Fifty Years of Federal

For most, January marks the beginning of a new year, but for Federal 2005 represents the end of its golden jubilee. During 2004 the company celebrated 50 years of a business that has grown significantly since its earliest days and announced that it would expand its total production capacity to 8 million units in 2005.

In recent times, a number of companies have investigated the possibility of manufacturing in China. Federal too has sought to take advantage of this emerging market. Federal’s explanation for moving to the people’s republic is because of Taiwan’s “high labour costs.” Now, although work at the Federal Taiwan plant continues, the company also produces in China. According to the company, “the potential of the China plant is massive with capacity growing from 1.5 million units at the end 2003 to 2.5 million in 2004. “This figure will soar to 3.5 million by 2005 and the trend will continue until Federal’s total capacity, including its Taiwan plant, reaches 8 million units. The major expansion will take place in the China plant, which provides huge opportunities for any potential OE business in China,” says Jamie Ma.
With the growth in automobile manufacture in China and with most manufacturers intent on securing a manufacturing base, the potential of emergent companies such as Shanghai Automotive Industry Corp and China Brilliance have attracted Federal.

Commenting on the Chinese market Mr Ma said: “High-tech tyres such as the Hero Milanza UHP will definitely be a tyre that should generate great market demand. We intend to market the tyre, not simply by emphasising its price competitiveness, but rather by its trendy look and remarkable performance.”

One advantage Federal believes it has over other manufacturers is its delivery times. “Unlike many large-scale manufacturers that have delivery lead times of 90 days from order, Federal’s delivery time is typically one month. Although the unprecedented huge order volumes received earlier this year affected the delivery time, urgent measures have been adopted to cope with this increased demand and our customers will confirm that the delivery service is returning to previous levels,” explained DaWu Chen, senior manager at Federal’s global business department.

Now, half a century down the line from its beginnings, Federal wants to expand its influence around the world. “We intend to bring this same reputation for ultra high performance tyres to Europe and particularly for markets that have a significant demand for UHP tyres. The extended territory and market size of the EU provides a considerable growth potential and Federal plan to explore every new opportunity in this area,” said company president, Jamie Ma.

Federal won’t be drawn on where its marketing focus is, instead its states that its concentrates “on a general basis worldwide.” DaWu Chen suggests that other expansion into other European markets may follow a similar pattern to the how things have worked in the UK. “The kind of partnership seen in the UK, where an independent wholesaler has taken a proactive lead with aggressive marketing and promotion of the brand and the targeting of key customer groups, is fundamental to future market expansion in other European markets.”