Industry faces shaky future

Analysts say the automotive industry is facing uncertainty over the coming years, reports Record Eagle. David Cole, chairman emeritus of the Center for Automotive Research, says there is a “huge amount” of uncertainty in the industry. “Be prepared for things that are going to change very quickly. That's the auto industry today.” Speaking at the Economic Club of Traverse City in Michigan, Cole said that carmakers face several challenges that provide both opportunity and the possibility of failure. One of those challenges is the development of autonomous cars. Cole said that the manufacturing process used to produce the vehicles is being reshaped in ways so revolutionary that the changes in the factory may overshadow changes visible on the road. He added that the continuing retirement of the ‘Baby Boomer’ generation was leaving the auto industry with fewer workers, who weren’t being replaced by younger workers. He said that while robotic manufacturing techniques required fewer assembly line workers, there was still a shortage of young people entering the industry. Cole also cited variable and unpredictable petrol prices as having a large impact on quickly changing customer preferences. He added that developments in alternative energy technologies such as electric and biofuels could also have massive changes in the factory. Intellectual property increasingly belonging to suppliers and other industry partners, rather than carmakers themselves, was also a challenge. While major marques controlled 90 per cent or more of the intellectual property used in their vehicles a few decades ago, Cole said today more than 50 per cent of the intellectual property was in the hands of suppliers. He predicted carmakers that would thrive in the coming years would be companies operating with a team mindset, where “executives think and act like coaches, where workers throughout the company combine their efforts to help the team succeed.” He added that the profit centre of the industry could shift in the near future. “If you don’t put tech into something physical, then it doesn’t have value. Future hardware may become more expensive than the technology that runs it.”