World Products Forecast Update

January 2006

PRODUCTS

INFORMATION TECHNOLOGY

Camera-enabled Cellular Phone Market Forecast to Rise from 225 million units in 2004 to 600 million units by 2007
 The camera-enabled cellular phone market is forecast to be 365 million units in 2005, up from 225 million units in 2004, rising to 475 million in 2006, 600 million in 2007, and 780 million by 2008, according to a report from US-based IC Insights. Shipments will be almost 1 billion units by 2010. In 2005, 45 percent of total handsets shipped are forecast to be camera-enabled handsets, vs. 34 percent in 2004. The figure will rise to 54 percent in 2006, 62 percent in 2007, 68 percent in 2008, and nearly three-quarters in 2009, when shipments of camera phones will be 910 million units. In Japan, the cellular handset market was 52 million units in 2005, up 27 percent vs. 2002. The digital-camera-equipped cellphone market in Japan was 47 million units in 2005, up over two-fold from 19 million in 2002.

EE Times                                                                                                                    

PC Growth for 2006 Pegged at 10.5%

The appeal of low-cost and portable PCs will continue to drive double-digit growth of the PC market in 2006, despite fewer replacements and slower economic growth, according to IDC.

Following third-quarter growth of more than 17% year-on-year, worldwide PC shipments are now expected to grow by nearly 15% in the fourth quarter, boosting annual growth a half point ahead of the 15.3% rate in 2004 to 15.8% in 2005 and raising the outlook for

growth in 2006 to 10.5%.

Although growth is still expected to slow in the months ahead, the recent strength of the overall market, and particularly in portable PC adoption, has contributed to rising expectations in all major regions except Japan.

"Following the shocks of 2001 and 2002 many people were impressed with the strength of the market in 2004 but cautious about the foundation and longevity of this growth," said Loren Loverde, director of IDC’s worldwide quarterly PC tracker. "The fact that solid double-digit growth has continued through 2005 shows that the market recovery did not peak in 2004 as many expected but is still ongoing. The market may slow in 2006, but persistent growth over the past several years shows the appeal of low-cost and portable systems and the potential for both a longer recovery and a higher rate of long-term growth."

The latest forecast update boosts growth from earlier projections of 12.6% in the fourth quarter of 2005, 14.1% for full year 2005, and 9.1% in 2006.

If the forecast holds, it would make 2006 the fourth consecutive year of double-digit shipment growth and raises the four-year CAGR for 2005-2009 to 9.4%.

Total shipments are expected to reach nearly 300 million units annually in 2009. Shipment value is expected to grow by 3.5% in 2006 with a CAGR of 3.6% from 2005-2009, increasing the value of shipments to more than $250 billion annually in 2009.

IDC called the outlook in the U.S. "fairly strong," led by booming portable demand and consistently strong growth in the business market.

                                            '04           '05*          '06*          '06 % Change

U.S.                                                                                          

Consumer                             21.8            23.6            25.6            8.7%

Business                              36.5            40.6            43.8            8.1%

Total                                    58.3            64.2            69.5            8.3%

World                                                                                       

Consumer                             64.3            77.5            86.0            11.0%

Business                              115.1          130.2          143.5          10.2%

Total                                    179.4          207.7          229.5          10.5%

In millions of units. Source: IDC, December 2005

SOFTWARE

Content Management Market at $1.3 billion in 2004, Anticipated to Reach $4.5 billion by 2011

Analysis indicates that the combined software license markets at $1.3 billion in 2004 are anticipated to reach $4.5 billion by 2011.

 

According to Research and Markets: "The market for enterprise content solutions relates to management of unstructured information. The ability to control enterprise content is central to IT. 90% of information transmitted on the network is unstructured."

Content management offers a range of capabilities: digital asset management, lifecycle management collaboration, web content management, storage management, Sarbanes-Oxley compliance, and document process management are aspects of the content management markets, says the report.

The trend is for enterprises to depend on content management software to achieve more efficient business process operation. Enterprise content management solutions are industry specific and may span several different product sets.

Market growth of the content management market segment is tied to the transfer of the paper-based enterprise to an enterprise that manages all information electronically.

