◎ Yang Honghui
“The strategic adjustment of Double Coin has been basically in place, and three-year hard period has passed away.” At China Rubber Conference in March this year, the reporter interviewed Chu Zhengyu, party secretary and president of Double Coin Tyre Group Ltd. He came straight to the point: “It is the 90th anniversary of the creation of ‘Double Coin’ brand. As a long-established national brand, Double Coin needs to vacate cage to change bird. We have already completed the layout of production bases at home and abroad, and we are confident that we will come out in this turning point in 2018. In the future, Double Coin will take the high-end product route and reinvigorate Double Coin.”
On March 26, the 2017 annual report released by Shanghai Huayi (Group) Company showed that Huayi Group’s operating income was RMB 43.553 Billion Yuan, increased by 4.26% on a year-on-year basis (the same below); the net profit attributable to shareholders of listed companies was RMB 619 Million Yuan, increased by 48.55%. Hereinto, Double Coin’s tire operating income was RMB 8.036 Billion Yuan, decreased by 4.94%; gross profit was RMB 864 Million Yuan, with gross profit margin decreased by 2.13 percentage points; annual tire production and sales volume were 9,913,300 and 9,993,600 respectively, with a growth rate of 12.09% and 10.07%; Double Coin’s rate of capacity utilization in Jiangsu, Chongqing and Xinjiang factories all reached 100%, and the rate of capacity utilization in Anhui passenger tire factory was 75%.
Complete Factory Adjustment in Min-hang Smoothly
Double Coin was listed on the A-share market in 1992 and was the first listed company in domestic tire industry. When describing the Company’s development during adjustment period, Chu Zhengyu said: “After listing, be cheerful for 3 years, but when adjusting, be painful for 3 years.” He said that the development of enterprise must be in line with the local industrial planning, and only take both into full account could enterprise have a stronger viability. At the beginning of 2000, according to the unified plan of Shanghai, Double Coin’s subordinates, Ta Chung Hua and Tsen Tai factories, were adjusted to develop in Minhang District, and the Minhang tire production base was established. In 2016, in order to better develop Double Coin, Double Coin once again made a strategic adjustment to the heavy-duty tire factory on Minhang base. This adjustment was not to relocate the factory, but to close Shanghai tire production base, and to transfer the equipment to other production bases. It faced so many tasks, involving production adjustment, capacity transfer and employee diversion, and the strength and difficulty was unprecedented.
It is learned that the strategic adjustment of Double Coin this time was decided in early 2016, and the adjustment of Shanghai base was completed in the same year. On April 15, Double Coin High-Duty Radial Truck Tyre Company issued an Open Letter to Staff in Heavy-Duty Company, which on one hand explained the reasons for shutting down the factory, and on the other hand expressed strong reluctance. On April 20, the relocation project of Minhang heavy-duty tire factory was officially launched; on May 19, the staff reposition and resettlement work were officially implemented; on December 20, Huayi Group issued an announcement, stating that the all-steel tire production line of Double Coin Heavy-Duty Radial Truck Tyre Company achieved a smooth shutdown; the capacity was transferred in a shorter time; the work of diversion and resettlement of staff was basically solved, and Double Coin Heavy-Duty Radial Truck Tyre Company was completely shut down.
Chu Zhengyu introduced that this strategic adjustment of Double Coin had always adhered to three “zero tolerances”: safety, environmental protection and stability.
In terms of capacity transfer, since the beginning of 2016, Minhang heavy-duty factory gradually reduced production. After the production was stopped, the production equipment was transferred to Jiangsu Rugao company and Chongqing company, and the relocation and debugging task of key equipment such as molding machines and vulcanizers was successfully completed in a short period of time. It took only 40 days from the disassembly and assembly of the equipment to the finished tire product.
