Market Snapshot: Automotive 3142

As the North American auto industry slowly recovers, moldmakers serving this sector are quoting more programs and molders are hopeful large molding jobs will hit.

A continuing recovery in global auto sales, including April’s 19.8% rise in sales of U.S. vehicles, coupled with Europe’s 6.9% rise in sales, has been a boon to automotive suppliers. Once again they have available cash to make acquisitions and establish long-term strategies, rather than merely hang on and survive, says SupplierBusiness, an IHS Global Insight Co. Of course, this report was released before the bad news about June’s auto sales, which might give pause to some auto suppliers considering spending their cash.

According to reports, it was the second-worst June for light vehicle sales in 28 years, with a total of 983,000 vehicles sold. Ford’s light vehicles sales were down 15% compared to May, but up 15% compared to June 2009. GM’s light vehicle sales were up 36% over June 2009.

In the auto industry, what hits OEMs also hits Tier One suppliers, and trickles onto Tier Two suppliers such as molders and moldmakers. However, it appears that some Tier One suppliers such as Johnson Controls, Magna International, and Borg Warner have plenty of cash to spend. Others such as Visteon and Delphi continue to struggle with bankruptcy issues, including exit strategies.

At the 2010 Automotive News World Congress held this past January, Rodney O’Neal, Delphi CEO and president, spoke about Delphi’s restructuring. “We are stronger, but we are not done,” said O’Neal. “We must finish our rotation and along with what we believe are the volumes and product mix for the foreseeable future. We are capitalized to fund the right-sizing and keep a strong product pipeline and we know the exact steps to take to execute that plan.”

Acquisitions and mergers are expected among the Tier One suppliers as buyers express pent-up demand. One example is Johnson Controls’ unsolicited bid for Visteon’s electronics and interior businesses, which “signals that a new era of supplier deals is about to begin,” noted the SupplierBusiness report. “JCI offered US$1.25 billion for Visteon, and Visteon’s board voted unanimously to reject the bid and work to emerge from bankruptcy as an independent company.” The primary reason Visteon gave for the rejection, according to a statement on June 1, was that it would hurt the company’s creditors.

Other suppliers on the lookout for acquisitions include Magna International, Borg Warner, and Mogul, according to the report. “Magna, staked with more than US$3 billion in cash and unused credit lines, aims to expand development of parts for electric cars and hybrids,” it said. “And Magna is seeking to grow in markets such as Brazil, China, and Russia.”

All of this most likely means a changing landscape for mold manufacturers and molders that serve the automotive industry primarily through Tier One suppliers. As the industry improves, however, it most likely means more work for Tier Twos.

Ford Motor Co., which didn’t take bailout money and has become stronger over the past year, reported a Q2 net income of $2.6 billion, a $338 million improvement from the same quarter in 2009. The company’s pre-tax operating profit of $2.1 billion is a $3.2 billion improvement from Q2 2009.

With this strong report, the company is heavily promoting its new Explorer SUV, which goes on sale this winter and will be exported to 90 countries. Ford’s supply chain—including Dakkota Integrated Systems, Johnson Controls, and Lear—will benefit from this new vehicle. Ford said more than 100 companies in 23 states will produce parts and components for the new Explorer. Between Ford and its suppliers, the new vehicle could eventually help create up to 12,000 new jobs overall (read the initial report, “New Ford Explorer drives job creation at plastics part suppliers,” at plasticstoday.com).

That good news mirrors a recent report from the Sustainable Transportation & Communities group at the Center for Automotive Research (CAR; Ann Arbor, MI), which says 1.7 million automotive-related direct jobs impact more than 8 million jobs in the private sector. The automotive industry spends $16 billion-$18 billion dollars annually on research and product development and half a trillion on employee compensation, and is a major driver of the overall manufacturing contribution to the GDP.

“The CAR study results provide strong evidence of the deep vertical and horizontal integration of the U.S. auto industry with so much of the U.S. economy, and illustrates the high productivity potential of the U.S. and the importance of its role in leading the U.S. economy in the current recovery,” said Sean McAlinden, executive VP of research and chief economist at CAR.

Auto suppliers develop tech to woo consumers
Interiors are an important part of the business of International Automotive Components (IAC; Dearborn, MI), says Maurice Sessel, VP, production engineering for IAC Group North America. Sessel points to a recent JD Power survey that shows interiors strongly influence how people choose their cars. Consumers reported that many vehicle interiors didn’t have a well-crafted, high-quality appearance. “Molding is such a large portion of what we do that it’s important that we keep the technology moving forward with tighter tolerances, better aesthetics, and better design of the parts to provide a softer, more crafted look to a vehicle’s interior,” says Sessel.

To provide its OEM customers with the interior aesthetics and the haptics (feel) that consumers want, Sessel says IAC follows a number of trends. One is the company’s FreeForm injection molding process, which provides a soft upper bolster by combining PP overmolded with TPE in one step. Another option for OEMs is low-pressure back-injection molding onto a soft skin. “We’re seeing leather-wrapped door panels and instrument panels, and there are a lot of different processes used to wrap these components, such as you’ll see on the Corvette and other GM vehicles,” Sessel notes.

