Peter Fuss of Ernst & Young and Andy Walton, Huntsman’s strategic marketing manager, automotive, opened the recent Automotive Polyurethanes, for performance and profit conference in Amsterdam. Simon Robinson reports.
The polyurethane industry has to understand the forces affecting the automotive industry if it is to take advantage of the opportunities that localisation, light-weighting, the move to hybrid and then electric cars offer in the future, said Peter Fuss, of Ernst & Young.
The automotive industry is on the edge of a new round of reinvention driven by lower emissions and the need to conserve resources. “The car needs to go on a diet,” he said.
Today, he said the “global car park is around 900 million cars, by 2050 we will get to a global car park of around 2 billion cars. This is a good figure, it’s a global growth industry,” he said.
Andy Walton, strategic marketing manager, automotive, Huntsman said: “The thought of 2 bn cars by 2050 is a good thing. We have a future industry ahead of us. The challenge is that the thought of sitting in traffic is a downside.”
Fuss added: “If we continue to design cars as we have in the past, we will need twice as much fossil-based input as today. This is unsustainable. It will take a significant effort to get to 2bn cars and use less resources than today. Whether we like it or not, the pressure is there. The regulators, whether they are in Brussels, Silicon Valley or China they all live in the same world,” said Fuss.
Walton said: “In the 30 years from the 1970s to 2000 cars doubled in weight thanks to added features such as safety, air con and improved comfort. We spent the next 11 years trying to go on a diet, and we've done a bit of slimming, but there’s still a long way to go.”
Polyurethane can contribute to reducing the weight, increasing the fuel efficiency and raising the volume of renewable content in cars, Walton and Fuss agreed.
“But this has to be seen in the context of a car industry that is changing shape and increasing in complexity. Asia-Pacific and other regions will grow. It is possible in future that European production will be cut, warned Fuss. As the centre of gravity of car production shifts towards Asia and away from Europe, regulations will increasingly be driven by the new locations, said Fuss. China now produces 18m cars/year, on a par with Europe, and China’s need to reduce pollution is starting to drive emission standards there. “Megacities, are going to drive the design of cars in the future and not the other way round. We have made cars for general use, now megacities are going to dictate what they want, for example zero emission in areas of China,” said Walton.
“If you look ahead 10 years there will be major production capacity in China, Brazil, Mexico and the US,” said Fuss. “When companies reach 100,000 or 200,000 cars sold in a region it makes sense to open production. It will replace European exports,” he said.
Walton said: “The increased use of platforms by car producers is one of the major changes over the last 20 years and the pace of this change is increasing rapidly over the next five years.”
In the future there will be “more global platforms, better economies of scale, better reproducibility,” said Walton.
It may make sense for the polyurethane converters such as foamers to locate its production close to their automotive customers when they start producing locally, Fuss suggested. A balance between centralised production and being close to the customer will have to be struck, Fuss added.
He did imply that there could be incentives for polyurethane converters to locate close to carmakers in the future. There is a “balance which we will need to understand between localisation and centralisation. Governments have only one interest and that is to benefit from car production and they want to employ other people,” he said.
Car production is moving out, or in