China’s CATL set to begin work on its first European production site
Chinese-based Contemporary Amperex Technology Ltd (CATL) is set to start work on its first production site in Europe after confirming a major contract with BMW, Reuters reports.
The deal will see CATL begin production in Germany to supply lithium-ion batteries after the contract was signed by China’s Premier Li Keqiang on Monday.
Wolfgang Tiefensee, Thuringia’s Minister of Economic Affairs, revealed to journalists that around €240mn ($280mn) is expected to be invested into the first part of the project.
During the upcoming years, BMW aims to source €4bn ($4.7bn) of battery cells from CATL with €1.5bn of that fund coming from a new facility in Erfurt in Eastern Germany while the rest will be from China.
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Chairman Robin Zeng hopes to expand CATL further afield if the project is successful.
“We want to supply all the OEMs (manufacturers) in Europe. If the Thuringia project is successful then we can consider other locations,” Zeng said.
German Chancellor Angela Merkel confirmed that the CATL investment was a good move but also insisted that Europe is the preferred option.
“If we could do it ourselves, then I would not be upset,” Merkel said.
It is the hope of the VDMA engineering industry association that CATL’s investment could help increase further investment in battery technology in Europe.
The CATL factory is expected to create around 600 jobs and reach production of 14 gigawatt hours (GWh) by 2022. This is in contrast to the 12 GWh that the company achieved shipments of in 2017.
IMF: Variants Can Still Hurt Manufacturing Recovery
After a year of on-and-off manufacturing in the US, UK, and the eurozone, demand for goods surged early last week. Factories set growth records in April and May, suppliers started to recover, and US crude hit its highest price point since pre-COVID. As vaccination efforts immunise much of the US and UK populations, manufacturers are now able to fully ramp up their supply chains. In fact, GDP growth could approach double-digits by 2022.
Now, the ISM productivity measure has surpassed the 50-point mark that separates industry expansion from contraction. Since U.S. president Biden passed his US$1.9tn stimulus package and the UK purchasing managers index (PMI) increased to 65.6, both sides of the Atlantic are facing a much-welcomed manufacturing recovery.
Lingering Concerns Over COVID
Even as Spain, France, Italy, and Germany race to catch up, and mining companies pushed the FTSE 100 index of list shares to a monthly high of 7,129, some say that UK and US markets still suffer from a lack of confidence in raw material supplies. Yes, the Dow Jones has made up its 19,173-point crash of March 2020, and MSCI’s global stock index is at an all-time high.
Yet manufacturers around the world realise that these wins will be short-lived until pandemic supply chain bottlenecks are solved. If we keep the status quo, consumers will pay the price. In April, inflation in Germany reached 2.4%, and across the EU’s 19 member countries, overall prices have increased at an unusual pace. Some ask: Is this true recovery?
IMF: Current Boom Could Falter
Even as Elon Musk tweeted about chip shortages forcing Tesla to raise its prices, UK mining demand skyrocketed; housing markets lifted; and the pound sterling gained value. The International Monetary Fund (IMF), however, cautioned that manufacturing recovery won’t last long if COVID mutates into forms our vaccinations can’t touch. Kristalina Georgieva, Washington’s IMF director, noted that fewer than 1% of African citizens have been vaccinated: “Worldwide access to vaccines offers the best hope for stopping the coronavirus pandemic, saving lives, and securing a broad-based economic recovery”.
Across the globe, manufacturing companies are keeping a watchful eye on new developments in the spread of COVID. Though US FDA officials don’t think we’ll have to “start at square one” with new vaccines, the March 2021 World Economic Outlook states that “high uncertainty” surrounds the projected 6% global growth. Continued manufacturing success will in large part depend on “the path of the pandemic, the effectiveness of policy support, and the evolution of financial conditions”.
Mathias Cormann, secretary-general of the Organisation for Economic Co-Operation and Development (OECD) concurred—without global immunisation, the estimated economic boom expected by 2025 could go kaput. “We need to...pursue an all-out effort to reach the entire world population”, Australia’s finance minister added. US$50bn to end COVID across the world, they imply, is a small investment to restart our economies.