IAC is implementing twin-shot technology (which has been used for some time in applications such as two-color taillamp lenses) for a new interior application for an Asian automaker. Sessel says that the company is injecting two different-colored materials at the same time for an instrument panel application. “We’ve done the material flow and gating analysis and developed a process that allows the flow front line to come together in areas that are covered and won’t be seen,” explains Sessel. “We’re going into production on that in September. That process has several benefits, including eliminating the need for paint, which makes recycling easy.”

IAC’s Deep Clear process is one in which appliqués are made by creating a printed image on paper, and then molding a substrate and inserting the printed image into the tool, followed by molding a clear acrylic over the image. “From a molding perspective, using the injection molding process gives unbelievable flexibility to the OEMs to customize,” says Sessel. “They can create a customized design using print on demand. The driver behind this technology is Gen Y, who are coming into full force in terms of buying vehicles. They want the very customized look such as they currently have with their iPods and laptops. They expect customized vehicles, and unique interior appliqués help the OEMs provide that.”

Molds, molding machinery seeing new growth
DME Co. (Madison Heights, MI) reports a “moderate pickup in what we would normally see in molding machinery.” Dave Lawrence, president and CEO of molding machinery maker Milacron and its DME subsidiary, a maker of mold components and hot runner systems, says that larger-tonnage machines are selling. “The big-machine market [was] very quiet during 2009, but since the fourth quarter of last year we’ve seen an increase in sales in our large-machine segment. We believe that the driver of this is an increase in some of the body component parts being injection molded.”

Some molders are taking a renewed look at improving productivity by using newer equipment, and Lawrence attributes that to the fact that, given the challenges of expanding brick-and-mortar plants and hiring skilled labor, they’re looking for gains that new machinery offers. “If there’s a way to get more plant capacity by using it efficiently, that’s the way people are going, so we’re seeing renewed activity in that area. And there is still a huge focus on energy efficiency in the automotive market, which means the plastics industry has new opportunities for weight reduction in vehicles, and alternative fuel vehicles as well.”

With that shift, Lawrence notes there are increased volumes of quoting activity in the automotive arena among Milacron’s and DME’s customers. “We know that a number of customers in the automotive environment are trying to get as much production as they can in their facilities and keep cost footprint where it is,” says Lawrence. “There’s a little more activity in the project [program] area with some uptick in quoting and in orders.

“On the DME [moldmaking] front,” he continues, “we’ve seen a nice increase in project activity where molders and moldmakers are beginning to look at automotive projects, and we think that trend will likely continue.”

Lawrence says that he spent some time in Europe recently, and that “interestingly, everybody seems to have had a strong second quarter and most are relatively comfortable that business levels will remain fairly steady throughout 2010, but there’s not much visibility beyond that,” notes Lawrence. “The 2011 outlook isn’t forming itself, and there’s still some hesitancy in the market about what we’re facing in the coming year. We think our businesses are providing products that help America become more competitive every day, so we’re encouraged.”

Material suppliers step up for new applications
Requirements for underhood applications are changing with environmental requirements, and the call for reduced fuel consumption has resulted in significant changes, such as the use of smaller engines with higher turbo pressures and EGR (Exhaust Gas Recirculation). So said DSM Engineering Plastics in its announcement that it will introduce its new Diablo high heat resins—Stanyl Diablo OCD2300 and Akulon Diablo—at K 2010.

With the changes taking place in vehicles, auto underhood components such as air ducts, air intake manifolds, and charge air cooler endcaps are exposed to continuously rising operating temperatures, and many thermoplastics cannot provide a long service life. Stanyl Diablo OCD 2300 is a high-heat PA46 material, developed specifically to meet the need for long-term temperature resistance at elevated temperatures, says DSM. Stanyl Diablo withstands more than 3000 hours at aging temperatures of 230°C before its tensile strength is less than half of its initial value.

DSM also will announce commercialization of Akulon RC, a portfolio of postindustrial recycled grades of PA6 for auto underhood applications. Akulon RC will be available in a number of grades, including RC grades of Akulon Ultraflow, from the end of 2010, with first commercial applications following in early 2011.

Krijn Dijkstra, global segment manager for DSM Engineering Plastics, says DSM is committed to expanding its environmentally aware portfolio. “By focusing on eco-efficiency and sustainability, DSM drives its innovation cycle to ensure that key new product innovation and/or development meets the evolving needs of customers, while ensuring that products meet key sustainability objectives,” said Dijkstra.

Sabic Innovative Plastics introduced several new applications for its materials recently, including a newly designed steering wheel molded from Lexan EXL copolymer resin. The steering wheel features a two-part design that offers an alternative to the typical steering wheel composed of a diecast magnesium or aluminum armature overmolded with flexible urethane foam.

