Industry News
News for 22nd June 2007
Silverstone rewards F1 in Schools winner with Grand Prix tickets
The F1 in Schools Technology Challenge champions from 2007 have been awarded a special prize by Silverstone Circuit, with each team member being given weekend tickets for the Formula One British Grand Prix at Silverstone next month.
The Irish National and World Champions, Team FUGA from Coleraine Academical College, Coleraine, Northern Ireland; UK National Champions from Gryphon School, Sherbourne, Dorset, Team Momentus; and the English National Champions from Devonport High School in Devonport, Team Pulse, will be given the chance to experience the thrills and excitement of Formula One racing on home soil, with the opportunity to cheer on local heroes Lewis Hamilton, Jenson Button, David Coulthard and Anthony Davidson.
Each of the teams fought off tough competition to take victory, using CAD/CAM software to design, build and test a model CO2-powered balsa wood F1 car of the future. Regional heats brought together the best entries and at an intense two-day final at Autosport International Show in the NEC, Birmingham, where the champions were crowned. The trip to Silverstone for the Formula 1™ British Grand Prix tops off their success earlier this year.
Andrew Denford, Founder of F1 in Schools said of the prizes, “We’re extremely grateful to Silverstone Circuit for their generosity in awarding this extra special weekend away for the winning National teams. Many of the students develop a love of the sport through their involvement with the F1 in Schools programme and this chance to see the cars up close and study the engineering excellence of the teams is invaluable to them.
“As a not-for-profit organisation we rely on the support of the motorsport industry to help us to achieve our goal of changing the perceptions of engineering, science and technology by creating a fun and exciting learning environment for young people to develop an informed view about careers in these areas. Silverstone Circuit, as the home of the British Grand Prix, is one of the most revered venues and I know that the students will have a fantastic day out at the event.”
October’s Biodiesel-Expo to greet end of duty on small-scale biodiesel production
Whereas at present the law requires anyone producing any quantity of a biofuel (mostly biodiesel in the UK) to pay duty of 28.35p on every litre they produce as well as submit returns to HM Revenue & Customs and hold a permit, from 30th June 2007 producers will not need to submit returns of pay duty below a production threshold of 2,500 litres per annum. A reduction in the frequency of returns for all but those producing over 450,000 litres per annum) from monthly to quarterly is also introduced.
At the present time there are approximately 1,400 producers of biofuels in the UK, a large proportion of whom produce for their own personal use.
The effectiveness of the 2,500 litre level will be monitored and the Government will consider the scope for raising the threshold a year after its introduction.
The full implications for this legislative change will be discussed and debated in workshops at the Biodiesel-Expo 2007 (www.biodiesel-expo.co.uk) which will take place at the Newark Showground in Nottinghamshire on 17th and 18th October.
Attendees at the Expo will also be able to meet with over 100 exhibitors, a number of whom offer solutions for taking advantage of this new legislation.
Geoff Riley, HM Revenue & Customs, who will be at the Expo to take part in the workshops said "This legislative change will reduce the administrative burden on HM Revenue & Customs as well as small producers and I look forward to explaining it more to attendees at the Biodiesel Expo."
Richard Price, MD Filtertechnik, a supplier to the biodiesel market and sponsor of the Biodiesel-Expo said "I anticipate this will lead to an explosion of biofuels producers who will create a new "homebrew" market. It is a very exciting time to be in the biofuels business."
Biodiesel-Expo is organised by Biofuels Media Ltd (www.biofuelsmedia.com), a company established to bring together the biofuel markets. Entry to Biodiesel-Expo 2007 is free if visitors pre-register by October 5th. After this date entry will be charged at £50.
- The latest quarterly truck operator survey from the Freight Transport Association indicates that 87% of operators are taking specific actions to reduce their carbon footprint, and a quarter of them are using biodiesel in their trucks.
(www.biodiesel-expo.co.uk, www.fta.org.uk)
BSI: Some manufacturers are about to sign up to Garage Services Kitemark
During a Q & A session following a briefing on the progress of the 1996 BSI PAS 80 Kitemark standard for Garage Services on 18 June, one independent garage proprietor asked, “Is there a resistance (to aligning dealer networks with the BSI standard) with the franchised dealerships, as they have to work in line with their paymasters, the manufacturers?”
