TOKYO/LONDON, Dec 9 (Reuters) – Japan, Britain and Italy are merging their next-generation jet fighter projects in a ground-breaking partnership spanning Europe and Asia that is Japan’s first major industrial defence collaboration beyond the United States since World War Two.
The deal, which Reuters reported in July, aims to put an advanced front-line fighter into operation by 2035 by combining the British-led Future Combat Air System project, also known as Tempest, with Japan’s F-X programme in a venture called the Global Combat Air Programme (GCAP), the three countries said in a statement on Friday.
Against the backdrop of Russia’s invasion of Ukraine and intensifying Chinese military activity around Japan and Taiwan, the agreement may help Japan counter the growing military might of its bigger neighbour and give Britain a bigger security role in a region that is a key driver of global economic growth.
“We are committed to upholding the rules-based, free and open international order, which is more important than ever at a time when these principles are contested, and threats and aggression are increasing,” the three countries said in a joint leaders’ statement.
Amid what it sees as deteriorating regional security, Japan this month will announce a military build up plan that is expected to double defence spending to about 2% of gross domestic product over five years.
British Prime Minister Rishi Sunak separately said that his country needed to stay at the cutting edge of defence technology and that the deal would deliver new jobs.
Britain’s BAE Systems PLC (BAES.L), Japan’s Mitsubishi Heavy Industries (7011.T) and Italy’s Leonardo (LDOF.MI) will lead design of the aircraft, which will have advanced digital capabilities in AI and cyber warfare, according to Japan’s Ministry of Defence.
NATO COMPATIBLE
European missile maker MBDA will also join the project, along with avionics manufacturer Mitsubishi Electric Corp (6503.T). Rolls-Royce PLC (RROYC.UL), IHI Corp (7013.T) and Avio Aero will work on the engine, the ministry added.
The three countries, however, have yet to work out some details of how the project will proceed, including work shares and where the development will take place.
Britain also want Japan to improve how it provides security clearances to contractors who will work on the aircraft, sources with knowledge of the discussion told Reuters.
Other countries could join the project, Britain said, adding that the fighter, which will replace its Typhoon fighters and complement its F-35 Lightning fleet, will be compatible with fighters flown by other North Atlantic Treaty Organization (NATO) partners.
Confirmation of the plan comes days after companies in France, Germany and Spain secured the next phase of a rival initiative to build a next-generation fighter that could be in operation from 2040.
The United States, which has pledged to defend all three countries through its membership of NATO and a separate security pact with Japan, also welcomed the joint Europe-Japan agreement.
“The United States supports Japan’s security and defence cooperation with likeminded allies and partners, including with the United Kingdom and Italy,” the U.S. Department of Defense said in a joint statement with Japan’s Ministry of Defense.
Japan had initially considered building its next fighter with help from U.S. defence contractor Lockheed Martin Corp (LMT.N), which had proposed an aircraft that combined the F-22 airframe with the flight systems from the F-35 fighter.
Reporting by Tim Kelly, Nobuhiro Kubo in TOKYO and Paul Sandle in LONDON; Editing by Robert Birsel
Our Standards: The Thomson Reuters Trust Principles.
Average age of vessels up more than two years since 2017
New emissions rules may force older ships to go slower
One-fifth of ships fitted with energy saving devices
New vessels and alternative fuels the long-term solution
LONDON, July 11 (Reuters) – If shipping is the beating heart of global trade, its pulse is about to get slower.
Faced with uncertainty about which fuels to use in the long term to cut greenhouse gas emissions, many shipping firms are sticking with ageing fleets, but older vessels may soon have to start sailing slower to comply with new environmental rules.
From next year, the International Maritime Organization (IMO) requires all ships to calculate their annual carbon intensity based on a vessel’s emissions for the cargo it carries – and show that it is progressively coming down.
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While older ships can be retrofitted with devices to lower emissions, analysts say the quickest fix is just to go slower, with a 10% drop in cruising speeds slashing fuel usage by almost 30%, according to marine sector lender Danish Ship Finance.
“They’re basically being told to either improve the ship or slow down,” said Jan Dieleman, president of Cargill Ocean Transportation, the freight division of commodities trading house Cargill, which leases more than 600 vessels to ferry mainly food and energy products around the world.
