TABLE OF CONTENTS
Toyota's Quake-Hit Yaris Plant Offline Until Late April
Nissan Aims to Return to Normal Domestic Production Operation by Mid-April
Global Carmakers Face Supply Shortage
Volvo to Expand R&D, Employ 1,200
Volvo CE Announces $100 Million Shippensburg Expansion
Mid-America Trucking Show: Cummins Runs the Numbers
Oshkosh Defense and General Dynamics Competing For Canadian Military Contract
Donaldson to Add Second Mexican Plant
Toyota's Miyagi assembly plant, which makes the Yaris small car for export to the United States, is expected to be offline for at least another month. Workers have completed repairs at the factory and restored electricity, but the facility cannot get supplies of natural gas, a person familiar with the situation said.
The assessment underscores the long road facing Toyota and other Japanese automakers in bringing plants back into full operation following the deadly quake, which killed more than 11,000 people, ruptured gas lines, shutdown electric grids and snarled logistics across half the country.
Toyota has resumed limited Japanese production of three hybrid models, including the popular Toyota Prius, but the rest of its 18 domestic assembly plants remain shuttered indefinitely.
A Toyota supplier said his company was informed by a Toyota purchasing executive that the hybrid lines are operating at only half their capacity.
While the Yaris plant is expected to be down until at least late April, the rest of the automaker's domestic plants—making up the bulk of the Toyota and Lexus lineups—are expected to remain closed until at least April 14, the person said, citing the Toyota executive. Reuters has reported, also citing a supplier, that Toyota has informed parts makers that widespread production won't begin until at least April 11.
Toyota spokesman Dion Corbett could not confirm a timeline for reopening operations in Miyagi or other assembly plants. The only production underway this week is for the Toyota Prius and Lexus HS250h and Lexus CT 200h hybrids.
Toyota issued a statement saying it was still assessing parts supply and inventories. It did not forecast a restart date, but warned: "Depending on vehicle type, there may be a significant impact on our production capabilities."
Toyota's Miyagi factory gets its gas from a plant in nearby Sendai that was badly damaged in the March 11 earthquake. The plant is expected to be out of commission for at least a month, the other source said.
In the meantime, Central Motors has delayed plans to shift Corolla production to the new plant in Miyagi, from its old plant in Sagamihara, just south of Tokyo. Central had planned to bring Corolla production to Miyagi in April and then shut the Sagamihara plant.
But it will keep building the Corolla at Sagamihara and move it to Miyagi in May, he said. Those Corollas are made for the domestic Japanese market.
Overall parts management is being now being centrally controlled by Toyota headquarters in Toyota City, the person said. They are organizing parts deliveries and production on a case by case basis for each factory and still trying to determine when full production can resume.
Nissan Motor Co. said it expects to resume normal production operations in Japan by mid-April as earthquake recovery work progresses.
Still, the car maker's output volume level won't return to pre-quake levels anytime soon as its parts suppliers need more time to reestablish full manufacturing operations, a Nissan spokesman said.
Nissan, Japan's second biggest car maker by volume, has restarted its domestic auto assembly lines using parts in stock. But it is seeking to resume production of vehicles with parts on order from its usual suppliers, the Nissan spokesman said.
The Japanese car maker will suspended its domestic auto assembly operations for a week as its parts inventory is running low, the Nissan spokesman said.
The company will continue to produce parts for the local repair market and overseas customers next week, the spokesman added.
Nissan expects its production schedule to be behind by 55,000 vehicles by the end of March.
Car plants around the world could face a supply crunch as a result of disruptions caused by the earthquake crisis in Japan.
The problems are not confined to Japan’s carmakers. Others, including General Motors and Ford Motor of the US, buy key components from Japanese suppliers. For example, Sanyo provides battery packs for the Ford Fusion hybrid, assembled in Mexico.
The US alone imported $12bn of car parts from Japan last year, from spark plugs and precision bearings to tires and engines. Toyota relies on Japan for about a quarter of its North American built cars.
To avoid a supply squeeze, Toyota and Subaru have suspended overtime operations at their factories in North America. Toyota said that with production halted in Japan, it aimed to preserve the parts it had in transit for its scheduled production.
John Hoffecker, managing director of AlixPartners, a Detroit-based consultancy, said that the industry faced an array of complex decisions depending on such factors as the length of their supply chains and whether they could source alternative parts from their own factories elsewhere in the world or from other suppliers.
