globalEDGE Blog - By Tag: transport-manufacturing

Autonomous or self-driving cars were once an idea in a sci-fi movie. Even if this seems like a farfetched idea, we see autonomous transit starting in more locations worldwide.

Elon Musk, the CEO of Tesla, released 30 brand new Model 3 electric vehicles to Tesla employees in Fremont, California on July 28. Tesla advertises the Model 3 as one of the most affordable electric vehicles on the market, competing with fuel-efficient cars like the Hyundai Ioniq EV, Chevrolet Volt, BMW i3, and Nissan Leaf. While demand for the Model 3 is high—it has already gathered 50,000 advanced deposits—the vehicle’s mass-market accessibility is not as apparent. In comparison to Tesla’s Model S, which can be prepared for delivery in seven days, current customer orders for the Model 3 are expected to be ready within the next 12-18 months. What is the underlying cause of such a large disconnect between consumers and the product? The reason boils down to an exponential increase in production that connects directly to a supply chain that has “about 30 percent of its components coming from abroad.”

In the last blog of this week's series, we take a look at the airplane manufacturing industry.

2017 has proved to be a successful year for airplane manufacturing so far. The industry experienced a surge in aircraft orders in February, putting it on track for a record year of directories. In the United Kingdom, in particular, the number of commercial aircraft ordered by airlines jumped to 43 last month from just 4 in February of the previous year, according to the Aerospace, Defence, Security & Space Group. These figures are based on orders from Airbus, Boeing, Bombardier (Canada), Comac (China), and Irkut (Russia).

Part four of our transport manufacturing blog series examines the role emerging markets play in the industry.

Emerging markets are proving to be key areas for future growth in the transport manufacturing industry. The 2017 Emerging Markets Index from Agility and Transport Intelligence shows continued strength in logistics, infrastructure, and investment potential for large emerging markets, including the United Arab Emirates, Malaysia, and Saudi Arabia. According to the index, countries such as India and Kazakhstan significantly strengthened their business capacity over the past year, warranting further attention from international logistics executives. In addition, China, India, and Brazil have become a hotspot for automotive and aircraft sales. Despite frequently cited concerns in dealing with emerging markets—government corruption, tax laws, and customs—more corporations within the transport manufacturing industry are hoping to expand their business in these countries.

In part three of our transport manufacturing blog series, we look at high speed trains.

In 2013, the Japanese government set the goal of tripling its infrastructure exports, such as nuclear plants and bullet trains, to a nearly $262 billion valuation in hopes of continuing to bolster its economic growth. Pros for the Shinkansen bullet train include a sound safety record, low emissions, and punctuality, but despite its technological advancements, foreign buyers remain unconvinced of the feasibility of the bullet trains.

In part two of this week's transport manufacturing blog series, we look at current issues affecting international trade in the auto industry.

Implemented in 1994, the North American Free Trade Agreement (NAFTA) consists of a trilateral compromise signed by Canada, Mexico, and the United States. The initial goal of NAFTA was to eliminate barriers to trade and investment between the U.S., Canada, and Mexico. Prior to NAFTA, American cars sold in the United States were made almost exclusively in the U.S., and most vehicles were sold in the market in which they were made. When NAFTA came into effect, U.S. automakers began diffusing their production across the trade zones, particularly taking advantage of the cheaper labor and lower production costs in Mexico. But, according to various economists, it is unclear if scrapping NAFTA would shift plants and jobs back to the United States.

This week, the globalEDGE blog is diving into the transport manufacturing industry. Over the next four days, we will take a look at automotive, airplane, and train manufacturing, along with a blog on the impact of emerging markets on the global industry.

The transportation manufacturing industry is comprised of businesses that manufacture vehicles, vehicle parts, and the infrastructure that supports them. Sectors in the industry include passenger cars, semi-trailer trucks, container ships, airplanes, and trains. Although most picture major companies such as Ford, Toyota, Boeing, or Airbus when thinking of the industry, smaller businesses that supply the parts and electronics are equally important.

With all the growth in the logistics industries, “several companies are racing to develop airships they hope will transform air travel.” Amazon, for example, has struggled keeping up with the high demand, especially with Prime members who get free two day shipping. Using airplanes to transport items will significantly increase the company’s shipping speed and help Amazon continue to grow.

