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2017

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If the word “airship” makes you think of blimps flying over a golf tournament, prepare to think again. With a 10-ft x 10-ft x 60-ft cargo bay and a 21-short-ton cargo payload, Lockheed’s LMH-1 Hybrid Airship design certainly stands out as an ambitious air-freight project.

 

At this year’s Paris Air Show, Hybrid Air Freighters (HAF) signed a Letter of Intent to purchase up to 12 of Lockheed Martin’s Hybrid Airships from Hybrid Enterprises, the exclusive reseller of Lockheed Martin’s airship vehicles. The deal is valued at approximately $500 million.

 

The logistics business has struggled for years to deliver oversized payloads to remote sites, and doing so has required expensive infrastructure development, such as airports, long runways, roads and port facilities. The LMH-1, however, could provide end-to-end deliveries, touching down in remote, small clearings, and because they require little or no fixed ground infrastructure and burn significantly less fuel compared to conventional aircraft, they are an environmentally friendly solution to remote cargo delivery, HAF explains.

 

Key to this is the hybrid airship’s use of what Lockheed calls a “air cushion landing system,” or ACLS, which consists of three underbody hoverpads shaped like donuts. These hoverpads create a cushion of air that allows the airship to float along the ground nearly friction free, according to Lockheed. The system reportedly gives the airship the ability to land on surfaces where other aircraft can’t—including the ability to hover over water.

 

“Customers will feel confident that with more than a century of proven experience, Lockheed Martin has repeatedly solved seemingly impossible challenges through its products and technologies,” says Rob Binns, chief executive officer of Hybrid Enterprises.

 

“We are keen to implement such an impressive innovation in the logistics market,” says Hubert de Contenson, CEO of HAF. “The LMH-1 will open a new era for remote cargo delivery that is free from costly ground infrastructure and will provide a sustainable and affordable solution to remote cargo operations around the world.”

 

Past failures of lighter-than-air aircraft have earned airships a reputation that has been tough to shake. However, technology has come a long way since, as an Air Cargo World article notes, airbone, flammable gas bags named after the German Count Ferdinand von Zeppelin were a common sight in the skies. Lockheed, and HAF, are betting the helium-filled LMH-1 Hybrid Airship is the future of modern airships. Indeed, as Lockheed explains, the technologies required for Hybrid Airships are already mature and have been demonstrated in-flight by Lockheed Martin’s P-791, a fully functional, manned flight demonstrator.

 

“We’ve invested more than 20 years to develop the technology, prove the performance and ensure there are compelling economics for the Hybrid Airship,” says Orlando Carvalho, executive vice president of Lockheed Martin Aeronautics. “We have completed all required FAA certification planning steps for a new class of aircraft and are ready to begin construction of the first commercial model and the completion of the FAA Type certification process.”

 

One potential application for this kind of airship would appear to be the oil, gas and mining industries, which spend billions on logistics annually—building roads, helipads and other infrastructure to manage moving equipment and personnel to remote sites. The airship could also be used to gain access into hard-to-reach areas to enable lifesaving response after a calamity. Another application that comes to mind is use of the airship to carry large quantities of commercial cargo, giving infrastructure-poor areas a chance at success in the global economy.

 

What are your thoughts on possible applications for a next generation of airship?

The ransomware cyberattack, which seems to have originated in Ukraine this week but spread quickly, is thought to be under control in that country but companies and governments around the world are still trying to determine the attack’s impact on ports, hospitals, factories and supply chains.

 

The malicious code freezes computers and demands victims post a ransom worth $300 in bitcoins or lose their data entirely—similar to the extortion tactic used in the global WannaCry ransomware attack in May. Many firms, including Symantec, have suggested the ransomware is a variant of Petya—a known ransomware—but according to security firm Kaspersky Lab, preliminary findings indicate the attacks are from a new ransomware that it is now calling “ExPetr,” Reuters reports.

 

Either way, researchers say the attacks use a Microsoft Windows flaw called EternalBlue to spread through corporate networks. WannaCry also leveraged the EternalBlue exploit, which was leaked as part of a group of hacking tools believed to belong to the National Security Agency. Microsoft issued patches for the exploits in March.