Research and Markets

Synplicity, Inc. FPGA Synthesis Market Share Increased 9 percent in 2004 to 67 percent

Synplicity, Inc. (Nasdaq: SYNP), a leading supplier of software for the design and verification of semiconductors, today announced the company grew its worldwide FPGA synthesis market share lead in 2004 by 9 percentage points over 2003, according to Gartner Inc., the leading provider of research and analysis on the global information technology industry. In Gartner's recently released 2005 EDA Market Trends report, Synplicity's share of the FPGA synthesis market was 67 percent based on 2004 license and maintenance revenue, compared to 58 percent in 2003. Synplicity has now held the top spot for FPGA synthesis for five consecutive years.

According to Gartner, Synplicity's share of the FPGA synthesis market has grown from 45 percent in 2000 to 67 percent in 2004. Synplicity attributes this rapid growth to its emphasis on product innovation, quality of results, close relationships with the silicon vendors, its focus on customer satisfaction, and its direct worldwide sales and application engineering teams.

"With today's FPGAs rapidly increasing in size and complexity, a premium is placed on advanced tools that enable design teams to quickly deliver outstanding results," said Gary Meyers, president and CEO of Synplicity. "Through our long-standing and close partnerships with the silicon vendors, we provide our customers with leading-edge design solutions. This, combined with our consistent delivery of innovative solutions that accelerate our customers' time to market and our investment in a worldwide direct channel that understands the challenges our customers face, allows us to establish and maintain our dominant position in the FPGA synthesis market. Moving forward, we expect the overall FPGA market to continue to grow and believe we are well positioned to meet the increased demand for tools that enable designers to meet their cost, time-to-market and performance goals."

Dataquest's annual market share and forecast report titled, "Market Trends: Electronic Design Automation, Worldwide, 2005, was compiled using a variety of data sources including Gartner's research, EDA vendor-submitted responses and detailed end-user surveys. Synplicity's leadership position was based on 2004 license and maintenance revenues for Synplicity's FPGA synthesis products including Synplify® Synplify Pro® and Amplify® FPGA synthesis solutions.

EDA Market Down 0.6 percent in 2005 to $3.96 billion, predicted to rise to 5.69 billion in 2009; Market for ESL tools expected to grow annually at 35.7 percent over the next five years

Electronic Design Automation (EDA) revenue growth will remain stagnant until new leaders emerge, and new technologies could displace the companies that currently dominate the sector, according to a report released earlier this month by Gartner Dataquest.

The report on worldwide EDA market trends, compiled by Gartner Dataquest EDA analysts Gary Smith, Daya Nadamuni, Laurie Balch and Nancy Wu, contends that customers are hungry for electronic system level (ESL) tools, but that there is a lack of these tools available. This lack of ESL tool availability, the report said, is "the only thing keeping register transfer level (RTL) tool sales growing."

On the bright side, the report indicates that the EDA industry finally has a set of proposed ESL methodologies that appear to work, the first crucial step toward ESL tool sales growth. "The market may be on hold as far as sales are concerned, but the new technologies are advancing rapidly," the report said. Gartner Dataquest forecasts that the market for ESL tools will experience a compound annual growth rate (CAGR) of 35.7 percent over the next five years, but firm hopes the rate will be even higher, "because this market needs explosive growth to pull the world of EDA out of its doldrums."

Citing the late arrival of 65- and 45-nanometer design tools to the market, Gartner Dataquest forecasts that the EDA market declined roughly 0.6 percent in 2005, coming in at an estimated $3.96 billion. The market research company forecasts EDA revenue will rise to 4.27 billion in 2006, 4.65 billion in 2007, 5.15 billion in 2008 and 5.69 billion in 2009.

Citing the lack of ESL tools, Gartner Dataquest forecasts that the RTL tool market will grow more than 9.8 percent in 2006, reaching nearly $1.4 billion. The forecast calls for RTL growth to reach 1.52 billion in 2007, 1.64 billion in 2008 and 1.78 billion in 2009, an overall CAGR of 7 percent. "Once the move to ESL is complete, the RTL market will be a small to no-growth market," the report states.

