Outlook  For  Automo,ve  

Dennis  Cuneo  Fisher  &  Phillips  LLP    Southern  Economic  Development  Roundtable  January  24,  2014  

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  

 

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  bo\lenecks  – Adding  new  assembly  capacity  to  exis,ng  facili,es                  e.g.  Subaru,  Toyota    

•  Mexico  à  expanding    hub  for  new  auto  plants    

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                                                

                             

 

 

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)    

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  

   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  

But  the  South  faces    new  challenges  &  new  opportuni,es    as  the  auto  industry  restructures    

 

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  

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  

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.  

Another  Challenge  for  the  South  

UAW  currently  targe,ng:  – Volkswagen  Cha\anooga  – Nissan  Canton  – Mercedes  Tuscaloosa    

UAW  Campaign  At  Nissan  

 

Center  for  Automo,ve  Research  Southern  AutomoDve  Research  

Alliance      

 Iden,fying  &  Exploi,ng  Opportuni,es    Southern  Automo,ve  Industry  

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

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Participation by six states

Supporting contributions and in-kind participation by Duke Energy and various Universities & AMA’s

Southern  AutomoDve  Research  Alliance  (SARA)  

Southern  AutomoDve  Research  Alliance  (SARA)  

Opportunities to Grow Southern Auto Industry •  Expand Supply Base •  Enhance Automotive R&D in the Region

Auto Parts Suppliers Still Concentrated In Upper Midwest

Thomas Klier, Federal Reserve Bank of Chicago

Assembly

Tier 1

Tier 2

Tier 3

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  

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  

Fuel  Economy  

Source:  CAR  2013    

ConnecDvity/AutomaDon   Electronics  Safety  

Bio-­‐Based  Materials/  Fuels  

LightweighDng  

New  Automo,ve  Technology  Brings    New  Opportuni,es    

 

Porsche    

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  ba\ery  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  

Loca,on  of  Automaker  &  Supplier    R&D…Design…Engineering  

Nissan  HQ  

Other  opportuniDes???  

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