Supply chains are already strained due to a surge in demand as economies rebound from lockdowns, pandemic disruptions at ports and a lack of new ships. If older vessels move into the slow lane as well, shipping capacity could take another hit at a time when record freight rates are driving up inflation. read more
At the moment, only about 5% of the world’s fleet can run on less-polluting alternatives to fuel oil, even though more than 40% of new ship orders will have that option, according to data from shipping analytics firm Clarksons Research.
But the new orders are not coming in fast enough to halt the trend of an ageing fleet across all three main types of cargo vessels: tankers, container ships and bulk carriers, the data provided to Reuters by Clarksons Research shows.
The average age of bulk carriers, which carry loose cargo such as grain and coal, had jumped to 11.4 years by June 2022 from 8.7 five years ago. Container ships now average 14.1 years, up from 11.6, while for tankers the average age was 12 years, up from 10.3 in 2017, according to the data.
“Some ship owners have preferred to buy second-hand vessels because of the uncertainties around future fuels,” said Stephen Gordon, managing director at Clarksons Research.
TALL ORDER
Orders for new container ships surged to a record high in 2021 and are still coming in at healthy clip this year, but as the appetite for new tankers and bulk carriers is much lower, the current order book across all three types of vessel only stands at about 10% of the fleet, down from over 50% in 2008.
Shipping companies are responsible for about 2.5% of the world’s carbon emissions and they are coming under increasing pressure to reduce both air and marine pollution.
The industry’s emissions rose last year, underlining the scale of the challenge in meeting the IMO’s target of halving emissions by 2050 from 2008 levels. The organization is now facing calls to go further and commit to net zero by 2050.
Some companies are testing and ordering vessels using alternative fuels such as methanol. Others are developing ships that can be retrofitted for fuels beyond oil, such as hydrogen or ammonia. There’s even a return to wind with vast, high-tech sails being tested by companies such as Cargill and Berge Bulk. read more
But many of the potential low-carbon technologies are in the early stages of development with limited commercial application, meaning the majority of new orders are still for vessels powered by fuel oil and other fossil fuels.
Of the vessels on order, more than a third, or 741, are set to use liquefied natural gas (LNG), 24 can be driven by methanol and six by hydrogen. Another 180 have some form of hybrid propulsion using batteries, Clarksons data shows.
Many shipping firms are hedging their bets mainly because prolonging the life span of vessels is cheaper and lower risk than new builds. They also gain breathing space while waiting for the winning new technologies to become mainstream.
“We have a clash between an industry that is very long-term investment oriented and a very fast pace of change,” said John Hatley, general manager of market innovation in North America at Finnish marine technology company Wartsila (WRT1V.HE).
Cargill says that as of now it doesn’t expect to have many new-build ships in its fleet, instead fitting energy saving devices to older vessels and prolonging their use, while there’s still uncertainty about future technology.
They’re not alone, with more than a fifth of global shipping capacity fitted with such devices, according to Clarksons.
Devices include Flettner rotors, tail spinning cylinders that act like a sail and let ships throttle back when it’s windy, or air lubrication systems that save fuel by covering the hull with small bubbles to reduce friction with seawater.
While energy saving devices go a long way to tackling emissions, ultimately, newer vessels are a better bet, said Peter Sand, analyst at shipping and air cargo data firm Xeneta.
“The next generation of fuel oil ships will be much more carbon efficient, they will be able to transport the same amount of cargo emitting only half of the emissions that they did over a decade ago,” he said.
THE POSEIDON PRINCIPLES
Shipping firms are set to come under growing pressure to comply with targets set by the IMO, which will rate the energy efficiency of ships on a scale of A to E, as the ratings will have a knock-on effect when it comes to finance and insurance.
In 2019, a group of banks agreed to consider efforts to cut carbon emissions when lending to shipping companies and established a global framework known as the Poseidon Principles.
The Poseidon Principles website shows that 28 banks, which include BNP Paribas (BNPP.PA), Citi , Danske Bank (DANSKE.CO), Societe Generale (SOGN.PA) and Standard Chartered (STAN.L), have committed to being consistent with IMO policies when assessing shipping portfolios on environmental grounds.
“Lending decisions on second-hand ships are going to become an issue on older tonnage,” said Michael Parker, chairman of Citigroup’s global shipping, logistics and offshore business, adding that environmental factors would be taken into account when lenders decided whether to refinance vessels.
“Second-hand ships will continue to get financing, provided that the owner is doing the right things about keeping that vessel as environmentally efficient as possible,” he said.
