BOEING DELIVERS FIRST 787— THREE YEARS LATE EVERETT, WA—After three years of production and design delays, Boeing delivered its first 787 Dreamliner to All Nippon Airways at a handover ceremony in Everett, WA, on Sept. 26. ANA signed delivery papers Sept. 25, and flew its new jet from Seattle to Tokyo on Sept. 27, the Associated Press (AP) says. The 787 is said to give to 20% fuel savings over other passenger jets, mainly because about half of its primary structure—including its fuselage and wings—is constructed from composite materials. Yet it travels at the same speed, Mach 0.85, as other wide-body planes. And it has the newest aviation technologies, including an on-board health-monitoring system that allows the Dreamliner to monitor itself and automatically send in maintenance reports to ground-based computer systems. In 2008, Boeing first revealed the Dreamliner, and said then that it had already taken 677 preorders. But at the time, the company said the first Dreamliner would fly by September of that year, and that the first passengers would be flying by May 2008. It would take Boeing until December 15, 2009, to get the plane into the sky. And only now will paying passengers be able to climb aboard. The Dreamliner issues began in September 2007, when Boeing delayed the first flight for a month because of “challenges with out-of-sequence production work, including parts shortages, and remaining software and systems integration activities.” Then, a month later, Boeing said it would slow down the program, for at least six months, “due to continued challenges completing assembly of the first airplanes.” A few months after that, the first flight was again pushed back because of a series of supply chain problems. The delays did not end there. There was a 57-day machinists strike, which ended in November 2008 but also caused new supply shortages. There were additional problems with assembly. And then, in June 2009, the aircraft maker announced more delays “due to a need to reinforce an area within the side-of-body section of the aircraft.” Even after the Dreamliner’s first flight in December 2009, there were still new problems to contend with. In August 2010, India’s National Aviation Co., which operates Air India, said it wanted $840 million in compensation from Boeing because of the delays. Boeing said then that it was involved in negotiations with various carriers over delayoriented costs. And then, in November 2010, came the most biggest complication of all—an onboard electrical fire in a control panel. Airlines have ordered more than 800 of the Dreamliner. The plane is covered in lightweight carbon fiber instead of aluminum, and should give fuel savings and offer passengers greater comfort, the AP says. HONDA RECALLS 100,000 CR-VS, CR-ZS IN UNITED STATES TORRANCE, CA—In the most recent of a series of recall announcements this year involving Honda cars sold in America, the automaker said it will recall 5,626 CR-Z hybrid sports cars from model year 2011. The recall affects CR-Z models that have manual transmissions, and the software that controls the vehicles’ electric motors needs to be updated. The affected cars’ problems involve the potential for the car to roll unexpectedly. When the gasoline engine has stalled with the integrated-motorassist (IMA) battery in a very low state of charge and the transmission is in gear, the electric motor can rotate in the direction opposite to that selected by the transmission. “If this occurs and the driver has not engaged the brakes, the vehicle may slowly roll in an unexpected direction (for example, backwards when the transmission is in a forward gear), potentially leading to a crash,” Honda says. A software update will add additional controls to correct the issue, Honda say, which has of yet not caused any reported injuries or deaths. Honda also said it would voluntarily recall 80,111 CR-V vehicles from the 2006 model year in the United States to replace the power window master switch. The design of the power window master switch can enable residue from interior cleaners to build up, which can, over time, cause the electrical contacts to degrade and may lead to a fire in the switch, the automaker said. No injuries or deaths have been reported related to this condition. Honda urges all owners of affected vehicles to take their cars to an authorized dealer as soon as they receive notification of a recall from Honda. The recall announcements came within hours of a Honda spokesman in Tokyo stating that the company would recall about 960,000 Fit subcompacts and other models globally to repair defects, including the malfunctioning power window switches. EXECS MAKE GROWTH A PRIORITY NEW YORK, NY—Large global manufacturers are setting their sights on top-line growth over the next two years fueled by new products, strategic acquisitions and alliances, innovation and increasing production capacity in highgrowth markets. Bolstering the growth agenda are stronger investments in supply chain risk management to mitigate the impact of continued market volatility, according to KPMG’s 2011 Global Manufacturing Outlook. The KPMG annual survey of 220 manufacturing executives, including 61 in the United States, from global companies with at least $1 billion in revenue, found that businesses are cautiously optimistic on near term prospects and are shifting from their previous emphasis on cost