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Today’s Turbulence: A Today’s Turbulence: A Foundation for Future SuccessFoundation for Future Success
David E. ColeChairman
Center for Automotive Research (CAR)
NASACT Annual Conference
Ritz-CarltonDearborn, Michigan
August 17, 2009
TitleDate
2
NASA
“Houston We Have a Problem”
TitleDate
3
Auto
“We Have a Problem”
Mostly Revenue –
with Depression Level of Sales
TitleDate
4
Pillars of EconomyPillars of Economy
Mining
Agriculture
Manufacturing
TitleDate
5
Manufacturing Like Rodney Dangerfield –
“Don’t Get No Respect”
TitleDate
6
Across the Land –
Amazing Level of Ignorance on Auto Industry
TitleDate
7
The Perfect StormThe Perfect Storm
Benefits
Hyper Competition
Competent New Players: China, India, …
Auto Industry
Tools
Materials
Policy
Money
TitleDate
8
Auto Industry of the FutureAuto Industry of the Future
A World of
Vanishing Boundaries
TitleDate
9
Energy
Policy
Money
Survival
Key Contemporary IssuesKey Contemporary Issues
TitleDate
10
Economic Contribution of the Economic Contribution of the U.S. Automotive IndustryU.S. Automotive Industry
TitleDate
11
Auto ManufacturingAuto Manufacturing
Manufacturers . . . . 332,000 + jobs
Parts Suppliers . . . . 544,000 + jobs
R & D Spending . . . $16 + billion
Source: BLS, NSF *includes NAICS 3361, 3362
TitleDate
12
Economic Contribution Per JobEconomic Contribution Per Job
Auto Mfr. $329,000
Average Job $112,000
Source: U.S. Census Bureau Annual Survey Manufacturers 2005
TitleDate
13
Economic MultiplierEconomic Multiplier
Auto Manufacturers – 7.5
Auto Parts Supplier – 5.7
TitleDate
14
We Are Swimming a River
That is Getting;
Faster, Deeper, & Wider
But!
TitleDate
15
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
PALE Meeting-March 19, 2009 16
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 17
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
PALE Meeting-March 19, 2009 18
US Light Vehicle Sales Forecast
10,000
12,000
14,000
16,000
18,000
20,000
2008 2009 2010 2011 2012 2013 2014 2015 2016
Th
ou
san
d U
nit
s
10,000
12,000
14,000
16,000
18,000
20,000
Th
ou
san
d U
nit
s
High Low
Last update: Mar 17 2009
19
The Challenge:
Getting to the Other Side
TitleDate
20
Failure of a Major OEM Failure of a Major OEM Would be a National DisasterWould be a National Disaster
2+ Million Job Loss
$100+ Billion Tax Impact
Prevention < $50 Billion
TitleDate
2121
First year:
2.5 to 3.0 million jobs
LOST
50 to 100 Percent 50 to 100 Percent Detroit Three Shutdown Detroit Three Shutdown
TitleDate
2222
After three years:
$275 to $400 billion personal income
$110 to $160 billion tax receipts
LOST
50 to 100 Percent 50 to 100 Percent Detroit Three Shutdown Detroit Three Shutdown
TitleDate
23
“Ounce of Prevention is
Worth a Pound of Cure”
TitleDate
24
Beware: The Aging of the Boomers.
TitleDate
25
DemographicsDemographics
Consumer Behavior
Socio / Political
Health Care
Skilled Workers
World Issue
“Boomers go Boom”
TitleDate
26
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
TitleDate
28
Success Requires Improvements in:Success Requires Improvements in:
Cost
Revenue
Agility
Innovation
TitleDate
29
The Old Business Model
is Broken
TitleDate
30
BureaucracyPaper Linear
Slow Lean
IndividualSequential
Regional
Physical Prototypes
Job for LifeKings
Talk
Competition StructuredAcquisitions
Vertical Integration
Legalistic
Old Business ModelOld Business Model
Control
TitleDate
31
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
TitleDate
32
TimeTime
Present Business Present Business ModelModel
New BusinessNew BusinessModelModel
RealReal
DesiredDesired
TitleDate
33
Global Integration-Global Integration-
Platforms
Components
R & D
Plants
Everything
One Company World-wideOne Company World-wide
TitleDate
34
Value of Global Economies of
Scale are Huge
TitleDate
35
Lean / AgileLean / Agile
Investment
Engineering
Manufacturing
Everything
TitleDate
36
Collaboration Driven by
Resource Shortage
Natural
Financi
al
Human
Time
TitleDate
37
KnowledgeKnowledge
The Competitive Edge
TitleDate
38
It’s nice to be smart and rich,
but smart is more
important than rich.
TitleDate
39
Customer Pull
Cars and Trucks
Productand
Process
Technology Push
TitleDate
40
TimeTime
KnowledgeKnowledgeApplicationApplication
KnowledgeKnowledge
Competitive Competitive AdvantageAdvantage
InnovationInnovation
TitleDate
41
Auto TechnologyAuto Technology
At the edge of a revolution?
TitleDate
42
Future Power Plants Future Power Plants
Gasoline
Diesel
Hybrid
Fuel Cell
The Answer – ?
TitleDate
43
Coming Fast – Plug-in, Coming Fast – Plug-in, Series HybridsSeries Hybrids
ororExtended RangeExtended RangeElectric VehiclesElectric Vehicles
TitleDate
44
Future FuelsFuture Fuels
Petroleum
Bio
Hydrogen
The Answer – ?
TitleDate
45
Future Gasoline Price –
$ 1.50 – $ 5.00 /gallon
TitleDate
46
Old Carbon Fuels Will ContinueOld Carbon Fuels Will Continueto be Used if they are Economicto be Used if they are Economic
TitleDate
47
2 Key Developments2 Key Developments
Lithium Batteries
Cellulosic Bio Fuels
TitleDate
48
Developments to WatchDevelopments to Watch
Vehicle/Infrastructure Integration
Auto/Utility Integration
TitleDate
49
Future DirectionFuture Direction
It’s All a Matter of Economics
TitleDate
50
World ClassWorld Class
is a Moving Targetis a Moving Target
TitleDate
Upcoming CAR EventsUpcoming CAR Events
October 19-21, 2009–
The Business of Plugging In. A Plug-in Electric Vehicle Conference, Detroit, Michigan
Additional information available at CAR’s website www.cargroup.org
51