In terms of staff resettlement, the Company strived to allow employees to “transfer their jobs without being laid off or lose jobs.” Chu Zhengyu said that staff resettlement was a big problem, and the work must be done in a deeper and more detailed way. For this reason, Double Coin Company spent RMB 500 Million Yuan as the adjustment cost for the heavy-duty factory, and the whole process was smoothly advanced. There was no formal employee petitioning.
Chu Zhengyu expressed that Double Coin guaranteed the smooth resettlement of staff in three aspects. The first one, to be early, detailed and strict was the key. Firstly, the Congress of Workers and Staff was held on May 19, 2016, and Double Coin Heavy-Duty Radial Truck Tyre Company of Double Coin Tyre Group Ltd. Staff Resettlement and Reposition Plan (Draft) was voted and passed with 82.4% of the votes. Secondly, the publicity outline was formulated, and the unstable factors were investigated. Employee forum was held for several times to answer the doubts of employees and respond positively to employees’ requests. The second one, to be attentive, emotional and powerful was the fundamental. After the factory was shut down, the Company conducted home visits, deeply understanding the life and suffering of employees, and developed reposition program for each one individually, so that many difficulties and contradictions were properly resolved. The third one, to steadily advance, promote and control was the guarantee. The work was carried out according to plan, and advanced steadily. There was no accumulation of different problems complicating the resolution of conflicts. The Company actively contacted the Shanghai Federation of Trade Unions Vocational Aid Service Center, Minhang District Employment Service Center, Jiangchuan Street Community Affairs Reception Center and other departments to carry out various job recommendation, invited social units and Huayi Group internal units to provide various positions to the employees of the heavy-duty company, and successively held specialized recruitment meetings for heavy-duty company, with leaders of the Company and the factory, and heads of various departments personally attending the event to help recommend the employees for job application.
Chu Zhengyu told the reporter that during the resettlement process, there were many touching stories about Double Coin. For example, a worker had already found a new job and knew that he was not in the scope of the Company’s retainment. However, when he learned that the Factory needed him to stay temporarily for equipment transfer, he did not hesitate to stay and said: “As long as the Factory needs, it doesn’t matter how long I stay, and I will follow the instruction.” There was a work area management staff that actively cooperated with the Department to do the resettlement work until the end. Finally, when dealing with the agreement to terminate the labor contract in person, he was still concerned about whether the work he handled met the requirements. One employee said with excitement after achieving re-employment intention: “My son is now studying at Fudan University. Although I am repositioned this time, the Company is affectionate. If Double Coin’s future development needs, I want my son to come to and work for Double Coin.”
Chu Zhengyu told the reporter that the domestic strategic layout of Double Coin was put in place now. At present, there are four production bases, namely: Jiangsu base, with an annual production capacity of 4 million all-steel tires, engineering tires and industrial tires; Chongqing base, with a capacity of 2.5 million all-steel tires; Anhui base, with a capacity of 15 million high-performance semi-steel tires; and Xinjiang base, with a capacity of 2.2 million all-steel tires. In addition, there is also a Xinjiang Kunlun Engineering Company producing bias tires. All production bases have reserved land and will be further expanded in the future according to the needs of the market.
Complete the Construction of Oversea Intelligentized Base
According to the strategic development plan, while adjusting Shanghai Minhang factory, Double Coin started the construction of Thai factory at the same time in 2016. On May 16, Shanghai Huayi (Group) Co., Ltd., as the parent company holding Double Coin, signed a joint venture agreement with Thai Tribeca Enterprise Co., Ltd., and the two parties invested USD 300 Million (about RMB 1.95 Billion Yuan) to build a factory with an annual output of 1.2 million all-steel tires and 50,000 engineering tires. After 9 months of construction, on June 30, 2017, the first testing tire of Huayi Group (Thailand) Co., Ltd. Double Coin project was off the assembly line.
