THE WORLD of truck trailer manufacturers just got a little smaller.
With limited exceptions, manufacturers in North America, Asia, and Europe generally have all built trailers for their respective markets. Conventional wisdom had it that the world was too big and the distances too far for trailers to be shipped to large numbers of customers overseas.
That still may be the case. But Vanguard National Trailer Corporation is demonstrating that there is more than one way to have a manufacturing presence half a world away from headquarters. In the case of Vanguard National, the Monon, Indiana, company imports fabricated steel parts made by its parent company in China and mixes them with North American components to produce trailers designed for the American market.
Owned by a Chinese container manufacturer and managed by a team of veterans of the North American trailer manufacturing industry, the new North American trailer manufacturer is on a pace to produce 3,000 dry-freight vans in 2004 (its first full year of operation) and expects to build 8,000 trailers in 2005.
The success of the operation partially hinges on two things:
The ability of the parent company to efficiently fabricate and ship quality steel components to the U S market.
The ability of the U S operation to assemble these fabricated parts and those of North American-based suppliers into a trailer that exceeds the expectations of North American customers.
Vanguard's parent company, China International Marine Container Group Ltd (CIMC), has plenty of fabricating muscle. As its name implies, CIMC specializes in producing intermodal shipping containers. The operation produces a million of these steel boxes annually, according to Richard Dessimoz, president of Vanguard National.
“They are excellent fabricators,” Dessimoz says. “The quality of the parts we receive has been impressive. But beyond that, we have also benefited from our parent company's manufacturing expertise.”
The Vanguard National management team is quick to cite galvanizing as an example of the quality of the parts that CIMC delivers. The rear door frame, underride guard, and landing gear mounting brackets are examples of the parts that CIMC galvanizes evenly and consistently. Each are offered as standard equipment on Vanguard National trailers.
Once those components arrive, they are assembled by a management and production team that is experienced in the North American trailer industry. In addition to Dessimoz, who has management experience with Wabash National and Monon Trailer, the team includes Kurt Herbst, director of purchasing; Jeff Hintz, director of manufacturing; Mark Roush, director of engineering; and Richard Tarpley, director of trailer sales.
East meets West
Even though the number of containers manufactured worldwide is greater than annual production of truck trailers, it does not match the dollar value of the trailers built in North America, Dessimoz says. Knowing that, CIMC began looking for a way into the North American trailer market about three years ago.
From the perspective of CIMC, the timing to move into the U S was good. U S manufacturers were struggling through an extremely difficult economy, and several major trailer manufacturing plants were up for sale. In 2002, CIMC began an effort to purchase selected assets of HPA Monon, an effort that ended June 26, 2003 when CIMC bought the selected assets of HPA Monon out of Chapter 7.
“The Chinese were not that familiar with the trailers that customers in the U S demand, but they had strong ideas about how to manufacture them,” Dessimoz says. “The challenge we had was to provide them with a design that the market would accept right away. It had to have enough in common with other trailers on the market to have credibility and enough new features to be distinctive.”
One reason CIMC acquired the Monon assets is its location. Less than 100 miles southeast of Chicago, the plant is near the geographical center of the U S trailer market.
“It's no coincidence that so many trailer manufacturers have plants in this part of the country,” Dessimoz says.
From a production standpoint, the new company started from scratch. With input from CIMC, Vanguard National spent the second half of last year gutting what had been Monon's main assembly plant. By November 2003, the building was completely empty, and Vanguard began equipping a plant that would produce trailers using automation and tooling designed by an international team.
“The plant layout was a group effort between Chinese and U S engineers,” says Jeff Hintz, director of manufacturing. “The Chinese brought a lot of good ideas, and we were able to blend them with what we have here.
“One of their strengths is process flow,” Hintz says. “About half of our fixtures came from China, primarily those that move material through the system. Some of our fit-up fixtures came from China, but most are designed for conveyance and quick material flow.”
From the beginning, the plant was designed as an assembly facility. Engineers didn't have to allocate space for fabrication equipment — those operations are done in China. Even the number of welding machines are minimal.
“The idea was to emphasize assembly and to move away from fabrication,” Hintz says. “We wanted to build as much quality as possible into our trailers through the fixtures we designed.”
Hintz headed up the team that designed the plant layout. The team completed the design in the third quarter of 2003, and implemented the design in the fourth quarter. The first trailer rolled off the assembly line in the first quarter of 2004.
“Production has grown steadily every month as we have overcome hurdles,” Hintz says. “We plan to operate two shifts next year and to increase the number of product lines we offer.”
Vanguard currently employs 300 people. The plant operates a 10-hour shift Monday through Thursday. The production technology department takes over the plant Friday though Sunday. This allows maintenance and production upgrades to be implemented without disrupting production. An example of a production upgrade is an electronic positioning table. Much like an air hockey table, it allows side sheets to be positioned easily.
Like the management team, many of those who assemble the trailers already had experience when hired by Vanguard National. The area had continued feeling the aftermath of the downturn in the trailer market when Vanguard National posted its first “help wanted” sign.
“Our county had one of the highest unemployment rates in Indiana,” Dessimoz says. “In no time at all, we became the largest employer in town.”
Experience in trailer manufacturing, however, was not entirely transferable to the way Vanguard National builds its products. For example, the company had little need for welders and fabricators.
“We are requiring people who can think strategically and who can help us succeed in a very difficult business,” Dessimoz says. “It's our goal to build the same number of trailers with half the people that trailer manufacturers typically employ. With the manufacturing approach we have chosen, that's very achievable.”