containment to a focus on top-line growth as a priority in the next two years. Looking at their top priorities, 26% of the U.S. executives say they will focus on top-line growth, followed by 13% saying R&D and innovation, and 12% indicating customer relationships. Throughout the past two years, U.S. executives were most focused on cost containment, followed by customer relationships and process efficiencies/ shared services. Seventy-nine percent of U.S. respondents were either very optimistic or optimistic about their company’s business outlook for the next two years. “Today, we’re seeing that despite an increasing set of cost challenges, manufacturers are realigning their business models to prioritize top-line growth,” says Jeff Dobbs, KPMG’s global head of Diversified Industrials and a partner in the U.S. firm. “Companies have learned they can survive the challenges of economic uncertainty, political instability and historic natural disasters with lean agile operating structures, enhanced risk management practices, and a focus on innovation.” In pressing ahead on the growth track, 39% of global respondents say they will grow through mergers and acquisitions (M&A), joint ventures and alliances; and 30% through increased production capacity, mainly in high-growth markets. U.S. respondents cite increased production capacity (36%), M&A, joint ventures and strategic alliances (31%), research and development (23%), and new sales offices (10%) as approaches to achieving growth for their companies. “Many companies emerged from the 2008-2010 downturn with significantly reduced cost structures, more cash and liquidity, and a laser focus on their customers and markets. These survivors have the mindset and strategy to define the standard of success in the next five years,” says Dobbs. When asked to compare the primary focus areas of their growth strategies in the next two years with the two previous years, the survey revealed a marked shift in focus: 56% of manufacturers globally are planning to sell new products in new and existing markets over the next two years, up from 37%. As to where demand is expected, the United States ranks as the top market, closely followed by China, then India, with Brazil and Germany rounding out the top five. Slightly more than half see emerging markets as key to their growth strategies. Price volatility of raw materials and inputs remains the biggest challenge for 44% of executives, followed by increased competition and pricing pressure, and uncertain demand. In the United States, price volatility on key cost inputs, uncertain demand, and intense competition and pressure on pricing were seen as the top three challenges. To better manage volatility, 56% of manufacturers say they are reshaping their supply chain models. Standardization is one of the key strategies—55% of manufacturers plan to standardize their production process, while 45% will require standardized inputs. Further, just more than 40% said they will focus on cost reduction through a shortening of the overall product development life cycle. Nearly half of respondents say they will invest in technology to improve visibility across the supply chain, the single most important tool for managing risk. Other measures include helping suppliers develop risk management standards and assessing supply chain processes. PORTFOLIO HELPS METROLOGY SOFTWARE VENDORS STAVE OFF COMPETITION LONDON—Consumers of metrology software have upped the demand for higher product quality in order to streamline their production processes, thereby reducing costs, maintaining efficiency and ensuring profitability, says market research firm Frost & Sullivan. To achieve these goals, consumers have increased investments in the automation of production processes, where software also plays a key role. Metrology software developers are looking to cash in on this demand by producing flexible, reliable and accurate solutions. New analysis from Frost & Sullivan, World Metrology Software Market, finds that the market earned revenues of $254.4 million in 2009 and estimates this to reach $331.9 million in 2014. “The majority of software vendors had spent substantial amounts of money on R&D and marketing to raise awareness among end users about the benefits of software enhancements,” says Frost & Sullivan research analyst Prathima Bommakanti. “Eventually, end users are more knowledgeable about the costsaving potential of software, and this is opening up new market opportunities for suppliers.” Market participants are striving to keep pace with the evolution of end-user technologies by focusing on ease-of-use and advanced technological feature sets that can accommodate future demand. The need to stand out in the market has forced manufacturers to provide services and solutions that can restore customer confidence and renew demand. One of the top criteria for choosing a metrology software vendor is a service portfolio. “Without an extended service portfolio and qualified engineers, suppliers have limited scope of becoming leaders in the metrology software market,” notes Bommakanti. “Most key market participants have well trained and experienced in-house staff that can offer complete and customized service support to their customers.” Although the market is progressing steadily, manufacturers are still trying to shake off the effects of the global economic downturn. Some of the