Pareekh Jain: Interesting News in Engineering, IoT, PLM, Industry 4.0, and Telecom

These 50 news stories caught my attention last week. These stories are across automotive, aerospace, rail, off-highway, IoT, robotics, drones, healthcare, AR, hi-tech, software, PLM, and telecom.

Automotive

· OEMs are continuing to disclose their EV plans. Daimler and BYD plan new EVs for China. BYD is backed by Warren Buffet and leads in EV sales in the first seven months of this year, delivering 46,855 cars. By contrast, GM sold only 738 EV cars in China. (Read here). Mazda says most of its cars will be hybrid or electric by 2035. ( Read here). Tesla China sold about 11,000 EVs last year. Tesla doesn't get any EV incentives and even subjected to 25% import duty. Tesla is saying it will have 1000 supercharges in China by the end of the year. (Read here). Porsche's stunning Tesla rival will arrive in 2019 and cost $85,000 (Read here). Nissan will launch 12 all-electric cars over the next six years, and EVs will represent 30% of the group sales by 2022. (Read here). Mahindra and Ford sign a 3-year agreement for EVs. (Read here).
· EV buses, trucks and tractors are picking up too. Volvo got its largest order ever for electric buses (25 buses) from the city of Trondheim, Norway. (Read here). Mahindra showcases driverless tractors. It is working on electric tractors too. (Read here). Daimler plans $1B investment in Vance, Alabama to build EQ electric utility vehicles. (Read here). Chinese startup TuSimple to challenge Tesla’s driverless Trucks in Arizona (Read here).
· There is action on battery front also. Samsung unveils new electric car batteries for up to 600 km of range (Read here). Suzuki to set up India’s first Lithium Ion battery unit with Toshiba & Denso. (Read here). Tesla files a patent for replacing vehicle battery packs. (Read here) So if the charging station is not available battery packs can be replaced in 15 minutes. I found this concept similar to how tires are replaced in F1. Okay, F1 tires are replaced in seconds not minutes!
· Engineering service providers are also investing in the automotive vertical. QuEST Global acquires DETECH an automotive engineering service provider in Germany. This is the second automotive acquisition by QuEST after EDF, again in Germany. (Read here).
· Vehicle recalls are again making the news. Fiat Chrysler will recall 494,000 medium and heavy-duty Ram pickups worldwide because of a water pump that could overheat and potentially cause a fire. (Read here).
· Automotive OEMs are losing interest in the fuel cell technology. VW is not pursuing it on priority and instead focusing on EV. Two major proponents of the fuel cell, Toyota and Hyundai, are also cutting back on it. It’s an idea whose time has not come yet. (Read here).
· Automotive OEMs will face billion of fines if they don't meet European CO₂emission standard of 95 gm/ kilometer for their entire model range by 2021. It looks that only 4 out of top 11 car-makers will be able to meet this deadline. OEMs are expediting their EV model launch, but it is unlikely to make much impact by 2021. It may be a good opportunity for engineering service providers to help OEMs in meeting emission standards. (Read here).
· Among other automotive news, Ford is cutting production at its five North American vehicle plants. (Read here). Bihar may lose its biggest Make in India project for diesel locomotives. The world is moving to electric and who needs new investment in diesel locomotives? (Read here). Peugeot may invest in a new plant in Tamil Nadu in India. I think this is part of Peugeot's turnaround strategy to acquire local brands (acquired Ambassador in India) and open small to mid-size localized factories which produce cars in small lot sizes in focused geographies. Working on the design of localized cars in small lots could be a good opportunity for engineering service providers. (Read here).

Robotics

· In robotics, the current R&D effort is to make humans safe while robots and human collaborate more on the shop floor. The two startup news stories highlight two different approaches to solve the same problem. An MIT spinout startup, Humatics, is developing an indoor radar system that should give robots and other industrial systems the ability to track people’s movements very precisely. (Read here). Another startup, Cobotect, is using the decades-old concept of airbags to cushion potentially dangerous robots or automated parts and prevent workers from getting hurt. (Read here).

Aerospace

· Canadian PM Trudeau threatens to halt Boeing F-18 deal on Bombardier dispute. (Read here).. Another geopolitics based aerospace news, UK signs deal with Qatar for 24 Typhoon jets in a boost for BAE (Read here). These news items show that without active or strong government support, aircraft manufacturing OEM can't survive Any guesses which will be the next country to support aircraft OEM industry. My bet Russia (Irkut) or China (Comac).
· Northrop Grumman agreed to buy fellow defense contractor Orbital ATK Inc. for $7.8 billion in cash, as acquisition activity in the aerospace industry ramps up. Northrop will expand its offerings in space and missile defense areas. (Read here). Boeing is also looking for acquisitions in Defense segment. (Read here).
· Among other aerospace news, Boeing is opening a new engineering center in Bengaluru to focus on IoT, avionics, testing, analytics, etc. (Read here). Turkish Airlines has announced an $11 billion order for 40 Boeing 787-9 Dreamliners. (Read here).

