david is to be returned to italy a bit of cultural news for a welcome change!
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The Auto Sun is Rising David E. Cole Emeritus Chairman Center for Automotive Research (CAR) Monahan Endowment Lecture Wayne State University, College of Engineering March 23, 2011. David is to be returned to Italy A bit of cultural news for a welcome change! . - PowerPoint PPT PresentationTRANSCRIPT
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The Auto Sun is RisingThe Auto Sun is RisingDavid E. Cole
Emeritus ChairmanCenter for Automotive Research (CAR)
Monahan Endowment Lecture
Wayne State University,College of Engineering
March 23, 2011
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David is to be returned to Italy A bit of cultural news for a welcome change!
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His Proud Sponsors were Fast Food Chains…
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Auto Problem
Mostly Revenue –
with Depression Level of Sales
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GM & Chrysler – Debt Reduction, Lean
Ford: Good & Bad News, No Bankruptcy but High Debt
All Manufacturers & Suppliers Have Been Hurt
But, The Sun is Rising Fast
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Across the Land – Still
Amazing Level of Ignorance on Auto Industry
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The Perfect StormThe Perfect Storm
7
Benefits
Hyper Competition
Competent New Players: China, India, …
Auto Industry
Tools
Materials
Policy
Money
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Auto Industry of the FutureAuto Industry of the Future
A World of
Vanishing Boundaries
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Economic Contribution of the Economic Contribution of the U.S. Automotive IndustryU.S. Automotive Industry
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Auto ManufacturingAuto Manufacturing
Manufacturers . . . . 313,000 + jobs
Parts Suppliers . . . . 686,000 + jobs
R & D Spending . . . $16 + billion
Source: BLS, NSF *includes NAICS 3361, 3362
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Economic Contribution Per JobEconomic Contribution Per Job
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Auto Mfr. $329,000
Average Job $112,000
Source: U.S. Census Bureau Annual Survey Manufacturers 2005
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Economic MultiplierEconomic Multiplier
Auto Manufacturers – 10
Auto Parts Supplier – 5.7
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Auto EmploymentAuto Employment
2010 – modest gains
2011 – 2013 + 100,000 per Year
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We Have Been Swimming a River
That is Getting;
Faster, Deeper, & Wider
But!
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The Pot of Gold on theThe Pot of Gold on the Other Side is Getting Larger Other Side is Getting Larger
Labor Cost Reduction Household Growth Pent-Up Demand Capacity Reduction Scrappage Return of Pricing Power
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The Challenge:
Getting to the Other Side
But We Have Reached the Shallow Water
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Domestics – Unbelievable Shift from about
$2,000 Disadvantage to
$2,000 Advantage
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PALE Meeting-March 19, 2009 18
However, Will It Come Back . . ?U.S. Light Vehicle Sales Forecast
Source: CSM Worldwide, J.D. Power
+4.4 M+6.8 M
+8.9 M+2.4 M
-9.3 M -5.2 M
-8.0 M
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PALE Meeting-March 19, 2009 19
U.S. Light Vehicle Sales History and ForecastCombined J.D. Power and CSM Worldwide Forecast
2007 - 2014
16.1
13.2
10.0
11.6
15.1
16.516.1
14.1
9
10
11
12
13
14
15
16
17
2007 2008 2009 2010 2011 2012 2013 2014Source: CSM Worldwide, JD Power, Inc.
Mill
ions
Mill
ions
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The New Break-even-
10-11 Million Sales
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Beware: The Aging of the Boomers.
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DemographicsDemographics
Consumer Behavior
Socio / Political
Health Care
Skilled Workers
World Issue
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“Boomers go Boom”
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Auto Industry - Auto Industry -
Thousands of New Jobs – But OnlyThousands of New Jobs – But Only
for the Educatedfor the Educated
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““This is Auto”This is Auto”
““Building America’s Tomorrow”Building America’s Tomorrow”
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The Business Model
is Changing Fast.
