summary:
This article analyzes the strategies used by major international automobile manufacturers to respond to the issue of net-zero emissions, and investigates the measures adopted by small and medium-sized enterprises in the international automobile industry to promote corporate carbon reduction in order to respond to the carbon reduction needs of automobile manufacturers. Reference for carbon reduction strategies and missed development of small and medium-sized enterprises in the machinery industry. Referring to the experience of major international manufacturers and small and medium-sized enterprises, this article suggests that in addition to promoting carbon reduction through strategies such as energy conservation, low-carbon product design, product/raw material recycling, process upgrading, and the introduction of renewable energy, this article suggests that It can also strive for internationally credible certification to enhance the efficiency of communicating with the outside world about the effectiveness of carbon reduction efforts.
1. Background of the topic:
According to surveys and estimates by the International Energy Agency (IEA), more than one-third of global carbon emissions come from transportation, of which road transportation accounts for more than 70%. This phenomenon has not only led to the introduction of new products such as electric vehicles, motorcycles, and trucks, but has also led all walks of life to focus on carbon reduction on major car manufacturers. On the other hand, the huge export scale of my country's auto parts also makes us believe that it is necessary to conduct research on the carbon reduction trend of the auto industry supply chain. Through this, on the one hand, we can understand the carbon reduction strategies of representative car manufacturers, and on the other hand, we can also clarify the main measures adopted by small and medium-sized suppliers in the automotive industry to respond to the carbon reduction strategies of car manufacturers.
According to survey statistics from the Taiwan Vehicle Industry Association, my country's auto parts exports exceeded US$200 billion in 2014 and will reach a total export volume of US$253 billion in 2022. The top five destinations for auto parts exports in 2022 are, in order, the United States (56.2%), the European Union (9.58%), Japan (4.72%), Mexico (3.23%), and mainland China (2.93%).
The latest statistics from the Taiwan Vehicle Industry Association (January to June 2023) show. There have been slight structural changes in the top five countries exporting my country's auto parts. The top four export targets are still the United States (50.37%), the European Union (11.46%), Japan (5.53%), and Mexico (3.6%). However, the fifth place is replaced by the United Kingdom (2.75%). Mainland China.
The combined proportion of auto parts exports to the top three major markets of the United States, the European Union, and Japan is nearly 70%. Therefore, this article will focus on the representative car manufacturers in the three major markets, including Ford Motor Co. in the United States, Volkswagen Motors Co. in Germany, and Toyota Motor Corp. in Japan, to discuss their carbon reduction strategies.
2. Carbon reduction trends in the automobile industry:
1. American Ford Motor Company
Ford's market share in the United States is about 13.9%. Although it is about 2.5% behind the largest car manufacturer General Motors (General Motors), Ford is the only one among many American car brands to respond to the "Paris Agreement" and Aim to become a carbon-neutral car manufacturer by 2050.
To achieve its goal of becoming carbon neutral by 2050, Ford is focusing its carbon reduction strategy on reducing carbon emissions during vehicle use and the carbon emissions generated by its suppliers. First of all, Ford Motor's survey shows that Scope 3 is its main source of carbon emissions, of which vehicle use accounts for about 81%, and another 15% comes from its suppliers. Ford is therefore committed to developing hybrid and electric vehicles to reduce the carbon emissions produced during the use of its products.
On the other hand, Ford Motor also requires suppliers to respond to the Science-Based Target Initiative (SBTi), set carbon reduction goals, formulate carbon reduction strategies, and disclose carbon reduction results to the public. The current supplier carbon reduction goal set by Ford Motor Company is that first-tier suppliers must achieve Scope 1 and Scope 2 carbon neutrality by 2035. In addition to these measures, Ford has also set a phased goal of using 100% renewable energy in all production bases by 2035.