The report points to a feeling within the design community that ESL and design-for-manufacturing (DFM) challenges, which were the talk of the industry for much of 2005, will completely revamp the EDA market, displacing leaders Cadence Design Systems Inc., Synopsys Inc. and Mentor Graphics Corp. According to the report, unidentified design experts draw a parallel between the current situation and that which took place in the 1980s, when then-startups Cadence and Synopsys offered RTL tools that displaced the dominant EDA vendors of the time, such as Daisy Systems Corp. and Valid Logic Systems.

"This is the inflection point we've been talking about," the report said. The report also decimates the idea that there is currently a "DFM market." Instead, the report asserts, "DFM seems to be a general term, similar to verification, which includes multiple markets." The best use of the term, the report says, is as an adjective used to describe a tool — "DFM-aware router" is presented as an example.

Using data from 2004, the Gartner Dataquest report also breaks down company market share in each of the various EDA markets.

The MathWorks leapt to the top of the ESL design and simulation in 2004, capturing 33 percent of the market, the report states. Synopsys, with 26 percent, and CoWare Inc., with 19 percent, were the only other companies with double digit market share in this space. Cadence, which had 28 percent market share in this space in 2003, according to Gartner Dataquest's 2004 market trends report, saw its share erode to 8 percent.

In the $263-million logic synthesis market, Synopsys maintains a dominant 85 percent market share, according to the report, which forecasts that this market will slowly but steadily, reaching $291 million in 2006 and $329 million in 2009.

Gartner Dataquest

IT Security Market at $21 billion in 2004, with Access Control System & Devices Industry Market at $1.8 billion

An impressive growth of the IT security market at $21 billion in 2004 is accompanied by growth-induced anti-viruses and firewalls. Markets for access control systems and security applications, which are worth $1.8 billion, have become progressive in the post Fahrenheit and 7/7 incidences. Thus, an emergence of demand for safe logical access and authorized physical access for safe networking has taken place. They should be highly authenticated with minimum human intervention.

A recent market research report by RNCOS, "Access Control Technologies and Market Forecast World Over [2007]" discusses that 40% of global businesses require establishing security systems in their premises costing $4.08 billion in 2007. While the market research report gives a study of demand for access control market technology, there is more about R&D for secured and innovative solutions.

In the present era when use of smart cards is rapidly growing and accommodating immigration control, biometric identification is a primary tool. Large investments are expected in this sector. Organizations are also merging new technologies in biometrics with existing ones essentially to benefit on costs and quality.
RNCOS

Video Surveillance Software $160 Million in 2004, to Reach $700 Million in 5-6 Years

The installation of video surveillance software helps buyers to save on costs by recruiting lesser workforce that would be deployed to monitor. The cost thus saved happens every time there is a use of this software. Moreover, it is more reliable and has remote accession facilities.

According to a recent market research report, "Access Control Technologies and Market Forecast World Over [2007]" published by RNCOS, the assessment shows that revenues from sale of video surveillance will become four fold to $700 m by the next 5-6 years as against $160 m in 2004. This dramatic rise will be due to the usage of the Internet as a mode of surveillance with cheap CMOS cameras. The report further says that the video surveillance market has been especially steady in its growth in the US and is expected to continue till 2006. This market alone in US is expected to earn worth $1 billion.

Vendors need to explore the market segments in terms of participation, evaluation of investment and installation, so that they are able to weigh the market prospects and gain greater profits. For the end-user who has a network installation, use of video surveillance is worthwhile, as it requires no further investment for setting up a new network.
RNCOS

HOUSING

U.S. Existing Home Sales forecast to be about 6.8 Million in 2006
The National Association of Realtors said an annualized 6.97 million houses were sold, compared with 7.09 million in October. Economists were expecting 7 million. The supply of houses available for sale also increased.

Wachovia Securities economist Phillip Neuhart said that while a 6.97 million rate in one month is "an incredibly strong number... it is clear that the housing market is decelerating from the peak levels it achieved in 2005."

He said Wachovia's economists look for existing home sales to be "somewhere in the neighborhood of 6.8 million in 2006."

Last week the industry said new home sales fell to a 1.25 million annual rate in November from 1.4 million in October. Economists had forecast 1.3 million.

