Business Briefing: June 2008

CBI: Orders holding up amid up rising costs and prices

Some 31% of manufacturing firms in the CBI’s June Industrial Trends Survey reported order books as ‘above normal’ and 30% said they were ‘below normal’, giving a balance of +1%. Exporters’ order book levels have also improved since May (a balance of -5% compared with -12% in the previous two months).
For the third month running, manufacturers expect their output to be broadly unchanged over the coming three months, while 39% of firms expect to put up prices compared to 10% who say they will lower them in the next three months. Ian McCafferty, the CBI’s chief economic adviser said: "Manufacturing demand is holding up reasonably well. Manufacturers, especially those exposed to the global economy, have been less affected by the slow-down in domestic spending than other sectors. At the same time, however, there has been no let up from the impact of higher costs on manufacturers, and the CBI’s data shows firms still having to pass them on in higher prices."

QBD driving pharma sector

Global pharmaceutical equipment suppliers are booking exhibition space at ACHEMA 2009 in record numbers, event organisers have announced. “Pharmaceutical and biotechnology manufacturers are increasingly adopting quality by design (QBD) initiatives to achieve faster paybacks from their R&D investments, by generating robust, optimised processes that improve intermediate and final product yields,” explains Mike Day, UK and Ireland representative for ACHEMA. “For QBD to be effective, companies need to maintain a complete understanding of the range of relevant process technologies available. Their knowledge base often has to stretch from product development through to final dosage form manufacturing. With Process Analytical Technology (PAT) also becoming a key part of the QBD philosophy, ACHEMA offers a ‘one-stop’ snapshot of industry trends and innovations."

Pumps maker KSB on target

Pumps and valves maker KSB has posted consolidated sales revenue of around Euro1.77bn and a 43% rise in pre-tax earnings to €129 million and said its order book promised further growth for 2008. Chairman Dr Wolfgang Schmitt said KSB had again recorded a 10.9% increase in its order intake in the first five months of 2008 compared with the prior-year period due to major orders from the water sector and a buoyant industry business. KSB has also received more orders from the power plant construction industry, the waste water sector and building services than in the already strong previous year. Schmitt forecast that KSB will "come very close" this year to the sales revenue target of Euro1.9 billion for 2010. He also said that KSB intends to further increase the group’s return on sales, which rose to 7.3% in the past financial year.

Davy signs biofuels US biofuels partner

Endicott Biofuels and Davy Process Technology Ltd (DPT), part of Johnson Matthey, have entered into a long-term, multi-plant, technical collaboration to develop the next generation of biodiesel facilities in the US. Under the deal, EBF will be licensed to use DPT’s esterification technology in North America for a class of biodiesel plants that will be feedstock flexible, using non-food feedstocks, such as non-edible agricultural process waste products. The agreement provides for multiple plants and the sharing of intellectual property developed from the technical collaboration. EBF is currently developing its first facility, a state-of-the-art plant to produce 100 ktpa of fatty acid methyl esters, or biodiesel. This plant is due to start commercial operation in mid-2010.

BP stats chart energy demand

Global energy consumption growth remained robust in 2007, driven by above-average economic growth and despite continued high prices, according to the BP Statistical Review of World Energy 2008. Divergent price movements, between fuels and regions, affected energy market developments in 2007. Crude oil prices rose for a sixth consecutive year - the longest unbroken period of growth in our data set. Natural gas prices increased modestly except in Europe, where spot prices fell substantially. For a second consecutive year, steam coal prices fell in North America but increased elsewhere.  World primary energy consumption increased by 2.4% in 2007 - down from 2.7% in 2006, but still the fifth consecutive year of above average growth. Global oil consumption grew by 1.1% in 2007, while world natural gas consumption grew by an above-average 3.1% in 2007, although only North America, Asia Pacific and Africa recorded above-average regional growth. Coal was the fastest growing fuel in the world for the fifth consecutive year. Global consumption rose by 4.5%, above the 10-year average of 3.2%.

GE Fanuc seals MOST deal

GE Fanuc Intelligent Platforms has completed its acquisition of MTL Open System Technologies (MOST) product lines including the MTL8000 general purpose I/O, intrinsically safe I/O, SafetyNet system, and process control technologies. Bill Estep, VP of GE Fanuc’s control systems business, claimed:  “This acquisition illustrates GE Fanuc’s commitment to the process market segments ... by providing customers with a superior line of SIL2 controls, intrinsically safe rated I/O modules and process control technologies.”  The MTL8000 I/O and its  technologies are used in demanding process control applications and is built to withstand the extremes of temperature and vibration as well as the hazardous and corrosive gases. SafetyNet is a SIL2 certified system for safety-related applications, including process shut down, emergency shut down systems and burner management systems.

