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Supply Chain by the Numbers

- July 17, 2014 -

  Supply Chain by the Numbers for Week of July 17, 2014

New Truck Engine Dramatically Reduces C02 Emissions; US Factory Utilization Continues to Hit Ceiling; Big Investment in VW Chattanooga Plant After Union Voted Down; Amazon Petitions for Drone Testing



That's the potential reduction in CO2 emissions from a new truck engine from Cummins, according to the company this week. What the company calls the Ethos 2.8 engine was developed in partnership with the California Energy Commission, which provided several million dollars in funding for the engine's R&D. What makes this major CO2 reduction possible is a design that focused on use of E-85 fuel, which is a blend of 85% ethanol and 15% gasoline. There are other improvements, such as automatically shutting down the engine when the truck comes to a stop. The Ethos engine is a mid-duty design, and is being integrated into a prototype Freightliner custom MT45 Class 5 step-van chassis. After two and a half years of testing, Cummins says the engine is in its final phase of on the road validation. The market is likely to solve CO2 emissions concerns before the government.



$900 Million

Amount of capital Volkswagen is set to invest to add a new manufacturing line at its Chattanooga, TN assembly plant to produce a new sports utility vehicle. The expansion will create some 2000 new jobs, and is planned to be operational by late 2016. The news is huge and interesting, as some sources said that the new line would come to the plant if it voted against joining the United Auto Workers union earlier this year, which workers there did in a bitter blow to the UAW. That even as some of VW’'s management seemed to favor unionization at the Chattanooga factory, which is the only non-union operation among more than 60 VW plants worldwide. US managers though were said to be against the organizing effort, and dangled the new line as a incentive to vote no to unionization.


The percent of shipments by that weight less than five pounds – the cut off weight for the use of delivery drone aircraft in Amazon's research on "Amazon Prime Air" service in recent years. That as Amazon petitioned the Federal Aviation Administration this week to allow it to test such drone deliveries in its home Seattle market. "We're continuing to work with the FAA to meet Congress's goal of getting drones flying commercially in America safely and soon," said Paul Misener, Amazon's vice president of global public policy. "We want to do more research and development close to home." Amazon’s stock actually rose 6% on the news.



Level of manufacturing capacity utilization in the US in June, according to the latest report from the Federal Reserve this week. The level of US manufacturing output at long last is poised to finally exceed the peak levels of 2007 some seven years later, reaching a score of 97.7 in June against the baseline year score of 100 for 2007. While capacity utilization has risen slowly and steadily from the disastrous low of just 64% in mid-2009, the long run (40-year) average is 78.7%, or 2.6 percentage points below the June number. 76% or so has been the ceiling in this metric for several years now, and that 2-3 percent delta between current and average utilization represents a lot in terms of increased wages, GDP growth and more. In 1998, manufacturing capacity reached some 85%, the high point over the past few decades.

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