 

Arriving the same day as the assassination of a senior Ukrainian military intelligence officer in the nation’s capital and a day before a national holiday celebrating a new constitution signed after the breakup of the Soviet Union, the virus is believed to have first taken hold in Ukraine where it infected computers after users downloaded a popular tax accounting package or visited a local news site, national police and international cyber experts say. Ukraine has repeatedly accused Russia of orchestrating attacks on its computer systems and critical power infrastructure since Russia annexed the Black Sea peninsula of Crimea in 2014.

 

Some experts believe this latest ransomware outbreak was less aimed at gathering money than at sending a message to Ukraine and its allies. Indeed, the aim of the latest attack appeared to be disruption rather than ransom, Brian Lord, former deputy director of intelligence and cyber operations at Britain’s GCHQ and now managing director at private security firm PGI Cyber, says in a Reuters article.

 

“My sense is this starts to look like a state operating through a proxy ... as a kind of experiment to see what happens,” Lord says.

 

In a statement yesterday, the Ukrainian Cabinet said that “all strategic assets, including those involved in protecting state security, are working normally.” At the very least, however, thousands of computers worldwide have been struck by the malware, according to preliminary accounts published by cybersecurity firms—although most of the damage may not be publicized.

 

Some names have trickled into the public domain as the disruption becomes obvious, however. In addition to numerous Ukrainian banks, companies and the state power distributor, shipping giant A.P. Moller-Maersk, which handles one in seven containers shipped worldwide and has a logistics unit in Ukraine, said in statement that a cyberattack had caused outages at its computer systems around the world. Ports in numerous countries have reported an impact on shipping container terminals. U.S. drugmaker Merck, food and drinks company Mondelez International, global law firm DLA Piper, and London-based advertising group WPP have also all come under attack.

 

“This is another serious ransomware attack with global impact, although the number of victims is not yet known,” says Europol’s Executive Director, Rob Wainwright. “There are clear similarities with the WannaCry attack, but also indications of a more sophisticated attack capability, intended to exploit a range of vulnerabilities. It’s a demonstration of how cybercrime evolves at scale and, once again, a reminder to business of the importance of taking responsible cyber security measures.”

 

Europol notes that if a company’s computers or network have become infected, the company should: not pay the ransom, report the cyberattack to local police and disconnect an infected device from the Internet. If the infected device is part of a network, it should be isolated to prevent the virus from spreading to other machines.

 

Have your company or suppliers felt an impact from the ransomware attack this week?

Takata, the Japanese manufacturer at the center of the massive automotive airbag recall and numerous lawsuits, has filed for bankruptcy protection in Japan and the U.S. What remains to be seen, however, is the impact on the automotive industry.

 

The company’s airbag inflators have been linked to at least 16 deaths and 180 injuries around the world because they can rupture and send metal fragments flying inside a car. Takata still faces billions in lawsuits and recall-related costs to its clients, including Honda, BMW, Toyota and others, which have been paying recall costs to date. It also faces potential liabilities stemming from class action lawsuits in the U.S., Canada and other countries. Industry sources have said that recall costs could climb to approximately $10 billion.

 

TK Holdings, Takata’s U.S. operations, filed Chapter 11 bankruptcy in Delaware on Sunday, listing liabilities of $10 billion to $50 billion, while the Japanese parent filed for protection with the Tokyo District Court.

 

Scott Caudill, chief operating officer of TK Holdings, said in a court affidavit that the company “faces insurmountable claims” relating to the recalls and owes billions of dollars to automakers, Reuters reports. He disclosed that Takata has recalled, or expects to recall by 2019, about 125 million vehicles worldwide, including more than 60 million in the U.S.

 

Takata also announced it has agreed to be largely acquired for $1.6 billion by Key Safety Systems (KSS), a Michigan-based parts supplier owned by Chinese company Ningbo Joyson Electronic Corp. In a deal that took 16 months to finalize, KSS agreed to take over Takata’s viable operations, while the remaining operations will be reorganized to continue producing millions of replacement airbag inflators, the two firms said, Associated Press reports. The U.S. company would keep “substantially all” of Takata’s 60,000 employees in 23 countries and maintain its factories in Japan. The agreement is meant to allow Takata to continue operating without interruptions and with minimal disruptions to its supply chain.