The housing industry has been a bedrock of strength for the U.S. economy over the past four years, although housing markets vary by location. But in November, all regions of the country experienced declining sales of previously occupied homes.

The Atlanta Journal and Constitution

Canadian Housing Starts Forecasted to fall in 2006 to 207,200 from 223,600 in 2005

Canadian Housing starts at a national level reached their peak in 2004 at 233,400 before edging down to an expected 223,600 this year. CMHC is forecasting they will fall further to 207,200 next year. If that forecast holds up, it will mean that starts will be above 200,000 for five years running, something not seen since the 1980s when the boomers were driving demand in the market.

EMPLOYMENT

United States Job Market Likely to Continue Improving in 2006

The biggest job gains are expected to come in the financial services, technology, health care, energy and international business sectors, which together could create as many as 1.3 million jobs next year, according to the 2006 job market outlook released in December by global outplacement firm Challenger, Gray & Christmas Inc.

“A return to a late 1990s-style hiring frenzy may be only a matter of time,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas. Employers are adding jobs at a strong pace and there is no indication that this will weaken in the coming months. More than 1.7 million jobs have been added in 2005.

The Challenger annual forecast also listed the top job categories that employers will be clamoring to fill. These include accountants, petroleum engineers, financial planners, physical therapists, computer support specialists and international sales and marketing managers.

Several signs point toward continued hiring in 2006. In a post-Hurricane Katrina survey by the Business Roundtable, 33 percent of chief executive officers from the nation’s largest corporations said they expected to increase their payrolls in the next six months.

Another survey found that 66 percent of small and medium-sized companies — which employ the most Americans — plan to add employees in 2006.

The National Academy of Sciences recently reported that American universities graduated just 70,000 engineers in 2004, compared to 500,000 in China and 200,000 in India.

“Those who enter the 2006 job market with math, science and other technology skills can write their own ticket,” Challenger said. “The key to success is always keeping these skills up to date. Those who graduated 10 years ago with degrees in computer engineering but have not kept up with the rapid changes taking place in the field should not be surprised by the lack of job offers.”

Sales and marketing executives specializing in international markets will be particularly sought after as American firms try to tap the growing populations of middle-class consumers in China and India.

“No amount of protectionist measures will keep the global economy from burgeoning,” Challenger said. “The Internet has made sure of that. Those who embrace the change and adapt will reap the rewards of higher profits and increased job creation. Those who yield to pressure from isolationists will be left behind.

CONSUMER GOODS

Global TV Market Growing Rapidly; High-Definition (HD) Broadcasting Expected to be Widely Available Globally by 2010

The global TV market is growing rapidly. In the world’s largest market, the United States, all TVs will be required to have an internal digital tuner by 2007. Various countries in Asia, including Korea, have begun to offer full-fledged digital broadcasting as well. Accordingly, high-definition (HD) broadcasting is expected to be widely available globally by 2010, with conversion to HD TVs taking place rapidly.

In particular, digital broadcasting for the 2006 World Cup in Germany and 2008 Olympics in Beijing should work as a catalyst for the expansion of the digital TV market. In Europe, broadcasters introduced HD late last year and will launch a new HD-class paid service for the World Cup in Germany. In North America and Korea, terrestrial HD broadcasters will stimulate consumers’ desire to enjoy new, richer services through large-sized plasma display panels (PDPs) and liquid-crystal display (LCDs). As HD TVs become commonplace and high-quality pictures proliferate, demand for high-quality contents should also increase, causing a simultaneous growth of TV broadcasting services and devices.

In the fiercely competitive display market, demand is growing for a wide range of products competing on size, picture quality and price. As such, it is not easy to forecast whether a particular type of display, if any, would rule the day.

Among flat panel TV sets 40 inches or larger, PDPs are now feeling increased competition from LCD TVs. Still, PDPs are expected to retain a competitive edge for sets at least 50 inches in size. In the last few years, the technical barriers to produce large-size plasma and LCD displays have been overcome, making them increasingly affordable and popular.

