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Clarke Vietnam Hai Duong Plant / 'Vietnam's First Forklift Plant' Operates as Global Supply Base

'Vietnam's first forklift factory' operates as global supply base

Investment continues with production target of 15,000 units per year by 2026

2024/04

Clark will increase the capacity of its Vietnam plant to 15,000 units by 2026 and strengthen its presence in Vietnam and other Asian forklift markets. We will also increase production of key functional parts. To accomplish this, the company will continue to invest in facilities and equipment.

Clark opened its first forklift production plant in Vietnam in 2018. The first plant was inaugurated in 2018, followed by the second and third plants in 2020, totaling 25,000 square meters. Factory 1 assembles forklifts, Factory 2 produces major work equipment and parts, and Factory 3 produces major pipes. In addition, there is a research building and a test building, the latter of which is equipped to conduct 90-meter driving tests.

With the establishment of the Vietnam plant, Clark now has a network of five production plants in Korea, China, the United States, and Brazil.

The Vietnam plant is a global supply base and is responsible for export volumes to North America, including the U.S., and Asian markets, including Vietnam.

The Korea plant produces forklifts for the Korean domestic market and exports to Europe, the China plant produces forklifts for the Chinese domestic market and exports to Latin America, the U.S. plant produces forklifts for the U.S. market, and the Brazil plant produces forklifts for the Brazilian market. The company is also considering a European plant to produce forklifts for the European market in the future.

Clark originally established Vietnam as a global supply base to increase price competitiveness and respond to changing market demands.

When the U.S.-China trade war in 2019 resulted in a 25 percent tariff on Chinese-made forklifts in the U.S. market, the company shifted all of its U.S. exports to the Vietnam plant, which was just starting production, and quickly became a global supply base.

"With the tariffs on Chinese-made forklifts raising the price of U.S. imports for all of our competitors, Clark naturally turned to Vietnam, where we were prepared," said Mr. Nguyen Thanh Dinh, General Director of Clark Vietnam. "With the tariffs on Chinese-made products still in place, we are able to ramp up production of Clark exports in Vietnam to manage global production risk and increase our price competitiveness."

Hai Duong, where the Clarke factory is located, has a favorable geographic location for import and export, as it is near the major port of Hai Phong. In addition, the road immediately adjacent to the factory is the main highway connecting Hai Phong to the capital city of Hanoi, and much of the logistics, including trucking, passes through this highway. As a result, there are several industrial parks along the highway, so it is advantageous to promote the factory through signage and find potential customers.

Vietnamese factories export most of their production to the United States

Engine forklifts account for 80 to 90 percent of forklifts produced in Vietnam. Most of the production is exported to the United States, as engine forklifts are mostly imported from Asian factories.

The Hai Duong plant's flagship forklift is the S series, a global model, which produces small forklifts ranging from 2.5 to 3.5 tons and medium forklifts ranging from 4 to 5 tons. While each export region has a defined role in the global production network, some models, such as the S20, are produced in different regions depending on the supply and demand of parts or country-specific regulations. The Changwon plant, for example, produces forklifts with Tourqueye export engines, as the Korean and Tourqueye emission standards are the same.

"We actively communicate with our global network centered at the headquarters to share parts supply and production plans," said Clarke.

Forklift production is centered at Plant 3, where overheads and frames are made, then transported to Plant 2, where they are combined with masts made at Plant 1 and put on the assembly line. The mast production capacity of Plant 2 is currently 7,500 units per year, the highest of any global production plant.

The main assembly line at Plant 1 is a conveyor production line for forklifts up to 3.5 tons, while medium-sized forklifts of 4 to 5 tons are produced in batches. All parts required for equipment specifications are collected in advance according to production instructions and put into the assembly line. The current production capacity of the first factory is 7,500 units per year, and it is being expanded to 15,000 units by 2026.

After production is completed, inspections such as speed test, unevenness test, load test, pit inspection, manufacturing quality and specification inspection are conducted.

The speed test creates driving conditions on a roller installed on the floor and checks the engine and power unit driving performance while passing over it, and also checks for errors or abnormal sounds that occur while driving the equipment.

The unevenness test checks for loose bolts or interference between parts while the forklift moves forward or backward over the unevenness. The load test checks the performance and leakage of the working device and hydraulics while operating the mast up and down after loading the forks.

In addition, the bottom of the pit is inspected to check forklift welds, the assembly of each part, and oil leakage at the bottom, and finally, the overall manufacturing quality is checked through product quality and specification inspection.

Once the quality inspection is completed, the forklifts are stored in the parts and finished vehicle storage warehouse, and then moved to the shipping yard according to the shipping plan, where they are marked with Clarke and customer logos and inspected for appearance.

Customizing forklifts to fit customer logistics is a 'strength'

As the first large-scale production facility of its kind in Vietnam, Clarke Hai Duong is also focused on expanding the domestic market.

Currently, the most widely used forklifts in Vietnam are second-hand. It's not uncommon to see forklifts that are 10 to 20 years old and are still being used without proper repair.

In order to expand the base of customers and increase awareness of the Clark brand, Clark has provided after-sales service regardless of the brand, such as Toyota, since the beginning. As the response from users who have not received proper after-sales service has gradually increased, the after-sales service team has been expanded from one to two teams. This has strengthened Clarke's customer trust, which leads to a virtuous cycle of new car purchases.

In addition, one of Clark's strengths is its customizability, which means it can add or remove features to suit the customer's logistics environment.

"In Vietnam, logistics sites often have different options than those in Korea," said Mr. Clarke's general manager of the Vietnam factory, "and since the production plant is local, we can respond to demand immediately."

Improving quality by training the Vietnamese workforce

One of the most challenging aspects of running a factory in Vietnam is labor management. Workers in Vietnam have a different mindset toward work than in Korea, and in the beginning, there were conflicts because workers were not familiar with forklift assembly or production. In response, Clark focused on understanding the local culture and improving workers' skills.

After the pandemic, the company sent middle managers to Korea for technical training to strengthen their perspective on the entire process, line production, and quality control.

"When Korean workers find something different in the assembly process, they actively notify us to prevent defects early, while Vietnamese workers tend to passively focus on their work," said a Clark local official. "We continue to improve production quality in many ways, such as continuing to train on-site workers' manuals, and middle managers who have learned the differences between Korean and Vietnamese factories through technical training actively inform on-site workers about improvements."

From this year, the company plans to further strengthen technical training by sending field operators to Korea for technical training.

Increased focus on Vietnam and Asian forklift markets

Clark's strategy is to strengthen its presence in the forklift market in Vietnam and Asia, with the long-term goal of expanding production for Asia from the Vietnam plant.

"In Vietnam, the supply of trucks is about three times that of Korea, and the number of forklifts needed to load cargo onto trucks should be three times that of Korea, but it is currently only about one-third," said Clarke's Vietnam plant general manager. "This is similar to the size of the Korean market about 30 years ago, and the forklift market is expected to grow faster than Korea's development rate, so the demand potential for forklifts is very high."

Asia is also comprised of several countries with high market potential, including Thailand, Malaysia, and Indonesia. Thailand, in particular, has a large number of Korean companies, and the rapid growth of e-commerce is expected to increase the demand for forklifts as logistics needs are very high.

In addition, Clark expects the demand for electric forklifts in Vietnam to continue to grow. Currently, engine forklifts are mainly used in logistics centers in Vietnam, resulting in poor working conditions due to fumes.

However, the number of logistics environments using electric forklifts is gradually increasing, especially Korean companies, and the price of lithium batteries from China is gradually decreasing, so electric forklifts are expected to spread.