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The North American Auto Industry: An O er ie of Opport nities andAn Overview of Opportunities and Risks
Area Development ForumNew Orleans, LAJune 6, 2011,
Kim HillDirector, Sustainability and Economic Development StrategiesDirector, Automotive Communities PartnershipCenter for Automotive Research
U.S. Light Vehicle SalesPercent Change g
YTD Through March: 2011 vs. 2010
20.2Total
24.3Light Trucks
16.7Passenger
Cars
0 10 20 30Percentage Changeg g
Source: Automotive News
U.S. Market Share:YTD Through March 2011g
Units: 592,546
Units: 495,508
Units: 433,924
Source: Automotive News*Ford = Ford, Lincoln, & Mercury divisions only
No Significant Difference?Harbour’s Overall Productivity Estimates:
(St t i O ti )(Strategic Operations)1995‐2008
50.0
40.0
45.0
25 0
30.0
35.0
95 96 97 98 99 00 01 02 03 04 05 06 07 08GM 46.0 44.6 46.5 45.6 43.0 40.5 39.3 36.7 35.2 34.3 33.2 32.4 32.3 31.6Chrysler 43.0 40.5 45.5 44.3 43.6 44.8 44.3 40.6 37.4 35.9 33.7 32.9 30.4 30.2Ford 37.9 37.6 34.7 34.8 36.2 39.9 40.9 40.0 38.6 37.0 35.8 35.1 33.9 32.4
25.0
5
Toyota 29.4 29.5 31.8 30.4 31.0 31.1 31.6 32.0 30.0 32.0 29.4 29.9 30.4 32.6
Source: Harbour Reports, 1996‐2009
Recessions and U.S. Automotive Productivity1960 20101960‐2010
130
110
120
0 = 100)
90
100
110
ndex (2
000
80
90
oductiv
ity I
60
70
1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012
Pro
1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012
Automotive Productivity Index consists of SIC 3711/3714 and NAICS 3361/3363. 2000 is the base year.Source: BLS, USDOL (Employment); Ward’s Auto (Production)
U.S. Light Vehicle’ l d d iCAR’s Sales and Production Forecast
Source: CAR Research, IHS Global Insight
But It Will RecoverU.S. Vehicle Production &
Automotive Employment Forecasts900,00012,000,000
800,000
8 000 000
10,000,000
t
700,0006,000,000
8,000,000
mploymen
t
Prod
uctio
n
600,000
2,000,000
4,000,000 EmP
2007 2008 2009 2010 2011 2012 2013
Vehicle Production 10,485,1 8,455,95 5,589,27 7,592,72 8,407,26 9,064,48 9,727,94i l
500,000‐
Automotive Employment 827,900 735,300 560,100 566,400 624,600 670,800 720,000
Source: IHS Global Insight; CAR Research
Plus 700,000 jobs!
And, supports , pp5.5 million other jobs!
Assembly PlantComponents Plant
• Manufacturing • Technical services (engineering,
architecture, survey, etc.)• Waste services• Distribution, transportation and logistics• Retail trade
GMFordChryslerToyota
Components PlantRetail trade• Mgmt & admin of companies• Finance, Insurance and Real Estate• Education• Health care• Arts, entertainment and recreation• Accommodations Toyota
HondaOther AutomakersSupplier
Accommodations• Food service (Restaurants)• Repair, maintenance, personal services• Government services
Since 2010: Automaker Investments Bright, HQ & Tech Center ‐ $11MChrysler, Auburn Hills HQ‐ $152MChrysler, Sterling Heights ‐ $870MDaimler, Detroit Diesel ‐ $194MFord, Dearborn Truck ‐ $227.5M
d Li i i i $212
GMPT Bay City ‐ $75.2M
Delta Township & Grand River ‐ $227MThink, Elkhart ‐ $43.5M
Chicago Supplier Park ‐ $400M
Ford, Livonia Transmission ‐ $212.5MFord, Rawsonville Components ‐ $10MFord, Sterling Heights ‐ $425MFord, Wayne Assembly/Stamping ‐ $521MFord, Windsor Essex Engine Plant ‐ $420MGM, Brownstown Battery ‐ $40M
Flint South Engine ‐ $138M
Belvidere Assembly ‐ $600M
g pp
Anna Transmission
Coda Battery
GM, Hamtramck Assembly ‐ $120MGM, Orion Assembly ‐ $145MGM, Pontiac EngineeringGM, Warren Technical Center ‐ $120MHyundai/Kia, Research CenterSaab, Royal Oak HQ ‐ $2.4M
Kokomo ‐ $1.19B
Subaru, Lafayette ‐ $81M
B df d F d $111M
Allison Transmission ‐ $23.5M
Coda BatteryToyota, Engineering and Manufacturing
Tonawanda Engine ‐ $825M
Etobicoke Casting ‐ $27.2M
Bedford Foundry ‐ $111M
Fairfax Assembly ‐ $136M
St. Catharines GMPT ‐ $480M
Sharonville Transmission ‐ $320M
Defiance Foundry ‐ $186.2M$17 billion U.S.
