Voith s Perspective on the New Tariffs

Transcription

1 voith.com Voith s Perspective on the New Tariffs Walla Walla NHA HPC NWHA Technical Committee Meeting Presenter: Steven R. Potter; Voith Western Region HyService Manager, NWHA Technical Committee Vice Chairman

2 Corporate Values Voith is a large global corporation with four (4) group businesses Approximately 20,000 employees worldwide Certain common functions are conducted through the Global Business Services group, one is procurement Voith has Corporate wide standards, policies, practices and values that are applied across the businesses and throughout the supply chain globally Markets and politics constantly vary Voith includes Voith Digital Ventures, Voith Hydro, Voith Paper, and Voith Turbo Visit Voith.com for details on each division and standards

3 Voith Global Procurement Perspective Four Divisions a well positioned company Voith GmbH & Co. KGaA Voith Digital Ventures Voith Hydro Voith Paper Voith Turbo Solutions for the internet of things: networking and digitalization Full-line supplier for hydro power plant equipment Partner and pioneer in the paper industry Intelligent drive systems and solutions

4 Voith Digital Ventures We enable our customers in traditional markets to transform their businesses Voith Paper Papermaking 4.0 Voith turbo - Smarter Mobility Voith Hydro - Digital Hydro Power Plants More efficiency and productivity in the papermaking process Vehicle data and analysis always in sight for smarter fleet management Intelligent tools for more availability and smarter energy generation 4

5 Voith Hydro Powering the world - 25% of Hydroelectric Installations Worldwide are Voith Brands Small Hydro HyService Large Hydro & PS Over 85 percent of all existing dams in the world remain unused for hydropower generation HyService teams offer repairs, spare parts, preventive maintenance, inspections and assessments Conventional and Pumped Storage Power Generation 5

6 Tariffs in a Global Economy Effective June 1, 2018 the US imposed additional tariffs on goods from numerous countries Primarily impacts Voith for Steel products; materials and fabrications September 24, 2018, another 200 Billion dollars in tariffs on Chinese goods Tariffs represent a yet another challenge to the supply chain Global Economy is constantly changing; it is necessary to quickly adapt to real time business environments Structure the supply chain to be robust and durable; where possible incorporate redundancy Work hard to stay ahead of the trend

7 Tariffs affecting material costs Tariff 232 effective June 1, 2018 Impact 25% tariff on imports of steel and 10% tariff on imports of aluminum from all countries except Brazil, Australia and South Korea Beginning August 13, steel articles covered by Section 232 from Turkey are subject to an ad valorem duty rate of 50% Minimal direct effect based on Harmonized Tariff Schedule (HTS) codes used for imports Indirect effect on fabricated and machined parts is random (0-25%) based on quantity and material specification

8 Tariffs effecting material costs Tariff 301 effective July 6, 2018 Impact 25% tariff on all imports from China based on Harmonized Tariff Codes (HTS) Direct effect based on imports with Harmonized Tariff Schedule (HTS) codes used for hydraulic turbine parts (included in List 1) final published by the U.S. Trade Representative Hydraulic turbines and water wheels of a power not exceeding 1,000 kw: Hydraulic turbines and water wheels of a power exceeding 1,000 kw but not exceeding 10,000 kw: Hydraulic turbines and water wheels of a power exceeding 10,000 kw: Parts, including regulators, of hydraulic turbines and water wheels Minimal tariff costs so far - Potential higher cost for customers Noticing that supplier pricing is increasing

9 Global Supply Chain Product responsibility Voith is renowned for its approach to safety, quality, and reliability. Sustainability is part of the ever-renewing commitment we make to our customers. Voith attaches great importance to the energy and resource efficiency of our products and ensure that we comply with all recognized environmental and social standards. We place the highest requirements on our actions both within our sphere of influence and in all of our supply chains. In doing so, we live up to our responsibility towards the environment and society through each and every one of our products.

10 Global Supply Chain How can Voith products help increase resource conservation? The Voith name stands for reliability and outstanding quality the world over. The commitment that we make with every single one of our products for over 150 years. Sustainability is a part of this promise; we attach great importance to ensuring our products conserve resources and increase efficiency both in terms of their production and in their subsequent utilization phases. How do customer benefits and environmental protection fit together? This approach brings multiple benefits to our customers Use fewer raw materials and less energy to save costs, and improve their and our own environmental footprint in the process.

11 Global Supply Chain How do we manage to integrate our environmental and social standards into our global supply chains? Within our overall sphere of influence, we also ensure environmental and social standards are upheld. Provide environmental and economic added value in everything we do for our customers

12 Global Supply Chain Review of Sourcing YTD Voith Hydro USA imported a number of major components in 2018 Half prior to tariffs in June Fabrications and Castings of Steel and Aluminum 6 Source Countries several of which were exempt from tariffs

13 Risk mitigation in an ever changing global economy Voith Hydro Global Sourcing Robust global supply base for major turbine and generator components with solid quality and financial stability Durable corporate profile across multiple markets and business segments allows leverage through volume and continuity of operations Supplier development and monitoring Expedite new supplier development in strategic regions globally Monitor suppliers frequently for financial stability, potential restructuring or capacity fluctuation Meet the Tariff challenges as they occur; and as another business opportunity

14 Manufacturing in the USA - changing global economy Largest Manufacturing hydro facility in the USA. Many units are assembled and finished in the USA. Therefore Tariffs are only affecting components which have lower value. Importing complete manufactured turbines will pay higher tariffs See ; ; &

15 Potential Tariff Impacts Voith Hydro Global Sourcing will continue Finishing product in the USA may improve Voith s competitive position Buying subcomponents and completing work in the USA means tariffs (if due) are paid on the imported (subcomponent) value not the as sold price Suppliers of turbines and generators that manufacture overseas exclusively will pay tariffs on higher import value; therefor on the as sold price It is not known how long tariffs will be in effect (days/months/years) The full and real of the effect of the tariff's may not be seen for several years Yet another market uncertainty for an industry that has a surplus of uncertainty

16 York PA, Turbine Machining center of excellence

17 We supply societies with highly efficient and reliable solutions of renewable energies. Contact: Steven Potter Western Region Manager, HyService Tel. (541)

18 Contact: Steven Potter Western Region Manager, HyService Tel. (541)