Monthly Archives: November 2010

Global Trade: Quid Pro Quo or Status Quo?

Hello everyone,

While I was writing this post, the G20 Summit was on in Seoul, South Korea. The world was obviously keenly following (though not with bated breath) the run-up to the summit (the G20 finance ministers had met at the same venue a couple of weeks earlier). With most countries differing in view with that of the U.S. and staunchly opposing any potential currency war, the joint declaration that “uncoordinated policy actions would only lead to worse outcomes,” while stressing the need to “move towards more market-determined exchange rate systems and refrain from competitive devaluation of currencies,” succintly summed up the deliberations. No surprises though, in the final analysis: Landed cost of imported products should hence not be significantly impacted in the short term.

COMPOSITES AND AEROSPACE

From a composites perspective related to aerospace, November apparently may not have begun very well. It is well known that carbon and glass fiber-based composites are used extensively in the Airbus A380 and Boeing 787 aircrafts. The temporary grounding of A380s by Qantas and Singapore Airlines and flight tests on the 787 by Boeing running into rough weather may have come as a dampener; more on engine-related  and mechanical issues rather than structural performance aspects related to composites. One hopes that these are minor hiccups and that demand for high performance fibrous reinforcements (glass and carbon) for the aerospace sector will continue to match the high growth projections.

However, elsewhere, there has been good news, in general, for composites:

-Another North American glass fiber supplier (Gibson) recently announced a price increase, effective January 2011. This follows price increases announced last month by PPG Fiber Glass and many leading resin  producers.

-A leading market research firm has forecasted recovery of the boating industry for the next five years, after the horrendous run of the past two years and flat growth in 2010. The demand for recreational boats is expected to register an upswing. [Reinforced Plastics, November 12 News Release]

-Close on the October 2010 announcement that its aramid fiber production lines are back to full capacity, Teijin announced last week, its intention to commission its first production line (in H2, 2011) of High Performance Polyethylene fibers based on Ultra High Molecular Weight Polyethylene — more popularly known by its acronym UHMWPE. When it comes to ballistic protection applications, this is good synergy. For the defense departments of advanced nations, there are now more options for bullet-proof vests and protective armoury (inserts, helmets, shields) — both from a materials as well as a suppliers perspective. Is DSM listening? While engineered yarns with glass fiber are light weight and effective, when it comes to comfort and durability, aramid and polyethylene fibers have a distinctive edge.

Speaking of technological breakthroughs, the world does require more of such innovative alternatives when it comes to protective armour, considering the fact that quest for peace is as elusive as Weapons of Mass Destruction (WMD)!

THE AUTOMOTIVE SECTOR

In the automotive sector, a late October Bloomberg news column spoke of the U.S. administration issuing a notification that large trucks must cut emissions as much as 20% by 2018 under the first standards proposed for work vehicles. In a publicised statement from the Environmental Protection Agency and National Highway Traffic Safety Administration, tractor-trailer trucks have to meet the 20% target while heavy-duty pickups and vans must reduce emissions by 10% for gas vehicles and 15% for diesel-powered models. Buses must cut emissions by 10%. By any yardstick, these have been termed historic standards as heavy trucks and buses are the energy hogs of America’s roadways. With the dual objectives of curbing pollution and oil imports, these standards would take effect from 2014 models. Glass and carbon fiber producers would have already started strategizing and making minor detours in their roadmap for the next 5 years while mapping the common final destination: Ability to demonstrate sustained return on capital. In other words, the ability of the fiber producers to generate returns that will allow them to continue to grow and invest.

GDP, GNI & HDI

In our ever changing world, it always makes sense to re-evaluate and redefine time tested norms and fundamentals. While GDP measures a nation’s economic output, the United Nations Development Programme (UNDP) began a forceful case for a new approach to thinking about development as early as 1990 in attempting to focus on the fact that people are the real wealth of a nation.

The Human Development Index (HDI) was developed to create a more human alternative to GDP. HDI essentially measures the well-being of a nation’s citizens, unlike GDP which measures economic output. A report released late last week, explains the formula that is a three-legged stool supported by the classic triad of Health, Income and Education as indicators. Health continues to be measured by life expectancy. But with income, the analysis shifted from Gross Domestic Product (GDP) – what a country produces to Gross National Income (GNI) – what a country earns. The most notable change occurred in regards to Education, with the HDI measuring two variables: years of schooling for adult population and expected years of schooling for elementary age children. On the occasion of HDI’s 20th anniversary, the U.S. made it to the fourth spot after Norway, Australia and New Zealand thanks to it’s higher per capita income. Changing trends in the economic analysis of nations? You bet!

Will the composites industry also be looking at additional/alternate ways of boosting usage through innovative cost-benefit analysis techniques vis-a -vis traditional materials and thereby shorten the concept-to-commercialization cycle?

Definitely food for thought!

DOMESTIC GOODS vs EXPORTS

The new economic paradigm also signifies a shift to focusing on strong domestic demand by nations rather than relying more on exports. Case in point is China, which has already started steering its economy away from exports, and towards domestic consumption. Globalization of trade would still continue as it is a necessity, but perhaps on a lower key for some time to come and not to the detriment of  any nation’s survival.

A case of  Quid pro quo ?

On a lighter vein…

BEER, ANYONE?

While China took over the mantle from the U.S. earlier this year as the world’s largest car market, did you know that Chinese beer drinkers surpassed the U.S. as top consumers as far back as 2002, and now knock back nearly a quarter of all beer produced in the world? Interesting statistic indeed recently from CNN !

That’s all for now, readers!

Till the next post….

Cheers,

S Sundaram

Email: SS@essjaycomposites.com
Twitter:
@essjaycomposite
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