Knock-down kit

Knock-down kit


A knock-down kit is a kit containing the parts
needed to assemble a product. The parts are typically manufactured in one country or region,
then exported to another country or region for final assembly. Variant names include
knockdown kit, knocked-down kit, or simply knockdown, and the abbreviated KD or CKD.
A common form of knock-down is a completely knock-down, which is a complete kit needed
to assemble a product. It is also a method of supplying parts to a market, particularly
in shipping to foreign nations, and serves as a way of counting or pricing. CKD is a
common practice within the automotive industry, the bus and heavy truck industry, and the
rail vehicle industry, as well as electronics, furniture, and in other products. Businesses
sell knocked down kits to their foreign affiliates or licensees for various reasons, including
to avoid import taxes, to receive tax preferences for providing local manufacturing jobs, or
even to be considered as a bidder at all. An incompletely disassembled kit is known
as SKD for semi-knocked-down. Both types of KDs, complete and incomplete, are collectively
referred to within the auto industry as KDX, and cars assembled in the country of origin
and exported whole to the destination market are known as BUX.
Technically, the terms “knockdown” or “kits of parts” are both misnomers, because the
knockdowns were never built up in the first place, and the shipments of parts are often
not in the form of kits, but rather bulk-packed by type of part into shipping containers.
The degree of “knockdown” depends on the desires and technical abilities of the receiving organization
or on government import regulations. Developing nations may pursue trade and economic policies
that call for import substitution or local content regulations. Companies with CKD operations
help the country substitute the finished products it imports with locally assembled substitutes.
Knockdown kit assembling plants are less expensive to establish and maintain, because they do
not need modern robotic equipment, and the workforce is usually much less expensive in
comparison to the home country. They may also be effective for low-volume production. The
CKD concept allows firms in developing markets to gain expertise in a particular industry.
At the same time, the CKD kit exporting company gains new markets that would otherwise be
closed. Automotive
In the automotive industry, the most basic form of a vehicle in KD kit lacks the wheels,
internal combustion engine, transmission, and battery – which are either supplied as
parts for assembly, or obtained from third parties; all of the interiors are already
installed at the originating factory. The term SKD for semi-knocked-down refers to a
kit with complete, welded car body, usually coated or already painted. To gain some extra
tax preferences, the manufacturer needs to further localise the car, i.e. increase the
share of parts produced by local manufacturers, such as tires, wheels, seats, headlights,
windscreens and glass, batteries, interior plastics, etc.; down to the engine and transmission.
At some point, even the steel body could be pressed, welded, and painted locally; this
effectively makes KD assembly only a couple of steps behind the full-scale production.
By the time that Henry Ford co-wrote his 1922 memoir My Life and Work, the Ford Motor Company
was already shipping car parts from its Michigan plants for final assembly in the regions of
the United States or foreign countries where the cars would be sold.
During World War II, a great number of U.S. and Canadian-built vehicles – most notably
light and heavy trucks like Willys MB/Ford GPW/GPA, GMC-353/CCKW and vehicles from the
CMP family – were crated and shipped overseas in KD form – in various degrees of completedness
– to Allied countries, in order to sustain their war effort. Assembly lines were preferably
set up in local automotive factories where appropriate tooling and equipment could be
easily found, but in case of need other types of buildings could be used, especially in
on-the-field situations, and on occasion even open-air rebuilding camps were set up, managed
by military personnel. Due to male mobilization, sometimes women workforce was employed. CKD
military vehicles could be stored for shipment in one vehicle-per-crate form or as several
vehicles divided in 2 or more crates. Vehicles shipped to certain countries could be lacking
some items like cabs, beds or tires, that were built and provided locally.
Mahindra & Mahindra Limited in India began its business in 1947 with assembling CKD Jeeps.