He noted, for example, that Toyota had only one plant worldwide – in Japan – that produces continuously variable transmissions, used in some of its hybrid vehicles.
The situation could be even worse for small, high-value items – such as electronic components – that are typically sent by air, rather than sea, and thus with less inventory in transit. Many carmakers use electronic parts from Japanese companies for their on-board entertainment and navigation systems and their electronic controls. Dale Ford, analyst at consultants IHS iSuppli, singled out electronic components such as micro-controllers, liquid crystal display (LCD) panels, and LCD parts and materials as among the most vulnerable to disruption.
According to Mr Ford, shortages of these items are likely to start appearing at the end of March or early April. He predicted that their prices could rise dramatically.
BMW, the industry’s top-selling premium carmaker, is studying how possible delivery stoppages of semiconductors and other electronic parts might affect its production.
Suzuki’s Indian affiliate, Maruti Suzuki – the country’s largest carmaker – was assessing whether it faced any break in supplies of imported components that could disrupt production.
While nearly 80 per cent of the carmaker’s components – by value – are produced in India, the company depends on imports of some parts. RC Bhargava, its chairman, told the Financial Times that the company had a month’s worth of supply “on the seas” which had already been shipped. However, it also relies on imported parts obtained indirectly from Indian vendors.
Volvo, the Swedish carmaker, is to recruit up to 1,200 people over the coming year to support an aggressive expansion of its product portfolio and its business in China the Financial Times recently reported.
The majority of the recruits will be engineers at its research and development department in Gothenburg, where the company is seeking to build expertise in electric cars. The company described the recruitment drive as one of the biggest in its history.
When it bought Volvo from Ford Motor for $1.5bn last year, Geely, the Chinese carmaker, sought to allay fears about a hollowing-out of the company by saying that expansion in China would support research and development and other jobs at its headquarters in Europe.
Volvo said that up to 1,000 of the recruits would work in Sweden, of which 900 would be engineers, mainly in product development. In Belgium, where the carmaker has a plant in Ghent, it will hire another 200 people.
As well as engineers, Volvo will be taking on people in areas such as purchasing, information technology, marketing and manufacturing. The carmaker employs about 19,500 people worldwide, of which about 13,000 work in Sweden and 4,500 in Belgium.
Stefan Jacoby, Volvo’s chief executive, is aiming to more than double the brand’s sales to 800,000 within a decade, including by expanding in China, where the carmaker plans to build up to three car plants.
Volvo CE has announced plans to spend $100 million at its Shippensburg, Pa., manufacturing facility and start production of Volvo wheel loaders, excavators and articulated haulers in North America. Also, the Volvo CE North American sales headquarters and Volvo Rents will relocate from Asheville, NC to Shippensburg, Pa. by September 2012.
“It makes sense, when possible, to manufacture products close to where our customers are,” said Olof Persson, President and CEO of Volvo Construction Equipment. “The global demand for Volvo construction equipment is rapidly increasing and we need to make investments to meet future demands in the region. Producing Volvo wheel loaders, articulated haulers and excavators in Shippensburg will result in shorter lead times for our customers. We will work closely with local suppliers to increase the North American content of our products. This will further reduce our exposure to exchange rate fluctuations, which will already be positively affected by our bringing more production to the USA.”
A customer and demonstration center will be built in Shippensburg. In addition, Volvo CE will put up a new office building on the campus to house its regional sales headquarters, its Volvo Rents offices, and its training center.
Volvo said all Asheville-based employees will be given the opportunity to relocate to Shippensburg. The move, which will affect about 220 people, will be concluded no later than September 2012. Since the acquisition of the Shippensburg facility in 2007, Volvo Construction Equipment has continuously invested in the existing plant. In June 2010, a 200,000 square foot, $30 million expansion of the facility was finalized, to improve manufacturing flow and increase production space to incorporate the production of Volvo motor graders.
Manufacturing Volvo wheel loaders, articulated haulers and excavators in Shippensburg will have no significant impact on the current production in other Volvo locations, the company said.
North American steel industry experts will launch FutureSteelVehicle (FSV) at the 10th Annual Great Designs in Steel (GDIS) seminar Wednesday, May 18 in Livonia, Mich. FSV is a global, multi-million dollar program that delivers auto body concepts addressing radically different steel structures for advanced powertrains, including advanced hybrid, electric and fuel cell vehicles. The program introduces more new advanced steel grades and manufacturing technologies to the industry’s advanced high-strength steel (AHSS) portfolio than ever seen before in steel industry projects.
