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US Automakers Surging in Capacity

By APICS Staff | 0 | 0 | September 04, 2012

By the end of the year, the three largest automakers in North America will be operating at greater than 100 percent capacity utilization, the Detroit News reports. This is a sign of a major turnaround for the car industry, which three years ago saw facility utilization numbers hovering below 50 percent.

Ford’s utilization currently is highest among the three, as the company’s North American operations are on track to reach 113 percent utilization by year’s end. Meanwhile, General Motors and Chrysler are set to reach levels of 108 and 104 percent, respectively. These figures are based on industry-standard definitions of two eight-hour shifts five days a week, excluding holidays. To attain utilization above 100 percent, managers add work shifts and overtime.

The boom in demand for domestic automobiles is good for workers and shareholders, but it presents challenges, as well. Many of the thousands of new workers on Detroit payrolls have no experience building cars. The demand also is putting strains on parts suppliers. “We’re going to do the same amount of volume [as 2007] with 100,000 fewer supplier jobs,” says Dave Andrea, vice president at the Original Equipment Suppliers Association. This requires “extra resources, extra manpower, and extra effort. Guys are working a lot of Saturday shifts.”

Yet, suppliers are cautious to increase hiring and build additional facilities, as overall recovery in the United States is slow. Additionally, small suppliers are finding it difficult to get the amount of credit from banks they need to step up production. Andrea says that the products and services auto suppliers are struggling to provide include casting, forging, precision-machined components, and stamping.

Patent Suits Big Business in China

Apple faces new lawsuits in China, where Chinese companies accuse the technology giant of infringing on their patents and trademarks, the Washington Post reports. Products targeted in the lawsuits include Siri, the iPhone’s voice-based search assistant, as well as the Snow Leopard operating system.

It’s relatively common to see US firms accusing Chinese manufacturers of copying products, but the reverse situation is evidence of a growing awareness of the value of intellectual property, not only as protection but as a source of revenue. It’s likely that more lawsuits are on the horizon.

Peter Yu is a professor at Drake University Law School and an expert on intellectual property law in China. “Think about a US firm that produces all its products in China,” he says. “If a Chinese firm is able to get an injunction over the production of that US firm, the firm would all of a sudden no longer have any products.”

China is seeing unprecedented levels of patent filing__in 2011, the nation ranked first in domestic patent applications for the first time. However, experts warn that the quality of the patents often is low, giving Chinese firms easy legal ammunition to go after domestic rivals and, increasingly, foreign firms. A recent report by the European Union Chamber of Commerce also called China’s level of innovation “overhyped.” Ma Yide, an intellectual property attorney in Beijing, agrees: “A good patent will reflect its value in its commercialization, not from lawsuits.”

India Mining Oceans for Rare Earths 

India is engaging in deep-sea mining for rare-earth elements, the Guardian reports. The country is building a processing facility to harvest the nickel, copper, cobalt, and rare earths that can be found in potato-shaped nodules on the ocean floor of the Central Indian Basin. In addition, India also is investing in exploration of the deep water surrounding its coasts.

These deep-sea efforts “offer a good solution to meeting the nation’s demand for metals,” says C. R. Deepak, head of the deep-sea mining division at the National Institute of Ocean Technology, an Indian government office. The country’s recent push for deep-sea mining reflects concerns that China’s own deep-sea excavations will further increase its dominance over rare earths.

Rare earths are elements such as molybdenum, tellurium, and titanium that are necessary for producing many of today’s high-tech electronics, as well as seeing use in aviation and defense. China controls about 95 percent of global output, and it has been accused of overly restricting exports of the materials. India joins China, Japan, and South Korea in stepping up efforts to retrieve rare earths from the ocean. 

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Colorado Convention Center

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