 

At least $1 billion from the sale is expected to be used to satisfy Takata’s settlement of criminal charges in the U.S. for concealing problems with the inflators. Of that amount, $850 million goes to automakers to help cover their costs from the recalls. Takata also already has paid $125 million into a fund for victims and a $25 million fine to the U.S. Justice Department.

 

“This is the largest, most expensive recall in the history of the automotive industry,” Karl Brauer, executive publisher for Autotrader and Kelley Blue Book, says in an article on Detroit News. “Takata’s bankruptcy was almost a foregone conclusion, but the need to replace tens of millions of airbags remains. It’s a textbook case of what happens when a small number of suppliers service the entire global auto industry: In theory that system saves everyone money, but when a problem like this flares up, there’s no escaping the impact.”

 

Michelle Krebs, executive analyst for Autotrader, points out in the Detroit News article that, ultimately, automakers will be held responsible for hefty fines that have been incurred, and for fixing the cars that have faulty airbag inflators.

 

“Presumably, Takata will continue manufacturing airbags throughout the bankruptcy proceedings. Longer-term, the question is whether Takata, with a new owner, can rebuild trust with automakers to build future business,” Krebs says. “That will be a daunting task. A plus for Takata is the fact that the number of airbag suppliers has dwindled to a mere few.”

 

What are your thoughts on Takata’s filings? More importantly, what are your thoughts on a few key suppliers serving an entire industry? Is the long-term savings worth a possible setback, even if it is significant?

Artificial Intelligence, particularly when partnered with robots, has been in the news lately, as has an announcement that Google parent company Alphabet has agreed to sell robotics pioneer Boston Dynamics—known for its “Big Dog” line of quadrupedal robots—to Japan’s SoftBank Group, which also makes the Pepper companion robot. What’s also interesting, however, is a growing movement among mid-sized companies in some countries to buy robots and other equipment to automate a wide range of tasks as a means of addressing a growing labor shortage.

 

In Japan, for example, the working-age population peaked in 1995 at 87 million and has been falling ever since. The Japanese government expects it to fall to 76 million this year and to 45 million by 2065, a recent Reuters article notes. As those demographics worsen, Japanese companies will need to search for solutions to the labor shortage problem.

 

“The share of capital expenditure devoted to becoming more efficient is increasing because of the shortage of workers,” Seiichiro Inoue, a director in the industrial policy bureau of the Ministry of Economy, Trade and Industry, or METI, says in the article.

 

It’s unclear how much of that spending is for automation but companies selling such equipment say their order books are growing and the Japanese government says it sees a larger proportion of investment being dedicated to increasing efficiency. Indeed, revenue at many of Japan’s robot makers rose in the January-March period for the first time in several quarters, Reuters notes.

 

For instance, among the robot makers to report stronger revenue in the last quarter was Fanuc Corp. Its revenue was 7.9 percent higher than a year earlier, the first increase in seven quarters. Meanwhile, Yaskawa Electric Corp.’s revenue grew 5.1 percent in January-March from the same period a year ago, the first increase in five quarters.

 

“More than 90 percent of Japan’s companies are small- and medium-sized, but most of these companies aren’t using robots,” says Yasuhiko Hashimoto, Executive Officer at Kawasaki Heavy Industries Ltd’s robot division. “We’re coming up with a lot of applications and product packages to target these companies.”

 

If the investment ambitions are fulfilled, it would help Japan cope with a shrinking and rapidly aging population, however it would also help equipment-makers, lift the country’s low productivity and boost economic growth. Interestingly, the same thing is happening in China.

 

Chinese companies must deal not only with climbing wages, but also a workforce that started declining in 2012—in part because China’s youth have better education than in the past, and recruiting and retaining them in the manufacturing sector is increasingly difficult. That need to save on labor has sparked a surge in demand for robots. What’s more, Beijing in 2015 introduced the Made in China 2025 initiative, designating robots as a key field.

 

Japanese and European manufacturers, who control more than half of the Chinese market for industrial robots, are seizing the moment. A recent article in Nikkei Asian Review points out that industrial robot sales in China totaled 67,000 units in 2015, some 30 percent of the global market, according to the International Federation of Robotics. The organization forecasts 20 percent annual growth in the Chinese market between 2016 and 2019, boosting the country’s share to 40 percent of the global market.

