Due to global macro trends, from growing transportation needs to more stringent environmental standards, the conditions for our operations are changing. It is more important than ever to have a well-founded understanding of the market changes that affect us. By making use of these driving forces, we can build long-lasting, sustainable operations.
Transport needs are increasing
More and more goods are being transported in a world with a growing population. According to the United Nations Population Fund (UNFPA), the current world population of 7 billion will increase to 8 billion by the year 2025, and reach 9 billion by 2050. Another significant factor is growing prosperity. Between now and the year 2030, the world’s middle class will double while absolute poverty is expected to decline. This is expected to lead to increased demand and thus, increased transportation needs, which will, in turn, lead to more trucks and trailers being produced.
Demand for transport capacity is closely linked to demand for Haldex’s products, since our customers are commercial vehicle manufacturers. The official production statistics for trucks and trailers are analyzed carefully to observe peaks and dips at an early stage, allowing production capacity to be adjusted. Although the long-term prognosis is good, there is considerable variation between individual years and the different geographic markets, which must be factored into the analysis. With a high proportion of fixed costs, it is important that Haldex has a long-term plan for its operations, so that adjustments can be made in time.
More than 50 percent of the world’s population currently lives in cities and, according to the UN, this figure will reach 66 percent by 2050. Increased urbanization, coupled with a growing population and improved prosperity, are creating an urgent need for better transportation infrastructure. Growing problems, with traffic congestion, noise and air pollution demand more sustainable and efficient solutions. As the urban population grows, we will see better road networks and more technologically advanced vehicles to meet the social and environmental challenges.
In countries where the road network is of poor quality, trucks without trailers are most common. Increased road network quality leads to more trailers being produced, which is the customer category where Haldex’s market position is strongest. Technologically more advanced vehicles also benefit Haldex. Today, in many countries, Haldex’s products are not competitive, because cost is prioritized over quality. With increasing demands for sustainable and efficient vehicle solutions, Haldex’s solutions become more attractive.
Higher safety requirements
Each year, 1.2 million people die on the world’s roads and 50 million are injured according to the World Health Organization (WHO). Although low and middle-income countries only have roughly half of the world’s vehicles, these countries account for about 91 percent of these accidents. The problems are greatest where the resources to combat them are least. Only 7 percent of the world’s population lives in countries with sufficiently effective legislation that can be used to address the risk factors. As more countries and organizations set ambitious targets for safety, safety systems will increasingly become mandatory for commercial vehicles.
It is clear that safety requirements are increasing in all parts of the world. In 2015, it became mandatory for all newly manufactured buses and trucks in India to have ABS installed. Similar legislation has been in place in Brazil for some years. In Europe, more stringent requirements on braking distances for heavy vehicles resulted in a breakthrough for disc brakes. Since Haldex’s products serve to improve safety, we work to promote and hasten stringent regulatory requirements. The regulatory change that could appear in the near future and that would have the greatest impact on Haldex, concerns whether or not the US will tighten its regulations on braking distance, such that this would cause a transition from drum brakes to disc brakes. However, no such amendment has yet been proposed.
Higher environmental standards imposed
The combustion of fossil fuels, such as oil and diesel, is a major source of the greenhouse gas emissions that are causing climate change. A sustainable transportation sector must improve fuel efficiency, and find alternatives with lower carbon emissions. An important area that affects emissions in this regard is the vehicle’s weight. A rule of thumb is that a 10-percent drop in truck weight reduces fuel consumption by 5-10 percent. For some time, the EU has been working on regulations to change emission levels, with the most recent change, known as Euro 6, entering force in 2014. In the US, the next change in levels is expected to take place in 2017 when to so-called Tier 3 enters force.>/p>
As a brake manufacturer, weight is the foremost area that can be influenced. Many kilos can be saved by optimizing a product’s design and choice of materials. The latest version of Haldex’s disc brake is 11 kg lighter than the previous model. With an average 5.8 wheels on a trailer, this entails an overall weight saving of 63 kg. Another important aspect is the environmental requirements that customers impose on our operations. Haldex measures and continuously monitors environmental impact, particularly of its manufacturing. Demonstrating that Haldex has long-lasting, sustainable operations is growing increasingly important in the customer’s choice of supplier.
Competition for skills
Safety products and industrial production require a broad range of skills. With fewer and fewer students applying to study the natural sciences and engineering subjects, the number of potential candidates is decreasing. In addition, competition for labor is expected to escalate as we have an aging workforce in general. Ernst & Young has estimated that there is currently a gap in Europe of 200,000 people between companies’ demand for labor and the available workforce. By 2030, it predicts that the gap will amount to 8.3 million people in Europe alone. This means that competition for skills and knowledge will escalate further.
Haldex has developed a plan to become an even more attractive employer. People want to work in areas where they make a difference and they want to work in companies with sound values and good leadership. By contributing to safer vehicles, we create a better traffic environment for everyone. Haldex’s values have been supplemented with behaviors called the 5 Cs and a management platform called the Bridge, which focuses on bridge-building and cooperation. Digital solutions and flexible working arrangements are other areas that, combined, give Haldex the appeal it needs to secure skills for the future.
