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Decarbonization of Steel Industry: A Rocky Road Ahead


Continuously rising carbon dioxide (CO2) emission is a leading cause of climate change which is considered to be one of the most pressing issues the world is facing today. Being one of the biggest contributors to CO2 emission, steel industry has garnered wide-spread criticism over the years. Several alternatives to conventional steelmaking process have been developed in an effort to reduce CO2 emission, however, the question is whether the producers of this shining grey alloy are ready to face the challenges in implementation of cleaner technologies.

Steel industry strives to move towards a low-carbon future

Global crude steel production increased from 1,808.6 million tons in 2018 to 1,869.9 million tons in 2019, registering 3.4% year-on-year growth. World Steel Association indicated that, on average for 2018, for every ton of steel produced, 1.82 tons of CO2 were emitted. In the same year, steelmaking accounted for 7% of the total CO2 emissions globally.

UN Paris agreement on climate change, inked in 2015, outlines a global framework to ensure global temperatures do not rise above 2 degrees Celsius compared to pre-industrial levels. To align with the goals set out in the Paris agreement, the steel industry will be required to reduce its CO2 emissions by 65% by 2050, as compared to 2014 emission levels.

Leading steel producers along with other stakeholders in the value chain, including automotive giants, banking and financial institutions, raw materials suppliers, and environmental organizations, came together in 2016 to establish ResponsibleSteel, an initiative to develop global standards and certification program aimed at reducing carbon emission in the steelmaking process and improve sustainability. Besides ArcelorMittal, the biggest steel producer in the world and one of the founding members of the ResponsibleSteel initiative, other steel producers such as Aperam, BlueScope Steel, Outokumpu, VAMA, and Voestalpine have also joined the initiative.

Alternative technologies to reduce CO2 emission at every stage of steelmaking process

Steel is produced either from iron ore or scrap. Conventionally, ore-based steel is produced in blast furnace-basic oxygen furnace (BF-BOF) which is undoubtedly the most carbon-intensive steelmaking process. This is because BF-BOF route uses coking coal as reducing agent as well as source of energy. World Steel Association indicated that, in 2018, coal accounted for about 90% of a BF-BOF’s energy input, while 7% energy input came from electricity, and remaining from natural gas and other sources. Overall, for every ton of steel produced through BF-BOF route, about 2.3 tons of CO2 is emitted.

To reduce CO2 emission in BF-BOF route, it has been proposed to substitute coking coal with biofuel. Biofuel is also carbon-based but it does not contribute to greenhouse gases upon combustion. Hence, its impact on the environment is comparatively lower. By using biofuels in BF-BOF, the CO2 emissions can be almost halved.

Moreover, combining BOF route with Carbon Capture and Storage (CCS) technology can also help to reduce CO2 emission

by almost 60%. CCS technology allows to capture the CO2 emissions pro­duced from the use of fossil fuels in steelmaking process, thus preventing the CO2 from entering the atmosphere. CCS technologies are quite advanced and can be retrofitted with the existing infrastructure used for BF-BOF production processes.

Direct reduced iron (DRI) is another steelmaking technology in which the metal is reduced directly from the ore in solid state without the need to melt it. DRI route generally uses natural gas as reducing agent, which reduces the carbon emission by about 50% as compared to BF-BOF route. About 5% of the global steel production is done through DRI route.

Electric Arc Furnace (EAF) is a dominant technology used to produce recycled steel from scrap. EAF are smaller and less expensive than BF-BOF. Moreover, in case of EAF route, coking coal is not consumed as a reducing agent, and thus the CO2 emission is much lower. Further, as per World Steel Association estimates, in 2018, for EAF route, electricity was the main source of energy accounting for 50% of the total energy input, followed by natural gas which accounted for 38% of energy input. In the same year, coal represented only for 11% of the total energy input for EAF route. EAF emits only about 0.4 ton of CO2 per ton of steel produced. The CO2 emission can be further reduced in the EAF route by using zero-carbon sources for electricity.

