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.
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.