Touchscreen displays to grow

Sales of global touchscreen operator terminals are on track to exceed 2 million units in 2012, more than double the quantity in 2006. Products with displays of less than 5.5” and greater than 15.0” will grow even faster than this, said an IMS survey of operator terminal suppliers. Machine builders and end users, it found, increasingly prefer to use either very compact touchscreen operator terminals or products with displays at the top end of the range. The main reasons were decreasing display costs, increasing display performance and, in the case of the larger displays, the ability to display more information. Market analyst, Mark Watson, said: “The trend seen previously in the desktop PC market for users to adopt larger displays is now also visible in the market for touchscreen operator terminals ... End users require increasingly larger displays in order to present greater amounts of more detailed process or machinery data. This, together with falling costs, is driving the trend to larger display sizes. Operator terminals with 15.0” displays are likely to be the largest in the market for the foreseeable future.”

Wireless partnership

Rajant Corp., a provider of portable, reliable, and wireless networking systems and Carlson Software  have started a partnership to serve the mining and construction industries. The partnership combines Carlson’s suite of civil, surveying, mining, construction, machine-control, GPS and positioning software applications over Rajant BreadCrumb wireless mesh networks. Carlson products work with the AutoCAD engine and as add-on software to AutoCAD and AutoCAD Map. Rajant wireless mesh networks are deployed worldwide, including a mine-wide installation at the Kennecott Utah Copper mine at Bingham Canyon, owned by Rio Tinto.

Shifts in the DAQ market

A new market study from Venture Development Corp. notes that shipments of data acquisition systems to markets in the Asia-Pacific region for both the external chassis and modules and plug-in analog I/O boards set to overtake those to Europe, the Middle East and Africa within the next four years. This, it links, to the rapidly increasing manufacturing operations in countries there, particularly China. Moreover, manufacturers in other regions are moving operations to the region. Part of the increases in capital investment by these firms will be in data acquisition products, both for use in manufacturing operations and in the design and testing of new products. In addition, these countries have growing needs for environmental monitoring, and in medical applications. Meanwhile, overall market growth rates are higher for the external chassis and modules than the plug-in analog I/O boards. There continues to be an ongoing trend in data acquisition applications to the use of external devices, especially USB PC front ends instead of plug-in analog I/O boards. The external products are attractive because of their portability and nature as computer peripherals rather than installed components that become permanent parts of a computer.

Shell boss targets Asia challenges

Shell / N/a: Asia Pacific remains the most exciting region for petrochemicals, Shell Chemicals executive vice president Ben van Beurden said at the recent Asia Petrochemical Industries Conference in Singapore. By 2010 around 30% of Shell's chemicals manufacturing assets will be located in Asia Pacific and the Middle East, and focused primarily on supplying the Asia Pacific market. However, van Beurden added, the region;s industry will face significant challenges relating to energy and feedstock availability and climate change. "Unless we take quick action, the concentration of CO2 and other greenhouse gases in the atmosphere could reach levels which would have serious climate change consequences ... "We can and will develop new energy resources. We can and will develop new feedstock routes. And we have already shown an ability to increase our energy efficiency and reduce the environmental footprints of our plants and processes."

EIU study: Credit crunch drives manufacturing change

An Economist Intelligence Unit survey of over 600 senior executives across Europe and the US reveals that 65% of top bosses in the manufacturing sector say their change programmes – structured approaches to implementing and managing change within a company – are a direct response to the credit crunch. Accordingly, 33% of manufacturing leaders plan to increase their spending on change initiatives over the next 12 months, while 21% intend to spend less, the Celerant Consulting-commissioned study found. Some 54% of leaders in the manufacturing sector say that improving their company’s operational efficiency is the top issue on their agenda. The next most common priority was creating a new organisational structure with new roles (44%). The manufacturing sector sees reducing cost as significantly more important than increasing revenue (49% v. 33%), figures which are broadly in line with the survey as a whole (47% v. 32%). Despite the increasing number of change initiatives, the Economist Intelligence Unit survey suggests the majority will fail. 58% of leaders in the leaders sector questioned said that half or fewer of the change programmes they have undertaken in the past five years have been successful. The most significant challenges faced by manufacturers in executing change programmes include winning the hearts and minds of staff (53%) and a lack of buy-in from local management (30%).

AMEC, BP enter global projects deal

AMEC has entered into an agreement with BP International Ltd to provide engineering and project management services for BP's offshore developments worldwide. AMEC is one of three companies selected by BP for this long-term agreement, which sets out the principles of collaborative working for the next four years with an option to extend. It will enable BP's project management teams to access AMEC's international resources when and where required. BP has a substantial programme of offshore development projects planned for the next 10 years, primarily across the seven strategic areas of Angola, Asia-Pacific, Azerbaijan, Egypt, Gulf of Mexico, the North Sea and Trinidad.

PricewaterhouseCoopers enters REACH JV

PricewaterhouseCoopers and Royal Haskoning: Have signed a joint venture agreement to combine their knowledge in the field of REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) - the new European chemicals regulation. The collaboration combines Royal Haskoning’s technical knowledge of chemicals with PwC’s financial and administrative knowledge about REACH and the management of risks. "This collaboration enables us to offer the industry a comprehensive package of services that will be needed in future to fulfil the REACH registration of chemicals,’ said Arno Pouw, of the PwC board. ‘For example, companies will need an independent party who can perform the role of Third Party Representative for their Reach registration or a party that can act for a consortium of companies working together on the registration of a particular chemical.’