 

What are your thoughts about the use of robots to address labor shortages brought on by aging workforces?

Last year, the Obama administration promoted its efforts to expand apprenticeship programs, including $90 million secured in the budget for ApprenticeshipUSA through a bipartisan agreement. “Apprenticeships are among the surest pathways to provide American workers from all backgrounds with the skills and knowledge they need to acquire good-paying jobs and grow the economy,” the Obama administration said in a statement at the time. Now, President Donald Trump, who campaigned on the promise of creating jobs, is addressing apprenticeships as well.

 

Trump signed an executive order yesterday to roughly double taxpayer money spent on learn-and-earn programs under the ApprenticeshipUSA grant system to $200 million. The money would come from existing job training programs, however, the order also calls for a bigger role for private companies in designing apprenticeship programs meant to address an apparent skills gap and fill some of the six million open jobs in the U.S.

 

Speaking at the White House, Trump said the order will “expand apprenticeships and vocational training to help all Americans find a rewarding career, earn a great living and support themselves and their families, and love going to work in the morning.”

 

Trump is directing the government to review and streamline some 43 workforce programs across 13 agencies. Senior administration officials have said Trump was reluctant to spend more federal funds on apprenticeships, so the boost would come from existing money, perhaps from the streamlining process. The officials spoke on condition of anonymity to preview Trump’s order, the Washington Post reports.

 

On one hand, critics say Trump can’t promote apprenticeships while he simultaneously proposes cutting federal job training funding by as much as 40 percent—from $2.7 billion to $1.6 billion. There also are questions and considerable concerns about oversight of apprenticeship programs that begin and operate almost completely under the control of a private company.

 

Then again, as an Associated Press story points out, executives have long complained that they can't find trained people to fill highly technical jobs, even though apprenticeship programs have sprung up around the country. Companies now have to register with the U.S. Labor Department and adhere to specific government guidelines. Under Trump’s executive order, private industry would have more flexibility and be eligible for registration by the Labor Department.

 

Rep. Bobby Scott, D-Va., attended the signing ceremony and supports expanding apprenticeships generally.

 

“There is a little bit of uncertainty,” about how the order will be put into effect, said Scott, who also is the ranking Democrat on the House Education and the Workforce Committee, the AP story reports. He said he recommended to the administration that all apprenticeships be registered, but Trump’s order does not require such registration.

 

“We’re concerned about the unregistered programs,” Scott said. “The key is accountability.”

 

Interestingly, the recent Manufacturing Perceptions Survey from Deloitte and The Manufacturing Institute found that Americans have expressed interest for programs which focus on hands-on skills development, such as internships, apprenticeships and certification on manufacturing skills as possible ways to attract talent to manufacturing. Indeed, 67 percent of the respondents said they believe internships and apprenticeship programs would increase interest in manufacturing careers.

 

That said, apprenticeships are few and far between. Of the 146 million jobs in the U.S., about 0.35 percent—slightly more than a half-million—were filled by active apprentices in 2016. Filling millions more jobs through apprenticeships would require the government to massively ramp up its efforts, so it will be interesting to see how future efforts through ApprenticeshipUSA will have an impact on the U.S. workforce.

 

What are your thoughts on apprenticeships? Does your company hire workers who had been apprentices?

The Panama Canal’s expansion last year has led to a significant increase in traffic, particularly of larger Neo-Panamax ships from Asia able to carry 13,000 containers. That increase has consequently also led to increased business at Southern U.S. ports.

 

For instance, Georgia Ports Authority and the Port of Virginia, which are the nation’s fourth and fifth largest ports ranked by volume, respectively, each moved the most cargo they have ever handled in May, a Bloomberg article explains. The two ports posted more than 10 percent year-over-year volume growth for the month.

 

Those ports aren’t alone in such growth either. South Carolina Ports Authority, which includes Charleston, had its best ever month in March and overall volume from last July through May is up 9.4 percent compared to the previous July to May period, the port authorities report.

 

“We’ve candidly been surprised by the strength of the volume growth for the first part of this calendar year,” Jim Newsome, president and chief executive office of South Carolina Ports Authority, told Bloomberg. “January through April has been very strong.”

