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

It’s All About Product

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

300,000 jobs!

Assembly PlantC t Pl tGMFordChrysler

Components Plant

ToyotaHondaOther Automakers

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

Locations of Electric Charging and Hydrogen Fueling Stationsg

StationsStations

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

Globali ation?Globalization?

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