Knock-down kit

PlymouthCKD crate being unloaded in a Swedish harbor

Aknock-down kit(alsoknockdown kit,knocked-down kit,or simplyknockdownorKD) is a collection of parts required to assemble a product. The parts are typically manufactured in one country or region, and thenexportedto another country or region for final assembly.

Definitions

A common form of knock-down is acomplete knock-down(CKD), which is a kit of entirely unassembled parts of 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 in theautomotive,bus,heavytruck,andrail vehicleindustries, as well as electronics, furniture and other products. Businesses sell knocked-down kits to their foreign affiliates or licensees for various reasons, including the avoidance of import taxes, to receive tax preferences for providing local manufacturing jobs, or even to be considered as a bidder at all (for example, inpublic transportprojects with "buy national" rules).

Asemi-knocked-down kit(SKD) orincompletely disassembled kit(although it has never been assembled) is a kit of the partially assembled parts of a product. Both types of KDs, complete and incomplete, are collectively referred to within the auto industry asknocked-down export(KDX), and cars assembled in the country of origin and exported whole to the destination market are known asbuilt-up export(BUX).

Technically, the terms "knock-down", "incompletely disassembled kit", and "kits of parts" are allmisnomersbecause the knock-downs were never built up in the first place. The parts shipments are often not in the form of kits,but rather bulk-packed by type of part intoshipping containers.The degree of "knock-down" depends on the desires and technical abilities of the receiving organization or government import regulations.Developing nations may pursue trade and economic policies that call forimport substitutionor local content regulations. Companies with CKD operations help the country substitute the finished products it imports with locally assembled substitutes.

Knock-down kit assembly plants are less expensive to establish and maintain because they do not need modern robotic equipment, and the workforce may be less costly than in the country of origin. The plants 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

CKD kit as delivered toAB Nyköpings Automobilfabrikfor assembly, probably a Plymouth

In the automotive industry, the most basic form of a vehicle in the KD kit lacks the wheels,internal combustion engine,transmission,andbattery.They are either supplied aspartsfor assembly (a "complete" kit) or obtained from third parties (an "incomplete" kit); all of the interiors are already installed at the originating factory. The term SKD for semi-knocked-down refers to a kit with a complete, welded car body, usually coated or already painted. To gain extra tax preferences, the manufacturer needs to "localize" the car further, i.e., increase the share of parts produced by local manufacturers, such as tires, wheels, seats, headlights, windscreens and glass, batteries, interior plastics, etc., even down to the engine and transmission. At some point, the steel body could be pressed, welded, and painted locally, effectively making KD assembly only a few steps away from full-scale production.

By the timeHenry Fordco-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.

DuringWorld War II,a significant number of US- and Canadian-built vehicles, most notably light and heavy trucks likeWillys MB/Ford GPW/GPA, GMC-353/CCKW,and vehicles from theCMP family,were crated and shipped overseas in KD form, in various degrees of completeness, to Allied countries 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, where needed, 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. Owing to male mobilization, sometimes a female workforce was employed. CKD military vehicles could be stored for shipment in one-vehicle-per-crate form (or SUP, Single Unit Pack), or as several vehicles (usually two to three) divided in two or more crates. Vehicles shipped to certain countries could be lacking some items, such as cabs, beds, or tires, that were built and provided locally.

Mahindra & Mahindra LimitedinIndiabegan its business in 1947 with assembling CKDJeeps.Mahindra expanded its operations to include domestic manufacture of Jeep vehicles with a high level of local contentunder licensefromKaiser Jeep Corporationand laterAmerican Motors Corporation(AMC).

In the 1950s and 1960s,Lotus Carssold itsLotus Sevencar in CKD form to avoid the UKpurchase taxthat applied to sales of fully assembled vehicles.

By 1959, and with the introduction of theMini,British Motor Corporation(BMC) products were still either imported or assembled from CKD kits in several international markets.

In 1961,Renaultbegan negotiations for a first partnership agreement with AMC to assembleRamblerautomobiles inEurope.Beginning in 1962, and continuing until 1967, AMC also sold CKD kits of its passenger cars to Renault. They were assembled in Renault's factory inHaren, Belgium,and sold through its dealers inAlgeria,Austria,Belgium,France,theNetherlands,andLuxembourg.The deal allowed AMC to sell its cars in new markets without significantforeign direct investment(FDI). The arrangement benefited the French automaker because its product range lacked large-sized cars, and it needed to offer an "executive" model for its European markets.The situation changed by 1977. By this time, AMC sought outside support for a new car in thesub-compactmarket segment, which led to the first of many agreements with Renault.

Volvo'sHalifax Assembly Plant,which opened in 1963, completed vehicles in CKD form from Sweden for North American consumers. Halifax Assembly closed in December 1998.