February was one of the best months for U.S. auto sales in recent years. Due to Presidents' Day deals, leap day transactions, and delayed demand from hazardous winter weather, overall sales from major automotive companies have far surpassed industry projections. The high numbers show promise for automotive sales in the U.S, with several analysts saying 2016 could be another record year for the industry. Investors were worried that 2015's prolific sales were to be the industry's peak; now many of them are changing their tune, expecting automotive prosperity to continue well into next year. It is keenly expected that companies based in foreign countries, especially Japan, will be playing a major role in the increased demand and consumption of automotive products in the U.S.

Just this week, Nissan Motor Co. announced its quarterly earnings, which revealed that its profits had experienced a 37 percent surge during the first half of the fiscal year. Because of this revenue spike, Nissan's net income through March is now projected to reach $4.44 billion, an unprecedented level in the company's history. Nissan is now experiencing its fastest sales growth in over ten years, citing rising demand in the United States and Western Europe as a significant part of its success. This is an important record for the popular manufacturing company, but it may not last too much longer. 

In the midst of what appeared to be a comeback for the European automotive market, which includes western Russia in international marketing figures, the current political crisis in Ukraine has spurred on fears that Russia's days as a growing reliable source of car sales may be coming to a quick halt. Seeing as Russian forces in the Crimea region has resurrected Cold War tensions between Russian and Western supported factions, American and European investors in the Russian automotive market have reportedly lost confidence in Russia as a continued source of fuel for the sector's global recovery. These tensions come alongside economic turmoil that the international automotive industry has been handling in other emerging markets, which includes the currency market problems that are worsening prospects in the emerging-market countries of Turkey and South Africa.

With China’s rapid economic growth in the past decade, fortunes were made as the country experienced an economic boon. However, this fast-paced growth also had its costs. During this growth period, air pollution and traffic congestion increased dramatically in many major cities around China. Now the government and businesses alike are developing ways to solve the costly side effects of rapid economic expansion.

Japan is the world’s third largest economy and the United States is the largest economy in the world ranked by GDP. But, these two huge economies do not have a free trade agreement, which strikes the question – why not? Obviously, there are a lot of reasons why these two great nations have not struck a deal yet, but one could be on the horizon.

The Indonesian economy is known globally for many things: tourism, agriculture, and defense.  But maybe transport manufacturing should be added to the list.  The production of Indonesian factories were most efficient all year last month; According to a report by Markit Economics and HSBC Bank, the purchasing managers’ index (PMI) for Indonesia's manufacturing sector increased from 50.5 in September to 51.9 in October.  Any reading above 50 on a PMI indicates expansion, which can be attributed to a multitude of variables.  However, the prime conclusion has been that the increase in PMI is a direct reflection of higher order intakes.  This is most apparent in Indonesia's auto industry.

As many of you news readers may know, China and Japan have been involved in a territorial dispute over a small chain of islands in the East China Sea. They can’t agree on a name—Japan calls them the Senkaku Islands and China calls them the Dioyu Islands, but both countries view those islands as part of their territory. They are technically controlled by Japan now due to war treaties, but China has had claims on them in the past so both countries have a case to make for ownership. However, as the islands do not really have much of significance on them, they are viewed as an important symbol of dominance in the often tumultuous relationship between China and Japan. While war or other extreme actions have not been taken yet, the dispute has impacted businesses in the area which could easily impact the world’s economy.

Brazil has been a steady pillar of South America and the BRIC for the past few years, but things seem to be taking a turn for the worse.  Not only has the economic powerhouse been losing steam when it comes to industry domination, but also labor costs are being set ridiculously high.  KPMP’s 2012 Competitive Alternatives Report, which compares the structure of costs for companies in various countries while taking into account, taxes, labor, rent, and cost of capital, studied 19 industry sectors in the BRIC and nine other industrialized countries.  The commentary revealed that Brazil is the most expensive developing nation for doing business, only about 7% cheaper than the United States.

With the global economy in a slump, there are many industries that are suffering. You do not have to look very far to find news about spending cuts, job loss, and shrinking sales within many sectors. One industry that has managed to escape the blunt of these issues is the automotive industry. A recent report found that auto sales in the United States were the highest in four years, many other countries around the world are experiencing success. Many experts are beginning to ask: is this the beginning of the next big boom for the global auto industry?

The auto manufacturing industry in Australia has seen brighter days. The once supreme car industry used to flourish with seven major auto manufacturers. There are now only three (Ford, Toyota, and General Motors Holden), and their future in the nation is uncertain. The industry is propped up by government support and in need of a revival. Is the industry holding onto false hopes of prosperity? Or is it going to show its typical resilience and bounce back from another punishing year?