There are a few other technologies which are still in the research phase, but have the potential to provide a breakthrough in future. For instance, research is ongoing on use of hydrogen in place of coking coal, as reaction of hydrogen with the iron ore generates water vapor as a by-product instead of CO2. Several leading steel companies including SSAB, ArcelorMittal, and Thyssenkrupp Steel are exploring and conducting feasibility studies to test this new concept. Another technology being explored involves reduction of iron ore through direct electrolysis at temperatures of about 1,600 degrees Celsius. This technology is already being widely used in aluminum production, but it is still in early phase of research for steel production.

Challenges in implementation

Eco-friendly steelmaking process is technically achievable but there are several challenges in implementation at commercial scale. Thus, steel industry lacks the incentive to adopt environment-friendly low-carbon technologies in the current business environment.

Even though a number of alternatives to BF-BOF route have been developed for ore-based steel production, about 95% of the ore-based steel is still being produced through BF-BOF route. The industry has been making constant efforts to make changes and improvement in BF-BOF process with a view to reduce carbon emissions. For instance, the replacing of coking coal with biofuel in BF-BOF route is a mature technology, but feasibility to implement this on large-scale depends on availability of biofuel, which varies from region to region. Thus, countries such as Brazil that have large biofuel resources have commercial-scale biofuel-based BF-BOF steel production, but it is not feasible for countries that do not have sufficient biofuel resources.

Similarly, DRI technology uses mainly natural gas as input and as the natural gas availability varies significantly from region to region, the feasibility of implementing DRI technology depends on the location.

CCS seems to be a promising alternative but it demands a large investment in construction of infrastructure for storage and transportation of CO2. A study released by Global Carbon Capture and Storage Initiative (GCCSI) in 2017 indicated that costs for capturing CO2 from steel furnaces could be estimated around US$65-US$70 per ton of CO2. For steel producers operating on competitive margins, this is a significant cost; thus, they seek strong incentives or policy reforms from their governments to support their investment in CCS. At present, only a handful of countries including, the USA, UK, Canada, Australia, and Denmark have CCS-specific policies and these policies vary significantly from country to country. Since steel is a globally traded commodity, the difference in government policies and framework may impact the competitiveness of the steel producers. Thus, lack of global regulatory framework for CCS is a major barrier in wide-scale implementation of the technology.

Scrap-based steel produced using EAF technology accounts for over one-fourth of the total global steel production and it is less carbon-intensive than ore-based steel. Hence, in order to keep the CO2 emissions in check, it is essential to increase the contribution of scrap-based steel in fulfilling the overall steel demand. But the quality of recycled steel is low compared to primary steel produced directly from iron ore, which makes it unsuitable for some specific applications such as construction. Moreover, steel scrap generally has high copper content which becomes problematic during the recycling process because it causes cracks. Application of such type of recycled steel is extremely limited. In order to give a boost to production of recycled steel over ore-based steel, it is important to overcome these downcycling problems.

Decarbonization of Steel Industry A Rocky Road Ahead by EOS Intelligence

EOS Perspective

While there are several challenges in implementation of alternative technologies in steelmaking process to reduce CO2 emission, steel producers are under pressure to act in wake of rising carbon prices. 86% of the industry’s production comes under the purview of existing or planned carbon pricing markets.

A study published in July 2019 by CDP, a non-profit environmental advocacy group, pointed out that the world’s 20 largest publicly-listed steel companies, which together account for over 30% of the global steel production, could suffer an average loss of 14% if the carbon price rise to US$100 by 2040. The report also indicated that about 60% of the companies have set some target for carbon emission reduction, of which, target of only two companies align with the Paris agreement goals. The 20 companies under study are expected to cumulatively reduce the CO2 emissions by less than 50% by 2050, which is much less than the target of 65% reduction in CO2 emission required to meet the Paris agreement goals. This clearly shows that the steel producers are underprepared to align with the global climate change goals. The need of the hour is to embrace radical technology changes, but high cost, limited resources, and lack of unified and global policy framework are the main barriers disincentivizing the steel industry to move towards low carbon future.

