On the road: Rhenus Automotive opens first production plant in China

Since the end of May 2021, Rhenus Automotive has been manufacturing front and rear axles for a new BMW model in Shenyang, in the north-east of the People's Republic. Highly automated facilities combine Industry 4.0 and smart manufacturing. The automotive logistics company's tasks also include the global procurement of components, quality assurance and supply chain management. Dr Marcus Ewig, Managing Director of Rhenus Automotive, reports on the construction of the plant, challenges and development opportunities in China.

Editor: Dr Ewig, at the end of April you celebrated the opening of the first Rhenus Automotive production plant in China. What significance did this day have for you?

ME: It was a special day not only for me personally, but also for all our employees and partners who have been intensively involved in completing the preparations over the past few months. Our client, but also political representatives such as the mayor of Shenyang and the German Consul General attended the opening. A project like this does not happen overnight. We worked for 18 months towards the start of the axle production and received great support from many sides.

Editor: How did it come about in the first place that you are now manufacturing axles for new BMW models in Shenyang?

ME: We were nominated by the BMW Group in 2019 as a supplier for the front and rear axles of new vehicle models at the Shenyang site. The axles will be delivered just-in-sequence to the BMW plant in Dadong. Therefore, it was important that our production facility is set up in the vicinity of the plant. The BMW plant is only about ten kilometres away from our site and can be reached in half an hour, including loading.

Editor: What happened next after the nomination?

ME: The plants and equipment were developed by us and implemented together with a German-Chinese partner. The implementation of the plants then took place from January 2021.

Editor: Setting up production in China for the first time is certainly not easy. Does that also correspond to your experience?

ME: Although Shenyang is our first Asian production site, Rhenus Automotive has a lot of experience as a partner to the automotive industry in many countries such as the USA, Spain, Germany, Poland and Russia. In parallel to setting up the production facility, we have also established a holding company in Shanghai, which accompanies and controls the overarching processes and will also drive our further development in the country. We also have the advantage that, as part of the Rhenus Group, we were able to draw on existing structures in China.

Editor: What was the biggest challenge for Rhenus Automotive in establishing the production site?

ME: In addition to all the usual challenges during a ramp-up, the Corona pandemic presented us with a number of hurdles. These included, above all, the at times very strict entry regulations and quarantine orders. It was not always possible to dedicate experts from other locations on site. However, we were able to compensate for this by having a strong local team. We also found very cooperative partners and authorities who always supported us.

Editor: What does the work of Rhenus Automotive in Shenyang now look like in concrete terms?

ME: The core task is the production of the front and rear axle for a new BMW model as a Tier 1 supplier. Unlike parts and component suppliers, Tier 1 suppliers provide complex systems and modules. The manufacturer, in our case BMW, then takes over the final assembly.

Editor: Can you describe for us how an axle is manufactured?

ME: In total, the front axle passes through 17 stations during production, the rear axle even 22. In Shenyang, we rely on highly automated systems that combine the concepts and technologies of Industry 4.0 and smart manufacturing. The result is highly networked plants that optimally meet the high customer requirements in terms of output and quality.

Editor: What particularly distinguishes the location?

ME: In addition to the assembly plants mentioned, which are based on the latest technological possibilities, our focus is on complete networking of all components and tools. This means that there is comprehensive communication at the equipment level, which is then continued at the process level in the individual production steps. All relevant data is stored in a manufacturing cloud, which is used for numerous other processes such as quality assurance and increasing efficiency. We are talking about the practical applications of Industry 4.0 here.

Editor: Rhenus often operates multi-user centres. Are you working exclusively for the BMW Group at the Shenyang site?

ME: We work here exclusively on behalf of the BMW Group. Not only because all capacities are already utilised with the customer. In axle production, the facilities are basically specifically tailored to the customer.

Editor: Does Rhenus also handle the procurement of upstream components for axle production?

ME: That is also one of our tasks and it should not be underestimated. We are talking about a worldwide supplier network from the USA, Japan, Korea and Europe, among others, which is controlled by us. This also includes customs. In addition, we take care of quality management and supplier control according to the Directed Buy principle. In this model, the OEM specifies to the supplier from which sub-suppliers he must procure the set part. For our axle production, the number of sub-suppliers is around 100 worldwide.

Editor: Are you planning to open more production facilities in China in the future?

ME: China is an important growth market for us, which is a priority in our internationalisation strategy. By the way, this is not just now. We have been analysing the Chinese market for a number of years and deliberately decided to enter the market at this time and with the BMW Group as our customer. We believe that China's potential in our service segment will only become fully apparent in the next few years. This is because, in addition to the well-known manufacturers, more and more local partners are entering the market, bringing with them further production concepts and philosophies. We will see a great dynamic here.

Editor: So we can stay curious. Thank you very much for the interview.