One early adopter of new technology is shipping giant A.P. Moller-Maersk . It has ordered 12 vessels which can run on green methanol produced from sources such as biomass, as well as fuel oil as there is not yet enough low carbon fuel available.
The Danish company doesn’t intend to use LNG because it is still a fossil fuel and it would prefer to shift directly to a lower carbon alternative.
Wartsila, meanwhile, is launching an ammonia-fueled engine next year, which it says is generating a lot of interest from customers, as well as a hydrogen engine in 2025.
Ship owners are facing a lot of uncertainty over how to “future proof” their fleets and avoid regretting investment decisions now within a couple of years, said Wartsila’s Hatley.
“They would rather wait for maybe the whole life of the ship of 20 years, but that’s even more uncertain now because of the pace of change.”
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Reporting by Sarah McFarlane; Editing by Veronica Brown and David Clarke
Our Standards: The Thomson Reuters Trust Principles.
People wearing face masks following the coronavirus disease (COVID-19) outbreak walk on a street in Shanghai, China, December 14, 2021. REUTERS/Aly Song
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SHANGHAI, Dec 14 (Reuters) – Multiple companies have suspended operations in one of China’s biggest manufacturing hubs as local authorities try to contain a COVID-19 outbreak, halting production of goods from batteries to textile dyes and plastics.
At least 20 listed companies have shut operations in virus-hit areas in Zhejiang, an eastern province with a large industrial sector that accounts for around 6% of China’s GDP and where many goods are manufactured for export.
Tens of thousands of Zhejiang residents are in quarantine and some domestic flights have been suspended as a national health official said the outbreak in three cities – Ningbo, Shaoxing and Hangzhou – was developing at a “relatively rapid” speed. read more
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The three cities accounted for more than 50% of the province’s economic output of around 6.46 trillion yuan ($1.02 trillion) last year.
Zhejiang reported 44 locally transmitted cases with confirmed symptoms on Dec. 13, official data showed on Tuesday, taking the total to 217 just over a week since the first case was reported on Dec. 6. Prior to the current outbreak, the province had reported just one local case this year.
Companies reporting suspended production on Tuesday included Zhejiang Mustang Battery Co (605378.SS), Guobang Pharma Ltd (605507.SS) and textile dyes maker Zhejiang Runtu Co (002440.SZ).
Ningo-based Mustang Battery said it expected the outbreak to be brought under control very soon, and the production suspension was a temporary measure that “will not have a long-term negative impact on the company’s growth.”
Zhejiang Runtu said all its units in the Zhejiang Shangyu Economic Development Zone (SEDZ), which accounts for 95% of its revenue, had been halted since Dec. 9 and it expected a negative impact on its fourth quarter results.
There are more than 350 industrial enterprises in the zone, which is located near the cities of Ningbo, Hangzhou, Shanghai, Suzhou and Wenzhou.
Ningbo Homelink Eco-Itech Co (301193.SZ), Zhejiang Zhongxin Fluoride Materials Co (002915.SZ), Zhejiang Jingsheng Mechanical & Electrical Co (300316.SZ) and Zhejiang Fenglong Electric Co (002931.SZ) have also suspended work in affected areas.
The companies said they halted operations in line with local government orders in Zhenhai district in Ningbo and Shangyu district in Shaoxing, which curtailed all production bar essential manufacturing.
The orders cover all companies in the affected areas, but only listed firms are required to disclose any impact on their business.
Major industries in Zhenhai, which has a port, include manufacturing of precision machinery and chemicals. The district also hosts factories with investments by more than 700 foreign companies including LG Electronics Inc (066570.KS) and Toshiba Corp (6502.T), according to the Zhenhai government’s website.
Sinopec’s (600028.SS) Zhenhai Refining and Chemicals, the biggest oil refinery in China, said on Tuesday it was maintaining a high operational rate despite tightened COVID measures. The refinery, which has annual crude oil refining capacity of 460,000 barrels-per-day, is currently processing 60,000 tonnes of crude oil each day, the company said in statement.
More than 50,000 people have been quarantined at centralised facilities across the coastal province of 64.4 million, while a further nearly half a million people were being monitored.
($1 = 6.3631 yuan)
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Reporting by Samuel Shen and Andrew Galbraith, additional reporting by Roxanne Liu; Editing by Jane Wardell
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DETROIT, Aug 20 (Reuters) – The investment surge by both new and established automakers in the electric vehicle market is a bonanza for factory equipment manufacturers that supply the highly automated picks and shovels for the prospectors in the EV gold rush.