However, with the support of the governments, technology innovators, and other stakeholders, some steel giants are working on several green initiatives to reduce the CO2 emissions. Most pilot projects are concentrated in Europe, as companies in this region are receiving immense support from the European Commission in view of its goal to make EU carbon neutral by 2050. The table highlights key projects undertaken by the leading steel companies to move towards low-carbon future.

Decarbonization of Steel Industry A Rocky Road Ahead - projects by EOS Intelligence

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Outlook for Textile and Apparel Industry in Mainland Southeast Asia


Mainland Southeast Asia (MSEA), comprising six countries – Myanmar, Laos, Vietnam, Cambodia, Malaysia, and Thailand, has emerged as one of the key regions for low-cost sourcing of textile and apparel (T&A, also referred as textile and clothing or textile and garment). Many global brands such as Tommy Hilfiger, Marks and Spencer, GAP, Adidas, Nike, etc. are increasing their collaboration with the region to leverage cheap labor pools. The T&A industry in most MSEA countries are witnessing positive growth, except Laos and Thailand, where the industry is in state of decline.

1-T&A Industry Statistics


3-Key Export Destinations

4-EOS Perspective

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Myanmar – Reemerging as Apparel Sourcing Hub


Prior to 2011, Myanmar’s apparel industry was plagued by sluggish growth, partly due to isolation from international markets in opposition to country’s military regime. A turning point came when a quasi-civilian government was established in 2011. Most of the sanctions were lifted in the following years and many countries granted a free trade or preferential trade status to several products, including apparel, manufactured in Myanmar. Myanmar’s changing political landscape is expected to have a positive impact on its export-oriented apparel industry. In view of rising demand, the industry will need to expand and strengthen its current capabilities.

1-Rise and Fall
2-New Life
3-Tough Road Ahead

EOS Perspective

Economic reform policies introduced by the democratic government and relaxation of international trade embargoes have opened up a plethora of opportunities for Myanmar apparel industry in the past few years. By 2015, international retail giants such as Adidas, Gap, H&M, Primark, and Marks & Spencer had started sourcing apparel from Myanmar, confirming recognition of this country as one of the frontiers for cost-competitive apparel sourcing.

Still, as a country evolving from conservative military rule and international isolation, several pitfalls and challenges exist. Apparel industry’s long-term growth prospects will largely depend on how proactively the industry stakeholders tackle the issues of underdeveloped local supply chain and low production efficiency. More importantly, Myanmar will need to gear up for transition to FOB model to meet the demands of international markets.

While Myanmar’s apparel industry is on its way to achieve the status comparable to its neighboring rivals such as Vietnam and Cambodia, it will first require extensive investment and collaboration from the apparel manufacturers, suppliers, apparel sourcing companies, as well as the government in order to positively shape its future growth trajectory.

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Raising Customs Duty – The Right Prescription for India’s Bulk Drug Industry?


Prescription and stethoscope.

India’s Drugs Technical Advisory Board (DTAB) has long expressed concerns over growing import of bulk drugs and over the challenges in ensuring the quality of the imported drugs. Hence, it came as no surprise when earlier this month (June 2016) the DTAB endorsed the Ministry of Health and Family Welfare’s (MoHFW) decision to increase customs duty on import of bulk drugs (APIs).

This also comes in the backdrop of India’s excessive reliance on China for its bulk drug requirement (including that for essential medicines) — ~70% of India’s bulk drugs come from China.

Chinese imports have already driven some Indian producers of bulk drugs (e.g. penicillin) out of business, and there are fears that Chinese producers may hike prices after destroying competition. China’s import influence is so strong that any event (such as Beijing Olympics of 2008 when several bulk drug plants in China were shut down to control pollution) could trigger tightening of supply to India, thus impacting domestic production.

The feeling in Indian government bodies is that unless China’s influence on India’s bulk drugs industry is curtailed, it might severely impact domestic growth prospects. By increasing customs duty, MoHFW’s aims (and hopes) to de-incentivize imports and create a level-playing field for domestic manufacturers of bulk drugs.

