2014 South Carolina Automotive Summit New Directions Dr. Jay Baron President & CEO Center for Automotive Research February 19, 2014
Name a product … ? • Which consists of nearly 30,000 parts, • Can be assembled at the rate of 1 per minute, • 16 hours a day - 200 days a year • Runs for several years, most of the time without a single manufacturing defect? • Is from the largest manufacturing sector in the U.S. economy. This accomplishment by the auto industry to execute mass production has become the norm.
Manufacturing Efficiency Excellence is now the Standard Taiichi Ohno: Toyota Production System Global Supply Chains Flexible Manufacturing & Industrial Robotics Global Platforms Digital Engineering & Manufacturing Interchangeability
Average Vehicle Age Average Age of the Light-Duty Vehicle Fleet 11.5 11.0 10.5 10.0 9.5 Average Age in Years 9.0 8.5 8.0 7.5 7.0 6.5 6.0 1970 1975 1980 1985 1990 1995 2000 2005 2010 Vehicle quality and reliability have risen steadily
New Vehicle Price Changes (YOY Change)
Automotive Impact – 50 States (why states want the auto industry in their backyard) • 8 million private sector jobs • $500 billion annual compensation • $70 billion personal tax revenue U.S. automotive industry’s total U.S. operations, including: • Vehicle development • Production • Parts manufacturing • Sales and service of new vehicles Source: CAR 2010
Distribution of the North American Automotive Industry Estimated 470 automaker facilities, and 7585 supplier facilities in the United States 2012 Source: CAR / BLS 2012
Southern Automotive Research Alliance (SARA) The Southern Automotive Research Alliance (SARA), administered by CAR will examine the critical success factors necessary for continued global automotive investment growth within the southern U.S. automotive manufacturing region. This study will seek to address the common challenges and identify actionable recommendations in order to attract new foreign investment.
Southern Automotive Research Alliance (SARA) Alabama Kentucky Louisiana Mississippi South Carolina Tennessee
Announced Automaker Investments in the SARA Region and Mexico: 2011-2013 GM, Spring Hill - $443M Ford, Louisville - $621M Investment Totals Nissan, Decherd - $50M Toyota, Georgetown - $392M South: $6,176 Million Toyota, Huntsville - $230M GM, Bowling Green - $135M Mexico: $9,476 Million Honda, Lincoln - $373M VW, Roane - $40M Mercedes, Vance - $2,070M BMW, Spartanburg - $900M Hyundai, Montgomery - $173M Elio, Shreveport - $100M Hyundai, Tijuana - $131M Toyota, Pendergrass - $350M Ford, Hermosillo - $1,300M GM, Roswell - $26M Nissan, Canton - $73M Chrysler, Saltillo - $1,249M Kia, West Point - $100M Porsche, Atlanta - $100M GM, San Luis Potosi - $251M Nissan, Aguascalientes - $2,057M VW, Silao - $118M Free Trade Agreements GM, Silao - $549M Honda, Celaya - $1,270M United States Mexico Mazda, Salamanca - $500M (14 FTAs, 20 Countries) ( 13 FTAs, 45 Countries) Automotive • • NAFTA NAFTA Compensation • • CAFTA EFTA GM, Toluca - $751M • • Agreements with Northern Triangle (Hourly) • VW (Audi), San Jose Chiapa - $1,300M Australia, Bahrain, Agreements with USA: $37.38 (2012) Chile, Columbia, Central America, Sources: CAR, BLS, CRS, USTR, SICE Israel, Jordan, Korea, Chile, Colombia, MEX: $7.79 (2012) Morocco, Oman, Costa Rica, European Peru, Singapore, and Union, Israel, Japan, Panama Nicaragua, Peru, and Uruguay
What Companies Want: SARA – Highlights • Mexico: pros and cons • Growth opportunities: capacity • Tooling • Decision making – Global, U.S., North/South – Need for speed – non-political entity in south • Costs - Incentives, training, taxes, • Workforce – Work skills – Pipeline, internships • R&D - Synergies, basic (home) vs. development (de-centralized)
Challenge: Logistics emerging as a primary factor for location decisions • Developing and enhancing freight and logistics industries has become a leading edge economic development strategy • Added network capacity has not kept pace with demand for trade • Over the past 30 years, highway miles have increased by 5% while VMT has doubled; rail line track has decreased by 35% though railroads haul 70% more freight than trucks haul • Other parts of the country are planning or already operating logistics hubs • The Alliance (Texas) • Columbus Heartland Corridor – Norfolk Southern Rickenbacker Intermodal Terminal • North Baltimore, Ohio – CSX Northwest Ohio Terminal • Will County, Illinois – CenterPoint Intermodal Center • Kansas City – BNSF Intermodal and Logistics Park Source: Gateway Cities Council of Government
Automotive Innovation Old News: • Quality products • Manufacturing efficiency • Cool products • Competitive costs • Economic development • Technology generator What’s coming next ?