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Old Business ModelOld Business Model
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BureaucracyPaper Linear
Slow Lean
IndividualSequentialRegional
Physical Prototypes
Job for LifeKings
Talk
Competition StructuredAcquisitions
Vertical Integration
LegalisticControl
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New Business ModelNew Business Model
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Anti-bureaucracyPaperless Collaboration
Fast Lean Agile
Teame-enabled
Global
Virtual Prototypes
People Flow Coaches
Listen
Coopetition
Parallel
FlexibleAlliances
Virtual Integration
TrustEmpowerment
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It’s the Team, the Team, the Team
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Global Integration-Global Integration-
Platforms Components R & D Plants Everything
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One Company World-wideOne Company World-wide
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Value of Global Economies of
Scale are Huge
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Lean / AgileLean / Agile
Investment
Engineering
Manufacturing
Everything
31
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KnowledgeKnowledge
The Competitive Edge
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Customer Pull
Cars and Trucks
Productand
Process
Technology Push
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TimeTime
KnowledgeKnowledgeApplicationApplication
KnowledgeKnowledge
Competitive Competitive AdvantageAdvantage
InnovationInnovation
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Do What You KnowDo What You Know
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Coming Soon:Coming Soon:
“Auto Harvest”“Auto Harvest”
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Auto TechnologyAuto Technology
At the edge of a revolution?
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FunPerformance
Green Environment
Future
Cars
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Future Power Plants Future Power Plants Gasoline Diesel Hybrid Fuel Cell
The Answer – ?
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$$
TimeTime
Technological Progress—When to CommercializeTechnological Progress—When to Commercialize
ACurrentTechnology
B
Too early
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POWER TECHNOLOGY POWER TECHNOLOGY COMPARISON CHARTCOMPARISON CHART
TECHNOLOGY OPTIONS /
COMPARISON PARAMETERS
ADVANCEDGASOLINE
CLEANDIESEL
HYBRIDPARALLELNON-GRID
Cost +$1,000 +$3,000 +$4,000 to +$6,000
Fuel Economy +20% +30% +20% to +30% (with diesel
+50%)
Non-CO2
EmissionsBaseline Nox and
Particulate Problem
-20% to -30%
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““BOTTOM LINE”BOTTOM LINE”
Not enough knowledge to pick winners and losers
Different strategies for different companies
Alliances necessary to overcome challenges
Government incentives required…ultimately consumers decide
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Coming Fast – Plug-in, Coming Fast – Plug-in, Series HybridsSeries Hybrids
ororExtended RangeExtended RangeElectric VehiclesElectric Vehicles
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Future FuelsFuture Fuels
PetroleumBioHydrogenNH3
The Answer – ?
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Future Gasoline Price –
$ 1.50 – $ 5.00 /gallon
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Annual Mileage 15,000
MPG
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Old Carbon Fuels Will ContinueOld Carbon Fuels Will Continueto be Used if they are Economicto be Used if they are Economic
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Improved Efficiency and New Improved Efficiency and New
Carbon Fuels – Can Slow Growth of OldCarbon Fuels – Can Slow Growth of Old
CO2 and Keep Expensive Old Carbon CO2 and Keep Expensive Old Carbon
Fuels From Being Extracted.Fuels From Being Extracted.
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2 Key Developments2 Key Developments
Lithium Batteries
Cellulosic Bio Fuels
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The Invention
is Here!
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Cellulosic Bio FuelsCellulosic Bio Fuels Lower Heating Value
2010 - 2015 - $1.00/gal?
Cost Increase for E-85 Vehicle - $100
Global Impact
Development not Invention
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Lithium BatteriesLithium Batteries4 x Performance Lead AcidMany ChemistriesHeat a ProblemKey to Plug-in HybridsDevelopment not InventionCost?
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Energy
BTU/ft³
Liquid
Compressed Gas Batteries
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LifeLife
Discharge LevelDischarge Level
Challenge for BatteriesChallenge for Batteries
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1.1. Battery EconomicsBattery Economics
Manufacturing
Materials
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GEN 1
GEN 2
GEN 3
GEN 4
GEN 5
$
TIME
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Life After the Car:
The Grid!
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Developments to WatchDevelopments to Watch
Vehicle/Infrastructure IntegrationAuto/Utility Integration
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Climate Change – DivisiveClimate Change – DivisiveConservation - CollaborativeConservation - Collaborative
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Future DirectionFuture Direction
It’s All a Matter of Economics
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Success FactorsSuccess Factors Risk Obsolete Own Products Tough Problems Systems Knowledge Collaboration
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World ClassWorld Class
is a Moving Targetis a Moving Target