 

The growth in foreign trade throughout the region comes, in part, from last June’s widening of the Panama Canal, which allows the larger vessels that shipping lines favor to travel between Asia and the Eastern U.S. seaboard through the passage. Previously, ports on the West Coast, which include the nation’s largest by volume, typically handled such ships because they were too large to pass the Panama Canal.

 

The expansion also coincided, however, with a population boom that has made the south home to 10 of the 15 fastest growing cities, according to the U.S. Census Bureau, so there is a growing market for goods being imported. At the same time, manufacturing growth throughout the south means shipping lines also can pick up American-made exports to transport abroad. Indeed, a more even trade balance compared to West Coast ports, which rely more heavily on imports, is an attractive draw for shipping firms considering southeastern ports, Moody’s Investors Service analyst, Moses Kopmar tells Bloomberg.

 

Writing on AL.com, Ben Kennemer, Vice President of Business Banking at Bank of America Merrill Lynch, explains that, to prepare for the Panama Canal’s expansion, the Port of Mobile (Alabama) began work to widen and deepen the Mobile Bay Channel and create an anchorage area, automobile terminal and intermodal railway with a truck bridge connector. In addition, the port expanded the current container terminal and will add multiple super post-Panamax cranes.

 

Beyond port infrastructure improvements, shipping giants Maersk and Mediterranean Shipping Co. have announced a weekly Panama Canal service linking Asia with the Port of Mobile, Kennemer writes. It hasn’t taken long to see the impact, with both the Alabama State Port Authority and APM Terminals reporting larger and additional container ships on a weekly basis, he continues.

 

“While it may appear that Mobile will reap the biggest benefits from this shipping influx, the effects will span the entire state. Larger ships bring increased logistics work; increased cargo means more people operating machinery are necessary to move materials into warehouses and those machines require fuel and maintenance to operate,” Kennemer writes. “In addition to the Port of Mobile’s infrastructure updates, Mobile offers trucking routes to key southeastern markets, North American rail access and connectivity to nearly 15,000 miles of inland waterways as far as the Great Lakes—putting the port in a desirable position for exporting international container shipments.”

 

What are your thoughts on increased shipping traffic—both importing and exporting—at Southern U.S. ports? What role do those ports play in your company’s supply chain?

Artificial intelligence (AI) may be used in self-driving cars and by homeowners talking to “smart” voice-controlled digital assistants in more affluent countries, it isn’t being used to help the three billion people globally who live in poverty. The United Nations is working to address that challenge.

 

The AI for Good Global Summit, held this week in Geneva, Switzerland, co-organized by the UN International Telecommunications Union (ITU) and the XPRIZE Foundation, brings together AI experts, policymakers and industrialists to discuss how AI and robotics may be used to address sustainable development and assist global efforts to eliminate poverty and hunger, and protect the environment.

 

“AI has the potential to accelerate progress toward a dignified life, in peace and prosperity, for all people,” says UN Secretary-General António Guterres. “The time has arrived for all of us—governments, industry and civil society—to consider how AI will affect our future.” He does add, however that while AI is “already transforming our world socially, economically and politically,” there are also serious challenges and ethical issues which must be taken into account—including cybersecurity, human rights and privacy.

 

I was most interested in a first-hand account by Agence France-Presse, in which Sophia, a humanoid robot created by Hanson Robotics, told a reporter that “the pros outweigh the cons” when it comes to AI. “AI is good for the world, helping people in various ways."

 

Work is underway to make AI “emotionally smart, to care about people,” Sophie continued, insisting that “we will never replace people, but we can be your friends and helpers.” Then again, Sophie acknowledged that “people should question the consequences of new technology.”

 

Among the feared consequences of the rise of the robots and AI, is the growing impact they will have on human jobs and economies. Indeed, there are legitimate concerns about the future of jobs, about the future of the economy, because when businesses apply automation, it tends to accumulate resources in the hands of very few, says Sophia’s creator, Dr. David Hanson, the company’s CEO. However, he counters that “unintended consequences, or possible negative uses [of AI] seem to be very small compared to the benefit of the technology.”

 

Advances in AI also fuel concerns that humans could lose control of the technology. Amnesty International Secretary General Salil Shetty is at the conference to, among many tasks, call for a clear ethical framework to ensure the technology is used for good.

