2010 Center for Automoitive Research Briefing Seminars Day One

CENTER FOR AUTOMOTIVE RESEARCH
MANAGEMENT BRIEFING SEMINARS
Traverse City – Day 1
By Steve Purdy
TheAutoChannel.com
Detroit Bureau

This is the 45th year that auto industry executives have met in Traverse City on Michigan’s beautiful northwest coast. Glaciers scoured the land thousands of years ago digging out lakes and hills that now draw tourists, fruit growers and now wineries by the score. Just once a year these often-staid engineers, business people and deep thinkers come to share thoughts and insights on an industry that has seen amazing tumult in those few decades.

Just in the few years I’ve covered the conference the auto industry has gone from boom to bust and is now struggling to get back to profitability. Last year – summer of 09 – might have been the low point for the industry but this year may be the low point for attendance here even though things are looking better. This year we have fewer booths filled with sales people touting their technology and fewer folks in the halls attending fewer seminars than I’ve ever seen.

But, like unemployment numbers coming out of a recession, perhaps the attendance here is a lagging indicator of the industry’s health overall. Just look at the news of the past few weeks. Ford is reporting substantial profits while paying down its massive debt. GM is poised and ready for a promising initial public offering. And even Chrysler is showing modest profits without any new products except the well-reviewed new Grand Cherokee. Last year at this time I don’t think many analysts would have dared predict any of those.

We start the week here with in-depth presentations from major players on the topic of “World Class Flexible Manufacturing” (italics are mine). Vice presidents from GM, Chrysler, Ford, Toyota, Johnson Controls and BMW carefully shared their systems and insights, all expounding the consensus view that being able to build a variety of products in every facility, and being able to change the product numbers at the drop of a hat, is the only way to achieve the efficiencies required to survive in the new global automotive environment.

This philosophy is really not new. Industry thinkers have talked about flexible manufacturing for some years now. BMW was a pioneer of that principal back in the early 1990s when they set up the gleaming Spartanburg plant where they started out building two vehicles on the same line and soon added a third. They’ve been in a nearly constant state of expansion there and continued to rotate products as different ones became hot in the market. Unlike many other US facilities of foreign manufacturers BMW has exported to the rest of the world much what’s produced there in South Carolina. Most foreign-owned domestic factories produce in the US just for the US market.

An example on the other side of that coin is the Atlanta, Georgia Ford plant that built the high-volume Taurus and Sable sedans. While the quality of the product and workforce were among the best in the industry, the plant had to be closed because it could not, for a variety of reasons, be converted to be a flexible manufacturing facility. Those two cars were just trim variations of the same vehicle.

There appears to be no dissension between any of the manufacturers on the basic principals involved in modernizing the factory infrastructure. Each has its own acronym for the organizational thrust to implement that philosophy but the principals are the same. Scott Garberding of Chrysler gives credit to his Fiat colleagues for the concept with which they are working. I wonder if they learned none of that from the Germans.

The guy we would think might have been a contrarian on the issue spoke inspiringly in support of the consensus. The new president of the United Auto Workers, Bob King, talked about the 180-degree turn in the historic strategies of the union but made it clear that the goals remain. He insists that the goals of organized labor are still the promotion of a universal middle class, social justice and a safe, secure work environment, but no longer would that require an adversarial relationship with the employer. This is the first time in many years – perhaps ever – that a union guy had a substantial presence here, let alone made a presentation. That’s a sign of the times and supporting evidence of the shift in philosophy.

Another big topic today revolved around the technology related to car-to-car and car-to-infrastructure connectivity. Without much fanfare the US Department of Transportation the OEMs, aftermarket folks and lots of hard scientists are working on all the ways these connections can make us safer, more productive and better entertained.

Think about it. Wireless communications can be used for all these and much, much more. It can tell us where traffic jams, accidents and even speed traps lurk waiting to spoil our day. It can help keep our car at a safe distance from other cars and can beam more cell phone, and more other communications stuff than we could even envision, right into our cars in a hands-free format. But what we’re more likely to be willing to pay for is the never-enough entertainment options.

A big problem with this technology is that there is not yet a universal or accepted format or platform. Systems are being developed around the world independently that will not be compatible. James Sayer of the university of Michigan’s Transportation Research Institute advocates an organization to monitor and guide the big-picture issues of compatibility.

If you’re looking for a business project John Waraniak of the Specialty Equipment Market Association says there are myriad opportunities developing apps and other connectivity-related products for the after market.

But my mind is boggled with all this stuff, so I’m going to give it up for today. Tune in tomorrow for more on the auto industry’s big event in Traverse City.