While DTAB’s move is welcomed by certain sections of India’s pharmaceuticals industry, the fact of the matter is that China still enjoys about 30-40% cost advantage vis-à-vis India in bulk drug manufacturing, making it a preferred import source, especially for manufacturers of essential medicines intending to save margins due to caps in retail pricing. It is unlikely that this advantage will change soon enough for India’s bulk drug industry to become self-sufficient.

In recent years, the Indian bulk drug industry has seen robust growth opportunities on account of off-patenting of several blockbuster drugs. The Associated Chambers of Commerce & Industry of India (ASSOCHAM) expects the bulk drugs industry to record a 12-14% CAGR growth during 2016-2019, driven by demand from manufacturers of off-patent drugs. So, while this move of increasing customs duty might boost growth of the local bulk drugs industry, this is only a small step towards promoting domestic production of bulk drugs.

On their part, India’s bulk drug manufacturers need to decide the basis of competition (specifically with their Chinese counterparts) i.e. cost vs. quality, niche vs. general formulations, regulated (markets with strict regulatory requirements and strong IP regime) vs. semi-regulated markets. Indian manufacturers stand a better chance by playing to their strength and focusing on developing quality products for regulated markets.

Government intervention is also required in the form of incentives, as recommended by the Katoch Committee (established in 2013 to look in to bulk drug industry issues), e.g. tax holidays, land for manufacturing at affordable rates, soft loans, etc., to enable cost-competitive domestic manufacturing. In December 2015, the government vowed to implement the Katoch Committee recommendations within 100 days (i.e. by April 2016). Since then there is no news (on public domain) regarding any development on this front.

It would be an overstatement to say that time is running out for the Indian bulk drugs industry. However, a time-bound action is the need of the hour to compete with China, which has a first-mover advantage (as far as favorable policies and pricing are concerned).

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Is Cambodia Ready To Dress Up The World?


Gap, Adidas, and Giorgio Armani are some of the renowned fashion brands that manufacture their designs in Cambodia. As of 2014, Cambodia was the sixth fastest growing economy in the world and its textile production held a 1.2% share of the global market by volume in 2008. It is no coincidence that whenever Cambodia is mentioned, almost instantaneously, it is linked to a soaring apparel production sustained by a large number of factories as well as workforce in number only comparable to some of the world’s largest textiles producers such as Thailand or Vietnam. Is Cambodia ready to face this steep growth?

Accounting for 16% of the country’s GDP in 2012, garment sector certainly plays an important role in the Cambodian economy. It provided employment to 8.2% of the country’s population in 2014, while textile export accounted for 80% of Cambodia’s total exports in 2013. Moreover, Cambodia’s government has recently increased its focus on industry development with stress on garments. The country has not only set a long term Industrial Development Policy to spur its textile sector growth but it also has implemented initiatives seeking to organize the apparel production and become an even more appealing destination for international buyers as well as investors.


In 2009, as a long term strategy, the country became part of the Association of South East Asian Nations community (ASEAN), a regional economic and political organization associating 10 member states. This allowed Cambodia to take advantage of several FTAs previously signed by ASEAN with developed countries, and benefit from many other betterments offered by this international community. After years of political stress and economic instability of the Cambodian’s economy, ASEAN membership helped Cambodia register a manifold increase in trade in the last five years, with stabilized inflation rate at about 4%, and an expected GDP CAGR of around 8-9% during 2015-2018.

Since declared a Least Developed Country (LDC) in 1991, Cambodia has been benefitting from quota-free and duty-free export to EU countries without having to comply with the rule of origin, a rule establishing that all manufactured goods must originate from the country of export. Fabrics may come from, i.e. China, but it is Cambodia that manufactures and exports all of the clothing and footwear to places such as UK (which accounted for 7.8% of total garment exports from Cambodia in 2013) or Germany (accounted for 6.7% of total garment exports in the same year). For a country as heavily dependent on raw material (57.2% of total imported garment raw material came from China in 2013) as Cambodia, this scheme is greatly favorable, allowing the country to export US$554 million worth of textiles and footwear during the Q1 2015 to the EU alone.


