Starting from the construction of the ‘lighthouse factory’, the ‘high-end manufacturing system’ has been fully upgraded.
—— During the exclusive interview with Li Guiping, CEO and President of CIMC Vehicles by New Fortune Magazine, the term “high-end manufacturing system” was repeatedly mentioned.
So, in Li Guiping’s eyes, what is the picture of the high-end manufacturing system?
What is the realization of high-end manufacturing?
A lighthouse factory that reduces costs and increases efficiency
How was it born?
In 2013, after the sales of CIMC’s semi-trailers ranked first in the world, Li Guiping began to think about how to achieve quality growth on the basis of leading market share.
As a result, CIMC Vehicles has made three changes in recent years: using efficiency enhancement as the core means of reducing costs; using digital transformation as a means of improving profit conversion; using marketing reform as the core means of improving gross profit.
Among them, the “lighthouse factory” is a key move for efficiency enhancement and digital transformation.
The “Lighthouse Factory” is to solve the problems of backward production equipment, technical lag, increase in labor costs, energy saving and emission reduction through the modular, digital, and intelligent construction of the factory. In 2015, CIMC Vehicles started the construction of the industry’s first “lighthouse factory” in Dongguan.
Li Guiping believes that “if the first one is made, it will also have enlightenment meaning and use a lighthouse to illuminate the future.” Therefore, this kind of intelligent and digital factory was named the “lighthouse factory”.
From the perspective of production mode, traditional semi-trailer manufacturers have a relatively small production scale, and the mode adopted is to set up factories with full-process production conditions at the places of demand; CIMC Vehicles adopts the production mode of “Lighthouse Factory” and satellite factory assembly. The “factory” completes the production process of stamping, welding, and painting and makes modular car components, which are then assembled at the satellite factory in the demand site.
In this mode, the satellite factory only needs to install assembling equipment, saving land, equipment and labor costs; the “lighthouse factory” has greatly improved production efficiency through automation, and the scale effect is significant.
So far, CIMC Vehicles has built 21 “lighthouse factories” around the world, covering 7 major categories of products. Under the transoceanic business model, its overseas subsidiaries can also purchase core components from China’s “lighthouse factory” to save costs.
CITIC Securities Research Report believes that CIMC vehicles are produced in the “lighthouse factory”. Compared with the traditional model, the cost of a single vehicle is reduced by about 1,000 yuan, the demand for personnel is reduced by 29%, and the per capita output value increases by 32%.
From ‘lighthouse factory’ to ‘high-end manufacturing system’ to achieve quality growth
After completing its business layout, CIMC Vehicles shifted from pursuing market share to high-quality development. Starting from the construction of a “lighthouse factory”, it comprehensively upgraded its “high-end manufacturing system”. In March 2020, Li Guiping proposed to build a “high-end manufacturing system”. Plan 3 During the year, revenue and profit growth increased significantly; within 5 years, the system will be fully implemented.
To this end, CIMC Vehicles has established the four cornerstones of upgrading product modules, improving the lighthouse factory, initiating marketing reforms, and promoting organizational development, as well as 21 specific starting points, and increased R&D investment. As of the end of 2020, CIMC Vehicles has more than 700 global R&D personnel and more than 1,000 registered patents.
CIMC Huajun, located in Zhumadian, Henan, is a large sample of its upgraded high-end manufacturing system. CIMC Huajun’s “Lighthouse Factory” was built in 2017 and put into production in April 2018. It is equipped with lighthouse production facilities such as laser cutting units with automatic loading and unloading, digital forming equipment, and welding robot clusters with AGV/RGV. .
All the vertical ribs of the frame on the side of the frame can be completed by a set of continuous punching die, and the production efficiency is increased by more than ten times; the position of all the vertical ribs on the frame is also accurately calculated by the system.
Under the high-end manufacturing system, CIMC Huajun will increase production efficiency by approximately 33% in 2020, increase per capita output value by approximately 27%, and shorten daily working hours by 1.5 hours. Among the green compliance indicators, VOC (Volatile Organic Compound) emissions are close to zero, wastewater meets the surface level 4 water standard (which can raise goldfish), 67% of wastewater is reused, and the utilization rate of coating materials exceeds 97%.
However, Li Guiping has more plans.
Relying on internal circulation and using external circulation to continuously build a ‘high-end manufacturing system’
He believes that the new crown epidemic will reshuffle and redefine the global economy; there will be outbreaks in trade wars, and the safety, sustainability, and development of global operating assets will all change.
In this context, relying on the internal cycle will provide quality growth opportunities and reduce business uncertainty; using the external cycle, although business uncertainty will increase, there are also challenging growth opportunities.
Therefore, the financing of CIMC Vehicles when it is listed on the Hong Kong stocks is mainly used for international market expansion, and the financing for listing on the ChiNext is mainly used for domestic.
CIMC Vehicles plans to raise a total investment of 2.6 billion yuan in the project, which is mainly used to build a “high-end manufacturing system”, including digital transformation and research and development projects, upgrade and new lighthouse factory projects, new marketing and construction projects, and repayment of bank loans And supplement working capital.
In recent years, the revenue of CIMC Vehicles has maintained steady growth. Mr. Li Guiping, the chief executive officer and president of JV, is also confident. Within three years, he will increase the overall gross profit margin to about 20%, and turn his leading position in the three core businesses into stronger profitability.
Under his leadership, CIMC Vehicles is based on a long-term cycle, relying on its own high-end manufacturing system and “new management infrastructure” to continuously increase its niche and improve gross profit.