we see a V-shaped recovery and sales were returning very quickly back to normal. Volvo has been selling more cars in China in 2020 compared to 2019. In Europe the drop in sales came later but was also bigger and longer.
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