For the past two decades, the country has been relying on FDIs with a strong focus on garment industry investment. Cambodia became an attractive investment destination in 1996, after receiving the status of Most Favored Nation (MFN) by the USA and launching an open trade administration with permissive investments and incentives for foreign investors. Due to open trade policies such as no price controls on products or services, free remittance of foreign currencies abroad, and full import duty exemption, favoring mostly foreign capital, Cambodia tripled its FDI in the last decade with a record of US$4.6 billion of cumulative approved FDI. As of 2014, about 28% of that FDI, or US$1.28 billion, focused on the garment and footwear sector production through foundation of new factories and implementation of high-tech manufacturing equipment rather than depending on low cost and low skilled labor as means of retaining international competitiveness.

Despite an increase in total export volumes buoyed primarily by textile and footwear export over the past several years, Cambodia’s government is yet to address internal problems that may obstruct both the country’s economy as well as apparel sector’s growth in the coming years.


EOS Perspective

During the last decade, Cambodia has strategically positioned itself as an attractive FDI destination for clothing and footwear companies to make their designs or to open new low-cost production facilities. However, since 2014, Cambodia’s internal conflict with garment sector workers has affected the country’s image causing a decline in purchase orders for the first time in a decade. The conflict has also negatively impacted foreign investors who are losing confidence in the country’s management of the apparel sector, and subsequently, Cambodia is registering a decline in FDI inflow, which it greatly relies on to aid its apparel industry development. Further, considering Cambodia’s textile industry is highly dependent on imported raw material and electricity, the apparel production cost is susceptible to possible increase in prices of imported fabric and unforeseen changes in electricity rates.

As a result, it does seem Cambodia is still unprepared to handle a possible steep growth of its textile industry. Although there have been several industrial development policies implemented to better organize the industrial setup, Cambodia is yet to build strong manufacturing industries to supply for its own apparel industry needs. Further, the ongoing lack of a fully-working power grid that feeds textile factories puts Cambodia in a weak position vis-à-vis its garment-oriented competitors. Therefore, in order to become a truly large player in the global apparel industry playground, Cambodia has to focus its efforts on developing self-sustainability and overcoming its ingrained internal conflicts.

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OEM Suppliers – Perfecting the Balancing Act


Suppliers to the automotive industry (OEM suppliers) have witnessed strong and steady growth over the past few years. Owing largely to the recovery in the global automotive market coupled with high-capacity utilization at their production facilities, OEM suppliers have performed better as compared with their OEM customers, especially in terms of profitability. However, the golden period is expected to expire in the coming year. With automobile sales not rising at a similar pace as before (especially in developed markets), and growing pressure on OEMs’ margins, OEMs have been undertaking massive cost cutting programs. This in turn is putting pressure on OEM suppliers to reduce prices. Additionally, OEM suppliers are facing rising expectations from OEMs to be located close to the OEMs’ facilities, especially in emerging markets.

As the automotive industry is seeing a shaving off of sales and profits, it is increasingly exerting pressure on its suppliers. OEM suppliers are facing increased pressure from OEMs to have an increased global presence (closer to the OEMs’ own assembly lines). While this means expanding operations and investments, OEM suppliers also need to keep costs low to be competitive and meet OEMs cost reduction programs. Thus, OEM suppliers need to balance both these approaches to remain competitive.

1 - OEM Suppliers Industry Performance

2 - Balancing OEM Expectations

3 - Proximity to OEM Locations

4 - Cost Pressure from OEMs

5 - How to Manage Expectations

EOS Perspective

While the strategy for cutting costs and location proximity largely remain mutually exclusive, suppliers that best manage to meet their clients’ expectations have a chance to shine. They can look at innovative strategies such as locating themselves in a third region (that offers proximity to the clients site as well as offers low costs) to best balance client demands. But most importantly, suppliers need to device an optimal manufacturing network keeping in mind all aspects and overall cost/location benefits. Suppliers that manage to come up with innovative solutions to handle complex client requirements, are well likely to come out as industry winners during time when the industry maybe entering a crunch phase again.

