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Non-Automotive
Transportation
Connector Market Update
Mid-Year 2009
A
Rough Ride for Recreational Vehicles and Non-Automotive Machinery
By Jim Wedding, Bishop & Associates Inc.
The non-automotive
transportation (NAT) connector market has traveled a very rocky road
over the last 18 months, and the road ahead is full of huge bumps,
potholes, and washouts. The NAT connector market continues to suffer
along with many others sectors of the global connector market. Coming
off a flat year in 2008, we have seen the demand for NAT connectors
continue to slide in the first half of 2009. We expect to see the bottom
of the curve sometime in Q3 or late Q4 2009.
The recreational vehicle and power sports market have been particularly
hard hit, as consumers have held on to their discretionary income or
found borrowing extremely difficult. The other NAT sectors have not
dodged the widespread recession, either. Problems in the global
automotive market have spilled over into the heavy-truck and bus arena.
The marine and aviation markets remain flat due to the long lead time of
the end products. But this market segment will experience a delayed loss
as demand falls in 2010 and 2011. The rail market has been precipitously
down, as orders have dried up and layoffs occur. The heavy construction,
farm, and garden markets, while down, are the only markets showing any
signs of life, as the U.S. and China stimulus packages begin to spur
equipment demand.
Heavy Trucks and Buses
Heavy truck
shipments for the first half of 2009 were down 25,979 units; that’s a 13
percent reduction from 2008, for global market supplier Volvo. Demand
for large and medium-sized trucks is estimated at 62,000 units, a
year-over-year decline of 17 percent. Demand for large buses will likely
not exceed 4,200 units, plummeting 20.8 percent from the previous year.
The good news in this category is that small bus sales are buoyed by
replacement demand, resulting in a final annual sales performance of
9,900 units, only a 2 percent drop from 2008.
European supplier Daimler Benz, the largest global supplier of all heavy
truck and bus manufacturers, will experience a 33 percent revenue drop
in heavy truck sales, down to $9.1 billion euros from 13.7 billion euros
in 2008. The Asian market, Benz’s largest market, was down 47 percent
from 2008. Fleet production was down 56 percent, from 236,471 units in
2008 to 104,349 units in 2009.
GM’s heavy truck builds are off considerably and mirror the deep drop in
demand experienced by all of the automotive companies.
Heavy Construction, Farm, and Garden
The heavy
construction, farm, and garden markets have also declined, as the
downturn in the global economy has dampened sales of bulldozers, earth
movers, excavators, and tractors. Estimates are that the world economy
will slide more than 2 percent in 2009. Tight credit markets and
weakening crop prices have combined to throttle demand down in this
sector.
Deere & Company reported a fiscal third quarter decline in profits of 27
percent, with sales off 25 percent. Construction activity continues to
be very slow and the weak dollar has added to Deere’s woes. The largest
decline was outside the U.S., as sales dropped 37 percent vs. a 16
percent drop in the U.S. and Canada. Company equipment sales are
projected to be down about 19 percent for full-year 2009, and down about
26 percent for the third quarter, including a negative currency
translation impact. Deere's net income is expected to be about $1.1
billion for 2009, with more risk on the downside.
Caterpillar’s second quarter results echoed those of Deere, as their
second quarter net income fell 66 percent, as sales fell 41 percent.
Hitachi’s first quarter ended July 31, showing a 20 percent drop in
revenue in the power and industrial business segment.
Sometime during the next decade, as America’s aging highway system
continues to deteriorate, long overdue spending will need to take place.
Estimates suggest almost 61,000 miles of highway are in poor to fair
condition, with over 150,000 bridges in deficient condition. In the
U.S., the money comes from the Highway Trust Fund, which is paid by the
federal fuel tax. The new stimulus bill earmarks $48 billion for
transportation. In the U.S., the funding is split between high-speed
intercity rail ($9.3 billion), public transit ($8.4 billion), highways
($27.5 billion), and other transportation grants ($2.8 billion). This
federal funding, along with individual state funding, will help drive
the demand for heavy construction projects and will spawn the
corresponding need for heavy construction vehicles in all product
families.
Aviation
The General Aviation Manufacturers Association (GAMA) released the
industry’s second quarter shipment and billings figures. In the first
half of 2009, total general aviation (GA) airplane shipments fell 45.8
percent, from 1,918 units in 2008 to 1,039 units this year. Industry
billings are down 21.7 percent, to a total of $9.38 billion.
Boeing
In the second quarter, Boeing’s commercial airplane business came
in at $8.4 billion, $200 million under the $8.6 billion revenue
generated in 2008. The delays with the highly touted 787 continued, and
Scott Carson resigned as head of Boeing Commercial Airplanes. Boeing’s
jet deliveries fell 22 percent in August 2009. However, Boeing still
expects to ship approximately 480 planes, up from 375 in 2008,
EADS/Airbus
EADS/Airbus, the European consortium that is embroiled in critical
arguments with Boeing and the World Trade Organization regarding illegal
business subsidies, sees 2009 as a flat year, with expected revenue at
about 2 percent under 2008 levels. Their Eurocopter Division continues
to run at about 6 percent above the levels reached in 2008.
For both of these large airframe manufacturers, 2010 through 2012 will
be critical years as the demand for air travel lessens and carriers
tighten their spending on new planes. We expect to see decreased demand
in this sector during this time.
Marine
Brunswick, the world’s largest manufacturer of marine pleasure
craft, noted that the boat segment of their business (17 brands) was off
77 percent in the second quarter. Total sales of $718.3 million were
down 52 percent vs. 2008.