The Thai factory of Double Coin has adopted the “4411” pattern to create a brand new intelligentized manufacturing factory of all-steel tire. The so-called “4411” pattern, namely 4 sets of automated stereoscopic warehouse system, 4 sets of automatic conveying system, 1 set of semi-product AGV conveying system and 1 set of informatization management system. Among them, 4 sets of automated stereoscopic warehouse system include: automated stereoscopic warehouse of raw material, automated stereoscopic warehouse of master/finished batch, automated stereoscopic warehouse of large rolling cord fabric and automated stereoscopic warehouse of green tire; 4 sets of automated conveying system include: automatic conveying system of natural rubber crushing and homogenization and synthetic rubber, automatic conveying system of shaped green tire, automatic conveying system of vulcanized green tire and detecting and automatic sorting system of finished tire; 1 set of informatization management system includes: ERP system, MES system, PLM system, sales system, and OA system, etc.
At present, homogeneous competition is quite fierce in tire industry, brand premium rate is not high, and investment is difficult. Chu Zhengyu believed that in this aspect, domestic enterprises should learn from foreign-funded enterprises, and only be daring to invest could they achieve technological innovation and improve brand value. He introduced that this time Double Coin did dare to invest in the Thai factory. General all-steel tire factories do not have 4 sets of stereoscopic warehouses at the same time. In addition, the secondary development ability of Double Coin is strong. The basic software for this intelligentized tire factory is provided by a supplier, and jointly developed by Double Coin and the supplier. Therefore, despite the late starting, the intelligentized system of Double Coin Thai factory is relatively mature. The field application is very good.
Chu Zhengyu said that after the intelligentized production line of Thai factory was mature, it could be replicated in domestic factories to improve the intelligent manufacturing level of domestic factories. He believed that domestic factories were factories that had been established. Although semi-finished products and molding process are difficult to transform due to site limitations, the rubber mixing, vulcanization and testing processes can all be modified to save a lot of labor, improve production efficiency, and stabilize and improve product quality.
Double Coin Will Take the High-end Route
Chu Zhengyu analyzed, the situation that the tire industry was facing in 2018 was very serious. Firstly, trade frictions are more frequent, so foreign market will shrink; secondly, due to the operation of high-speed rail and subway, intercity bus and inter-provincial bus become less in number, so domestic tire market is also shrinking. Thirdly, resource development reduces; coal mines, steel and other industries further cut overcapacity; and real estate investment declines, etc. As a result, tire demand will certainly decline, the domestic tire market competition will become increasingly fierce, low-end products will certainly be eliminated, and the market requires tires to develop towards high quality.
At present, the structural adjustment of China’s tire industry has achieved initial results. The proportion of all-steel tubeless tires has increased year by year, the market demand has become more rational, the brand effect has become more prominent, and the credit system has been more perfect. “This is good for brand enterprises, and it is favorable news for Double Coin. The positioning of Double Coin is to develop high-end tires. Double Coin is also the earliest to produce tubeless all-steel tire products in China. The tubeless products are the iconic products of Double Coin. At present, the production accounts for more than 65%. Double Coin has three major advantages: all-steel engineering tires, tubeless heavy-duty tires and all-steel light truck tires.” Chu Zhengyu said that the goals of Double Coin were to produce tires in a professional, standard and large-scale way, to be China’s most professional tire manufacturer and service provider, and to lead the Company with “intelligent manufacturing” and “smart service”.
Chu Zhengyu believed that tire companies were perfectly able to make a breakthrough in intelligent manufacturing. The key is to improve and enhance production technology and product quality. This is what companies need to concentrate their efforts to do well. For this reason, Double Coin has introduced foreign technical experts. At present, Double Coin is working with light rail to develop rubber tires for light rail instead of metal wheels.
Chu Zhengyu said, currently, Double Coin had been out of the predicament through adjustment; it had multiple production bases at home and abroad, established sales companies and representative offices in many countries and regions around the world, and actively implemented lean production and promoted intelligent manufacturing, thus it would surely regain its glory in future development.