$11 Billion in Great Lakes
Dundee Engine ‐ $150M
Spring Hill ‐ $483M
Sharonville Transmission $3 0M
Nissan, Smyrna ‐ $1.7B
Detroit Three Manufacturing PlantsIngersoll Assembly (GM)
Total U.S. Detroit Three Employment (12.31.09): 177,417
Brampton Assembly
Oshawa Assembly 1 & 2 (GM)Windsor Engine
Windsor Transmission (GM)
Oakville Assembly (Ford)St. Tomas Assembly (Ford)
Twin Cities
Buffalo StampingLockport and Rochester Delphi
Next Slide Windsor Assembly
Oshawa Metal Center (GM) Cambridge Engine (Toyota)
Windsor Transmission (GM)
Tonawanda Engine
Belvidere Assembly
Toledo North Assembly
Toledo Transmission
Ohio Assembly (Avon Lake)Lordstown Assembly And Metal Center
Assembly
Kenosha Engine
Twinsburg Stamping andParma Components & Metal
Cleveland Engine & Casting
Baltimore TransmissionChicago Stamping and Assembly
Toledo Supplier Park &Toledo Machining
Parma Components & Metal
Marion Metal Center
Defiance GMPT Foundry
Walton Hills Stamping
L i ill A bl
Fairfax Assembly & Stamping
Kansas City Assembly 1 & 2 Fort Wayne
Sharonville TransmissionMoraine Engine Plant 2
Lima Engine
Bedford FoundryIndianapolis Metal Center
y
Bowling Green Assembly
Louisville Assembly
Kentucky Truck Assembly
Spring Hill Assembly & StampingSpring Hill Engine
Arlington Assembly
Wentzville Assembly & Stamping
Kansas City Assembly 1 & 2 Fort Wayne Assembly
Indiana Transmission Plant 1 & 2Kokomo Transmission &
Castings/Kokomo Delphi GMShreveport Stamping & Assembly
International Automotive Manufacturing Plants
East Liberty Assembly
Marysville Assembly
Anna EngineRussell’s Point
Buffalo TransmissionMuncie Transmission
Total U.S. International OEMs Employment:(12.31.08) 107,488
Cambridge Engine
Cambridge North & SouthAssembly (Toyota)
Woodstock Assembly (Toyota)
Greensburg Assembly
Georgetown 1 & 2 Assembly
Lafayette Engine
Georgetown Engine
Buffalo Engine
Transmission
Buffalo Transmission
Buffalo Transmission
(Toyota)
Normal Assembly
Lafayette Assembly
Princeton East & West AssemblyChattanooga Assembly
Buffalo Engine
Columbus Engine Volvo Powertrain
St. Louis Stamping
Spartanburg AssemblySmyrna & Smyrna Truck Assembly
Decherd Engine
Smyrna Engine Raleigh Transmission
Greenville Transmission
p g
Troy Casting
Mt. Holly AssemblyJackson Foundry
West Point AssemblyTupelo Assembly
S A t i A bl
Decherd Engine
Huntsville EngineGainesville Transmission
Tallapoosa Transmission
Long Beach Engine
West Point Transmission
Ladson Assembly
Tuscaloosa Assembly 1 & 2Lincoln Assembly
Montgomery AssemblyCanton Assembly
San Antonio AssemblyLincoln Engine
Montgomery Engine
West Point Transmission
Automotive Community Partnership / Center for Automotive Research ‐ June 2010
Energy: Three Main Issues
• Energy Efficient TransportationEnergy Efficient Transportation– Investments both private and public
• Industry’s Energy Demands and SourcesIndustry s Energy Demands and Sources– Where does it come from and how– Greening the manufacturing supply chainGreening the manufacturing supply chain
• Supply Chain and Disruptions– Transport costs and fuelsTransport costs and fuels– Lessons from the earthquake: rethink globalization?
