The Expanding Empire of Fuwa KHitch

Fuwa’s sprawling industrial park in Taishan, China, includes VIP accommodation and a floating restaurant serving home grown organic produce.

 

The coming together of two companies always poses an element of risk. Yet when a Chinese manufacturer and an engineering expert from Perth united to form Fuwa KHitch (FKH), the fusion produced one of the strongest entities in the transport component business. And as PATRICK O’BRIEN discovered, while China and Australia are becoming increasingly linked economically, at FKH the bonds start with the people at the top.

A perfect match

Mr Zhiqiang Wu is what you might call a self-made man.

The owner of Chinese axle and suspension giant Fuwa took his first steps in the transport industry by starting his own container building business in the Chinese manufacturing hub of Shunde. To transport his containers he simply built his own skels but soon reached the conclusion – somewhat amusingly – that the Chinese running gear available at the time just wasn’t up to his standards.

After a short period importing a variety of gear, Wu was once again forced to concede that if he wanted something done properly, he’d have to do it himself. So not content with building his own containers and his own skels to carry them, and no longer wanting to rely on someone else’s product, Wu entered the axle market himself. In 1997, the Guangdong Fuwa Group was born.

Mario Camenzuli seems to have been cut from the same cloth. Some years earlier in Perth, FKH’s current executive director had been taking his own first steps in the transport industry by starting an engineering business manufacturing fifth wheels and kingpins in a shed in his parents’ backyard. The year was 1989 and the company was Camo Engineering. Mario had previously honed his engineering skills in Western Australia’s mines, spending a few years working on gigantic draglines and face shovels at mine sites, before taking a spell as a ground fitter in the RAAF maintaining hook systems on runways for F-18s and runway nets for Mirages.

Yet, according to Mario, trucking was always in his blood.

“I’ve always been involved in transport,” he says. “My father had a spray painting business in the early ‘70s and he used to paint all the new trucks that were sold in Perth, the early Volvos and Scanias that came to Western Australia. He was also very good friends with the people at Mack, which was his biggest customer. A lot of the people I met in the industry over the years I met through my father.”

In 1992, Mario made a decision that would not only shape his own life but also influence the future direction of the transport component industry. Camo Engineering purchased the intellectual property of a fifth wheel design from Kewdale Body Building in Perth and within two years he had introduced an automated production system that increased output tenfold, as well as expanded the range with six new models. Mario ended up selling the engineering business to Geographe Engineering in 1997 but kept the intellectual rights to the fifth wheel. Then with the directors of Geographe he formed KHitch Australia (the ‘K’ stands for Kewdale) and set his eyes on expansion.

“I’m a big fan of Australian engineering and never really wanted to sell Camo Engineering,” Mario admits. “But the reality was I had entered a highly competitive global market which left me with no other option. Basically I’d had Western Australia to myself until the big players woke up to how much market we had. And that, of course, was when they acted.

“We had offers to buy us out, there was product dumping, all sorts of actions, which made me realise that if I didn’t find an alternative I wouldn’t survive. It was as simple as that.”

That alternative broke cover at a trade show in Indonesia when Mario was introduced to Mr Wu. With Fuwa looking to make its own running gear and KHitch needing to expand, it seemed a logical move to link the two together to form Fuwa KHitch or FKH.

“One of the companies that offered to buy me out was a fifth wheel manufacturer that had actually just bought an axle company and a suspension company in the USA,” Mario adds. “They planned to introduce a package deal to our market as there was no way KHitch could have survived as just a fifth wheel manufacturer.

“We also understood the need to have a full product package and Fuwa just felt like a better fit. In essence, we had to recreate KHitch, we had to enable the situation where we could go to our customers and offer them more, offer them an axle and suspension, a turntable, and a landing leg as well.”

The timing, as Mario points out, was perfect. KHitch hooked up with Fuwa just as the Chinese economy was hitting full steam. And for its part, Fuwa invested in Australia right when the mining boom – so strongly linked to the Chinese economy of course – was hitting its straps. The move was also a smart one because the Western Australia market was much smaller than that of the eastern states, allowing the new FKH company time to settle and find its feet before heading east.

Mario himself led the charge across the Nullarbor, packing his suitcases and setting up FKH’s premises in the Melbourne suburb of Derrimut. By 2002 though, he felt the need for a change and left not only the transport industry but Australia itself, returning to his parents’ birthplace of Malta. Perhaps a leopard never completely changes its spots though as Mario certainly stuck to type by keeping his hands busy, doing a bit of sailing and property renovating. Then in 2008, he answered the phone to find Australia calling.

“I actually never thought I’d come back to the company, not in a million years,” Mario exclaims.

“I thought I’d achieved everything I’d wanted to – started it, built it up, and left it on the right track and in great hands. During those six years I was away Andre Berrichon and Chris Barrett (now national sales manager) and the rest of the team got some fantastic results. The turnover increased dramatically and I didn’t think I could do any better.

“But in that time Fuwa in China started developing truck drive axles and that’s what brought me back. My role now is to get the drive axles established in the Australian market. The first thing I did was double the size of the Derrimut premises, and then hired the best engineers and prepared FKH for the next stage of its development.”