Over the past decade, automakers’ use of AHSS has outpaced the growth rate of competing materials, making it the fastest growing automotive lightweighting material, according to Ducker Worldwide. The Steel Market Development Institute (SMDI) is continuing this track record by researching new steel solutions to help automotive manufacturers in their quest to meet stringent fuel economy and emissions requirements.
“Despite the rapid growth, we are just scratching the surface on steel lightweighting,” Ronald Krupitzer, vice president, automotive market for SMDI, said. “And while automakers increase their use of today’s suite of AHSS materials, we are working on the next generation.”
“Weight reduction will be important to these newly designed powertrains. Car manufacturers will use structural mass reduction to reduce battery and motor sizes,” Krupitzer said. “Therefore, the choice of material will become critical. The steel industry has met the challenge of affordable weight reduction, safety and environmental responsibility for the last 10 years. Implementing FSV project results will continue this commitment over the next 10 to 15 years.”
To learn more about the benefits of steel, FSV or to register for Great Designs in Steel 2011, visit www.autosteel.org.
The Steel Market Development Institute (SMDI), a business unit of the American Iron and Steel Institute, grows and maintains the use of steel through strategies that promote cost-effective solutions in the automotive, construction and container markets, as well as for new growth opportunities in emerging steel markets. For more news or information, visit www.smdisteel.org.
At its annual press event just prior to the Mid-America Trucking Show in Louisville, Cummins executives gave a rundown of the company’s engine business and looked ahead to what it expects will be an improving 2011 in the on-highway engine markets.
Cummins said it produced nearly 900,000 engines globally in 2010, approximately 245,000 in North America and 261,000 in China. It was the first time production in China exceeded North America.
The company also noted a production milestone by producing its eight millionth B series engine in 2010. First developed in 1984, the engine is used in both on-highway (the Cummins ISB and Dodge Ram Turbodiesel) and off-highway (QSB) applications.
Cummins said more than 130,000 EPA 2010-certified engines, including more than 62,000 with SCR technology, have been produced and shipped from Cummins manufacturing facilities in Jamestown, N.Y., Rocky Mount, N.C., and Columbus, Ind., during 2010.
The 2010 heavy-duty ISX15 engine has shown consistent fuel economy improvements of 6% over the 2007 versions, according to Steve Charlton, vice president and chief technical officer – Engine Business. “Using our extensive bank of real-world data from customer field units and by working closely with our customers, we have been able to deliver significant calibration improvements that positively impact both fuel consumption and diesel exhaust fluid consumption,” Charlton said. Depending on load factors, duty cycles and operator behavior, Cummins had seen gains as high as 8% in some instances, Charlton added.
Looking ahead, Cummins said it expected Class 8 heavy-duty truck sales in North America for 2011 to finish between 210,000 to 230,000 units, although Cummins Vice President Ed Pence indicated replacement demand appeared to be strong enough to perhaps push those totals higher.
Berkshire Hathaway Inc. and The Lubrizol Corp. have announced a definitive agreement for Berkshire Hathaway to acquire 100% of outstanding Lubrizol shares for $135 per share in an all-cash transaction. The deal, which was unanimously approved by the board of directors of each company, is valued at approximately $9.7 billion, making it one of the largest acquisitions in Berkshire Hathaway history.
The price also represents a 28% premium over Lubrizol's closing price from March 11 and is 18% percent higher than Lubrizol's all-time high share closing price. Lubrizol is a specialty chemical company that produces and supplies technologies to customers in the global transportation, industrial and consumer markets, including lubricant additives for engine oils, other transportation-related fluids and industrial lubricants, as well as fuel additives for gasoline and diesel fuel.
"Lubrizol is exactly the sort of company with which we love to partner - the global leader in several market applications run by a talented CEO, James Hambrick," said Warren Buffett, Berkshire Hathaway chief executive officer. "Our only instruction to James - just keep doing for us what you have done so successfully for your shareholders."
The transaction, which is subject to the approval of Lubrizol's shareholders and regulatory agencies, is expected to be completed during the third quarter of 2011. Lubrizol will remain located at its Wickliffe, Ohio, headquarters and will continue to be led by its current management team.