Historical Trends: Horsepower, Weight and Fuel Economy • Fleet Average (approx.): Comfort/convenience (music, powered accessories) • 1980: 23 mpg • Safety (crashworthiness, airbags) • 2012: 28 mpg • Emissions reduction • Increased power
Volcanic Eruption of Epic Proportions
Powertrain Technology Dilemma • New Technologies = Huge Risk • Ironically, there are too many technology options CAFE & Safety driving innovation Goal: 0 fatalities due to crash Mobility concerns (congestion)
Non-Compliant Vehicle Fleets (CAFE) • A fleet is defined as domestic 25 passenger car, import passenger car, or light truck for a manufacturer 20 • Credits earned through 15 compliant fleets may be used to offset non-compliant fleets 10 • Credits can be carried forward or 5 backward from the MY 0 • Credits can be sold from one MY MY MY MY MY MY 2008 2009 2010 2011 2012 2013 manufacturer to another
The New Big-3 Technology Shock ! Potential growth of 100,000 jobs for mobility by 2025 Materials Powertrain Connectivity
Growth in Electronics (>40%) An average vehicle contains around 60 microprocessors to run electric content – four times as many as a decade ago. More than 10 million lines of software code run a typical vehicle’s sophisticated computer network.
Intelligent Mobility
Convergence and Automated Vehicle Forecast • Significant research for 5 years • Converged applications using both sensors and communications more likely in 10 years • Automated vehicles likely in 10 to 20 years Source: CAR, 2012
Lightweighting Material Architectural Strategy Ford 2015 F-150 All technology pathways anticipate lightweighting Aluminum body & bed Steel frame The “monolithic” car with one dominant material is: – Easier to design, and – Easier to manufacture, but – Not optimum for reducing mass and cost • • • Future Steel Vehicle Aluminum Intensive Composite Car - 55% reduction in body mass – – 35% reduction in body mass 45% reduction in body mass Source: Center for Automotive Research
Mass Reduction Cost of Competing Material Implementations • Small levels (1%) of mass reduction may be achieved through material substitution at little to no cost penalty • 20% mass reduction potential with AHSS BIW structure and Al closures and chassis • 25% mass reduction is possible with an aluminum intensive vehicle – Largest potential for mass reduction is in BIW and closures • CFRP BIW structures combined with aluminum can achieve a 35% reduction in vehicle mass – CFRP at today’s price (~$12 per pound) comes at a considerable cost penalty – A reduction of CF price (~$5 per pound) could present an opportunity for CFRP (excluding manufacturing constraints) NOTE: Assumes no reduction in vehicle size Source: Center for Automotive Research
Lightweighting High Strength Steel, Aluminum & Composites Take on the Heavyweights
Key Material Trends (Next 10 years) • Increased use of ultra high strength steel for structural components around the “safety cage” to prevent intrusion • Aluminum use for chassis and exterior panels is increasing • Fiber reinforced plastics (glass and carbon) for structural components are still several years away from high volume production Structural Adhesive • Joining complexity: more laser welding, fasteners and adhesives
Powertrain Diversity and Convergence future today evolving (electric) gasoline gasoline HCCI EV / range extender gasoline diesel diesel EV (battery / EV - battery fuel cell) diesel Alternative fuels Alternative fuels EV / fuel cell hybrid hybrid EV / range extender HCCI = homogeneous-charge compression ignition Source: Robert Bosch LLC 26
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