Off-highway

· Caterpillar is looking for aftermarket services for the growth. (Read here). This is a similar trend that we see in aerospace where OEMs such as Boeing are targeting aftermarket space for the growth. This is good news for PLM and IoT industry. If more OEMs target the aftermarket space, they will have a stronger business case for investing in the digital thread, PLM, and IoT solutions.

PLM

· QuEST Global announces a partnership with Siemens. In my opinion, all engineering service provider will sooner or later enter PLM and digital manufacturing segment. (Read here).
· Dassault Systemes announced two PLM deals last week. One with Chevron (Read here) and other with Valmet (Read here). It is interesting to see that PLM is picking up in Oil and Gas industry vertical.
· Siemens PLM and digital factory acquisitions continue. Last week Siemens acquired Infolytica Corporation, expanding the company’s simulation suite into electromagnetics.(Read here).

Semiconductor

· Toshiba's chip business is on sale. The potential suitor is Western Digital, but now it looks that Apple is interested in the bidding also. (Read here). The rationale is to protect its chip supply and remove the dependency on its smartphone competitor Samsung for chips. In another news, Tesla is also investing in its own chips. (Read here). It looks that premium brands such as Apple and Tesla need to get into chip design and production to protect themselves from supply chain risk.

IoT

· One of the reasons IoT is not scaling up is lack of standards. Now some progress is being made. TPC is announcing the TPC Express BenchmarkTM IoT (TPCx-IoT), the industry’s first benchmark standard for measuring the performance of IoT gateway systems. TPCx-IoT was developed to provide the industry with an objective measure of the hardware, operating system, data storage and data management systems for IoT gateway systems. (Read here).
· Dell signs a multi-year deal with where Dell becomes primary IT infrastructure supplier to GE. Among other things, Dell will collaborate with GE on IoT opportunities. Dell has a strong IT infra footprint among enterprises, and GE Predix could gain from this collaboration. (Read here).

· I came across an interesting use case of AR in servicing Coke vending machines in remote locations. The interesting thing is the definition of remote locations, i.e., cruise ships. When you think again, it makes sense. (Read here).

Software Product Engineering

· Google debuts Tez, a mobile wallet in India. Indian market is ripe for digital payment, but there are challenges. Will Google crack this market? Don't know but interest in developing native solutions for emerging markets by internet companies and ISVs can be a growth driver for software product engineering work. (Read here).

Hi-Tech

· Google is rebooting its hardware strategy with $1.1 Billion investment in HTC. (Read here) Will Google be second time lucky after its Motorola acquisition debacle a few years back? Software hardware acquisitions rarely work as evident from examples of Oracle-Sun, Microsoft- Nokia and recent split of HP software, hardware and services businesses. After all, everyone cannot become Apple!
· HP Enterprise is planning to cut 5000 jobs. While news of job cuts is not really new, the interesting comment was that rationale of operational cost cutting is to divert spending into R&D. The increase in R&D spending is good news for engineering services sector. (Read here).

Drones

· Insurance companies use drones to assess storm damage in Houston. (Read here).

Healthcare

· One other technology which proved its usefulness in these storms is telemedicine. Thousands of people in Florida and Texas have made use of remote consults. (Read here).

M&As and Chinese Competition

· Interesting news about M&As among manufacturing firms. GE is about to sell its industrial solutions unit to ABB for $2.5-3 Billion. (Read here).
· ThyssenKrupp and Tata Steel are merging their European operations to create second biggest European steel manufacturer with 25% market share. It will generate Euro 600 Million savings. The merger rationale is overcapacity in the sector driven by China. (Read here).
· Siemens is said to be in discussion with its two main rivals Bombardier and Alstom for its rail business - JVs or merger. This is in response to increasing competition from the market leader CRRC Corp from China. (Read here).
· I see many similarities in current competition in rail business to telecom equipment business where a Chinese firm, Huawei, became a world leader and many European telecom equipment firms have to merge together to remain relevant - Nokia, Alcatel, Siemens, and Lucent. Talking about competition from China there is another industry - Aircraft manufacturing. Comac is moving toward volume production of ARJ21 a 90 seater aircraft although only two ARJ21 are in service currently. (Read here). Comac claims to have orders of about 400 aircrafts from 19 customers. (Read here).

Toys Industry

· Another industry hurt by the disruption. Toy'R'Us files for bankruptcy (Read here). It doesn't look that the retail format is the only problem. It’s a problem across toy industry value chain. In another news, Lego is cutting 1400 workforce as its sales slide. The sales are declining in developed markets but are growing strongly in emerging markets in Asia for Lego. (Read here). It looks that kids nowadays prefer digital over physical toys. Toy makers need to think differently to remain relevant in the digital era. It is a product and solution design problem. Internet of Toys anyone?