In 1967,Rootes GroupUK began exporting CKDHillman Huntersto Iran where they were sold as thePaykan(meaning "arrow" inPersian). Bought by Chrysler in 1967 and then part of the sale to thePSA Groupby theChrysler Corporationof its European operations in late 1978, the Rootes business basis in Iran became the primer for the very significant PSA Peugeot Citroën business in Iran involving engine and CKD deliveries, particularly from the 405, introduced in 1990 and facelifted as the Pars in 1999 and 206 introduced in 2001.In 2004, Peugeot's partnerIran Khodroproduced 281'000 Peugeot vehicles, securing a 36% market share.

In 1967 as well,Peugeotintroduced CKD-based production of a light pick-up vehicle based on thePeugeot 403in Peugeot's Berazategui factory (inBuenos Aires) under the name Peugeot 4TB.In 1973, this model was replaced by the404 pick-upand later (1990) by the504 pick-up.The 404 and 504 were massively marketed worldwide through local CKD assembly shops: the 404 was assembled, besides France and Argentina, inAustralia,Belgium, Canada (at the SOMA plant shared with Renault), Chile, Ireland, Kenya, Madagascar, Malaysia,New Zealand,Nigeria, Portugal, Perú, Rhodesia, South Africa, and Uruguay;the 504, mainly in Argentina, Egypt, Nigeria, Kenya, South-Africa, Australia, and China by theGuangzhou Peugeot Automobile Companywhich developed a specific crew cab version.

In 1968, the independent German automotive firm,Karmann,began assembly of CKD kits of AMC's newly introducedJavelinfor distribution in Europe. American Motors also providedright-hand driveversions of their automobiles to markets such as Australia, New Zealand, andSouth Africa.The components were shipped in containers to Australia from AMC's plants inKenosha, Wisconsin,orBrampton, Ontario.Assembly of Rambler and AMC vehicles in Australia was done byAustralian Motor Industries(AMI) inPort Melbourne, Victoria.Local content requirements were met by using Australian suppliers for the interiors (seats, carpeting, etc.) 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 inThames(laterToyota New Zealand), which had also builtToyota,Datsun (later known as Nissan),Hino, Renault, and Peugeot cars.

New Zealand had developed a car assembly industryas a means ofimport substitutionand providing local employment, despite the small size of the local market. Following economic reforms in the 1980s, including the lowering of import tariffs, and the ability to import Australian-built vehicles duty-free under theCERagreement, many car companies ended assembly in New Zealand. They switched to importing completely built-up vehicles fromJapan,Australia, or Europe. More significantly, the easing of import restrictions led to manyused imports,because they were less expensive than locally assembled used cars, and outsold the 'NZ New' vehicles. The last companies to construct CKD kits in New Zealand were Toyota, Nissan,Mitsubishi,andHonda,which closed their plants in 1998 when the government announced plans to abolish import tariffs on cars.

Other examples includeUkraine,which has almost prohibitive import taxes on finished cars.AutoZAZassembles CKD kits of someLada,Opel,Mercedes-Benz,andDaewoocars.It went as far as adopting a version ofDaewoo Lanosfor full-scale production and equipping it with a domestic engine. The GermanautomotivegiantVolkswagen Groupalso produces SKDs in Ukraine at itsSolomonovoplant, producing cars under itsŠkodaandVolkswagen Passenger Carsmarques.

InRussia,KD assembling facilities are owned byAvtotor,which producedHummer H2,BMW 3 Series,andBMW 5 SeriesinKaliningrad,andRenault LoganinMoscowusing facilities that once belonged toAZLK.InKaluga,Volkswagen Group had a plant that was expected to have an annual output of 150,000 units.

Daimler AGhas a CKD assembly plant inSouth Carolinathat re-assemblesMercedes-Benz Sprintervans for sale in the United States and Canada at Mercedes-Benz andFreightlinerdealers, along withDodgedealers beforeFiat Group's takeover ofChrysler 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/Ramlineup with the similar Ram ProMaster, a rebadgedFiat Ducato.Unlike the CKD Dodge Sprinter, the ProMaster is fully imported to the U.S. from a Chrysler plant inMexicounder of theNorth American Free Trade Agreement(NAFTA).

In 2009, Mahindra & Mahindra Limited announced that it would export pickup trucks powered bydiesel enginesfrom India to the United States in knockdown kit (CKD) form, again to circumvent thechicken tax.Mahindra planned to export CKDs to the United States as complete vehicles that will be assembled in the United States from kits of parts shipped in crates.However, Mahindra's United States CKD and export plans never materialized and were subject to several lawsuits.

In 2013,Teslastarted operating an assembly plant inTilburg,the Netherlands.It is used for the assembly of theirModel Ssedan andModel XSUV for theEuropean Union,but not all of Europe since only cars imported to the EU benefit from circumventing the 10% import duty(e.g. cars to Norway are shipped directly from the United States). For the most part, the car is still manufactured in theTesla FactoryinFremont, California.During the final assembly in the Netherlands, various parts are added to the car, most notably the rear subframe with the drive train as well as the battery pack.

Buses

Motor Coach Industriesopened itsPembina, North Dakota,assembly plant in 1963, as part of an expansion into the US market. Unfinished KD (knocked down) coach bodies are shipped fromWinnipeg, Manitoba,by flatbed trailer and completed, outfitted, and delivered at Pembina. This practice simplifiesUS Customsand meets the "Buy America Act"provisions (49 USC 5323(j) and 49 CFR Part 661) for public agencies purchasing new equipment with federal funds.