2. German Flowserve Group
The Volkswagen Group consists of Volkswagen, Porsche, Audi, Škoda, Lamborghini, Bentley and other brands. Its market share in the EU market is approximately 23.3%, making it the current leader in the EU automobile consumer market. On April 29, 2021, with the expectations of investors and consumers, Ralf Brandstätter, President of the Volkswagen Group, announced the Volkswagen Group’s carbon neutrality road map and announced that it will achieve carbon neutrality by 2050.
In order to achieve the goal of carbon neutrality in 2050, Flowserve Group has set the following phased goals. First of all, by 2030, Flowserve Group’s factories in Europe, North America, and South America will fully introduce renewable energy to improve the carbon emissions of factory Category 1 and Category 2. Secondly, Volkswagen Group will also expand its electric vehicle product line and production capacity, produce more electric vehicles, improve the carbon emissions generated during the use of its products, and also increase the proportion of sustainable materials in electric vehicle products, and even Wheels made from recycled aluminum and tires produced using low-carbon processes. Through these measures, Volkswagen hopes to achieve the 40% carbon reduction target for cars produced in Europe by 2030 (base year 2018).
Supply chain carbon reduction is also a key focus of Flowserve Group. Flowserve Group particularly emphasized that the carbon emissions of suppliers will be a key indicator to judge whether the bilateral cooperation will continue in the future. At the same time, Volkswagen will also expand cooperation with suppliers who continue to reduce carbon emissions. On the one hand, it encourages high-quality suppliers, and on the other hand, it also provides sustainability of the product supply chain.
3. Japanese Toyota Motor
Toyota Motor is the most influential car brand in Japan, with a market share of 55%. Compared with Ford Motor and Volkswagen Group mentioned above, Toyota Motor started promoting the brand's carbon reduction strategy many years earlier, starting in 2016.
Toyota has been promoting the "2050 Environmental Challenge" since 2016, setting an overall goal of achieving carbon neutrality by 2050 and six major challenge projects. The first challenge is to reduce the average carbon emissions of all cars produced by Toyota by 90% by 2050 (base year 2010). The second challenge is to eliminate all carbon emissions from the product life cycle. Specifically, Toyota will use the regeneration cycle to make its automotive products from raw material production, component manufacturing, assembly, use, to disposal, etc. Carbon emissions throughout the entire life cycle are zeroed out.
The third challenge is to reduce the carbon emissions of all Toyota factories to zero before 2050. This challenge also requires reducing the carbon emissions of all new factories by one-third by 2030 (the base year is 2001). Specific methods to achieve this goal include the introduction of renewable energy, hydrogen energy, energy conservation, process upgrades, etc. The fourth challenge is to optimize the efficiency of water use according to the conditions of each region. The main methods include wastewater and rainwater recycling and water reduction.
The fifth challenge is to develop recycling technology and promote the dismantling, recycling and reuse of abandoned vehicles around the world. The sixth challenge is to use Toyota Motor's experience and network to promote environmental education and environmental protection around the world. In addition to these six major challenges, Toyota also emphasized that raw material and component suppliers must cooperate with Toyota's carbon reduction strategy, promote carbon reduction measures and disclose relevant information.
Participate in the carbon reduction cases of small and medium-sized enterprises in the international automobile industry:
Below we will introduce Penda Corporation, an American automotive component supplier that supplies many automotive brands, Calamason Industries, a British family-owned small and medium-sized enterprise that produces a variety of automotive components through the stamping process, and Toyota Motor Supplier, which is also Japan's No. 1 supplier. Three small and medium-sized enterprises, including Hiep Fat Industries, which have obtained Science Based Initiative (SBTi) certification, are promoting carbon reduction through product design, resource recycling and reuse, process technology upgrades, energy conservation and other strategies to respond to the carbon reduction needs of automobile brand manufacturers.
1. Penda Corporation of the United States
Penda Corporation was founded in 1975 in Portage, Wisconsin, USA. It is a professional automotive parts OEM (OEM) with between 150 and 200 employees. The company's main products are truck bedliners, pickup truck bed racks, roof trunks, etc. Large automakers including Ford Motor, General Motors, Honda Motor, Toyota Motor, etc. are their customers. In recent years, Penda Corporation has been committed to promoting corporate carbon reduction in response to environmental sustainability demands from clients.
