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The accelerated development of large numbers of Asia-Pacific Rim countries is upsetting the old statistics, changing the economics of entire industry segments in the process.
(Published on October 2008 – JEC Magazine #44)
With this as a given, JEC Group has put out a study called “Main Dynamics of the Composite Industry in Asia-Pacific”. Here are a few excerpts.
While automotive is the largest final market in terms of value (23% in value of the final market), aerospace and windmill applications are a showcase for the composite industry, thanks to the technical performance of composite materials.
Automotive: a booming sector
In the automotive sector, composites offer a number of advantages over competing materials (especially steel and aluminium). They are mostly used in two types of applications. First, small series parts (under 1,500 units a day) requiring strong resistance are produced using SMC, a material that is more cost competitive than competing materials, due to a limited up-front investment. These applications account for 60 to 70% of composite use in the automotive industry. Composites are also used for their specific properties (mainly shock absorption and heat resistance) in either large or short series, representing 30 to 40% of automotive applications. These are mainly produced by injection moulding (BMC in the case of thermosets or injection moulding for thermoplastics).
The worldwide growth of automotive production is driven by the Asian market, which has been growing at a historical 6% per year, compared to 0% in North America and Western Europe. This trend is expected to continue.
In Europe, car CO2 emissions were around 163 g/km in 2005, but the regulations have imposed a 140 g/km limit for 2008 and a 120 g/km limit for 2012. In their attempts to reduce CO2 emissions, car manufacturers tend to focus on engine improvements rather than on weight reduction. As a consequence, the regulation on car CO2 emissions should not help improve the penetration of composites in automotive applications in Europe in the medium term. There are no such regulations in North America, which does not affect the market penetration of composites. In Asia, in addition to the underlying market growth, the growth of composites penetration versus traditional materials depends on two factors: the pace of implementation of environmental regulations limiting CO2 emissions and the consumer demand for fuel-efficient cars (assuming that oil prices remain high). A Chinese car currently contains about 20% less composites than a car in developed countries (30 kg composite versus 36 kg in Europe), which leaves room for further penetration. In 2005, car CO2 emissions averaged 180 g/km in China, compared to a targeted 120 g/km in 2012 for Europe and 130 g/km in 2010 for Japan (see Table 1). As China hopes to export part of its automotive production, it will need to reduce the weight of its cars. Extending the use of composites will be part of the solution.
Aerospace: bright prospects
A strong growth is expected in air passenger traffic (5% p.a.), especially in Asia and North America (8% p.a.), thus driving aircraft sales. While commercial aircraft account for one third of composite use in the aerospace industry, this positive trend will be intensified by a growing penetration of these materials. For instance, composites will represent almost 50% of the new Boeing 787’s total weight, compared to under 10% for the 777 launched in the 90’s. Overall, while the same trend is being observed for most other aerospace applications (spacecraft, business and regional jets), composites are expected to gain a 5% market share on average, mostly at the expense of aluminium.
Composite use in the aerospace industry relies on high-tech materials, mostly epoxy resins reinforced with carbon or aramid fibres. These materials exhibit very high strength at a very low weight. Considering that weight-saving is a priority for aircraft manufacturers and air carriers, aluminium is expected to lose more and more ground in the years to come to the benefit of composites, especially in structural components (fuselage, wings, nacelle), interior parts (seatbacks, armrests, etc.) and floor panels.
Asia is expected to account for 18% of airplane passenger traffic growth over the 2004-2015 period (see Table 2). Asia- Pacific, and especially China, will be a key future market, a source of low-cost supply and home countries of new competitors for the aerospace industry and its suppliers.
With market growth forecasts at 8% to 9% a year (Revenue Passenger Kilometres, RPK), China will be the fastest growing market and the largest one outside the USA. The airplane fleet is expected to triple in size by 2025, reaching 3,900 planes. China should spend $280 billion in aeronautics over the next 20 years.
China is also a low-cost-factor country, developing its technical know-how in all industrial segments. China is also trying to develop its own aircraft industry. For example, AVIC Commercial Aircraft is moving forward on the production of a local regional jet, the 80-seat ARJ-21, with a $600-million government investment.
In this context, Airbus and Boeing are investing in China to secure these contracts and reducing their costs to face the competition. Both companies are trying to develop industrial cooperation, ventures and facilities, support to civil aviation, training, technical assistance and support services.
Both manufacturers are intensifying their sourcing policy in China. Airbus announced a $120-million yearly procurement budget in China starting in 2010. Boeing has signed active supplier contracts with the Chinese aviation industry, valued at $1.6 over the lifetime of the programmes. The main suppliers are:
Airbus and Boeing are also encouraging their suppliers to expand in China. Several of Boeing’s suppliers, including BHA, Goodrich, Fisher Aerospace, KAI, and Gurit, followed the manufacturer’s implantation in Tianjin.
To address this market, aircraft manufacturers are also establishing production sites in China, mainly in the Tianjin region. Airbus and Hexcel installed new capacity there, and some of their suppliers, notably Gurit, are following the trend. Old 747s are being converted into 747-400 BCF in China. The engineering work is implemented by Boeing (US), subcontracting labour to TAECO (Xiamen), and final testing and certification also take place in China. Tianjin (the fourth biggest Chinese town) is becoming an assembly centre for the A 320. The first A 320 will be finished in 2008. Tianjin aims at becoming China’s leading aerospace centre with the construction of a new university mostly dedicated to aerospace and the presence of BHA (a joint venture between Boeing, Hexcel and a local plane manufacturer (AVIC)) and Airbus.