Although Microdisplay Rear Projection TVs are intrinsically bulkier than flat panels, they are deemed to provide good performance relative to price. Their picture quality is also considered at least equivalent to or better than other HD TVs, allowing them to retain competitiveness in large-screen models. Additionally, Tube TVs which still offer exceptional picture quality are now designed with drastically reduced weight and thickness, while costs have continued to be streamlined.

This year in Korea, Samsung Electronics has already commercialized both 57-inch LCD TVs and 80-inch PDP TVs. Developing progressively larger displays is a roadmap for technology advancement. The ultimate benefit of cultivating such technology is to commercialize products that deliver superior customer satisfaction. The development of 102-inch PDP TVs and 82-inch LCD TVs is paving the way for full-scale mass production of today’s 50-inch PDP TVs and 40-inch LCD TVs and tomorrow’s even larger HD TVs.

Samsung, which recently became the world’s No. 1 TV brand by revenue, plans to expand its large-screen, high-margin visual display business. Samsung’s strategy includes delivering a comprehensive lineup of all flat panel solutions, supported by component excellence in LCD, PDP, and microdisplay technologies.

Moreover, to realize the promise of digital convergence in today’s Digital Age, Samsung Electronics is also developing digital TV-based home network technologies.

Samsung Electronics is leading the digital networking market with XHT (Expandable Home Theater) technology, which was recently adopted as a U.S. standard. XHT is a technology capable of controlling not only a TV and connected visual and audio devices, but also multiple TVs, by employing IEEE1394 (Firewire) to deliver rich content via internet protocol standards.

In today’s home, a consumer must have a digital broadcast receiver for each TV on which he or she wants to enjoy digital TV broadcast programming. For example, if the TV in the bedroom does not have such a receiver, the consumer would have to watch the TV in the living room that is connected to a digital broadcast receiver or equip the one in the bedroom with a receiver. With XHT Technology, the consumer will be able to watch digital broadcasting on the TV in the bedroom through a digital broadcasting-sharing feature from the living room TV. The XHT-enabled living room TV can deliver content of any connected device, such as DVD player, home theater, digital camcorder, to any other TV on the home network. Consumers in various rooms in the home will be able to enjoy digital broadcasting and peripheral digital devices without incurring additional costs, thus spurring the proliferation of digital TVs throughout the home.

Samsung Electronics enjoys a number of competitive advantages, which form the pillars of its market leadership strategy. Through technology leadership, world-class supply chain management, speedy decision-making, and outstanding human resources, Samsung is poised to win in the Digital Age. With its recent opening of a state-of-the-art Digital R&D center—the largest in Asia—Samsung Electronics plans to continue leading the global digital TV industry.

Choi Gee-sung, President and CEO of Digital Media Business, Samsung Electronics

Video Game Industry Software Declined by 7.8 percent in 2005

Citing lackluster sales in the game-machine market, investment banking firm SG Cowen Securities Corp. has reduced its forecast for the video software game industry in both 2005 and 2006.

The U.S. video software game industry is projected to decline by 7.8 percent in 2005, according to SG Cowen (New York). Originally, the firm projected the market would fall by 4.1 percent in 2005.

The reduced forecast is due in part to supply constraints for Microsoft Inc.’s Xbox 360 game machine, which is more “severe” than originally thought, according to SG Cowen. Sales for Nintendo Ltd.’s Game Boy Advance have also been disappointing.

SG Cowen also reduced its estimates for software makers Activision, Electronic Arts and Take-Two.

SG Cowen Securities Corp.

Furniture & Bedding Forecast 4.3% Increase in 2006 to $82 Billion

The American economy is still performing fairly well. Real GDP growth stood at 3.6% in 2005, only slightly down from 4.2% the year before. However, growth decelerated while the year progressed and this trend became more pronounced in the last quarter of 2005. For the next two years, GDP growth will likely remain lackluster. We predict an average advance of only 3.0% for 2006 and even less next year.

Helped by an expected increase in job creation, personal income may hold up better than the economy as a whole. The growth rate stood at 5.9% in 2004 and 5.3% in 2005. It will probably continue to grow at a rate in excess of 5% during the next two years. However, if we take inflation and taxes into account, the anticipated growth rate of real disposable income will be only about 2.5%.