The constant rise in fuel prices and the movement to cut fuel emissions are leading airline companies to develop biofuels.  This year alone, the world’s airlines will emit 650 million tons of carbon emissions in the process of burning over 200 million tons of fuel.  In recent years, the popularity of developing biofuels has increased and is now becoming more of a reality than a theory.

Currently in Hungary, the car industry accounts for a quarter of their industrial output. Germany’s Audi has just announced an over $1 billion expansion plan which will strengthen an economy that is struggling for growth. Hungary has become a center of production for export to the rest of the EU, just like the neighbouring Czech Republic. This isn’t just a big deal because of the amount of money being put into the project, but it also shows that these plants can become increasingly important over time as they do more than just simple assembly work.

Technology is always changing, causing us to play catch-up on a daily basis. A new trend on the horizon? Mind reading. Today, a variety of consumer products such as games and phone-apps use mind reading technology to captivate users. Last Christmas two new games used mind-reading technology to find the way into many homes. Mattel’s Midflex and Milton Industries Force Trainer both use brain-wave technology similar to the electroencephalograph, which is used to diagnose brain disorders. Many video games are also trying out this new technology. Next year a new Apple app is planned to be released using mind power. This app, Tug of Mind, will be the Apple’s first game controlled by the mind and can be partnered with a NeuroSky headset.

It's something that's been the lore of science fiction novels and movies-- a wild, futuristic dream... the flying car. It's been deemed so difficult to pull off, that not many have tried to make one. If a flying car were made at a relatively affordable price, the demand for it would be huge. A flying car being the stuff of dreams is no more: the Terrafugia Transition is here!

The auto industry has certainly gone through hard times these past few years, and now it is trying to rebuild itself. Part of the comeback is restructuring the companies, and finding ways to cut costs. This is often done by offshoring the manufacturing portion to countries that demand lower wages. Mexico is one of the countries that will see the benefits of this move in the next few years.

We all know that countries like India and China are becoming global giants. In order for India to keep up with countries like the United States and China, it must improve its railroad system.  Railroad routes are often severely backed up due to overbooked trains and the fact that railroad travel is the only affordable option for many people in India. In order for India to compete with China for major global economic growth, Indian transportation needs to be improved significantly. The Prime Minister of India recently set a goal of an annual growth rate of 10%, but without a major renovation of India’s transportation system this goal will be unattainable.  It looks like India has a lot of work to do to continue to compete globally. 

With the excitement of the World Cup evident in South Africa, there is also great pride and unity among locals.  The energy of the World Cup has spread all over the country, and has even hit the poorest areas.  This energy has provided harmony among citizens and although many areas in South Africa are still suffering, right now everything is about football.  Problems such as poverty stricken homes and jobless citizens still exist, but they are being put on hold for a very important event for South Africa.  During the game between Mexico and South Africa, over 3,000 locals gathered in a park to enthusiastically watch the game. The World Cup has greatly improved the moral of South African citizens. 

When I think of Brazil, coffee, tropical fruits, and sugarcane come to mind. This is not only because I enjoy all three things, but also because Brazil leads the world in production of these goods.  Over the years, exporting these goods has been a key factor in generating growth for Brazil’s economy. Speaking of economic growth, President Luiz Inacio Lula da Silva, has been working towards poverty alleviation and economic growth for the past several years. In 2007, the Growth Acceleration Program (PAC), an infrastructure development program meant to improve the country’s energy supply, road, rail, and other infrastructure needs, was established.

“Fast and growing” is how the Turkish market is described by Jim Fluker, Senior Commercial Officer of the United States Foreign Commercial Service.  With a population of over 72 million and a growing middle class, Turkey is poised to be an ideal export market.  The country is uniquely positioned between Eastern Europe and the Middle East, where the political climate is relatively mild in comparison to many of its neighbors.

Did you ever wonder what happens to airplanes when they “turn in their wings?” Well, when airlines can’t fill seats or sell their old, inefficient jets, they send them to an airplane scrap yard.  Kemble Airfield, located in Cotswold, Britain, is now the hot spot for the dismantling, crushing, and recycling of aircrafts that are out of a job.

In a recent interview with Mitch Jackson, the senior director of environmental affairs and sustainability at FedEx, Doug Barry from the U.S. Commercial Service was told a few ways that companies can not only reduce their environmental footprint, but also increase the standards of living for all. I personally took quite a few things away from this interview. I learned the following:

Imagine walking into a car dealership and seeing a brand new car with $2,000 written on the windshield in huge neon letters. It seems too good to be true right? Well in India this actually happens. Tata Motors is an Indian automaker that produces the world's most inexpensive car – the Nano.

