The Kerryman (South Kerry Edition)
Experts’ reports throw doubt on Borg Warner’s ‘falling demand’ excuse for closing Tralee plant
AS it announced shock plans to shutter its Tralee plant, US car parts giant Borg Warner laid the blame on falling demand for the car heaters made at the Kerry facility.
The firm’s excuse prompted much scepticism in Tralee and a look at trends in the global motor industry tends to support the sceptics’ argument.
The main product made at Borg Warner’s Tralee plant is a ‘High Voltage Positive Temperature Coefficient Heater’ specially designed for use in electric vehicles.
Back in 2017 Borg Warner announced an €11.5 million investment into the Tralee plant to develop a ‘high volume’ production line for the heaters which, the company said, offer an ‘innovative’ solution to a ‘growing challenge’ for the ‘booming electric vehicle market’.
At the high profile 2017 jobs and investment announcement – attended by the then Jobs, Enterprise and Innovation Minister Mary Mitchell O’Connor and IDA head Martin Shanahan among many other dignitaries – Borg Warner Thermal System’s President Joe Fadool had the following to say about the ‘innovative’ new product.
“As the trend towards hybrid and electric propulsion continues, we expect demand for our efficient, high-voltage cabin heating solutions to grow. By further expanding our EV capabilities, we are able to continue supporting our customers as they look to rapidly expand their EV product portfolio.”
Clearly the company expected big things from the new device, which continues to be promoted prominently on its corporate websites.
Borg Warner are not the only ones to see huge potential in such products.
In June 2019 leading London based global market research and analysis firm Future Market Insights (FMI) published a comprehensive report on the ‘Global Automotive PTC Heater Market’ which included Borg Warner among the manufacturers it examined.
In its report FMI found little to suggest demand would drop, in fact the opposite appeared likely to the company’s expert industry analysts.
Here’s how they predicted the global PTC heater market would pan out between now and 2028.
“The positive outlook of electrically driven vehicles and hybrid technology will promote the high voltage PTC heaters across the globe.”
“Electric vehicle sales are expected to expand with a double digit compound annual growth rate over the next ten years.”
“Thus the sales of high voltage PTC heaters are anticipated to grow with the positive outlook of electric vehicles during the forecast period,” the FMI experts concluded.
In a similar report the international market intelligence firm Fact.MR provided an even more glowing assessment of the global PTC heater market’s prospects.
“Increasing demand for electric and hybrid automobiles is expected to strengthen market growth avenues for automotive PTC heaters in the global market. Thereby, remarkable prospects in the production of automotive PTC heaters is foreseen for market players during the forecast period (from 2018 to 2026),” Fact.MR’s researchers wrote.
Fact.MR specifically identify Borg Warner as a ‘major stakeholder’ in the heater market for electric vehicles.
It should be noted that since both reports were published the Coronavirus pandemic has played havoc with all markets and, as such, predictions from 2018 and 2019 cannot be entirely relied on.
However, in a statement to the Government Borg Warner expressly told Tánaiste Leo Varadkar that the decision was due to a decline in demand and, Mr Varadkar said, “was not related to Covid-19,”.
Global sales of electric vehicles reached all time record levels in 2019 and while sales have dropped dramatically this year (though sales of petrol and diesel vehicles have fallen much further) they are predicted to rebound and surge post pandemic.
We may never know the full reason Borg Warner decided to abruptly abandon Tralee.
It certainly appears that Tralee Chamber Alliance Chief Executive Ken Tobin was on to something when he suggested the decision has more to do with Borg Warner’s take over of UK based Delphi Technologies than it does with falling demand for its car heaters.
When the €3.3 billion Borg Warner Delphi deal was done last January the firms said they expected to make savings of $125 million in the next two years by eliminating redundant or duplicated functions and jobs.
When Borg Warner Tralee’s main client, Elon Musk’s Tesla, subsequently unveiled its own new cabin heating system it seems that the 210 Kerry workers were deemed surplus to requirements and Borg Warner felt their work could be done elsewhere.