C.A.R. Management Briefing Seminars 2013 - Day Three

CENTER FOR AUTOMOTIVE RESEARCH
MANAGEMENT BRIEFING SEMINARS DAY THREE

By Steve Purdy
Photos By Bob Benko
The Auto Channel
Michigan Bureau

Wednesday morning is always a highlight of the week at the Management Briefing Seminars - the traditional time for Michigan’s governor to address the assembled industry. We snagged a front row seat as Rick Snyder “one tough nerd,” as he billed himself during the campaign, could barely contained his enthusiasm for what his administration has done to “reinvent Michigan.” Snyder is the only CPA among the nation’s governors and an unrepentant semi-partisan Republican. As an uber-successful businessman in IT and tech fields he has a much different approach to politics than one might expect.

He talked about eschewing national interviews and international travel his first few years as he concentrated on getting a few crucial problems solved – redesigning, not massaging, the business tax structure among other things. Now he’s out and about – Asia, Europe and all over the U.S. promoting the state and recruiting business investment.

From the beginning, though, and even now, his first priority is on “gardening” rather than “hunting,” meaning that he first wants to be sure Michigan’s existing businesses are happy and successful before he goes outside the state to lure others. He euphemistically calls the citizens and businesses of Michigan, his “customers.” Snyder, unlike many others, sees a major roll for “making things,” that is manufacturing, in Michigan’s future.

Few issues have been more divisive or potentially more impactful on Michigan’s economy than what he calls the “freedom to work issue.” Most call it the “right to work,” and it involves the protection of union rights to organize and bargain with employers. Whether that will bring more jobs to the state is yet to be seen but it will certainly depress wages. While he supported the concept he did not make it a priority until his lame-duck conservative legislature popped it into their agenda with his acquiescence.

Governor Snyder jumped right into a discussion of Detroit’s bankruptcy, an issue that dominates the world’s perception of Detroit. The ever-optimistic Snyder sees this as the last hurdle to the city’s renaissance that has already begun. Investors are already buying up premium properties at bargain prices and youngsters are moving in and rejuvenating small areas within the city. With the bankruptcy plan scheduled to be ready for review by the federal court by the end of the year we could begin to see progress in Detroit’s recovery very quickly, he opines.

We spent a couple of paragraphs yesterday on VW’s diesel mileage record and diesels generally, then later learned VW announced an all new 2.0-liter diesel they plan to have in next year’s Golf, Jetta, Passat and Beetle. With a modest increase in horsepower and a solid 236 pound-feet of torque it will be both cleaner and more fuel-efficient than their current engine. This ought to cement VW’s leadership in passenger car diesels in the U.S.

We find the discussion of alternative powertrains endlessly fascinating. We’re still hearing that hydrogen fuel cells are at least 10 years away, which is exactly what we have been hearing for the past 20 years. Advanced batteries are still on the cusp of a breakthrough. We’ve heard that for at least 10 years here as well. But one fun tidbit we heard today is the prediction that electric and hybrid vehicles will increase by almost a third in the next three years. If you look closely you’ll see that is still a very small number. A big increase in a small number is still a small number. Hybrids and EVs will continue to have an unattractive payoff period for many years to come, we predict.

Honda announced here today they will invest another $250 million in and around their Marysville, Ohio plant. In addition to expanding transmission and engine production and a new training center, they plan a heritage center to highlight that Japanese company’s over 30-year history in northern Ohio. We love automotive history and look forward to seeing how they tell the story of Honda in the U.S. This contributes to the total of $2.7 billion they’ve invested in Ohio in the past three years including preparations to produce the much-anticipated new NSX next year.

We’ve had a number of discussions this week with experts and analysts about the pace of advancement in vehicle to vehicle and vehicle to infrastructure technology as well as how our automobiles will facilitate our connections with the Internet. I compare that with the implementation of the data recording “black box” in most cars today. Both are examples of how the technology is way ahead of its legal and ethical use. For example, even though we’ve had event data recorders for decades we still don’t know who owns the data.

Perhaps the best quote of the day came this morning when CAR CEO Jay Baron was introducing the governor. He was talking about the social challenges of nerds in college and how the available college girls used to say that in the engineering school “the odds are good, but the goods are odd.”