today’s turbulence: a foundation for future success today’s turbulence: a foundation for future...
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Today’s Turbulence: A Today’s Turbulence: A Foundation for Future SuccessFoundation for Future Success
David E. ColeEmeritus Chairman
Center for Automotive Research (CAR)
Leadership Detroit
November 18, 2010
David is to be returned to Italy A bit of cultural news for a welcome change!
His Proud Sponsors were Fast Food Chains…
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NASA
“Houston We Have a Problem”
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Auto
“We Have a 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
Suppliers – The Struggle Continues
All Manufacturers & Suppliers are HurtingBut, Things are Looking Up
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Pillars of EconomyPillars of Economy
Mining
Agriculture
Manufacturing
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Manufacturing Like Rodney Dangerfield –
“Don’t Get No Respect”
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Across the Land –
Amazing Level of Ignorance on Auto Industry
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The Perfect StormThe Perfect Storm
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
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 Are 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 ReductionHousehold GrowthPent-Up DemandCapacity ReductionScrappageReturn of Pricing Power
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The Challenge:
Getting to the Other Side
PALE Meeting-March 19, 2009 20
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
PALE Meeting-March 19, 2009 21
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 2014
Source: CSM Worldwide, JD Power, Inc.
Mil
lio
ns
Mil
lio
ns
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The New Break-even-
10 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
“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
Automotive Communities Program17 April 2008
Kristin Dziczek, [email protected] Bernard Swiecki, [email protected]
Center for Automotive ResearchAnn Arbor, MI
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““This is Auto”This is Auto”
““Building America’s Building America’s
Tomorrow”Tomorrow”
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The Old Business Model
is Broken
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BureaucracyPaper Linear
Slow Lean
IndividualSequential
Regional
Physical Prototypes
Job for LifeKings
Talk
Competition StructuredAcquisitions
Vertical Integration
Legalistic
Old Business ModelOld Business Model
Control
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Anti-bureaucracyPaperless Collaboration
Fast Lean Agile
Teame-enabled
Global
Virtual Prototypes
People Flow Coaches
Listen
Coopetition
Parallel
FlexibleAlliances
Virtual Integration
Trust
New Business ModelNew Business Model
Empowerment
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TimeTime
Present Business Present Business ModelModel
New BusinessNew BusinessModelModel
RealReal
DesiredDesired
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Global Integration-Global Integration-
Platforms
Components
R & D
Plants
Everything
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
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Collaboration Driven by
Resource Shortage
Natural
Financi
al
Human
Time
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KnowledgeKnowledge
The Competitive Edge
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It’s nice to be smart and rich,
but smart is more
important than rich.
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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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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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Future FuelsFuture Fuels
Petroleum
Bio
HydrogenNH3
The Answer – ?
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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 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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2 Key Developments2 Key Developments
Lithium Batteries
Cellulosic Bio Fuels
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The Invention is HereThe Invention is Here
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Developments to WatchDevelopments to Watch
Vehicle/Infrastructure Integration
Auto/Utility Integration
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Future DirectionFuture Direction
It’s All a Matter of Economics
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World ClassWorld Class
is a Moving Targetis a Moving Target