ANNUAL REPORT 2018

Market report

After 2018 provided almost ideal conditions for Feintool right into the fourth quarter, the most important customer industry (automotive) lost some momentum towards the end of the year. Nevertheless, Feintool has again reached its ambitious goals and set the course in 2018 to continue operating successfully in the coming years in a continuously changing market environment.

IGlobal economic growth slowed in the final months of 2018. Having grown more strongly over the course of the year than projected in many forecasts however, the economic growth of 3.7 % for the full year is still in line with OECD projections. In light of several positive signals at the end of the year, the OECD expects slightly reduced yet nevertheless very solid global economic growth of as much as 3.5 % for 2019. Feintool’s largest customer group, the automotive industry, came to a halt in growth in the last quarter of 2018. According to market research agency LMC Automotive, global automobile production decreased over the full year 2018 by -0.5 %, while in the previous year it had been growing by 2.2 %. It’s clearly visible that this is the effect of the fourth quarter 2018, since the same research agency had estimated overall growth for the full year still at 1.1 % by the end of the third quarter 2018. In the Feintool core market Europe, production increased slightly by 0.2 %, while Asia shrinked overall by -1.1 %. After a weak year 2017, North America slowed the loss in production volume down, shrinking only by -0.2 % in 2018 (2017: -4.2 %). Even under these massively difficult conditions, Feintool continued to expand its market share and managed to grow. The specific trends in the automotive industry covered by Feintool, including premium vehicles, automatic transmissions (also with regard to autonomous functions which require transmission automation) and electrified (in particular hybrid) drives, contributed to this increasingly. In addition, SUVs remain highly popular, especially in the US, where, for example, Ford has announced that it will cease production of regular passenger cars (especially sedans) in favor of SUVs and pick-up trucks.

WLTP and political uncertainty

Mainly the European market was significantly impacted by the introduction of the new consumption and emissions test cycle WLTP at the end of 2018. On the one hand, as a result of the legislative change, vehicles certified according to the old standard were increasingly pushed into the market before the deadline of September 01, 2018, which resulted in an immediate drop in demand after the above deadline. On the other hand, as of the deadline, many vehicle manufacturers had only been able to certify part of their product portfolio according to the new WLTP cycle, which led to a supply shortage, and in particular a reduction in the variety of products on offer. In addition, there was growing uncertainty concerning Diesel bans in Germany, Europe’s largest market, in addition to uncertainty surrounding the economic impact of the impending Brexit, as well as political uncertainty regarding the trade dispute between the US and China. Nevertheless, 2019 is likely to be a good year for the automotive industry again. It is assumed that the introduction of the WLTP will be balanced. LMC forecasts a 1.0 % increase in global production, driven by a European market that remains positive overall, but especially by an again faster gaining Asian market.

At the same time, the upheaval that is keeping the industry busy will continue to gain momentum in 2019. For example, the proportion of electrified vehicles, i.e. hybrid and electric vehicles, will reach more than 8 % of global annual production in 2019, an increase of roughly 3 percentage points compared to 2018.

Alternative drives

2019 will be a key year for the automotive industry in terms of electrification. Numerous new models will enter the market this year, with the Volkswagen Group in particular pushing ahead with a first wave of launches (with, for example, the Audi e-tron, the Porsche Taycan or the VW I.D. Neo) . For Tesla, 2019 will be the first full production year of the Model 3. With the significantly expanded range of pure e-vehicles in addition to a large number of new plug-in hybrid models, it remains to be seen how well the customers and thus the market is actually accepting these alternative drives by now. It is true that the charging infrastructure is still rather weak: According to the “National Mobility Platform,” Germany needs about 70 000 public charging points, but in mid-2018 only about 5 000 public charging stations with 20 000 connections were available. However, the vast majority of driving profiles (the average distance traveled by a car in Germany is less than 40km/day) allows charging at home overnight and/or while at work.

The industry is also not idling as far as the longer-term future of the drive technologies is concerned. As specialist presentations at the 2018 CTI Symposium in Berlin demonstrated, the automotive industry now expects and is working towards a differentiated picture of a future technology mix. It is true that battery-powered vehicles and plug-in hybrids are reducing the fleet emissions of vehicles on the market. However, this alone is not enough to achieve the politically and socially recognized CO2 emission targets, for example within the framework of the Paris Climate Agreement. Depending on the application and taking into account the total energy balance (cradle-to-grave and well-to-wheel), different alternative types of drive are emerging as the potentially most effective and efficient options:

  • Battery-powered electric drives make the most sense for shorter distances and small vehicles, because they get by with relatively small batteries thanks to their low weight and manageable range requirements.
  • Plug-in hybrids make sense for vehicles that are predominantly used to travel short and medium distances and in situations where it is important to be able to travel locally completely emission-free (for example, in inner cities).
  • High-efficiency, mild-hybrid diesel vehicles (48V systems) are, for the time being, the unbeatable long-haul and high-mileage technology.
  • In the long term, fuel cell vehicles will be able to replace plug-in hybrids and combustion engines for long distances, but only provided that corresponding investments are made to set up the hydrogen infrastructure.
  • For the majority of internal combustion engine vehicles already built and in circulation (i.e. the installed base), synthetic fuels represent a possible means to reduce CO2 emissions, especially if they are produced using renewable energy sources (solar, wind, hydropower).

Over the course of 2018, Feintool set the base to be able to supply components for all of these drive technologies. In addition to the well-known fineblanking and forming parts for internal combustion engine and hybrid drives, the focus was on being able to supply components for the electric drives installed in hybrid as well as in battery-powered and fuel cell electric vehicles. Two steps stand out: With the acquisition of the new Feintool System Parts Jessen GmbH plant, the group now has the expertise and capacity to produce core components (rotors and stators) for electric motors and has the right basis for a worldwide roll-out of this technology. A fuel cell project was launched in 2018, which will allow us to present a large-scale manufacturing process for the production of metallic bipolar plates for fuel cell stacks within 2019.

Thus, the first steps have been taken to be able to offer to Feintool customers an even wider range of components for all drive technologies relevant now and in the future. With the global network of Feintool locations, this offer will also extend to all major production regions in the automotive industry.

Autonomous driving

The development towards autonomous systems did not stop in 2018, but it has developed very differently in different regions. While China has now approved the trial use of SAE level 4 autonomous vehicles, for example in Beijing, the legal basis has yet to be created for general approval of the first level 3 system in Europe, which was actually already expected in 2018.

Despite this, efforts are being made worldwide to develop market-ready autonomous or semi-autonomous systems. This will not have any direct implications for Feintool in 2019. However, it is expected that the proportion of automatic transmissions in passenger cars will continue to increase in 2019, also due to the further spread of self-braking assistance systems for new cars. This is having a positive effect on Feintool’s business.

Shared mobility

Now that DriveNow and Car2Go, the shared mobility providers of BMW/Sixt and Daimler, are to merge, it would appear that not all shared mobility concepts are already profitable. At the same time, Uber, Lyft and their Chinese counterpart Didi continue to grow without losing momentum and are essential drivers for the development of autonomous systems. Although there is no direct influence on Feintool’s business, large cooperations such as those between Uber and Volvo or Daimler now contribute significantly to the success of the respective car manufacturer. Accordingly, Feintool’s sales may fluctuate, depending on which manufacturer gets large fleet orders from the mobility providers.

Connectivity and efficient production

The digital connection, in particular of the individual steps and the associated machines in the production process, is one of the key issues for the digitalization of the industry or the so-called Industry 4.0. It promises more flexible and efficient processes than at today’s standards. Feintool is taking this into account with the latest generation of fineblanking presses, both for the automotive and other industries. The latest generation of hydraulic presses, called FB One, can be flexibly connected with the rest of the production network and already contains the required features for the integration of smart tools in the future, which for example autonomously monitor tolerances where needed.

Other markets

Especially with regard to Feintool’s new electro sheet stamping technology for the production of rotors and stators for electric motors, other customer markets besides the automotive industry are of significant importance for the success of the company for 2019 and the years to come.

The focus of the media is currently on the electrification of mobility. However, there is no denying the fact that society as a whole is being electrified. Automation with robots in the industry is increasing rapidly. By the end of 2020, there will be more than two million industrial robots worldwide. Forklifts are increasingly powered by electricity to keep production halls free of exhaust gases. Modern houses have electric gates, shutters and blinds. The Internet of Things is increasing demand for remote-controlled actuators; from coffee machines to cat flaps, everything is equipped with electric motors these days. Where electricity is generated from wind power, large electric motors swing the wind turbines into the wind direction and electric transformers feed the electricity into the grid. Feintool serves all these markets, currently out of the base in Jessen, and globally in the future.

Outlook

For Feintool, the described market environment in the automotive industry is more complex than it was just a few years ago. However, it will continue to offer clear advantages for the technologically and globally broadly diversified Feintool Group. Significant strategic decisions have been made in recent years, thus leading to high investments in order to successfully face the changes in the automotive industry. In addition, these investments offer potential in the industrial and energy sectors and in other customer industries. Feintool therefore continues to look confidently into the future.