Swagelok ties up Coreflex

Swagelok Co. has completed its acquisition of Coreflex LLC, a Bowie, Maryland-based manufacturer of hose products used mostly in semiconductor and biopharmaceutical applications. “We are excited about this acquisition,” says Arthur Anton, Swagelok president and CEO, “because these ... hose products, combined with our network of authorized Swagelok sales and service centers, will help us provide better solutions to our customers worldwide.”

Pursuit, Air Products target sauces

Pursuit Dynamics and Air Products have collaborated to launch the PDX Sonic and the Freshline Continuous Sauce Chiller as an integrated single line production unit. The combined solution for cooking and chilling sauces can reduce processing time, increase throughput capacity and maximise plant cost-effectiveness by remaining within or even reducing the existing equipment footprint, the partners claim. Unlike traditional processing equipment, the system can be retrofitted readily into existing plant layouts. Pursuit Dynamics is now offering companies the opportunity to see the system in action at its site in Huntingdon, UK. Uwe Rosenbaum, new business development manager, Food, Air Products Europe, said: “The combined system allows for rapid sauce cooking and chilling and can fit easily within limited floor space, making it ideal for food processors looking for new solutions in sauce manufacturing.”

Air Liquide to buy Edwards Chemical

Air Liquide Electronics U.S. LP is to purchase the major part of the assets of Edwards Vacuum Inc’s Chemical Management Division, which is focused on designing, manufacturing, and selling chemical and slurry dispensing equipment, installations and services to leading semiconductors as well as OEMs worldwide. With production based in Chanhassen, Minnesota, it employs about 120 people (including 20% in Asia and Europe) and has annual sales of about $50m. Christophe Fontaine, VP Electronics, Air Liquide Group, said: “This acquisition will bring key complements to our current portfolio, especially allowing us to cover the whole equipment and installation spectrum for ultra-pure fluids with the key players of the electronics industry.”

Energy crisis the catalyst for new chemical engineering group

The IChemE is re-launching its Catalysis Subject Group, in response, it said, to a surge of interest in the prospect that catalysis can contribute to solving future energy shortages. The group will organise events to provide a forum for exchange of ideas amongst scientists and engineers on all aspects of application of catalysis to process systems. Andrew Furlong, director of policy at the Institution said: “There is an urgent need to develop alternative, sustainable sources of clean energy and by bringing together catalysis experts into a ‘Catalysis Community’, they will be more likely to deliver novel and imaginative solutions to combat the impending energy shortages facing the planet. Whilst there are superb ideas out there, it is the transfer gap between basic science and industrial applications that needs to be overcome to advance new ideas at a speed commensurate with future requirements and legislation.”

Manufacturing costs to rise amid slowdown

The highest percentage of manufacturing firms since 1995 have told the CBI their products will get more expensive over the coming three months, as rising oil prices drive up costs. At the same time though, manufacturers said their order books are 'below normal' and that they don't expect output to grow in the next quarter, the CBI's May Industrial Trends Survey found. Despite shrinking demand, 36% of manufacturers expect they will put their prices up over the next quarter. The price of a barrel of oil averaged $118.10 in the survey period, a month-on-month rise of 14%. Metals prices rose almost 5% between April and May, food continued to become more expensive. The need to pass on these cost pressures is being felt most intensely among capital goods firms, like machinery and plant manufacturers but it is makers of intermediate goods, which include energy and commodity intensive industries, who continue to expect the highest rate of price inflation. Ian McCafferty, chief economic adviser at the CBI, said: "It is clear from the pricing data in the survey that manufacturers are really feeling the impact and having to pass their increasing costs on. Oil prices rose more than 75% over the last year, and 14% in the past month alone.

Foster Wheeler Paper:

Petrochemicals Refining: a changing business model?

Sustainable business improvement

Sustainable business improvement is the aim of a series of Masterclasses at Manchester’s Manufacturing Institute, beginning July 2008. Combining case studies from manufacturers who’ve been there and are prepared to share their story, with expert know how of manufacturing excellence, the seminars will provide delegates with proven solutions they can apply to their business.
This year's events are:
July 17: Lean Enterprise Masterclass. Lean transformation boosts performance and productivity, but this Masterclass also shows that companies must fundamentally redesign their business to deliver what customers want, when they want it. Senior managers from Nissan, United Biscuits, Ultraframe and Cannon Hygiene will be presenting at the event.
18 Sept: Leadership & Culture for Lean Masterclass. Lean must be employee-driven rather than management-driven. This class will explain the critical success factors for lean transformation, common reasons for failure and the importance of leadership in the process. Delegates will learn how to build a culture that supports operational excellence, and gain an understanding of the role of HR.
27 Nov: Energy & Environment Masterclass. Growing customer expectations and increasing legislation mean businesses cannot afford to ignore green issues. But ‘going green’ can lead to operational savings and improvements in productivity – and give a business competitive advantage.