Lexan EXL glass-filled polycarbonate-siloxane copolymer resin gives stiffness and a high degree of impact over a wide temperature range, says Sabic IP. The material supplier developed two designs: a two-part IM design with a leather wrap as a high-end solution, and a one-piece IM armature with a PU overmolding. Both are attached to the steering column with a small metal hub.

Reported benefits include up to 20% system cost reduction and a 40% reduction in mass compared to a magnesium or aluminum alloy steering wheel. It also offers greater design flexibility, and new styling options such as special colors and effects. Simpler manufacturing is made possible by reducing the number of secondary processes required with previous steering wheels.

Underhood applications are also beneficiaries of plastics. Sabic IP’s Noryl and Valox are the choice for some automotive parts suppliers for use in power train solutions to displace weight and increase performance, particularly in plug-in hybrid and battery electric vehicles, the company says. Although both of these types of vehicles can reduce fuel consumption and emissions, the additional weight of battery packs—up to 661 lb on a midsized car—can undermine environmental benefits. To reduce weight, plastics can replace steel in different applications such as battery housings, which are already being adopted by auto manufacturers. Noryl and Valox are also said to offer chemical and temperature resistance, dimensional stability, and flame retardance.

Hella, a Tier One auto lighting supplier, selected Sabic IP’s XHT high-heat PC resins to create a metalized headlamp bezel and a clear, ice-blue-tinted bezel for two major European car manufacturers. “As temperatures climb with new headlamp technology, many traditional materials can’t handle the heat,” notes Markus Richter of Hella.

Ticona offers its Fortron 6162XF, a mineral/glass-reinforced polyphenylene sulfide (PPS) with superior fuel resistance for applications used in aggressive fuels. The new fuel-resistant Fortron PPS grade has reduced weight gain by more than 45% compared to Fortron 6165A6, Ticona says, which has been used in fuel systems. Both Fortron grades are well suited for applications with components needing extremely high dimensional stability during storage in aggressive fuels, such as impellers, outlet covers, and fuel injection components.

Fortron PPS is versatile and can withstand long-term exposure to gasoline, diesel, bio-diesel, and aggressive fuels containing oxygenates such as methanol and ethanol, as well as to natural gas and other fuels in alternative propulsion systems. Ticona says Fortron offers a high continuous use temperature of 320°F-464°F, and short-term temperature resistance up to 518°F. Additionally, it offers a potential weight savings of up to 50% vs. metal.

PolyOne helped Ford Motor Co. provide additional eco-friendly features to its Escape Hybrid by focusing on the polypropylene engine cover, which had been coated with metallic paint to achieve a high-quality finish. Ford designers wanted to eliminate painting and its associated VOC emissions without losing the aesthetic appeal of a metallic look.

Ford likes PolyOne’s Maxxam FX Metal, a metallic-look, talc-filled PP compound, so it asked its supplier MPC Inc. (Walworth, WI) to evaluate the material in the engine cover application. PolyOne worked with the mold supplier to eliminate visible knitlines by routing material flow in the mold so flow fronts meet at the edges of the cover. The Maxxam FX Metal met all of Ford’s performance requirements including impact strength, heat deflection temperature, and tensile strength while also providing the aesthetic requirements of the engine cover.

On the interiors front, PolyOne helped a German automotive OEM develop a new application involving Onflex-S TPE with UV stabilization. The OEM had developed interior TPE parts in the past and the engineers requested help creating an elastomeric insert for the map case pocket in each door of a compact SUV now in series production. PolyOne’s Onflex-S with UV stabilization improved weathering performance and helped the OEM reduce cycle times with higher flow rates than other SBC-based TPEs, according to the material supplier.

Teijin Chemicals (Tokyo and Osaka, Japan) was able to improve fuel efficiency, reduce weight, and green up vehicles with its PC for injection molded windshields. Teijin’s Panlite PC resin is half the weight of glass and 200 times more impact resistant, according to its maker. It also reportedly offers excellent transparency with no optical distortion.

Using one of its large injection molding presses (the company boasts it’s one of the world’s largest) with four-axis parallelism control to maintain the mold’s parallel balance, the machine molds parts fast and molds uniformly thin parts without compromising resin fluidity, says Teijin. After molding, the windshields are treated with Teijin Chemicals’ DMT series of hard-coating agents, making Panlite fully capable of withstanding the rigors of weather and abrasive conditions of the road.

IAC’s Sessel says that his company compounds some of its own TPO materials to improve quality. “We found a lot of fluctuations in materials, and one of the key things we found out on the TPO side is that we wanted to have materials to meet product specs, not just some material specs,” says Sessel. “In some cases, material properties might not be important to the product. We design and optimize the material to fit the product, which is what we’ve done on the TPO side.”

Sessel says IAC continues its efforts with the bio-based materials. “Currently we have several different materials that we’re working with, but getting the supply is the big problem, especially with global OEM programs,” he says,  “They don’t want different materials in different parts of the world. We’ve had success with several of these.” —Clare Goldsberry