Eaton Corp. said it has agreed to acquire Internormen Technology Group, a manufacturer of hydraulic filtration and instrumentation. The deal is subject to customary closing conditions and terms were not disclosed.
Internormen, which is based in Altlussheim, Germany, has sales and distribution subsidiaries in India, China, Brazil and the United States, employs approximately 360 people and had 2010 sales of more than $55 million.
Internormen Technology has been owned by the Franger family since its foundation in 1972. After completion of the sale of the company, the sons of the founder of the company, Stefan and Bernhard Franger, who held leadership positions at Internormen, will assume similar management responsibilities at Eaton.
“This acquisition will significantly expand Eaton’s filtration product portfolio with technically advanced products and systems for mobile, industrial hydraulic and process applications,” said William R. VanArsdale, president of Eaton’s Hydraulics Group.
Deere & Co. has announced plans to double the manufacturing space at its Domodedovo production facility near Moscow and establish its own leasing company in Russia for the sale of agriculture, construction and forestry machinery.
"Russia can make a significant and sustainable contribution to help meet the world's growing demand for food, energy and forest products," said Deere Chairman and Chief Executive Officer Samuel R. Allen. "These investments enhance our ability to serve customers in Russia, the Commonwealth of Independent States, and in other nearby markets."
The investment at the Domodedovo facility will double John Deere's manufacturing space at that site, allowing the company to expand the products it manufactures in Russia and add new products such as log forwarders, which are widely used in the Russian forestry industry.
In addition to the manufacturing investment, Deere also will establish a leasing company through its John Deere Financial Services division to augment current retail financing offered by local banks and leasing companies. "By establishing a leasing entity in Russia, John Deere will be able to provide retail financing solutions to our customers,” said James A. Israel, president of John Deere Financial. “Offering financing is an important factor in our service to customers in the agricultural, construction and forestry industries."
Oshkosh Defense and General Dynamics Land Systems-Canada, have been selected to compete for the Canadian Medium Support Vehicle System (MSVS) program. The Canadian Dept. of National Defence (DND) selected Oshkosh to proceed following the solicitation of interest and qualifications.
Oshkosh Defense has teamed with General Dynamics Land Systems-Canada for the Standard Military Pattern (SMP) portion of the MSVS program, which will replace the Medium Logistics Vehicles, Wheeled (MLVW) fleet. The companies also are teamed for the Tactical Armoured Patrol Vehicle (TAPV) program, which will replace the Armoured Patrol Vehicle (APV) and the Coyote reconnaissance vehicle. The team unveiled a TAPV prototype in February.
Oshkosh said the team continues to align its proposal to Canadian government requirements for industrial and regional benefits. In February, the team announced that London Machinery, Inc. (LMI), an Oshkosh company, is set to provide in-country manufacturing for the team. The new facility in London, Ontario, was designed and built with capacity for future programs. It fosters an experienced workforce to support the TAPV and MSVS programs, as well as a broad range of commercial and specialty vehicle programs, Oshkosh said.
General Dynamics Land Systems-Canada will provide systems integration and testing support for the vehicles, as well as the complete spectrum of in-country sustainment support.
Oshkosh will serve as the prime contractor for both MSVS and TAPV programs, and will leverage existing Oshkosh vehicle platforms and technologies for its MSVS proposal submissions, including the Heavy Expanded Mobility Tactical Truck (HEMTT), Family of Medium Tactical Vehicles (FMTV), and the Medium Tactical Vehicle Replacement (MTVR). Oshkosh Defense uses the services of Valley Associates to provide Canadian-based marketing and business development.
Donaldson Co. Inc. said it will begin construction on a second manufacturing facility in Aguascalientes, Mexico. The new 140,000 sq. ft. facility will manufacture air filters for the company’s growing markets in the Americas.
The company’s existing Aguascalientes facility currently manufactures both air and liquid filters. When the new air filter plant is completed, it will manufacture exclusively liquid filters, Donaldson said.
“The ongoing economic recovery, plus our market share gains, has driven our replacement filter sales to record levels over the past year,” said Joe Lehman, vice president of Global Operations at Donaldson. “Based on our strategic growth plan, this new plant will allow us to expand both our air and liquid filter manufacturing capacity to meet our projected OEM and aftermarket customer demand throughout the Americas.”