Growth of American consumer spending stood at 3.9% in 2004, and 3.6% last year. We believe that the pace will slow down this year and next, to match the 2.5% growth rate of real disposable income

The durable consumer good market is subject to erratic fluctuations as such goods are quite sensitive to consumers’ confidence and household expenditures. After growing by a staggering 10.8% in the third quarter of 2004, it descended to a meager rate of 2.6% in the first quarter of 2005 only to rise again to 10.5% in the third quarter (all rates are annualized). The average annual growth last year amounted to 5.5%. Similar to overall consumer spending, durable good consumption will grow much slower in 2006 and 2007, estimated at 2.3%.

Residential construction was a very strong sector of the American economy during the past two years. Thanks to low mortgage rates, the performance remained robust in 2004 growing at an average rate of 10.3% (in value terms). The housing market is now a bit oversupplied, and growth dropped to a still respectable 7.3% last year. The slowdown in the construction sector is likely to continue for the foreseeable future with annual growth rates dropping below 3%. In volume terms, this translates to approximately 2.04 million new housing units in 2005 but only an expected 1.80 million in 2006.

Furniture consumption in the USA was weak during the first three years of this century. Fortunately, the sector entered a strong recovery phase, recording a 7.9% growth rate in 2004 and 3.8% last year. In line with the growth of real disposable income, we foresee a slightly faster rate of 4.3% in 2006, bringing the market value to about $ 82 billion.

For more information on this report or to contact AKTRIN about a wide selection of home furnishings industry specific research reports contact aktrin@aktrin.com or visit www.aktrin.com.

Furniture World Magazine 

INDUSTRY

AEROSPACE 

Slowdown in Asian Airline Market Predicted

The Center for Asia-Pacific Aviation (CAPA) said in its annual outlook report that, despite bold expansion plans among many carriers, global uncertainties could undermine future operations.

CAPA's gloomy prediction could indicate that the region is finally buckling under market pressures that have forced several major Western airlines, including American and Northwest, and numerous budget carriers to the brink of bankruptcy. It could also impact on business travelers who rely on the expanding regional air network to connect to Asia's emerging powerhouse economies.

Unlike elsewhere, Asia's airlines have been enjoying rapid growth in recent years, ordering an unprecedented number of aircraft for 2007 delivery. But the Sydney-based research group said the next 12 months were likely to prove the "quiet before the storm" with a predicted rise of pilot shortages and industrial tensions as airlines resort to outsourcing and wage cuts to trim budgets.

"As we enter 2006, there is a higher than usual level of unpredictability, as the still-unknown impact of higher fuel costs continues to flow through consumer spending," CAPA's executive chairman Peter Harbison said.

He said the coming year would be a time of consolidation as the region's airlines counted the cost of factors including high fuel costs, bird flu, Severe Acute Respiratory Syndrome and global terrorism.

"If, for whatever reason, their efforts are thwarted, it places in jeopardy strategic development plans which are essential to their medium term futures and, in some cases, to survival," Harbison said.

He said China's ongoing economic growth would make it a cornerstone of Asia's air industry, while India's aviation reform program and moves towards greater liberalization in Southeast and North Asia would be influential factors in 2006.

CAPA said the pilot shortage would hit hard in China, where airlines would fall deeper into debt to pay for fleet upgrades.

"This offers difficult choices for the administration, anxious on one hand to ensure economic viability of its three major airlines, while constantly being pressured to admit new independent entrants," the report said.

Hong Kong would see the most significant changes with the emergence of new airlines forcing local operators to rethink their policy towards budget carriers.

The report predicted continued frictions in Singapore as low-cost airlines expanded further, while intense regional competition from no-frills outfits like AirAsia would force Malaysia Airlines to restructure.

"The airline will face a watershed year in 2006 as the government's patience runs low and AirAsia continues its growth pattern," it said.

Air New Zealand and Japan Airlines were both expected to face problems as they cut costs either through lower salaries, redundancies or by decommissioning ageing aircraft.

"It is improbable that these changes will be introduced without upheaval," it said.

FOOD

Russia Sugar Beet Output at 2.5 Million Tonnes in 2005, up from 2.25 Million Tonnes in 2004

Russia may break its own all-time record for sugar beet production in 2005, the Agrarian Market Affairs Institute (IKAR) has forecast.