FKH is confident of succeeding in the drive axle market due to two critical factors: Knowledge and size. According to Mario, Fuwa’s Chinese factories are set up with the best equipment in the world and some of the best talent in the game.

“Our product support manager Markus Sidler, who has many years experience in heavy truck engineering, recently returned from China and he can’t believe what he saw over there,” Mario enthuses. “We know what needs to be done with drive axles and that’s what we’re doing in a big way.

“We already have some major truck manufacturers ready and waiting for our product. They like it when they see state-of-the-art equipment with the right people and the know-how. There’s a lot of experience and knowledge over in China – the people I like to refer to as our ‘grey haired men’.

Twin attack

Fuwa’s twin attack in China comes in the form of its Shunde plant and the new – and by now almost infamous – industrial park in Taishan.

Both the Shunde and Taishan plants have facilities to produce Fuwa’s renowned one-piece trailer axle. This process involves a length of square or round tube being heated, swaged, pushed and rolled into a one-piece beam with significant strength and weight savings compared to a conventional three-piece welded axle.

The figures pertaining to the Shunde plant alone can seem the stuff of fiction. A phalanx of almost 3000 employees operating a throng of computerised machinery with the capacity to produce a mind boggling 1,800,000 trailer axles, 100,000 fifth wheels and 350,000 suspension sets annually. It’s like the game that left your head spinning at school: Think of a number, double it, multiply it by infinity … plus one!

Yet at close to one million square metres, the Taishan facility makes Shunde’s 180,000 square metres seem positively puny in comparison. There are 12 main buildings, each measuring around 800 metres long, where the manufacture of trailer and truck axles in addition to brake linings occurs. A cast iron machine shop for producing hubs and drums along with a variety of other product manufacturing processes are also housed here.

Also on the premises are apartments and eight luxury villas built for senior staff. And for VIP visitors to the factory there is grand hotel-style accommodation which includes a swimming pool, spa and a floating restaurant serving organic produce grown onsite.

Importantly, one of the 12 main buildings caters for a specific relationship between Fuwa and braking giant Wabco. The first product coming out of the factory is trailer axle disc calliper ‘pan 22’ for export to Europe and Australia, with ‘pan 19’ closely following. It’s expected that in the near future all Wabco trailer axle callipers for Australia, New Zealand and Asia will be manufactured at this facility.

“Presently around 50 percent of FKH’s work in Australia involves the assembly of disc brake trailer axles using bare beams arriving from China,” Mario says. “While this currently makes good business sense, the reality is before long the complete axle will be imported to Australia which will make us more competitive.

“We also have a great working relationship with (trailer suspension specialist) Weweler. We work together promoting air suspended axles to compete with the European offerings. This world class product is opening a lot of doors for both companies as the package is priced very competitively.”

Fuwa has also purchased a cast iron foundry about an hour’s drive from Taishan which is presently being upgraded with modern facilities to produce high volumes of cast hubs and drums for Fuwa axles. The site includes additional land for future development into what the company envisions will be a duplication of the Taishan plant.

“We regularly take customers to inspect our factories in China to see for themselves the quality of the product and the sheer size of the facilities,” Mario adds. “In China, you will find the best in the world and you will also find the worst – we like to say that Fuwa is the best!”

Bringing it home

A recurring theme in the FKH story is the fascinating way in which events in China and Western Australia mirror each other. So, just as in China, another place where the company is trying to stay ahead of a hungry pack is on the original home turf of KHitch. With the two-speed economy seeing a slight slowdown in general freight in eastern states more than made up for by a booming mining market in the west, competition in sandgroper territory is getting fierce.

Obviously, the mining companies – and their shareholders both here and abroad – are keen to move that precious dirt to the ports while prices are at record highs. But with satellite mines developing around the major sites swamping rail capacity, the miners are forced to hire contractors with huge roadtrains and other specialised vehicles to do the work. It is here that FKH axles and suspensions are being used on combinations grossing up to 300 tonnes.

FKH national sales manager Chris Barrett, who’s spent his entire working life in transport, has never seen so many companies heading west to try and get a slice of the rich action. Accordingly, he says the recent addition of 1800 square metres to the company’s Perth headquarters was an acknowledgement of the need to make a greater level of stock readily available to customers.

“Previously, all manufactured product came out of the Melbourne facility,” Chris explains. “However, to better service our existing customers and win more business in Western Australia our own production facility and workshop were flagged as critical in meeting these objectives. Our ongoing plans for what really is one of the key growth sectors of our market include making further additions to our production and sales capabilities. This means increases in both manufacturing equipment and personnel in the coming months.”

“The beauty of our connection with Fuwa is that we have the capacity to meet all of these challenges,” Mario adds. “Many companies lose their flexibility as they get larger but developing a new product doesn’t present the same problems for us. I’m very close to boss Wu and speak to him regularly. If he thinks it’s a good idea he says yes and the product will be developed. We react very quickly.

“What will happen with FKH now is that we’ll split the business into a truck division – including axles, suspensions and fifth wheels – and a trailer division. It’s a crucial step, equally as important as our move to diversify by joining with Fuwa in the first place. FKH doesn’t have a defining product, we focus on everything.”

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