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China in 2016 – Time to Broaden the CV Horizon

The article was first published in Automotive World’s Guide to the automotive world in 2016.


Whatever the current state of affairs in China, let’s be clear that the decline in commercial vehicle production and sales numbers is merely a speed bump and not a meltdown.

China still offers significant benefits in terms of continued internal investment in infrastructure and development, above average industry and trade sentiments, and GDP growth that is higher than in most other economies globally. Besides, as China moves towards a more consumer-oriented economy, the demand for goods and services locally will become the engine of automotive growth. Beyond China, there is a need for OEMs to look at other avenues of growth, be it export-driven or geographical expansion of production base.

In November 2014, as we were penning down our thoughts on how China’s automotive market is likely to shape up in 2015, we were concerned about market growth rates, anti-trust fines, role of local OEMs, and how China will sustain its dominance in the global auto market. As we progressed through 2015, everyone – OEMs, government, consumers, analysts – focused only on one aspect – China’s economic slowdown. Unfortunately, numbers validate that fear as we go into 2016.

While the story of passenger vehicles was more positive, with production and sales growing by 2.2% and 3.9% year-on-year, respectively, during the first 10 months of 2015, the production and sales of commercial vehicles during January-October 2015 declined by 11.3% and 10.6% year-on-year, respectively (as stated by China Association of Automobile Manufacturers). Figures for trucks were down 12.7% (production) and 11.9% (sales). There was some positive momentum in October, but not enough to make much impact on overall slowdown.

Will 2016 be any different for China’s CV market prospects? Unlikely. At best, the double-digit decline in production and sales that was seen in 2015 might come down to single-digit figures on a year-on-year basis, and we might see the market consolidating its position as the world’s CV factory. Growth apart, the bigger issue will be how OEMs manage inventory and production lines in 2016, and how OEMs restructure their operations to mitigate further risks of China’s slowdown.


Could exports be a way out for CV OEMs, to avoid getting slammed by China’s economic slowdown? Perhaps. 2016 might just be the year that OEMs with production base in China look at China as a serious export hub for the Southeast Asian region.

With several large scale infrastructure projects underway in the Southeast Asian region, the demand for CV, especially trucks is likely to be significant. Indonesia is a great example of how China could benefit from being an export hub of CVs. The country aims to complete over 300 major infrastructure projects including ports, railways and highways by 2025, and is likely to see a substantial demand for transport and construction vehicles. Similarly, the ambitious One Belt, One Road project and the establishment of the Asian Infrastructure Investment Bank (which aims to fund infrastructure construction in the region) are likely to provide a lucrative platform for China-based CV manufacturers to cater to the growing need for various commercial vehicles in the region. Vietnam, The Philippines, and Myanmar are not far away in terms of their infrastructure investment hunger, and have over the years displayed significant need for trucks, construction vehicles, and vehicles for public transportation.

Neighbouring India presents a very interesting opportunity as well. With the new government’s focus on infrastructure development, there is space for China-based CV OEMs to make their mark. Beiqi Foton and BeiBen are actively exploring this opportunity, in spite of severe competitive threat from Indian OEM powerhouses Tata, Mahindra & Mahindra, among others.

2016 might just be the right time to explore these opportunities and take the leap of faith. Those CV OEMs which are able to see the long-term benefits of expanding in this region, are likely to gain immensely.


Another area of interest in 2016, specifically for Chinese CV OEMs, might be looking at setting up production units in South America and Africa, with OEMs unlikely to invest further in their China operations to add capacity at this stage of excess inventory. Africa and South America have been steady partners over the last several years, accounting for over 50% of China’s CV exports.

A renewed look at prospects in South America (Brazil as a possible export hub to both South and Central America) and Africa with its growing appetite for infrastructure development, an area that China also has deep interests in, could provide an avenue of growth for Chinese OEMs given the strained economic conditions locally. These initiatives, however, should not be knee-jerk reactions to current issues with slowdown, but must be looked at from strategic long-term perspective.