Combined, new technology, stricter safety and environmental requirements, cost pressure and growing transport needs lead to the development of increasingly intelligent vehicles. All major vehicle manufacturers have extensive development projects in areas including electrification and self-driving vehicles. In 2017, self-driving trucks were presented by companies including Daimler, Volvo, Otto and Peterbilt.
A prerequisite for creating smarter vehicles is that the different parts of the vehicle are connected to one another, as well as the vehicle itself being connected to its surroundings. To collect data, sensors will be a natural part of the various parts of the vehicle. However, data from sensors only become valuable when analyzed and put into context. Was that a leaf fluttering past the front of the vehicle or was it a child running across the road? Is the driver trying to overtake the car in front, or is the vehicle switching lane by itself because the driver’s attention was distracted.
Technological solutions that the driver of a vehicle will clearly perceive, such as adaptive speed control, lane switching, automatic braking and collision warning could be more noticeable than solutions that operate in the background. The driving characteristics of a vehicle are determined largely by the characteristics of the wheels as the friction is transferred to the road. By measuring and analyzing the behavior of the wheels, such as their speed and resistance, the brake system can act preventively, stabilizing the vehicle. The brake system should not only respond quickly when the vehicle’s other systems signal that a collision must be avoided. It should also respond appropriately. Whether the driving surface is wet or dry, affects how the braking effect should be distributed. The brake system can also be used to steer to avoid a potential collision by distributing the braking effect between the various wheels. The brake system can also adjust the behavior of the wheels while driving to make the ride safer and more comfortable. Consequently, a brake system that is connected to the other parts of the vehicle is crucial to the driving experience and vehicle safety.
Another aspect of connected vehicles is how they communicate with their surroundings. Already today, vehicles can transmit signals to one another, although this is mostly used between vehicles of the same brand and to an extremely limited extent in relation to what is possible. If a fully loaded tractor with a trailer brakes, other vehicles from the same manufacturer further behind on the same road are signaled and can adjust their speed early. However, if connected vehicles are to operate on a large scale in society, open standards must be applied on a broad front, with all vehicles communicating with one another to create a safer traffic environment.
Electric trucks, tractors and buses have been on the market for several years. The challenge lies in getting batteries to last for long distances, especially for a fully loaded truck with trailer. Part of this challenge involves the design of the brake system. Heavy vehicles have pneumatic brake systems operated by compressed air. Passenger cars and lighter trucks have oil-based hydraulic brake systems. One of the advantages of pneumatic systems is the brake force, since hydraulic systems are not adequate to brake a fully loaded tractor with trailer. However, pneumatic brake systems require certain components to make the compressed air function, such as compressors.
Today’s electric heavy vehicles have smaller pneumatic systems installed to operate the brakes. This is complicated, however, and adds weight. Electric brakes would be preferable. The solution is electromechanical brakes, built on the same principles as pneumatic brakes for heavy vehicles, but without compressed air. There are currently no commercial electromechanical brakes in the market and, in most countries, legislation prevents such brakes from being used. Considerable research is being conducted in the area, however, with Haldex being among the companies with a patented solution under development.
The degree to which a vehicle is self-driving is indicated according to the levels 0 to 5. The cars sold commercially today are of level 3 at most, with level 2 still being most common and including, for example, automatic parking or correction of the vehicle’s position between lane lines. Level 5 vehicles are currently being tested on our roads and in special test environments.
Self-driving vehicles offer many advantages. Safety is one of them. Every day, an average 3,287 people die in car accidents, about 1,000 of them being under the age of 25. A clear majority of these car accidents are attributable to driver error. Self-driving vehicles would make the traffic environment safer.
Another advantage is that self-driving vehicles free up time for the driver. This entails major savings for the transport sector, since personnel costs represent the largest cost item per mile driven for fleet operators.
For society, there are several advantages. With self-driving vehicles, the road network can be utilized when there is less traffic on the roads, such as at night. Self-driving vehicles have shorter reaction times and can therefore be positioned closer to one another on the road. With new designs that optimize space, vehicles can be made smaller. Individual commuters need only sufficient space for themselves. The same vehicle can be used to pick up another commuter with different working hours. A truck convoy can consist of one truck with a driver at the front, followed by a row of driverless freight pods. This would mean a more intelligent utilization of our roads while increasing safety.
Self-driving vehicles also raise questions and issues in new areas. Software will be a key component of the vehicle, in many cases distinguishing vehicles from one another. Who bears the legal responsibility if something goes wrong? The vehicle manufacturer, software manufacturer or the subcontractor that manufactured the component? What should vehicle manufacturers develop in-house and what should be purchased by subcontractors to still be able to offer unique and competitive vehicles? How open must each system then be for the vehicle manufacturer to be certain that it has sufficient influence and can assume legal responsibility? What business models will emerge when it is no longer mechanical products that are sold but software-controlled features?
The automotive industry does not yet have answers to all of these questions, but in 2017 it was clear that the trend towards self-driving vehicles took a substantial step forward. Both Haldex and our customers invested more in development projects to keep pace with the very rapid development taking place in this area. We are headed towards a very exciting change in society, which will affect all of us.