Mahindra expanded their operations to include domestic manufacture of Jeep vehicles with
a high level of local content under license from Kaiser Jeep Corporation and later American
Motors. In the 1950s and 60s Lotus Cars sold its Lotus
Seven car in CKD form to evade the UK Purchase tax that applied to sales of fully assembled
vehicles. By 1959, and with the introduction of the
Mini, the products of BMC were still either imported or assembled from CKD kits in several
international markets. In 1961, Renault began negotiations for a
first partnership agreement with AMC for assembly of Rambler automobiles in Europe. Beginning
in 1962, and continuing through 1967, AMC also sold CKD kits of its passenger cars to
Renault. They were assembled in Renault’s factory in Haren, Belgium and sold through
its dealers in Algeria, Austria, Belgium, France, the Netherlands, and Luxembourg. The
deal allowed AMC to sell its cars in new markets without having to make a major Foreign Direct
Investment. The arrangement was good for the French automaker because its product range
was lacking large cars and it needed to offer an “executive” model in its European markets.
The situation changed by 1977. It was now AMC that sought outside support for a new
car in the U.S. sub-compact market segment, which led to the first of many agreements
with Renault. Volvo’s Halifax Assembly Plant completed vehicles
in CKD form from Sweden for North American consumers. Halifax Assembly closed in December
1998. In 1968, the independent German automotive
firm, Karmann, began assembly of CKD kits of AMC’s newly introduced Javelin for distribution
in Europe. American Motors also provided right hand drive versions of their automobiles to
markets such as Australia, New Zealand, and South Africa. The components were shipped
in containers to Australia from AMC’s plants in Kenosha, Wisconsin, or Brampton, Ontario.
Assembly of Rambler and AMC vehicles in Australia was performed by Australian Motor Industries
in Port Melbourne, Victoria. Local content requirements were met by using Australian
suppliers for the interiors as well as for lights, heaters, and other components. Various
Rambler models were assembled in New Zealand from the early 1960s until 1971 by Campbell
Motors in Thames, which had also built Toyota, Datsun, Hino, Renault, and Peugeot cars.
New Zealand had developed a car assembly industry as a means of import substitution and providing
local employment, despite the small size of the local market. Following economic reforms
in the 1980s, including the lowering of import tariffs, the ability to import Australian-built
vehicles duty-free under the CER agreement, many car companies ended assembly in New Zealand
and switched to importing completely built up vehicles from Japan, Australia, or Europe.
More significantly, the easing of import restrictions led to a large number of Japanese used imports,
which were far cheaper than locally assembled used cars, and continue to outnumber so-called
‘NZ New’ vehicles. The last companies to assemble CKD kits in New Zealand were Toyota, Nissan,
Mitsubishi, and Honda, which closed their plants in 1998, when the government announced
plans to abolish import tariffs on cars. More recent examples include Ukraine, which
has almost prohibitive import taxes on finished cars. AutoZAZ assembles CKD kits of some Lada,
Opel, Mercedes-Benz, and Daewoo cars. It went as far as adopting a version of Daewoo Lanos
for full-scale production and equipping it with a domestic engine. The German automotive
giant – Volkswagen Group also produces SKDs in the Ukraine at its Solomonovo plant, producing
cars under its Škoda and Volkswagen Passenger Cars marques.
In Russia, the most known KD assembling facilities are owned by Avtotor, which produces Hummer
H2, BMW 3-series and BMW 5-series in Kaliningrad, and Renault Logan in Moscow using facilities
that once belonged to AZLK. In Kaluga, Volkswagen Group is currently constructing a new plant,
which when completed, is expected to produce an annual output of 150,000 units.
Daimler AG has a CKD assembly plant in South Carolina that re-assembles Mercedes-Benz Sprinter
vans for sale in the US and Canada at Mercedes-Benz and Freightliner dealers, along with Dodge
dealers prior to Fiat Group’s takeover of Chrysler Group LLC — essentially to circumvent
the 25% tariff on imported light trucks known as the “Chicken Tax”. The Sprinter was eventually
replaced in the Dodge/Ram lineup with the similar Ram ProMaster, a rebadged Fiat Ducato.