Back home, one wonders how the CV market will restructure itself. Local CV OEMs are clearly dominant, with few foreign OEMs managing to make their presence felt in the market. Various JVs in recent times have somewhat changed this picture, but the CV market is still quite fragmented. While there are a few specialised large OEMs operating across the value chain, one wonders if it is not the right time for further consolidation. There are a large number of small vulnerable manufacturers operating in the CV space, and perhaps some form of consolidation will help strengthen market dynamics.

The other aspect to consider, thanks to the imposition of stringent emissions standards, is how China’s CV market is slowly moving from price-focused purchase to product-focused purchase behaviour – 2016 might just be the starting point of China’s westernisation of CV market.

As we stand at the doors of 2016, it seems that OEMs have not one but several ways out of this slowdown. The question is if they have the risk appetite to make most of this downturn by expanding their presence beyond China – in both sales and production terms.

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Printing the Automotive Industry of the Future – 3D Style!


3D printing has been around for almost three decades but it is only recently that OEMs have begun to realize the commercial benefits of this phenomena beyond just prototyping. It has significantly altered the ways OEMs approach model designing, development, and manufacturing. It is helping car manufacturers across the globe shorten their product development phase, reduce prototype costs, and test new ways of improving efficiency.

Using 3D printing for prototyping has become much of a standard in the industry today. The 3D printing automotive industry, which is estimated at a little less than US$500 million in 2015, is expected to more than triple by 2020.

With 3D printing, OEMs are able to use CAD software to design parts and then print a prototype themselves, saving them both time and money.

Previously, OEMs outsourced the process of prototyping to machine shops, which not only resulted in additional costs but also took weeks to produce a part. Moreover, if the produced part needed modification (which in most cases it did), then the modified blueprint was sent to the machine shop again for production, resulting in a repeat of the entire process.

Due to lower costs and turnaround time, this technology has given OEMs the flexibility to use a fleet of printers to try out multiple designs in a go, rather than being limited to one design and then restarting with another in case the first result did not meet expectations. This has largely helped OEMs boost quality levels as they do not waste too much time applying modifications to their designs and then testing them.

Who Is Using 3D and What For?

GM uses 3D printing technologies of various kinds, such as selective laser sintering (SLS) and stereolithography (SLA), across its design, engineering, and manufacturing processes and rapid prototypes about 20,000 parts. Chrysler uses 3D printing for prototyping a wide variety of side-view mirror designs and then selecting the one that looks and performs the best. Ford, on the other hand, has been one of the earliest adopters of 3D printing technology. It runs five 3D prototyping centres, of which three are in the US and two are in Europe. The company churns out about 20,000 prototyped parts per annum from just one of these centres (Michigan, USA).

However, few OEMs such as Mitsubishi (who bought its first 3D printer in 2013), have been late adopters of the technology.

While 3D printers continue to be widely used for rapid prototyping across the industry, several large automobile manufacturers have advanced into the next stages of 3D printing technology adoption. Although still in nascent/experimental stage, these OEMs have applied 3D printing to produce hand tools, fixtures and jigs to enhance production efficiency at floor level. Ford, which is definitely one of the most advanced users of 3D printing, uses this technology to produce calibration tools.

The Case of BMW and Stratasys
BMW also uses 3D printing’s FDM technology to build hand-tools for automobile assembly and testing. In addition to the financial advantages, FDM process helps the company to make ergonomically designed assembly tools that perform better than traditionally made tools.

For one such tool, BMW worked with 3D printing company, Stratasys, to reduce the weight of the device by about 72%, thereby enhancing its ease of use considerably. Apart from improving the handling abilities of tools, the technology has also helped enhance functionality. The company has managed to print parts with complex shapes that allow workers to reach difficult areas specific to BMW-produced vehicles. In one such instance, the company created a tool using 3D printing for attaching bumper supports, which features a convoluted tube that bends around obstructions and places fixturing magnets exactly where needed.