The Vanguard manufacturing approach, which CIMC uses extensively, is to assemble a standardized box with as much automation as practical. Once the box is assembled, it is moved quickly to the assembly line where customized features can be installed.
Designing the trailer
While the plant was being equipped, product engineers were refining the design of the trailer the plant would produce.
“We don't hide the source of our fabricated products,” says Dick Tarpley. “The quality is very good. But this is very much a trailer built for the American market, complete with the domestic content that customers here expect.”
With the exception of the steel components that are fabricated in China, Vanguard National trailers are equipped with familiar components produced by North American suppliers. Preferred suppliers include ArvinMeritor and Holland, but customers are free to name their own preferred supplier.
“We are like every other trailer manufacturer in that we build our trailers the way the customer wants,” Tarpley says. “If a fleet has standardized on a certain supplier, that's what goes on that trailer. We have our preferred suppliers, and we will explain the advantages of those brands to our customers. Even so, we already have installed a lot of different brands in the brief time we have been in business. Ours is not a Chinese trailer built with parts that you can't get in this part of the world. We put that misconception to rest right away.”
And not all the fabricated steel parts are imported. Crossmembers (which are hot rolled) and side posts (which are roll formed) are made in the U S.
“These products do not have a lot of labor content,” Kurt Herbst says. “It made sense to source them here.”
In developing the Vanguard National trailer and the plant in which it is manufactured, engineers on both sides of the Pacific Ocean have shown they can work together, regardless of their native language.
“Designing the trailer was easier than you might think,” Dessimoz says. “Some of the Chinese engineers we work with speak English well. Plus, communication between engineers is simplified because engineering relies heavily on graphics and drawings.”
Trailers are a relatively new product at CIMC. As such, the trailer was designed in the U S. Vanguard National created the design using ProE engineering software, the same program that CIMC has in China for its container engineering work. Drawings were transferred electronically to China. There CIMC engineers used ProMechanica, a high-level finite element analysis program, to make sure that the designs would perform as expected.
The graphic basis of engineering has helped CIMC and Vanguard National to bridge their language differences. In much the same way, a graphics system is making it easier for purchasing to order.
“We can point to what we need,” Herbst says. “The CIMC people who work here help us communicate, too. But ordering our parts from China does not require more communication effort than dealing with any other vendor.”
Less than a year into the operation, the parts are flowing from the CIMC facility. The fabricated parts sail from China to various west coast ports. From the port, they move by rail to Chicago. They are trucked from Chicago to the Vanguard National plant in Monon.
“We have developed a smooth operation,” Herbst says. “We knew before we started that we needed efficient communication, purchasing, and logistics systems.”
A little extra
As the new kid on the block, Vanguard National management knew it could not offer a “me too” trailer and gain market acceptance. In part, this took the form of offering as standard equipment items that generally are considered upgrades. Among the features that Vanguard National offers as standard equipment:
100-inch inside width.
Laminated oak flooring, with three screws per board.
16-inch sidepost spacing.
A front wall with five posts.
Extensive use of galvanizing. Among the galvanized parts are a 22-inch threshold plate, bolt-on underride guard, rear frame, landing gear bracing, front apron, crossmembers aft of the coupler, and mudflap brackets.
“The galvanized components will minimize maintenance, control corrosion and extend the useful life of the trailer.” says Tarpley. “We studied several leasing companies to see what they wanted for upgrades. Much of what we are offering as standard is what they are ordering as upgrades elsewhere.”
The initial Vanguard National dry-freight design was functional, but the company has been working to make refinements that will make the trailer easier to assemble — and a little more customer friendly.
The new Vanguard VIP 4000, scheduled for introduction this month, is the first model to be designed since the company started production. Many of the changes are minor revisions designed to make the trailer go together easier. But it also includes a drip cap for the rear header, a rear header that will include three recessed LEDs, rubber dock bumper installed between the lights at the rear, galvanized steel service tunnels outboard on each side, and a one-piece front top rail.
The VIP 4000 has an inside width of 100 inches post to post. By early next year, the company plans to offer a 101-inch-wide version as a 2006 model. It may be simply one new model, with many more to follow.
“Our parent company intends to compete in every segment of the van market,” Dessimoz says. “Manufacturing trailers is relatively new to China, but CIMC has tremendous engineering and manufacturing resources. We in the U S have the commitment from them to become one of the largest trailer manufacturers in the world.”
Who is CIMC?
Now a leading container manufacturer, China International Marine Containers (Group) Ltd (CIMC) was founded as a joint venture between China Merchants Holdings and the East Asiatic Company Ltd in 1980.
CIMC went public in 1993 and has been listed in Shenzhen Stock Exchange market since 1994.
Today the company is a worldwide supplier of transportation equipment manufacturing container, trailer, and airport equipment. With total assets of $1.23 billion, CIMC has 18 manufacturing plants along the Chinese coast. It employs more than 22,000 people. According to the company, CIMC has more than 50% of the world's ocean shipping container market.
Container manufacturing remains the company's core business. The company offers dry van, reefer, tank, and various specialty containers.
Customers include some of the world's leading shipping and leasing companies. According to the company, it has been the world's largest container manufacturer since 1996. The company claims to have more than a 40% share of the international container market and more than half of the world's reefer container market.
Trailers are a key component of the company's expansion plans. CIMC recently formed CIMC Vehicle, an operation that produces a wide range of equipment for both Chinese domestic use and for export. Factories in Yangzhou and Shenzhen have been expanded and equipped to produce products such as container chassis, tank trailers, vans, dump trailers, cement mixers, low-loaders, and car carriers.
The stated goal of CIMC is to supply top-rated ground transportation equipment for the global market and to accelerate the modernization of ground transportation equipment in China.