The cruise ship industry production backlog stands at approximately 31
units, with three due for delivery in 2009 and 14 scheduled for delivery
in each of 2010 and 2011. It remains to be seen if these numbers will
hold up, as the cruise industry continues to struggle with an overall
drop in bookings for 2008 and 2009.
New orders of China's shipbuilding industry in 2009 are expected to fall
nearly 50 percent from 2008, to as low as 20 million deadweight tons
(DWT), according to the China Association of the National Shipbuilding
Industry (CANSI). China's ship building is down 44 percent YTD. The
shipbuilding industry forecasts trouble until 2012. The association also
predicted that new shipbuilding worldwide will fall to around 40
million, or 60 million DWT.
China has overtaken Japan as the world's second largest shipbuilder,
after South Korea, according to Clarkson Research Studies, the British
intelligence provider on the shipping and offshore industries.
Rail
Locomotives
GE’s North American-based transportation unit has not received a
single new order for a locomotive the first half of the year. The
company is forecasting a “very tough” and “bleak” market through 2010.
GE had estimated that their production would be down 44 percent this
year, but that seems optimistic. It’s hard to forecast the production
for the remainder of the year, but it will be far less than the first
half. GE estimates the production at their Erie facility will be down to
260 units from the previously estimated 800-plus units this year.
Rail Cars
North America rail car production is a leading indicator of
global rail production and parallels the locomotive market. Production
is forecast to be down more than 50 percent in 2009, coming in at 24,800
units. The industry sees a further degradation in demand, with 14,750
units estimated for build in 2010 and 27,500 in 2011. The average build
for the last five years has been in the 57,000-unit range, and experts
do not see it reaching that level of demand until 2014.
RVs and Power Sports
The North American recreational vehicle market, which is the
largest segment of this market, has suffered the most in terms of lost
business. For the first half of the year, sales of towable RVs were down
49.5 percent and motor homes were down 70.3 percent, with combined sales
down 52 percent.
Snowmobiles, Personal Watercraft and Motorcycles
There are four major manufacturers that build snowmobiles. They
are Arctic Cat, headquartered in Plymouth, Minn.; BRP in Valcourt,
Quebec; Polaris Industries in Medina, Minn.; and Yamaha Motor
Corporation in Cypress, Calif. Year to date in 2009, 147,066 snowmobiles
were sold worldwide; 61,593 in the U.S. and 49,510 in Canada.
Motorcycles
Motorcycle and scooter production is down an estimated 20 percent
globally, with all regions seeing a drop in sales and production rates.
Japanese motorcycle production is off almost 41 percent in the first
half of 2009, with only 41,000 units built vs. 69,000 in 2008.
In Europe, Italian and French government incentives were launched to
improve the sales of small motorcycles and scooters, and to also reduce
pollution.
In Japan, Yamaha’s sales of motorcycles and personal watercraft and
related items dropped over 43 percent in Q2. This was due to
currency-translated issues related to the strengthening of the yen and
decreased demand in North America and Asia. Honda, Suzuki, Yamaha, BMW,
and Harley Davidson also have seen double-digit drop offs in sales in
the first half of 2009. Harley Davidson has opened its first plant in
India, manufacturing cruisers and road bikes catering to the more
prosperous enthusiast.
2009 Non-Automotive Transportation Connector
Forecast
The second half of 2009 does not bode well for the overall
non-automotive transportation connector marketplace, due to the global
recession stifling overall demand. Experts do not expect an uptick in
this market until mid-year 2010. Because of the internal market
dynamics, coupled with the extended lead times in the aviation, rail,
marine, and heavy construction markets, 2010 is expected to be a flat
year for connectors sales, with final numbers that are expected fall
between 2008 and 2009 numbers. The U.S. and China stimulus packages
could potentially have a positive effect on connector demand in 2010. We
expect 2009 to finish at $1.362 billion.
What’s Hot?
Despite the abysmal market conditions, the global manufacturers of
non-automotive transportation vehicles continue to invest heavily in
research and development. The connector arena is not an exception. What
follows is a brief snapshot of some of the new connectors and connectors
systems developed for the non-automotive transportation market.
Non-Automotive Transportation Connector Products
Developmental Areas
We are
seeing numerous developments in specialized connection systems for
hybrid vehicles and other high-current applications. The connector
manufacturers continue to expand their development of new connection
systems that focus on smart connectors that integrate intelligent power
and active electrical functions imbedded in the connector.
Of course, we continue to see improvement in all areas of power and
signal connectors for harsh environments, with the development of new,
sealed connectors, some of which have electronic shielding and
filtering. Here are a few of the newest connector products for the
non-automotive transportation marketplace.
Delphi has engineered a HSDD high-speed digital data system that
conforms to the MOST standards.
Delphi’s power pack high-current connectors are used in multiple
applications throughout the vehicle.
 Yazaki’s
Power and Data Network PDN combines power, fiber optics, and wireless
technologies, such as Bluetooth, in a reliable, cost-effective approach.
 Huber+Suhner’s
Q-ODC push-pull connector sets a new standard for harsh environment
connectivity. It is the smallest and most robust design in its class and
has an outstanding coupling mechanism. The push-pull mechanism allows
easy and fast installation, while at the same time, it provides
excellent installation safety, since only two defined mating states are
possible, either mated or unmated.
 Souriau
has developed an environmentally shielded RFI plug with mini-coax
contacts for rail applications that can be ordered in a lightweight
stainless steel version or in a hermetically sealed package.
With products like these on the horizon, it appears that these difficult
years for the non-automotive connector industry can also be seen as a
time of opportunity, with forward-looking companies designing the
products needed for a new generation of vehicles.
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