Ian Harper, BSI’s Director of Global Marketing & Business Development, answered: “There’s not a difficulty. Typically, if you’re Rolls Royce or Fiat or whoever you are, you go to market with your own brand, you don’t go with mine. And they have to be cautious about what it says. That said, I desperately wish I could share this information with you, but there are some significant VMs that are about to come on board with the Kitemark for Garage Services.”
To date, some 90% of the 180 garages that have signed up to the BSI standard (50 have qualified to date) have been in the non-franchised, independent sector, while franchised dealers have been awaiting the OFT’s approval of an alternative code of practice, whose development has been sponsored by the Society of Motor Manufacturers and Traders.
The National Consumer Council gave the garage trade a year’s reprieve last September from a threatened super-complaint to the OFT on garage servicing, taking the view that progress in the formulation of the SMMT-sponsored code of practice was sufficiently encouraging to await its launch. Such a super-complaint, which the NCC is entitled to make by law, is thought likely to lead to legislation for a mandatory garage licensing regime rather than to a further enquiry, following past enquiries have provided evidence of the deficiencies of garage service regulation.
(Source: BSI, 21 June)
IMI 2007 Learning & Skills Awards winners announced
From almost 50,000 students registered on qualifications awarded by the Institute of the Motor Industry (IMI), 27 were short-listed as finalists for the 2007 IMI Learning and Skills Awards, held on 15 June at the IMI in the presence of its Patron, HRH Prince Michael of Kent.
Seven IMI approved centres, selected from its network of 400, were also in the running for the IMI's Approved Centre of the Year Award, complementing the six individual categories, all of which were sponsored by Lloyds TSB autolease. Each of the winners received a glass trophy, framed certificate and a cheque for £200 from HRH Prince Michael, who applauded the efforts of all winners and finalists.
In the most hotly-contested of the six individual award categories, 19 year-old Daniel Lees, a technician at Stratstone Volvo in Chesterfield, scooped the title of Outstanding Technical Student (Light Vehicle), having won Volvo's Apprentice of the Year in 2005.
Adam Liddicoat, 19, a trainee sales executive at Renwicks Hyundai in Exeter, received the accolade of Outstanding Student in a non-technical discipline, having shown the highest levels of commitment, reliability and determination which should result in him completing a three-year programme in only 13 months.
Mature student Ean Daniel, 28, who is Service Manager at Lookers Volvo in Ipswich, landed the title of IMI Outstanding Management Student. As well as completing the required exams and assignments for the IMI Certificate of Management with distinction at Thurrock and Basildon College, Ean assisted less experienced members of the class and demonstrated high level of self motivation throughout the course.
Other winners were Outstanding Technical Student (Motorcycle) Laura Hooper, Technician, Cheltenham Motorcycles; Outstanding Technical Student (Body and Paint), Dan Holmes, Body Repair Technician, Lookers Northallerton; Young Student of the Year George Matthews, Young Apprentice, Carter & Carter; IMI Approved Centre of the Year Mondial UK, and IMI Approved Centre of the Year - Highly Commended South Devon College.
Toyota reports that Andrew Daniels, 22, a second-year bodyshop apprentice with Farmer and Carlisle in Loughborough, was commended. Farmer and Carlisle recently became the first Toyota Centre in Europe to be awarded the Toyota Service Marketing accreditation for Body and Paint operations.
Latest AlixPartners study expects cheap companies to increase private equity's automotive footprint
Private-equity firms know a good deal when they see it and, right now, some of the best deals going are in the automotive industry where price multiples are below average, according to a new study released on 20 June by the consulting firm AlixPartners LLP, at a briefing held in conjunction with a meeting of the U.S. Original Equipment Suppliers Assoc. (OESA).
The AlixPartners’ 2007 Global Vehicle-Industry Analysis noted that while the average transaction multiple (a target company’s enterprise value divided by its EBITDA earnings) in the white-hot private equity market throughout the U.S. today is 8.4, the average multiple in the auto industry stands at just 5—and that’s down from a multiple of 6.2 in 2005.
Further highlighting U.S. companies’ current woes, the study found also that Ford Motor Co., General Motors Corp. and Chrysler Group together employ 8,200 more assembly workers in the U.S. than does Toyota USA, due solely to more stringent union work rules and job classifications.
“Forget the old, three-part ‘perfect storm’ analogy; there are really two big issues to watch in the domestic (U.S.) auto industry this year — private equity and the upcoming labour negotiations this fall,” said John Hoffecker, a managing director of AlixPartners and co-head of the firm’s healthy-company Performance Improvement practice.