Sugar output from sugar beets will total 2.5 million tonnes in 2005 against 2.25 million tonnes in 2004, IKAR said. The previous record of 2.48 million tonnes came in 1993.

The Russian Sugar Producers' Union said that sugar beets were still being processed at 13 plants as of December 21. Based on the number of roots left to be processed, six plants are expected to be working in January 2006.

Growth in sugar beet production has been continuing for the last few years despite an 8% drop in the area that can be planted with such crops in 2004 and a 4% decrease in 2005, experts say. The growth is attributable to an increase in the yield of sugar beets.

Russia annually consumes about 5.5-5.7 million tonnes of sugar. The remaining sugar it consumes comes from the processing of imported raw sugar.

Interfax

World Coffee Production for 2005-2006 Forecast at 14.94 billion pounds, down 7 percent

World coffee production for 2005-2006 is forecast at 14.94 billion pounds, or 113.2 million bags, down 7 percent from last season, the U.S. Department of Agriculture's Foreign Agricultural Service reports.

Production is down in Brazil (to 36 million bags) and Mexico (to 4 million bags) but up in Vietnam (to 12 million bags).

The Hawaii coffee harvest now under way is forecast to total 6.4 million pounds, 19 percent larger than last year's. The bulk of the world coffee market is commodity coffee. Hawaiian coffees are specialty coffees, a smaller, pricier, separate market that does not always track trends in commodity beans.

U.S. Department of Agriculture's Foreign Agricultural Service

TRANSPORTATION

U.S. Vehicle Sales Flat in 2005

A lackluster December was expected to cap a dismal year for U.S. automakers, who saw Asian competitors eat away at their market share throughout 2005. Analysts are forecasting a weaker month than December 2004, as the impact of traditional year-end deals was muted by deep discounts over the summer. However, the month's sales are likely to be vastly improved from the autumn slump that followed the end of the summer's promotions.

Full-year sales were expected to be essentially flat, but with market share losses for the Big Three, whose best sellers - gas-guzzling trucks - fell out of favor. General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group had a combined U.S. year-to-date market share of 57 percent at the end of November, down from 60 percent two years before. Robert Barry, an analyst with Goldman Sachs, estimated their December market share at 54.5 percent, down from 58.1 percent last year.

Early numbers released midmonth indicated that sales got off to a slow start in December, traditionally a time of brisk sales thanks to year-end deals. U.S. sales were down 14 percent for the first 11 days of the month, according to the Power Information Network, a division of the marketing research and consulting firm, J.D. Power, and Associates.

Though the pace picked up later, analysts John Murphy of Merrill Lynch and David Healy of Burnham Securities, both predicted December sales would be 5 percent below year-ago levels.

GM, Ford and Chrysler saw sales soar to near-record levels this summer with discounts that let consumers pay the employee price. But sales plummeted as soon as the discounts expired in October. "The programs were more about 'reallocating sales' than stimulating demand," Barry said in a research note.

Sarah Karush, Associated Press

US Auto Market Sales Forecast 16.8 million units for 2006

Automotive experts predict 2006 will look a lot like 2005: a decent national economy, steady sales, but high gas prices—and more brutal competition for automakers.

Even with the stable sales outlook, it’s unclear when the automotive operations at General Motors Corp. and Ford Motor Co. will become profitable again, putting pressure on the automakers to reduce costs, preserve cash and boost revenues.

The industry is expected to finish 2005 with sales of about 16.9 million units. Paul Taylor, chief economist for the National Automobile Dealers Association, forecasts industry sales of about 16.8 million next year. Sales are still down from a peak of 17.4 million in 2000, but they are holding steady.

Beneath the sales outlook, there is good news and some bad news for Detroit automakers, Taylor said. Sales should remain strong for some of Detroit’s newest models, such as the Chrysler 300, Ford Mustang and Fusion, and the Pontiac Solstice.

But the North American market will continue to be deathly competitive, with competition from Toyota, Honda, Nissan, Hyundai and Kia keeping prices down. Foreign automakers also will add new models and U.S. factory space to boost output next year, adding to the pressures.