fallouts of the downturn were pricing pressure on vendors and the dip in demand for new applications. The competitive landscape and the market maturity further compelled software vendors to place emphasis on maintenance contracts from the major customers. The situation will ease gradually, once customers start unfreezing their investment plans. The percentage of licenses is expected to increase as the pent-up demand is released and end users’ business plans are solidified. BUSINESS OPTIMISM INDEX REVEALS GLOOMY OUTLOOK AMONG MANUFACTURERS CHICAGO–U.S. manufacturing leaders are extremely pessimistic about the U.S. economy, according to Grant Thornton LLP’s most recent Business Optimism Index, a quarterly survey of U.S. manufacturing business leaders. Only 13% believe the U.S. economy will improve in the next six months, down significantly from 40% in May. At the same time, 40% believe the U.S. economy will get worse, up from 26%. In addition, only 21% of manufacturers say they will increase hiring and 35% say they plan layoffs. “Manufacturing has been one of the few bright spots in the economy since the end of the recession, generating more than 300,000 new jobs since December 2009, according to the National Association of Manufacturers,” says Jim Maurer, partner and practice leader of Grant Thornton LLP’s Consumer and Industrial Products Practice in Chicago. “Strong export growth in 2010 and the first half of 2011 helped increase revenues and create jobs. However, the slowing global economy coupled with a lack of confidence in domestic and global economic policy has caused senior manufacturing executives to turn cautious as these are matters over which they have very little direct control.” The manufacturers that Gruenes speaks to regularly say they are focused on matters that they can control, with their top three priorities being reducing costs by improving their manufacturing processes; utilizing techniques such as lean manufacturing and Six Sigma; upgrading their production equipment and IT systems to enhance their efficiency; and re-enforcing quality and customer satisfaction. When asked what public policy initiative would make business leaders most optimistic about the country’s future, a job creation program was most popular (46%) with manufacturers, followed closely by deficit reduction (43%). CHEVROLET TURNS 100 DETROIT, MI—When the first Chevrolet was built in 1911 in a rented garage near downtown Detroit, it began a journey that has taken Chevrolet to every corner of the planet. A hundred years and more than 209 million cars and trucks later, Chevrolet is one of the world’s-largest car brands, doing business in more than 140 countries. “For Chevrolet, the journey is just beginning,” says Chris Perry, vice president, global marketing and strategy for Chevrolet. “Chevrolet starts its second century with its best product lineup ever and strong growth in major markets in Asia, Europe and South America. “Our goal is to build on the foundation laid in our first hundred years to make Chevrolet a hometown brand in home towns around the world,” says Perry. Chevrolet is becoming GM’s global mainstream brand, the foundation of the company’s business in most major markets. In recent years, Chevrolet has expanded from its traditional markets in North and South America, and its list of Top 10 markets now includes China, Russia, Uzbekistan and India. The brand today sells more than 60% of its vehicles outside the United States. Last year, Chevrolet sold a record 4.26 million cars and trucks, and was the only global automaker in the top five to grow its market share. This year, Chevrolet is on track for the best sales year in its 100- year history. New, globally designedand- produced models are behind Chevrolet’s record growth. For example, the Chevrolet Cruze is on pace this year to mark 1 million in total sales since its launch. Cruze went on sale in the United States last year, and is the nation’s best-selling compact car, surpassing all Asian, European, and U.S. competitors. A Malibu sedan will launch this fall in South Korea, along with a global midsize Colorado pickup in Thailand. A Sonic subcompact (Aveo in global markets) goes on sale this fall in the United States, followed by the Spark mini-car in 2012. Chevrolet was founded on building affordable cars and trucks with style, value and features not offered by competitors. For example, in 1955, Chevrolet re-engineered the V-8 engine in a way that made performance accessible to millions of new customers. The result was the small-block V-8. This spirit of innovation continues today. A new Malibu Eco model will include eAssist technology that improves fuel economy by approximately 25%. Last year, the first Chevrolet Volt extendedrange electric vehicle rolled off an assembly line near Detroit, combining electric power and a small rangeextending gas engine. The Volt and Malibu are part of Chevrolet’s global electrification strategy to reduce petroleum use and vehicle emissions. Chevrolet was created in 1911 by auto pioneer and industrialist and William C. Durant and Swiss-born race car driver Louis Chevrolet. Durant believed Chevrolet should produce cars offering more value than the volume leaders of the time, most notably the Model T. Although both men had left GM by 1920, Chevrolet has stayed true to this vision.
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