“It just stands to reason that the auto industry’s below-average multiples, coupled with its significant cash flows, will make it a magnet for private equity for as long as money for deals remains as free-flowing as it is today. This will put great pressure on all companies, especially suppliers, to perform at higher levels—though it also should present some new opportunities, such as suppliers partnering with private-equity funds for strategic acquisitions or divestments.
“Meantime,” continued Hoffecker, “our analysis of the cost differential between the domestic automakers and Toyota just due to work rules and job classifications further points up just how important this year’s labour negotiations are to the Detroit Three. At a time when the domestic companies are facing new regulatory pressures that could add literally tens of billions in cost over the next five years, the last thing Detroit needs is that kind of differential. And our analysis was for assembly workers only. We estimate this discrepancy would be 50-70% wider if stamping, power-train and other manufacturing operations were included, not to mention supplier operations.”
In terms of the opportunities that private equity might present to suppliers, Hoffecker noted that “not all private-equity firms are created equal,” and defined what he called the four types of private equity firms: “Leverage” (those that look for stable cash-flow companies where only the balance sheet needs restructuring), “Operational” (those looking for companies where strong new management can make the difference), “Distressed” (those looking for companies with a lot of distressed debt, especially the type with covenants that could trigger a change in control, for restructuring and eventual sale) and “Roll-up” (those looking for vertical integration opportunities within an industry segment).
While noting that the number of private-equity deals could decrease dramatically if interest rates rise significantly, Hoffecker emphasized that private equity could indeed be an all-new M&A (mergers and acquisition) source for suppliers. “The example from the aerospace industry last year of the private-equity firm Onex helping Spirit AeroSystems expand its business with the acquisition of the aerostructures unit of BAE Systems is a good one of where private equity was open to risk-sharing as well as deal-making,” he said.
In terms of the multiple challenges facing U.S. vehicle manufacturers, Hoffecker cited what he called their “profit indifference curve.” It shows that as market and regulatory pressures move the product-line mixes for U.S. automakers away from SUVs and other light trucks to passenger cars, every 5% shift in mix would have to be accompanied by a 3-4% increase in total company vehicle sales just to maintain the same operating profit levels—a tall task. “With the domestics currently having more than 60% of their mix in light trucks, they’re going to have to run incredibly fast just to stay in the same place,” he said.
This year’s AlixPartners analysis looked at 51 light vehicle manufacturers, 25 heavy vehicle producers and 297 automotive suppliers (up from 104 last year), and measured and compared them across a wide range of operating as well as financial metrics.
Other findings in the study included:
- North American suppliers are being consistently outperformed financially by their European (as well as Asian) counterparts; and, even with the avalanche of supplier bankruptcies already, 27% of North American suppliers face “fiscal danger” (possible insolvency) within 24 months;
- India is on track to become a bigger automotive market than Brazil, France and South Korea within the next six years, and Indian suppliers, flush with cash, could be poised to go on an acquisition binge of their own, following the lead of companies such as Bharat Forge Ltd., now the second-largest forging company in the world;
- China, whose automotive components exports to the U.S. were up 38% in 2006, is this year on track to permanently pass Germany in that field (as it did in the first quarter of this year), while the market capitalization (stock price times shares outstanding) of Chinese and Indian automakers together is now larger than that of General Motors and Ford combined, even though the latter’s revenues are ten times greater;
- Within five years, North America, Europe and Japan will together make up only about half of the global auto market, down from controlling about three-quarters of the world’s market five years ago;
- Sourcing from India, China and other low-cost countries (LCCs) is critical to the success of most Western manufacturers and suppliers; however, much of LLC sourcing to date has been woefully ineffective (mirroring another recent AlixPartners study in which 38% of CFOs and other senior financial executives from three industries, including automotive, said their outsourcing of SG&A functions was “not fully effective”).
Despite the woes in the domestic supply industry today, the returns of top-performing suppliers have been consistently growing since 2002, with returns much higher than those in other industries;
Suppliers with strong balance sheets, as opposed to just the lowest costs, are now in the best position to achieve sales growth globally, given the level to which the risk to vehicle manufacturers of failing suppliers has risen.
Hoffecker said: “The auto industry can still be a growth industry, no matter what a company’s geographical location happens to be or even its product segment. But, as this study confirms, the companies that are in fact achieving growth today are moving at warp speed to shore up their balance sheets and to achieve a cost or innovation advantage in their markets.”
