The Outlook for Automotive
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Dennis Cuneo delivered a speech at the 2014 Southern Economic Development Roundtable describing the outlook for the automotive industry. This is the powerpoint presentation. He goes on to focus exclusively on the Southern Automotive Industry, using research from the Center for Automotive Research (CAR) and the Southern Automotive Research Alliance (SARA).
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The Outlook for Automotive
- 1. Outlook For Automo,ve Dennis Cuneo Fisher & Phillips LLP Southern Economic Development Roundtable January 24, 2014
- 2. US ProducDon Vehicles (million) CumulaDve Increase 2009 5,611,800 2013 11,000,000 E +5,388,200 US Light Vehicle Produc,on Doubled Since Recession Source: United States Auto report, BMI 5.4M incremental vehicles ! Equivalent 27 assembly plants
- 3. Why No New U.S. Assembly Plants? • Automakers focused on using & expanding exis,ng capacity – 3 shiX opera,ons (adds 33% capacity) – Investments to eliminate bolenecks – Adding new assembly capacity to exis,ng facili,es e.g. Subaru, Toyota • Mexico à expanding hub for new auto plants
- 4. Auto Assembly Geography 1980: 5 companies à assembled vehicles in 21 states • Midwest (MI, OH, IN, MN, WI, IL, MO, KS, PA) • East & West Coast (CA, MA, NY, NJ, DE, MD) • South (VA, GA, OK, LA, TX, KY) Today: 13 companies à assemble vehicles in 13 states • Coastal states (CA, NY, NJ, MA, MD, DE) losers • Several Southern States (TN, AL, MS, SC, KY, TX) winners • But other Southern States (VA, GA*, OK, LA) losers * GA lost 3 plants, gained 1
- 5. Southern Assembly Plants Closed Over Past 2 Decades • GM Shreveport (2012) • GM Doraville (2008) • Ford Norfolk (2007) • GM OKC (2006) • Ford Atlanta (2006) • GM Lakewood (1990)
- 6. 3 decade shiX to “Auto Alley” Detroit 3 pulled back to upper Midwest core Foreign automakers built new plants along I-‐65/ I-‐75 corridor: Canada to South
- 7. But There Are New Challenges As Well As New Opportuni,es For the Southern States South Emerged As Major Automo,ve Manufacturing Hub For Foreign Automakers 2 decades of Investment by Foreign Automakers Source: Thomas Klier, Federal Reserve Bank of Chicago
- 8. But the South faces new challenges & new opportuni,es as the auto industry restructures
- 9. Canada $3.2 billion Total $51.7 billion U.S. Great Lakes $23.9 billion United States $35.8 billion Mexico $12.7 billion South $8.2 billion U.S. Great Lakes includes: IL, IN, KY, MI, MO, and OH South includes: AL, FL, GA, MS, SC, TN, and TX North American Automaker Investments 2010-‐2013 Source: CAR Research, Book of Deals
- 10. Since the Great Recession Mexico Has Outpaced U.S. Southern Region 24 month comparisons Oct 2010 – Sept 2012 * States include TN, MS, AL, GA, NC, SC, FL & TX Mexico • More trade agreements • Cheaper labor • Growing Parts Infrastructure Automaker investments in Mexico 2010 – 2013 $12.7 billion Automaker Investments in Southern States 2010 – 2013 $8.2 billion What does the future hold? Map Source: Thomas Klier, Federal Reserve Bank of Chicago
- 11. New Assembly in Mexico • Nissan, Honda, Audi, Mazda, (w Toyota produc,on) building new plants. • Chrysler, Ford, GM adding capacity at exis,ng plants. • BMW & Hyundai reportedly in talks with Mexican government. • Volkswagen: majority of $7B NA investment in Mexico.