Penda Corporation promotes corporate carbon reduction from two aspects: product design and product manufacturing. First of all, Penda Corporation increases the proportion of recycled plastics used, and at the same time aims to produce 100% recyclable products, and conducts product design to achieve the goal of reducing the carbon footprint of the product life cycle. Secondly, during the product manufacturing process, Penda Corporation recycles and reuses all leftover materials generated during the production process, which on the one hand improves the efficiency of the use of raw materials and on the other hand reduces the amount of waste. Currently, in Penda Corporation's product design and manufacturing, 50%'s materials come from scraps or recycled products, 20% comes from recycled materials, and the proportion of virgin materials has dropped to 30%.
In addition, in order to respond to the requirements of suppliers, Penda Corporation has introduced an environmental management system and formulated corporate environmental management policies in accordance with the specifications and framework of ISO 14001, such as setting environmental goals and related indicators, and based on these policies, it provides internal Provide employees with environmental management-related training to improve the efficiency and implementation of the company's environmental policy introduction.
2. British Clamason Industries
Clamason Industries is a family-owned precision parts stamping manufacturing company with approximately 200 employees. It was founded in 1947 in Kingswinford, central England. Currently, Clamason Industries has customers from the automotive, medical, industrial, environmental technology and other industries. Its products in the automotive industry are mainly components for automotive cockpits, engines, fuel, lights, tire pressure sensing and other systems. In addition to the UK, Clamason Industries also has a production base in Slovakia in order to serve European customers nearby.
Taking into account the 2050 national net-zero emissions target set by the British government and the continued commitment of major car manufacturers to reduce the impact of their operations on the environment, Clamason Industries has set a carbon reduction target of 25% in 2040, hoping that it can contribute to reducing the environmental impact. impact makes a greater contribution. Currently, Clamason Industries mainly promotes carbon reduction from four aspects: raw material substitution and process improvement, investment in energy-saving equipment, reduction of energy consumption, and optimization of operations.
First of all, in terms of raw material substitution and process improvement, Clamason Industries uses aluminum as the main raw material of its products for reasons such as recycling convenience, lightweight, and sturdiness, and upgrades the manufacturing method from traditional casting to stamping. Reduce energy consumption in the product manufacturing process and implement the concept of low-carbon manufacturing. Second, Clamason Industries replaced all boilers in the factory with new A+ grade boilers and improved the temperature control and energy efficiency of the entire operation through an integrated AI digital monitoring system.
Third, in terms of reducing energy consumption, since most of the factories are pneumatic equipment, Clamason Industries has introduced energy-saving and environmentally friendly compressors with automatic control functions. The compressors are only started when the equipment needs to be operated. Generate the compressed air needed to drive production equipment, thereby reducing unnecessary energy consumption. Fourth, in terms of optimizing operations, Clamason Industries has replaced all official vehicles with electric vehicles and is also implementing a diesel truck elimination plan to achieve the goal of reducing Scope 1 carbon emissions.
3. Japan Xiefa Industry
Xianfa Industry was founded in 1966. It is a small automobile component stamping, welding, and assembly factory with 30 to 40 employees in Okazaki City, Aichi Prefecture, Japan. Japan's Toyota Motor is one of Xinfa Industry's customers. one. In recent years, Xianfa Industrial has responded to the concept of environmental sustainability and actively cooperated with customers' demands for net-zero emissions (Toyota Motor requires Xianfa Industrial to reduce carbon emissions by 3% every year), and in February 2021, it became Japan's first automobile manufacturing industry. Small and medium-sized enterprises certified by SBTi.