(www.alixpartners.com)
Harris Interactive launches ‘GlobalSynch’ integrated data collection and reporting system
Harris Interactive has introduced GlobalSynch, a ‘global synchronized research platform’, to provide increased speed, greater accuracy and easy real-time access to research data collected anywhere in the world regardless of collection mode. David Vaden, president of North America and global operations, says, "GlobalSynch has the power to synchronize millions of online and telephone surveys administered around the world, while giving our clients customized access to those data in real- time."
The system is claimed to provide:
- Superior data access – a web-based platform provides real-time access to consolidated survey data – at any time or in any place.
- Greater efficiency - automated system greatly reduces the need to 'manage' projects and frees up time to think, analyze and provide insight.
- Improved accuracy - single database eliminates manual data conversion/aggregation errors.
- Strengthened security - integrated system reduces opportunities for unauthorised data access and provides greater protection of confidential information.
- Improved consistency and enhanced coverage - truly global system integrates and synchronizes all data collection processes; improves administration and supervision of multi-lingual, multi-country, multi-mode studies; and reduces coverage errors and non-response bias.
(www.harrisinteractive.com/)
New 1link innovation set to save on daily rental costs
The latest feature of epyx’s 1link electronic trading network is designed to save leasing fleets money by allowing them to see exactly when the need for a hire car supplied as a replacementvehicle has ended.
Leasing companies using the 1link Service Network service and maintenance e-commerce platform to book work for their fleet also often use the 1link Hire Network daily rental equivalent to supply a relief vehicle for each vehicle's driver. Now, closer integration of the two platforms means that as soon as a dealer has completed a service and maintenance job, the leasing company will be notified and able to end the hire for the relief car provided to the driver without delay.
FTA survey: 87% of truck operators are taking action to reduce fuel consumption
Almost nine out of ten lorry operators are taking action to reduce their carbon footprint. The major areas of activity have been in the ongoing monitoring of fuel efficiency and in regular reviews designed to reduce empty running, according to the latest issue of the Freight Transport Association’s Quarterly Transport Activity Survey, which asked FTA members about their response to climate change in the way that they move freight and operate their vehicles.
Eighty-seven per cent of respondents said that they had taken some action to reduce their carbon footprint. In addition to measures relating to fuel use and empty running, three-quarters of operators repeated reviews of vehicle specifications to ensure optimum vehicle fill and fuel efficiency, 60% had implemented fuel efficiency training for drivers, and one in five regularly reviewed the viability of alternative transport modes, notably rail. A quarter of operators were using biodiesel and almost one-third of those surveyed report their operation’s environmental performance at board level, so the FTA concludes that carbon footprint is clearly a significant, and growing, area of concern for many lorry operators.
- In oral evidence given to the House of Commons Transport Select Committee, the FTA has said proposals in the draft Local Transport Bill to tackle congestion - including local congestion charge schemes - fail to consider the needs of commercial vehicles accessing towns and cities to deliver the goods and services that communities require.
Cerberus unopposed in planned acquisition of Tower Automotive
Tower Automotive has announced that the marketing process ordered by the U.S. Bankruptcy Court in conjunction with Tower's Chapter 11 Plan has concluded and no competing bids to purchase the company were received. As a result, the auction scheduled for June 25, 2007, has been cancelled and Tower will request Bankruptcy Court approval of the previously announced sale agreement with TA Acquisition Company, LLC, an affiliate of Cerberus Capital Management, L.P.
The Bankruptcy Court is scheduled to hear Tower's request to confirm its Chapter 11 Plan and approve the sale on July 11, 2007. If successful, the company expects to close the transaction by July 31, 2007.
Raser wins Frost & Sullivan innovation awards for hybrid vehicle and industrial motor & drive technologies
The technology research firm Frost & Sullivan has awarded Raser Technologies two Innovation of the Year Awards for both Hybrid Motor Vehicles and Industrial Motors and Drives technologies. Other companies recognised at the industrial research firm’s event on 13 June included, Bosch, Eaton, Honeywell and Philips, but Raser Technologies was the only company to receive two Innovation of the Year Awards.
Leo O'Conner, Global Vice President of Research for Frost & Sullivan commented, "It is a testament to the company's [Raser's] technology platform and innovations that it has developed that are significant for not just one major industry, but two major industries, namely industrial and also plug-in hybrid technology." Frost & Sullivan believes Raser’s ‘Symetron’ technology may have a major impact in a broad array of applications where energy concerns and the environment are paramount.
