The Center for Automotive Research (CAR), a nonprofit research organization in Ann Arbor, Michigan, conducts a wide range of studies related to the automobile industry. David E. Cole, chairman and founder of CAR, discusses the various challenges facing the state’s carmakers, as well as emerging strategies for addressing them. The interview was conducted by Mott Communications Officer Duane Elling.
Mott: How would you describe the current climate of the U.S. auto industry?
David Cole (DC): What we’re seeing is the sector’s “perfect storm.” The costs associated with producing vehicles — manufacturing materials, factory upgrades, technology, wages and benefits, and so on — continue to climb. Furthermore, rising fuel prices are reducing the demand for the domestic manufacturers’ most profitable vehicles. Finally, the inflation-adjusted price of cars and trucks has actually declined for nearly 10 years, which means that auto manufacturers and suppliers — not consumers — are absorbing the higher costs.
These forces have left many companies struggling, leading some to downsize their operations and even eliminate jobs. The implications are especially troublesome in Michigan, where many families and communities have historically relied on the auto industry for their livelihood.
Mott: What can be done to improve that climate?
DC: First, reduce the cost disadvantages for domestic manufacturers, particularly expenses related to health care benefits and excess manufacturing capacity. Next, redouble our efforts to build quality products that both meet consumers’ needs and are profitable for the manufacturer.
Finally, create an educated workforce that understands the challenges facing the industry and has the skills to be a part of its future.
Mott: How is CAR helping address these goals?
DC: One route is our Program for Automotive Renaissance, or PAR, which focuses on building cooperation and collaboration within the auto industry.
We believe that, by working together, manufacturers and their suppliers can position themselves — and the state — to compete in the global economy. We also believe that doing so will be key to the future of the industry and of Michigan residents.
Mott: There are nine unique initiatives under the PAR umbrella. Could you discuss a few of them?
DC: One is the Global Automotive Marketing Alliance, which we’ve launched with the support of Mott.
The strategy is fairly straightforward. Several small auto parts suppliers pool their resources to access new processes and technologies that might otherwise be out of reach. This reduces their individual costs and increases their productivity, giving each a competitive edge. The big carmakers who buy their parts take notice, which can lead to increased business for the small manufacturers and, ultimately, greater stability for their employees and communities.
The Program for Automotive Labor Education is another important initiative launched with Mott’s help. As technology and manufacturing processes have changed, so too have the skills required of workers. This program is bringing together leaders from Michigan’s auto industry and educational systems — K through 12, as well as colleges and universities — to identify those skills and develop new models for training and certification to ensure the future needs of the industry, and the new workforce, are met.
Mott: What are the potential barriers to reaching these goals?
DC: The auto industry is complex and its challenges extend deep into other sectors of the economy. Furthermore, change has to take place while the industry itself continues to operate, which makes the task a bit like trying to change the fan belt on a car while the engine is running.
And yet, I’m very confident that we can and will succeed. People throughout Michigan recognize that a “business as usual” approach to our economic future is not going to work. And many are stepping forward and saying “We need to be creative and innovative, and to recognize — and seize — the opportunities around us.”
Additional Resources
- Click here to view details about the Mott grant to Center for Automotive Research (CAR) in Ann Arbor, MI.
- Click here to read a related interview with Mott Senior Program Officer Jack Litzenberg.