TLD in China

TLD opened its first Chinese manufacturing facility at Shanghai in 1997. (TLD)

Tom Allett spoke to TLD’s CEO Jean Marie Fulconis about his company’s expansion in China.

TLD opened its first Chinese manufacturing facility at Shanghai in 1997. (TLD)

TLD has long been associated with producing GSE items on more than one continent, but its recent expansion in China has attracted the attention of many who would like to achieve the same thing.
Having a presence in Asia isn’t new to TLD; it acquired its first company in the region in the early 1990s.  It soon set up offices in Singapore and Hong Kong, while at the same time purchasing a small manufacturing unit in the US called ACE.  In 1992 TLD’s activities in Asia were sales rather then manufacturing based, though this changed when a factory was created in Taiwan with the idea of producing basic GSE items such as passenger stairs and belt loaders.
Then, like now, the company’s foundations were built upon its manufacturing plants in France which formed the core of what was subsequently forged into the TLD Group.
It began to recognise the potential of a growing Chinese market.  It already exported US and French built products there through its office in Hong Kong, but this was proving difficult for ‘low-tech’ equipment.  For those products, it wasn’t possible to compete on level terms with the Chinese manufacturers’ greatly-reduced labour costs which gave the local firms an unassailable price advantage.  While TLD was in with a chance of selling its top-of-the-range items to the larger Chinese airlines and airports that could a) afford them and b) see the advantage of buying a quality-engineered item that was more reliable and had a longer working life, it struggled to win sales from smaller customers.
In 1997 TLD opened its first Chinese manufacturing plant; acquiring an existing but empty factory in Shanghai.  It is quite close to the city’s Pudong International Airport, which was still under construction at that time.  Mr Fulconis recalls: “To be honest we effectively started our Chinese operation without having defined a sales strategy that had been specifically adapted for the local market.
TLD’s Wuxi factory began producing loaders earlier this year. The group’s President and CEO Jean Marie Fulconis, says he is: "extremely happy" with the company’s business interests in China. (TLD)

“In the beginning we relied on our Taiwanese and Hong Kong teams to start-up our operation as the language barrier was huge at first.  As a general rule, only the younger generations of Chinese people speak English; the over 45s can’t usually speak it, so we had to rely on colleagues from Hong Kong and Taiwan to get involved and help us.”
Mr Fulconis left TLD in 1997, only to return as President and CEO in October 2001.
“During that time the factory hadn’t really been developed,” he explained, adding: “so realistically we were still unable to sell our products with western components on the local market because of their costs, though we were still exporting equipment from our factories in France and the US.
“We were still firm believers in the Chinese market and having a manufacturing plant in a low labour-cost country gave us a firm foundation to build upon.
“We hired Chinese engineers who could speak both English and French and that helped us a lot.”  Tang Xiang (now MD of the Chinese operation), joined TLD in 2002.  He is a mechanical engineer by trade and had studied in France where he became fluent in French, having already learnt English at school.  He had also worked for an international company manufacturing in China before joining TLD.  Tang played a key role in the development of TLD’s Chinese factories, which had been building items such as belt loaders and baggage tractors, but also needed to widen its product base to include the more complex equipment, such as ground power units and loaders.
“Before we had been too busy at the Group level with developing our key range of products, such as loaders, towbar-less tractors, jet starters and air conditioners,” Mr Fulconis explained, adding: “we hadn’t invested much in lower tech products like passenger stairs, belt loaders, lavatory and water trucks, for example we were still offering three different types of toilet trucks inherited from the company we had acquired.”
“We needed to set international standards for these product lines, but still offer equipment that could be sold in any market, including the local Chinese one, which meant offering ‘local’ items such as Chinese engines if required.  Initially our Chinese engineering office wasn’t up to meeting these requirements, but we introduced group engineering cooperation and standards and subsequently achieved the standards we were aiming for.”
At this stage TLD’s various factories were building items such as belt loaders in Canada, China and France; ground power units in China and the USA, plus passenger stairs in China and France.
“The key element was to achieve the critical mass at which the products’ design and manufacturing, becomes economically viable.  Some of the items, such as passenger stairs for example, are within a traditionally low volume market where global sales would only be 300-400 units per year spread across all the world’s manufacturers.  Depending on what type of stairs the customers need, that could represent market sales of between €15m – €30m to fight for.
The second manufacturing facility opened in February 2008. (TLD)

“We think that all international ground handling companies benefit from our group-wide engineering standards because it means that they can buy the same item, built to the same specification and standards they know, from any of our plants, be they in America, China or France.”
As TLD’s Chinese operation ramped up, the original factory premises were extended, but further progress meant that more space was needed.  There was no room for expansion at the existing facility, so a second factory was planned for Wuxi, about 93 miles (150km) west of Shanghai, which, with a population of ‘only’ 4 million people is quite small by national standards.  It lies on the way between Shanghai and Beijing and will soon be linked to the express train line than runs between those two Chinese business giants.  The new location brings TLD closer to its subcontractors and suppliers, but even after acquiring the land for its new premises, it still faced significant challenges.
Mr Fulconis recalled: “Soon after we acquired the land for our second factory, the global economic crisis struck and we decided to start-up in rented premises for the time being, but soon we will be building on our own land.”
Asked whether, despite the company’s multi-national manufacturing facilities, some potential customers still ask if they can buy a cheaper product from TLD’s Chinese factories, Mr Fulconis explains that some companies do, but the fact that shipping costs rose substantially in 2008 means that such a move isn’t usually a viable option.  From all angles, including cost, it makes sense to deliver products to its European customers from France and so on.
All of TLD’s towbar-less tractors continue to be built in France, with its jet starters and air conditioners coming from the USA, but Mr Fulconis is quick to point out that items on its Chinese-built product range shouldn’t be thought of as ‘cheap’ because they are just as likely to have international designs and western-built main components like engines or transmission systems, depending on the customers’ requirements.
TLD has recently started to build loaders in Wuxi and Mr Fulconis states that he is: “extremely happy with business there,” adding: “we ‘lost’ three years initially during the start-up of the Shanghai factory; but caught up afterwards.  We are now effectively ‘behaving Chinese’ in China; competing head to head with local manufacturers thanks to our strong local sales and support presence and state-of-the-art factory there.”
Mr Fulconis, who mastered English as a second language many years ago, is now busy improving his Chinese language skills.  “I have been attending two, two-hour sessions per week for a while now and I also have language lesson CDs playing in my car and books to read when I have time.  I can take part in casual conversations now, but I still have some way to go to before I can conduct business talks in Chinese,” he says.