GM and Ford will be undermined by high operating costs, volatile gas prices, rising interest rates and uncertain consumer confidence, according to Scott Sprinzen, analyst with Standard & Poor’s.

"Market share for these two companies has eroded significantly, and sales of their most profitable products have plummeted," Sprinzen said.

Auto Suppliers Hampered by Production Declines at GM and Ford through 2008
Production cuts at Detroit’s two biggest automakers and ongoing pricing pressures will continue to hamper auto parts makers in 2006.

"You’re going to see production declines by both GM and Ford through 2008," said BNP Paribas analyst Brad Rubin. "That’s going to have a negative impact on any supplier that has a large dependence on GM and Ford."

GM and Ford are expected to cut 2006 output by 5 to 10 percent each, Rubin said. The reduced output will make matters worse for part suppliers such as Delphi Corp. and Visteon Corp. that are already struggling financially. It’s unclear when they will become profitable.

Key concerns for North American auto suppliers in 2006 are a potential strike at Delphi and its impact on GM; uncertainty about GM’s new large SUVs and pickups; and fluctuating gasoline prices that threaten to keep light truck sales depressed.

Raw material prices are expected to remain high, too, hurting suppliers, many of which have been unsuccessful this year at passing the cost on to automakers.

The industry could see additional consolidation in 2006 as outsiders such as Wilbur Ross take advantage of low prices and suppliers shed non-core business lines. And 2006 could see more suppliers reorganize under bankruptcy. But more credit downgrades are expected in the near term for auto suppliers, and they will continue to outpace upgrades, S&P says.

Japan's Daihatsu Motor Co. plans 19.8 percent increase in Production to 1.398 million vehicles for 2006

Japan's Daihatsu Motor Co., the minivehicle arm of Toyota Motor Corp., said it plans to produce 1.398 million vehicles globally in 2006, up 19.8 percent from this year.

Daihatsu, Japan's second-biggest maker of 660cc minivehicles after Suzuki Motor Corp., forecast 17.3 percent growth in overseas output to 332,000 units, and a 20.6 percent jump in domestic production to 1.066 million vehicles.

The numbers include vehicles built by Daihatsu for sale under the Toyota badge.

Daihatsu, which primarily serves the stagnant Japanese market, forecast a 4.5 percent rise in domestic sales to 630,000 units, and a 10.7 percent climb in exports to 124,000 units.

Daihatsu is aiming to boost its presence overseas to ensure continued growth, but faces tough competition from rivals such as Suzuki Motor and South Korea's Hyundai Motor Co., which have secured a strong foothold in emerging markets such as India and China.
Reuters

UK New Car Sales down 5 percent in 2005 to 2.43 million cars

Sales of new cars have fallen at their fastest rate for more than 11 years. The data from the Society of Motor Manufacturers and Traders (SMMT) followed what was generally recognised as a bumper year for car sales in 2004.

About 2.43 million cars were sold in 2005, down 5 per cent on sales of 2.56 million the year before, the SMMT said. The fall is the biggest since 1994 and the first time new car sales have slipped below 2.5 million since 2001.

However, a spokesman for SMMT said the drop followed an "unsustainable high" last year. He said: "We saw a fantastically high level of car sales in 2004 after two years of growth and now there is a levelling out, although it is still at a very good level. It is caused by interest rate rises and we expect a further 2.5 per cent fall in sales next year, but the industry has nothing to worry about."

Professor Garel Rhys, the head of the centre for automotive industry research at Cardiff Business School, said the fall was "very considerable and significant" and reflected caution among consumers. He forecast a further sales drop of 2 per cent next year, with a rise in 2007.

He said: "The 2005 sale still makes the UK market one of the biggest in the world. But it is not going onwards and upwards."

The full SMMT statistics on 2005's car sales will be published next week and are expected to show that the Ford Focus was, for the sixth year running, the best-selling car in 2005, followed by Vauxhall's Astra and Corsa.

Pulp and Paper Chemicals

The following presentation in Oct 2005 by Kemira provides their estimates of market share in pulp and paper chemicals. They estimate Ciba as # l and Kemira as #2

worldind/worldproducts updates/Pulp_Paper_CMD_13092005.pdf