Leaders in the use of 3D printing, such as Ford, also apply the technology to prototype parts that are of such strength that they are installed on running test vehicles. The company uses engine parts, such as intake manifolds, from 3D printing white silica powder, to install it in its running test vehicles. With the use of 3D printed prototypes of components such as cylinder heads and intake cylinders in test vehicles, Ford is successful in avoiding the requirement of investment castings and tooling, and in turn saving significant amount of time and dollars.

Another advancement in 3D printing encompasses the use of new and innovative materials. While most companies use silica powder, resin, and sand, few OEMs are innovating with forming test parts out of clear plastics. This allows them to validate designs as the team can visually see what is happening inside the part. Chrysler uses transparent plastic in 3D prototyping their differential/transfer case. By inserting oil inside it, they can ensure if the gear is staying well-lubricated under the prototyped design/model.

The use of metal as printing material is an innovation that though is still in its nascent stage is being used by OEMs such as BMW to 3D print (using SLM technology) a metal water wheel pump for its DTM racing car. Auto-parts manufacturer, Johnsons Controls Automotive Seating, also uses 3D printers to print metal parts that have complex shapes and are difficult to produce using traditional welding.

Various Stages in 3D Printing Adoption by OEMs

3D Printing Illustration

With these new applications taking the industry by storm, several OEM manufacturers are increasingly investing in and exploring the uses of additive manufacturing. While few companies have been slow in adopting to 3D manufacturing initially, it is expected that they will soon come up to speed with the advances in the use of this technology, given the holistic benefits offered by it.

Strati is born in 44 Hours…

Local Motors, and Arizona-based company has created the world’s first 3D printed car, Strati, which it plans to launch in 2016 (considering it passes the crash test and other requisite tests).

Strati’s body and chassis are completely created from 3D printing, however, components such as wheels and suspension are sourced from Renault. The battery-operated car is expected to cost in the range of US$18,000-30,000 and have a top speed of 50mph.

…Shuya to follow!

Taking cue from Local Motors, China’s automobile manufacture, Sanya Si Hai, has unveiled its own 3D printed vehicle called Shuya. While Shuya takes relatively longer (5 days) to print and has a top speed of only 25mph, it costs only US$1,770.

The Biggest Challenge – Seeing Beyond the Prototypes

One of the biggest drawbacks of 3D printing is that in an industry driven by volumes, its current speed cannot match the production volume requirements, thus inhibiting the use of this technology for direct part manufacturing. This in a large way restricts the use of 3D printing for mass production. While there is ongoing research on high-speed additive manufacturing, it still remains a concept.

Even if large automobile components are to be produced using this technology, they still need to be attached together through welding or other techniques. This lowers the benefits accrued from 3D printing the parts in the first place. This aspect of 3D printing is also being researched upon, and unlike high-speed additive manufacturing, 3D printing companies have made good ground in building large 3D printers that do not restrict the size of the component produced.

Another indirect but real challenge to the widespread adoption of additive manufacturing is high levels of intellectual property theft. Since additive manufacturing products can only be patented (and not copyrighted), there is much ambiguity regarding what all falls under patent protection. Till the time there are no clear guidelines regarding intellectual property and 3D printing, OEMs will remain wary regarding the extent to which they should use this technology.

The biggest challenge, however, is the mindset of OEMs which continue to look at 3D printing as primarily a prototyping tool.

On Reflection

The automotive industry must take cue from the aerospace and defence industry, which has heavily invested (along with additive manufacturing companies) in developing new materials and technology in 3D printing to meet their evolving requirements. Instead of sitting and waiting for 3D printer manufacturers to bring about new uses of 3D printing for the automobile industry, OEMs should proactively look for innovating with the technology themselves.

Companies such as Ford and BMW, which are exploring other uses of this versatile technology have the opportunity to not only save costs, but also improve overall performance. And this is what may just provide these OEMs the competitive edge they are looking for. The question is who else is willing the take the big leap of faith.