It is well known that the auto industry has taken a hit across the globe. With sales and production down and several plant closures, it seems that things are looking grim. However, several Japanese automakers are thriving, not internationally, but in China.

The preferred way of travel for long distance travel among those in the business field has been by air. Flying takes less time and is more convenient than taking a four hour train trip to the desired destination. However, flying has its disadvantages as well - lost luggage, taking taxis to and from airports, etc.

In Spain however, taking the train from two main cities - Madrid and Barcelona has become very popular since the opening of Alta Velocidad Espanola high-speed service. This rail service provides the same luxuries as a plane - breakfast, newspaper, and comfort; however, it is a faster journey than flying. This improvement in high-speed rail has shifted most travel in Spain from air to rail. Even though Spain joined the high-speed rail industry later than other countries, it has become one of the top leaders in it - right after Japan and France. Furthermore, it has brought more tourists to Barcelona and Madrid which has been a boost to business there. Also, the success of this project has been noticed from other countries. For example, there is a proposition in Britain for a high-speed line between London and Glasgow. Moreover, in the U.S., there is a proposal to invest $8bn in high-speed rail.

In conclusion, high-speed rail in Spain has been a huge success, as it has enabled railways to take market share from airlines and has been promoting economic development. It also promotes competition in the travel industry and stimulates innovation in other countries as well. 

If the norm at the moment is that countries don’t want to invest in other countries due to the economic downturn and volatile markets, then the exceptions are Qatar and Germany. Currently, the country of Qatar is looking to invest heavily into the exporting powerhouse, and they have the money to do it. As of 2007, Qatar has attained the highest per capita income in the world, primarily through the means of oil and natural gas revenues. So what interests Qatar so much about Germany?

Surprisingly enough, Qatar has its sights set on Germany’s auto industry. The oil giant is primarily concerned with the German brands Volkswagen and Porsche, brands which are very numerous and very popular in the Arab world, especially in the country looking to invest, which had an $80,900 GDP per capita in 2007.

Gas prices have been fluctuating in the past few weeks without following a certain trend. The volatility is minimal however, when compared to last summer's record-setting high prices. Many people started using public transportation more often, or buying more fuel efficient cars. Others looked toward hybrids. This increased the pressure on car companies to produce zero-emission vehicles at an affordable price. Nissan was one of the companies to rise to the challenge. Spokespeople for Nissan express confidence when saying that their new electric car will sell exceptionally well because it is what the consumer wants.

One of the more interesting subplots of the environmental movement that has popped up lately is the potential of lithium-ion batteries to replace gasoline in automobiles. Lithium-ion batteries are lighter, more energy dense, and lower-maintenance than some of their more conventional counterparts.

For three and a half years Porsche tried to take control of the much larger Volkswagen. Finally they gave up on that idea and agreed to a merger instead. This merger is supposed to create an “integrated leading company” which will include VW’s nine brands and Porsche. However, details about the merger are not clear and many believe the deal will end up falling through. Furthermore, after years of quietly buying up shares of VW, Porsche now owns over 50% of the company. These share purchases increased Porsche’s debt levels, and the company is now beginning to show some signs of financial strain.

How can a used car be worth more than a new car? How can a car increase in value the second it is driven off the lot? The answer is that these events only happen in Venezuela. The UICIFD Blog recently had a post about this strange phenomenon in the Venezuelan car industry. 

Be sure to check out our blogroll to read other great blogs.

“Bailout” has become an all-too-familiar word as of late, but a Russian auto industry bailout brings an interesting (though not entirely positive) twist to the dreaded word. The goal of this particular bailout is aimed more at social stability than in creating a leaner and more competitive industry for the future. The Russian bailout will focused ensuring employment of autoworkers by avoiding layoffs - in spite of plummeting demand.

A few days ago, Tata Motors of India introduced the commercial version of the Nano, a tiny ten-foot-long five-foot-high compact car which the company hopes will revolutionize transportation not only in India, but in other parts of the world too. The car will sell for roughly 100,000 rupees ($1,979; £1,366) and goes on sale next month.