Energy Efficient VehiclesEnergy Efficient Vehicles• ICEs
– Remarkable strides toward efficiency• Electric
– clean until you factor in source of electricity y y• Diesel
– 30% more efficient (GHG), but low‐level smog (NOX, SOX)• Fuel‐cell• Fuel‐cell
– 20 years away (always)• CNG
D ti f f l f ki d li– Domestic source of fuel, fracking, delivery• Other fuels and technologies
– Biofuels—plentiful but divert from food chain• Which to invest in?
Average Real Gasoline Price* and Detroit 3 U.S. Market Share1970 20101970‐2010
90
$4.00
80
90
$3.00
$3.50
reon
70$2.00
$2.50
e M
arke
t Sha
r
e pe
r Gallo
50
60
$1.00
$1.50
Perc
enta
ge
Gas Pric
40$0.00
$0.50Average Yearly Price per Gallon of Gas
Detroit 3 Yearly Market Share
Months*Gas prices expressed in 2011 USD
Retail Hybrid Registrations by State per 10,000 Residents (2007‐2009)( )
48.244.5 41.1
39.145.5
54.1( C)
41.2
36.5
38.6
43.3 (DC)
Registrations perRegistrations per 10,000 Residents
35.0
Government‐Industry Partnerships
Clean Cities• Nearly 90 local coalitions• Over 6,500 public and private stakeholders• $300 million in 25 cost‐share grants from ARRA
The EV Project• DOE award of $99.8 million (plus $15 million added later)• Project worth $230 million• Project worth $230 million• Cities in 6 states plus D.C.• 6,000 LEAF EVs plus Chevrolet Volts, 15,000 charging stations
ChargePoint America• $37 million program$3 o p og a• Will install 5,000 charging stations (220 volt), public and private
A DisconnectA Disconnect
• Comparatively little support for:Comparatively little support for: – Advanced dieselCNG– CNG
– Fuel cellAlt ti f l– Alternative fuels
’ f f h l• Lot’s of support for anointed technology
Tsunami Effects on Global Supply Chains?
• Impact is hitting N.A. now. . . Last all summer• 30 000 parts to build a car:• 30,000 parts to build a car:• Consolidation of suppliers increases risk• Globalization increases risk• Part‐sharing in design increases risk• Non‐auto suppliers increase risk• China doesn’t decrease risk . . .• Regional products should contain close to100% regional content• Global products should contain back‐up sourcing –not regional sole sourcingsole sourcing
• Relocalization makes sense• De‐consolidation of supply base may make sense• This will cost a lot – opportunities?
Toyota says…Toyota says…
• Won’t return to pre‐earthquake levels until end of yearp q y• 50% utilization in Japan, 40% overseas
– Suppliers hit hard• Cutting production at N.A. plants by 75% over 6 weeks to save parts made in Japan
• Production expected to increase beginning in July• Production expected to increase beginning in July• Overseas, not until August• Toyota: Shortages of 150 critical partsToyota: Shortages of 150 critical parts• “We need to procure more parts overseas, ..urge suppliers to make more…outside Japan”
Internationals…Internationals…
• Toyota and other international manufacturersToyota and other international manufacturers ship a large portion of vehicles overseas
• JIT very low inventories exacerbate problem• JIT, very low inventories, exacerbate problem of global supply chainsT ill di if l b• Toyota will diversify supply base
• Energy supply in Japan a huge concern• Ditto, Nissan and Honda
Automotive TechnologyAutomotive TechnologyWhere is the white space (gaps)?• Alternative fuels• Alternative powertrains (beyond batteries)Alternative powertrains (beyond batteries)• Bio‐materials
Li ht i ht t i l• Lightweight materials• Vehicle connectivity, communications and
driver assistance• Systems and other vehicle electronics
ConclusionsConclusions
•Sales/Production/Employment will increase as•Sales/Production/Employment will increase aseconomy slowly improves•Vehicles fleet at record age – replacementg psales must happen•Opportunities to attract suppliers—mitigate risks of interrupts, fuel costs and currency issues.•Cost‐conscious industry—like never before•Technology and productivity have made U S attractive•Technology and productivity have made U.S. attractive place to build and export advanced manufacturing goods•New technology vehicles will provide opportunities forNew technology vehicles will provide opportunities for many years ahead