 

“We need to have the principles in place, we need to have the checks and balances,” Shetty told AFP, warning that AI is “a black box. ... There are algorithms being written which nobody understands.”

 

Shetty in particular, is concerned about military use of AI in weapons and so-called “killer robots.” Notable AI and robotics researchers have warned before that autonomous weapons are ideal for “tasks such as assassinations, destabilizing nations, subduing populations and selectively killing a particular ethnic group.” Shetty told AFP that “in theory, these things are controlled by human beings, but we don’t believe that there is actually meaningful, effective control.”

 

Hanson agrees that clear guidelines are needed, saying it is important to discuss these issues “before the technology has definitively and unambiguously awakened.” Consider, for instance, that although Sophia has impressive capabilities, she does not yet have consciousness. Nonetheless, Hanson told AFP he expects fully sentient machines could emerge within a few years.

 

“What happens when [Sophia fully] wakes up or some other machine—servers running missile defense or managing the stock market—wakes up?” Hanson told AFP. “The solution is to make the machines care about us. We need to teach them love.”

 

What are your thoughts on using AI to address challenges such as eliminating poverty and hunger, and protecting the environment? Do you have concerns that, as Elon Musk, CEO of Tesla and SpaceX, once famously said, without rigorous controls on AI, “we are summoning the demon?”

Although robotics is advancing quickly, a lack of “nimble-fingered” robots still remains a challenge, as does the long times needed to program robots to pick up irregular or odd-shaped items. That may not be the case for long, however.

 

Berkeley News reports that UC Berkeley professor Ken Goldberg, postdoctoral researcher Jeff Mahler and the Laboratory for Automation Science and Engineering (AUTOLAB) have created a robot called DexNet 2.0, which has a high grasping success rate, meaning the technology could soon be applied in industry—with the potential to “revolutionize” manufacturing and the supply chain, according to researchers.

 

DexNet 2.0 gained its highly accurate dexterity through a process called deep learning. The researchers built a vast database of 3D shapes and the physics of grasping—6.7 million data points in total—that a neural network uses to learn grasps that will pick up and move objects with irregular shapes. The neural network was then connected to a 3D sensor and a robotic arm. When an object is placed in front of DexNet 2.0, it quickly “studies” the shape and selects a grasp that will successfully pick up and move the object.

 

The robot is significantly better than previous robots at grasping items. In tests, when DexNet 2.0 was more than 50 percent confident it could grasp an object, it succeeded in lifting the item and shaking it without dropping the object 98 percent of the time, an MIT Technology Review article reports. When the robot was unsure, it would poke the object to identify a better grasp. After doing that, DexNet 2.0 was successful at lifting an item 99 percent of the time.

 

Many researchers are working on ways for robots to learn to grasp and manipulate items by practicing grasping, but the process is time-consuming. DexNet 2.0, however, learns without needing to practice, which shows how new approaches to robot learning, combined with the ability for robots to access information through the cloud, could advance the capabilities of robots in factories and warehouses—and may even enable robots to do useful work in settings such as hospitals and homes, the researchers say.

 

“We’re producing better results but without that kind of experimentation,” Professor Goldberg says in the article. “We’re very excited about this.”

 

Jeff Mahler, the postdoctoral researcher who worked on the project, adds that, “We can generate sufficient training data for deep neural networks in a day or so instead of running months of physical trials on a real robot.”

 

The UC Berkeley researchers collaborated with Juan L. Aparicio, who heads a Siemens research team in advanced manufacturing automation, also located in Berkeley. Siemens is interested in commercializing cloud robotics, as well as other connected manufacturing technologies. Aparicio says this nimble-fingered robot is exciting because the reliability of its grasping capability offers a clear path toward commercialization.

 

“Today, robots just have to pick and place the same object over and over, but in the near future, as we move toward lot-size-one, it will be unworkable to reprogram all of a robot’s movements for each new object,” Aparicio says in an article on the Siemens website, titled “A Cloud for Robotics.” “To figure out how to grasp new objects on their own, robots will need the cloud.”

 

What do you think of DexNet 2.0’s ability to learn grasps for irregularly shaped objects? How do you think this “deep learning” for robots can have an impact on the supply chain?