The good times for the makers of robots and other factory equipment reflect the broader recovery in U.S. manufacturing. After falling post-COVID to $361.8 million in April 2020, new orders surged to almost $506 million in June, according to the U.S. Census Bureau.
Reuters Graphics
Here’s a graphic on U.S. manufacturing new orders: https://tmsnrt.rs/3lVyhlM
New electric vehicle factories, funded by investors who have snapped up newly public shares in companies such as EV start-up Lucid Group Inc (LCID.O) are boosting demand. “I’m not sure it’s reached its climax yet. There’s still more to go,” Andrew Lloyd, electromobility segment leader at Stellantis-owned (STLA.MI) supplier Comau, said in an interview. “Over the next 18 to 24 months, there’s going to be a significant demand coming our way.”
Growth in the EV sector, propelled by the success of Tesla Inc (TSLA.O), comes on top of the normal work manufacturing equipment makers do to support production of gasoline-powered vehicles.
Automakers will invest over $37 billion in North American plants from 2019 to 2025, with 15 of 17 new plants in the United States, according to LMC Automotive. Over 77% of that spending will be directed at SUV or EV projects.
Equipment providers are in no rush to add to their nearly full capacity.
“There’s a natural point where we will say ‘No'” to new business, said Comau’s Lloyd. For just one area of a factory, like a paint shop or a body shop, an automaker can easily spend $200 million to $300 million, industry officials said.
‘WILD, WILD WEST’ “This industry is the Wild, Wild West right now,” John Kacsur, vice president of the automotive and tire segment for Rockwell Automation(ROK.N), told Reuters. “There is a mad race to get these new EV variants to market.” Automakers have signed agreements for suppliers to build equipment for 37 EVs between this year and 2023 in North America, according to industry consultant Laurie Harbour. That excludes all the work being done for gasoline-powered vehicles.
“There’s still a pipeline with projects from new EV manufacturers,” said Mathias Christen, a spokesman for Durr AG (DUEG.DE), which specializes in paint shop equipment and saw its EV business surge about 65% last year. “This is why we don’t see the peak yet.”
Orders received by Kuka AG, a manufacturing automation company owned by China’s Midea Group (000333.SZ), rose 52% in the first half of 2021 to just under 1.9 billion euros ($2.23 billion) – the second-highest level for a 6-month period in the company’s history, due to strong demand in North America and Asia.
“We ran out of capacity for any additional work about a year and a half ago,” said Mike LaRose, CEO of Kuka’s (KU2G.DE) auto group in the Americas. “Everyone’s so busy, there’s no floor space.”
Kuka is building electric vans for General Motors Co (GM.N) at its plant in Michigan to help meet early demand before the No. 1 U.S. automaker replaces equipment in its Ingersoll, Ontario, plant next year to handle the regular work. Automakers and battery firms need to order many of the robots and other equipment they need 18 months in advance, although Neil Dueweke, vice president of automotive at Fanuc Corp’s (6954.T) American operations, said customers want their equipment sooner. He calls that the “Amazon effect” in the industry.
“We built a facility and have like 5,000 robots on shelves stacked 200 feet high, almost as far as the eye can see,” said Dueweke, who noted Fanuc America set sales and market share records last year.
COVID has also caused issues and delays for some automakers trying to tool up.
R.J. Scaringe, CEO of EV startup Rivian, said in a letter to customers last month that “everything from facility construction, to equipment installation, to vehicle component supply (especially semiconductors) has been impacted by the pandemic.”
However, established, long-time customers like GM and parts supplier and contract manufacturer Magna International (MG.TO) said they have not experienced delays in receiving equipment.
Another limiting factor for capacity has been the continuing shortage of labor, industry officials said. To avoid the stress, startups like Fisker Inc (FSR.N) have turned to contract manufacturers like Magna and Foxconn(2354.TW), whose buying power enables them to avoid shortages more easily, CEO Henrik Fisker said. Growing demand, however, does not mean these equipment makers are rushing to expand capacity. Having lived through downturns in which they were forced to make cuts, equipment suppliers want to make do with what they have, or in Comau’s case, just add short-term capacity, according to Lloyd. “Everybody’s afraid they’re going to get hammered,” said Mike Tracy, a principal at consulting firm the Agile Group. “They just don’t have the reserve capacity they used to have.”
Reporting by Ben Klayman in Detroit; additional reporting by Joseph White; Editing by Dan Grebler
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