- 12. Another Challenge for the South UAW currently targe,ng: – Volkswagen Chaanooga – Nissan Canton – Mercedes Tuscaloosa
- 13. UAW Campaign At Nissan
- 14. Center for Automo,ve Research Southern AutomoDve Research Alliance Iden,fying & Exploi,ng Opportuni,es Southern Automo,ve Industry
- 15. 1. Alabama 2. Kentucky 3. Louisiana 4. Mississippi 5. South Carolina 6. Tennessee - - - - - - - - - - - - - - - - - - - - - - - - - • Duke Energy • CU-ICAR • University of Alabama • AAMA • MAMA • SCMA • TAMA • GAMA Participation by six states Supporting contributions and in-kind participation by Duke Energy and various Universities & AMA’s Southern AutomoDve Research Alliance (SARA)
- 16. Southern AutomoDve Research Alliance (SARA) Opportunities to Grow Southern Auto Industry • Expand Supply Base • Enhance Automotive R&D in the Region
- 17. Auto Parts Suppliers Still Concentrated In Upper Midwest Thomas Klier, Federal Reserve Bank of Chicago
- 19. Includes Alabama, Georgia, Mississippi, North Carolina, South Carolina, and Tennessee. Source: CAR 2010 Includes: Illinois, Indiana, Michigan, Ohio, Pennsylvania, and Wisconsin Opportunity Less Lower Tier Supplier Jobs in the South
- 20. Job Impact US MS Outside MS Region Outside Region Direct 2000 2000 -‐-‐-‐ 2000 -‐-‐-‐ Supplier 5133 1857 3276 2603 2530 Total Direct +Supplier 7133 3857 3276 4603 2530 Spin-‐off 8680 1713 6967 3871 4809 Total (Direct + Supplier+ Spin-‐off) 15,813 5570 10,243 8474 7339 Es,mated Impact Toyota Tupelo Assembly Plant Source: Center For Automo,ve Research: “ContribuXon of Toyota To the U.S. in 2010” Opportunity 46% out-‐of-‐region jobs Opportunity 65% out-‐of-‐state jobs
- 21. Fuel Economy Source: CAR 2013 ConnecDvity/ AutomaDon Electronics Safety Bio-‐Based Materials/ Fuels LightweighDng New Automo,ve Technology Brings New Opportuni,es Porsche
- 22. High-‐Tech Automo,ve Systems Next genera,on high strength steels Foamed metals Aluminum and magnesium alloys Corrosion protec,on Bio-‐based materials Advanced plas,cs and composites Mold in color/Films/Other for plas,cs Alterna,ve automo,ve trim cover insert and/or bolster fabrics Recycled low cost filler materials Coa,ng technology Non-‐destruc,ve tes,ng methods Robo,cs simula,on soXware Forming high strength steels New laser technology for trimming, piercing and cupng New joining technologies Tool rapid hea,ng and cooling Mul,-‐material joining technologies Low cost fine blanking alterna,ves Materials and Processes Powertrain and Fuels Connected Vehicles Gasoline direct injec,on Turbochargers and superchargers Dual-‐clutch transmissions Higher-‐speed automa,c transmissions (8-‐ or 9-‐speed) Con,nuously variable transmissions Vehicle electrifica,on: motor assist, hybrid electric vehicles, plug in hybrid electric vehicles, extended range electric vehicles, or baery electric vehicles Alterna,ve fuels: natural gas, biofuels (E85 and B20), and hydrogen Dedicated Short Range Communica,ons (DSRC); 3G, 4G, LTE Cellular; Wi-‐Fi; Bluetooth; and Global Posi,oning System Infotainment (e.g. Sync, Uconnect, and Cue) Human machine interface Collision warning and avoidance Lane departure warning Blind spot and pedestrian detec,on Road condi,on and event no,fica,on Adap,ve route guidance with real-‐ ,me traffic informa,on Signal phase and ,ming Tolling and E-‐payment Loca,on-‐based services Efficiency monitoring and carbon footprint accoun,ng Infrastructure investment planning and condi,on monitoring Fleet management Prognos,cs and diagnos,cs Advanced Driver Assistance Radar, light detec,on and ranging (LiDAR), and cameras Forward collision warning systems Automa,c emergency braking and steering Back-‐up and rear-‐view assistance systems Lane departure and lane-‐keeping assistance systems Adap,ve cruise control and adap,ve cruise control with lane-‐keeping Blind spot and pedestrian detec,on systems Parking assistance and automated parking systems Adap,ve headlights and adap,ve high beams Source: CAR 2013
- 23. Loca,on of Automaker & Supplier R&D…Design…Engineering Nissan HQ Other opportuniDes???