Unlike the CKD Dodge Sprinter, the ProMaster is fully imported to the U.S. from a Chrysler
plant in Mexico, which is part of the North American Free Trade Agreement and not subject
to the Chicken Tax. In 2009, Mahindra & Mahindra Limited announced
that it would export pickup trucks powered by diesel engines from India to the US in
knockdown kit form, again to circumvent the chicken tax. Mahindra planned to export CKDs
to the US as complete vehicles that will be assembled in the US from kits of parts shipped
in crates. However, Mahindra’s US CKD and export plans never materialized and were subject
to several lawsuits. Buses
Motor Coach Industries opened its Pembina, North Dakota assembly plant in 1963, as part
of an expansion into the U.S. market. Unfinished KD coach bodies are shipped from Winnipeg,
Manitoba by flatbed trailer and completed, outfitted and delivered at Pembina. This practice
simplifies U.S. Customs and meet the “Buy America Act” provisions and 49 CFR Part 661)
for public agencies purchasing new equipment with federal funds.
Rail The practice of selling “knocked down” railcars,
called by that name, pre-dates the 20th century, as evidenced by an advertisement by J. G.
Brill and Company in the Street Railway Journal from 1898.
During the late 1930s, 1940s and early 50s, the St. Louis Car Company shipped PCC streetcar
body shells and trucks north for assembly by Canadian Car & Foundry. The Toronto Transit
Commission PCC fleet was purchased and delivered in this method.
Bombardier ships incomplete cars from its plant at La Pocatière, Quebec, to Plattsburgh,
New York, and Barre, Vermont, facilities for final assembly. These are to meet “Buy America
Act” provisions for U.S. public transit agencies and tariff rules. Since 2009 the Plattsburgh
assembly plant has full stainless steel welding and fabrication capability, allowing for cars
to be fully assembled and completed on site. Kawasaki Heavy Industries has an assembly
plant in Yonkers, New York, that completes final assembly of cars using bodies shipped
from Kobe, Japan. KHI also has a car body plant in Lincoln, Nebraska, full cars are
built there and can be shipped to Yonkers for completion.
Alstom’s Hornell, New York, assembly plant produces final completed cars using stainless
body assemblies shipped from the Lapa plant in Sao Paulo, Brazil. The same production
method was used by Morrison Knudsen when it built new passenger cars at the Hornell shops
in the 1990s. From their first U.S. order from the South
Shore Line in 1982 until the opening of a full body manufacturing and assembly line
in Rochelle, Illinois thirty years later, Nippon Sharyo sent commuter train bodies from
Japan to US finishers, including an American unit of Sumitomo.
The London Underground 1995 and 1996 Stock fleets have aluminum bodies built by Alstom
in Barcelona with assembly completed at the Metro-Cammell works in Washwood Heath, Birmingham.
Aircraft Unserviceable military aircraft are also sold
as “knockdowns” after they have ended their service life, packaging them with serviceable
aircraft. This allows them to be used for cannibalization of spare parts.
The European aircraft manufacturer Airbus uses knock-down kits to assemble A320 family
aircraft outside Europe. The Airbus A320 final assembly line in Tianjin, China assembles
fuselage, wing, and tail sections made in Europe with avionics and engines made in Europe
or the United States and locally sourced components for interiors. Airbus plans on opening a similar
A320 final assembly line in the United States in 2015, located in Mobile, Alabama; again
using European-made fuselages, wings, and tail sections. However, the Mobile final assembly
line will use more locally sourced components than the Tianjin line; engines, interior components,
and avionics will be sourced mainly from American suppliers. Both the Airbus Tianjin and Mobile
plants receive or will receive their fuselages, wings, and tail sections from Europe via ocean
freight using specially designed ships, as the plants are located in port cities.
Housing A 1908 advertisement in Popular Mechanics
attests that knock-down kits for houses were on the market by the early 20th century, if
not before. References

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