Imagine if you could use one simple swipe pass to pay for everything. No, I’m not talking about a credit card. Think of it more like a bus pass. Now integrate this pass into a whole infrastructure of travel. Behold Hong Kong’s octopus card! In Hong Kong, 90% of all traveling is done by mass transit: 7 million daily riders have access to an “octopus card,” used by 95% of Hong Kong’s population (16-65), which is accepted as currency not only for the various forms of mass transit but also at parking meters, convenience stores, and fast-food restaurants. Hong Kong is widely regarded as having the best blueprint of a successful mass transit system. Could this spread elsewhere?

The United Kingdom recently unveiled a new plan to revamp its inter-city rail system, awarding Hitachi a contract to develop new, more efficient and lightweight trains, called the "Super-Express". The 7.5 billion-pound upgrade comes in the midst of the worst global recession in decades, but transport secretary Geoff Hoon is confident that investing now will pay off, both in the short term job creation and the long term infrastructure boost.

Oversized ships crowd the high seas while global trade is at its lowest. These jumbo vessels, many longer than three football fields and able to carry over 13,000 containers, can provide tremendous economies of scale if the shippers can fill their holds. Meanwhile, a ship capable of carrying 22,000 containers has been designed by a South Korean shipbuilding company.

With overcapacity and a drop in global trade, shipping rates per container have fallen 90% from a year ago. In fact, some ships will take containers for free and only charge for fuel and transit fees. Yet, shipping companies aren't cancelling orders for new ships, allowing global fleet to increase by 12%, including 200 ultralarge ships in service by 2013.

Around a week ago, the World Economic Forum took place in Davos, Switzerland. The Forum primarily addressed the global financial crisis. One person who attended the Forum was Airbus CEO Tom Enders. Enders argues that in order to successfully finance expenditures on their products, a global financial system is needed.

The days of flaunting wealth through exorbitant purchases have come to an end, thanks to the global economic recession. As companies cut back and global business activity declines, the demand for private jets has dropped sharply. A host of buyers from Asia, the Middle East, the U.S., and Europe are second-guessing the necessity for an expensive private jet. The decline has jet manufacturers such as Canada’s Bombardier Inc. and Brazil's Embraer S.A. scrambling to adjust their business models amid mass cancellations and declining orders.

Most teenagers dream about owning their own car. For some, it is a realistic expectation that in the near future, they’ll own a car. For others, it’s a long-term goal. Regardless, few can deny the convenience, comfort, and freedom of owning their own car. Japanese youth, however, seem to have other dreams. Japanese automakers say the youth in Japan are more interested in technological goods such as cell phones, computers, and many other Japanese technological marvels. For more on Japanese business, visit its page on globalEDGE!

In the past few years as petroleum was getting more and more expensive, scientists were trying to find alternative ways of transportation such as hybrid cars. Well, Italian company COVINI Engineering had a different focus. We have all heard of a 4-wheel drive, but how about a 6-wheel car? This is what the Covini Six Wheeler is (C6W). The team of COVINI Engineering has been developing a six wheel car for over 30 years and now they dream has come true – the car will be produced in limited numbers starting at the end of 2009. The C6W has four front wheels and two in the back. The car reaches a maximum speed of 300km/h (185mi/h) and its light weight “can give superb driving sensations” according to the COVINI Engineering website. Some of the reasons Ferruccio Covini – founder of the company gives for creating the CW6 are better grip, better breaking, less chance of aquaplaning.

As the executives of the Big 3 in Detroit - General Motors, Ford, and Chrysler - fly in their private jets to Washington in order to ask for public funds, they should consider this: a bail-out may not be the best way to revive the auto industry! The problems being faced by the Big 3 are not only a result of hard economic times, but also an inevitable conclusion of poor business practices. There are a number of things the auto industry must do to get itself back on track, and a check for $25 billion isn’t one of them. Such a measure will only prolong the inevitable collapse.

As gas prices remain unpredictable and other environmental issues become a greater concern, there has been much more talk about electric cars. Yes, the electric car is real! Innovations in lithium ion batteries and the materials used to make them have increased the range of electric cars and decreased the amount of time needed to recharge them.

Various municipal and university fleets now have electric cars in use, however, the problem of recharging them still remains a valid concern. What is needed is an infrastructure for recharging them on the go. The problem with this is that many investors are hesitant in investing a huge amount of money in building a widespread system of recharging units for electric cars without being sure that it would pay off. On the other hand, consumers are reluctant about buying electric cars when there is a lack of places to “fill them up." At least there is a lot more talk about electric cars now than there was a decade ago. Analysts warn though that profits are years off. They give hybrid cars as an example - hybrids have been around for years but are still not profitable.