North American Bus Industriesopened operations inAnniston, Alabama,in 1993, with incomplete buses shipped fromBudapest,Hungary,to Anniston for final assembly. NABI expanded production operations in Anniston to allow full production with its first fully domestically produced bus unit in 2008.

Rail

The practice of selling "knocked down" railcars, called by that name, pre-dates the 20th century, as evidenced by an advertisement byJG Brill Companyin theStreet Railway Journalfrom 1898.

Many rail equipment builders have used kits or incomplete vehicles, often to meet local assembly and production requirements or quotas, or to satisfy tariffs. Some examples include:

• Between 1938 and 1951, theSt Louis Car CompanyshippedPCC streetcarbody shells and trucks north for assembly byCanadian Car & Foundry.TheToronto Transit Commission(TTC)PCC fleetwas purchased and delivered in this method.
• Bombardierships incomplete cars from its plant atLa PocatièreQuebec, toPlattsburgh, New York,and (until 2002)Barre, Vermont,facilities for final assembly. These are to meetBuy America Actprovisions for US public transit agencies and tariff rules. Since 2009 the Plattsburgh assembly plant has had full stainless steel welding and fabrication capability, allowing for cars to be fully assembled and completed on-site.
• Kawasaki Heavy Industries(KHI) andCSR Qingdao Sifanghas a joint venture assembly plant inQingdao, China,that carried out final assembly of first 10 sets ofChina Railways CRH2high-speed trains, itself derived fromE2 Series Shinkansen,using parts shipped fromKobe, Japan.Later the plant was tasked with the local manufacturing of further CRH2 train orders, through technology transfer from Japan.
• Alstom'sHornell, New York,assembly plant produces final completed cars using stainless body assemblies shipped from the Lapa plant inSão Paulo,Brazil.Morrison-Knudsenused the same production method when it built new passenger cars at the Hornell shops in the 1990s.
• From their first US order from theSouth Shore Linein 1982 until the opening of a full-body manufacturing and assembly line inRochelle, Illinois,thirty years later,Nippon Sharyosent commuter train bodies from Japan to US finishers, including an American unit ofSumitomo.
• Hyundai Rotemopened an assembly facility inSouth Philadelphia,located in an industrial park offColumbus Boulevard.Car shells are assembled, outfitted, and completed for delivery at this site, which is served byConrailon thePhiladelphia Belt Line,allowing delivery of new cars by rail. TheSilverliner Vcars for Denver'sRTD commuter railand Philadelphia'sSEPTA Regional Railwere purchased and delivered in this method.
• TheLondon Underground1995and1996 Stockfleets have aluminium bodies built byAlstominBarcelonawith assembly completed at theMetro-Cammellworks inWashwood Heath,Birmingham.
• British Rail Class 385fleets have aluminum bodies built byHitachiin Kasado, Japan, with assembly completed at theNewton Aycliffeworks inCountry Durham.
• Taiwan Rolling Stock Company's assembly plant in Hsinchu County, Taiwan has assembled several rolling stock models using knock-down kits fromHitachi Rail Italy(EMU101trains for Taipei MetroCircular Line),Kawasaki Heavy Industries(Taipei MetroC371,C381andTaoyuan Metro 1000 series) and Nippon Sharyo (TRAEMU700andEMU800 series)

Aircraft

Unserviceable militaryaircraftare also sold as "knock-downs" after they have ended theirservice life,packaging them with serviceable aircraft. This allows them to be used forcannibalizationofspare parts.

The European aircraft manufacturerAirbususes knock-down kits to assembleA320 familyaircraft outside Europe. The Airbus A320 final assembly line inTianjin,China, assembles fuselage, wing, and tail sections made in Europe withavionicsandenginesmade in the EU or theUnited Statesand locally sourced components for interiors. Airbus opened a similar A320 final assembly line in the United States in September 2015, located inMobile, 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 their fuselages, wings, and tail sections from Europe viaocean freightusing specially designedships,as the plants are located inportcities.

Housing

Main article:Kit houses in North America

Advertisement for knocked-down kits for houses, inPopular Mechanics,May 1908

From 1908 to 1940, theSears, Roebuck & Co.mail-order catalog offered over 400 styles of homes.Buyers were provided with all of the materials and the instructions needed to build a house. Everything that arrived by train or in the mail was designed to fit together, therefore buyers could build the houses themselves or hire contractors.Sears sourced building materials at a high volume, thus keeping prices low and competitive with the local builders.

Furniture

Main article:Ready-to-assemble furniture

Knock-down furniture dates back to at least the mid-19th century, with the 1859Thonet No. 14 chair bentwood chairbeing easily disassembled for transportation.In the late 1940s, Australian designerFrederick Charles Wardfounded a mail-order business for knock-down furniture in response to a lack of affordable furniture.

Swedish furniture companyIKEAbegan selling flat-pack furniture in 1956.

See also

• Rules of origin