In response to SBTi, Hiap Huat Industries has set a goal of reducing Scope 1 and Scope 2 carbon emissions by 50% in 2030 compared with 2018, based on the scenario of preventing the earth from warming by 1.5 degrees Celsius. After conducting a carbon inventory, Xie Hua Industrial found that its carbon emissions were mainly caused by electricity use (the proportion was as high as 90%), so it selected energy conservation and source conversion as the main carbon reduction strategy.
In terms of energy conservation, Xie Hua Industrial inspects and replaces equipment with a high proportion of carbon emissions, including air compressors, air conditioners, lighting, etc., installs insulation facilities on the roof, and recovers waste heat from air conditioning compressors for reuse. Regarding energy conversion, in addition to purchasing renewable energy from renewable energy suppliers, Hien Huat Industries is also planning to use solar panels on factory roofs to generate self-generated renewable energy for offices and factories.
Promoting the above-mentioned work enables Hip Sing Industrial to respond to clients’ carbon reduction requirements and maintain its competitiveness in the supply chain. However, Hiep Huat Industries pointed out that obtaining SBTi certification may be the biggest achievement in promoting carbon reduction. At the beginning, Xie Huat Industry responded to SBTi in order to have a trace to follow. After obtaining SBTi, we unexpectedly gained more customers that we had not had contact with before, and they came to discuss cooperation.
4. Findings and Suggestions:
(1) Requiring suppliers to reduce carbon emissions has almost become a basic strategy for large car manufacturers to promote carbon reduction.
It can be seen from the carbon reduction strategies of three major representative car manufacturers such as Ford Motor Co. in the United States, Volkswagen Group of Germany, and Toyota Motor Corporation of Japan that requiring suppliers to reduce carbon emissions and implementing supply chain carbon reduction have become an important factor for car companies to develop hybrid, electric, and hydrogen fuels. The main carbon reduction strategy in addition to new generation vehicles such as automobiles. Ford has set specific carbon reduction targets for its first-tier suppliers. Volkswagen Group pointed out that the carbon emissions of suppliers are a key indicator of continued cooperation in the future. Toyota even requires suppliers to reduce carbon emissions by 3% every year. Small and medium-sized enterprises in the supply chain of major automobile manufacturers should make early arrangements to reduce carbon emissions in order to respond to customer demand and maintain their own supply chain competitiveness.
(2) In addition to promoting carbon reduction, striving for credible carbon reduction certification will also be of substantial help to small and medium-sized enterprises.
Faced with pressure from car manufacturers to reduce carbon emissions, the carbon reduction practices that small and medium-sized enterprises can adopt include energy conservation, low-carbon product design, product/raw material recycling and reuse, process upgrades, introduction of renewable energy, etc. These strategies are all proven and feasible strategies for small and medium-sized enterprises in the international automobile industry and are worthy of reference for small and medium-sized enterprises in my country. In addition, the case of Japan Xinfa Industry shows that small and medium-sized enterprises can also strive for representative carbon reduction certification. On the one hand, they can draw on the methodology of credible carbon reduction certification to set carbon reduction goals and formulate reduction plans. Carbon strategy, gradually implement corporate carbon reduction, respond to client requirements, on the other hand, strengthen its own image and open up more new business opportunities by obtaining certification.
Source:
1. Refer to IEA survey data, source: https://www.iea.org/energy-system/transport
2.July Sales Press Release (ford.com)
3.2023 Climate Change Report (ford.com)
4. https://media.ford.com/content/fordmedia/fna/us/en/news/2020/06/24/ford-expands-climate change-goals.html
5.https://annualreport2022.volkswagenag.com/group-management-report/business-development/deliveries.html
6.https://global.toyota/en/company/profile/production-sales-figures/202306.html
7.https://global.toyota/pages/global_toyota/sustainability/report/er/er18_07-13_en.pdf
8.Penda Corporation
9.Clamason Industries
10.Hip Fat Industrial
Sponsor: Ministry of Economic Affairs, Small, Medium and New Enterprises Agency, Ministry of Economic Affairs
Execution unit: Plastic Industry Technology Development Center
