We all know the gut-wrenching restructuring the traditional "Big Three" have been and continue to go through. And they will have to go through even more change to qualify for the bridge loans being extended to them by Congress.
Getting rid of their legacy costs is going to help immensely. But at best, this will merely put them on an equal footing with other automakers. Wouldn't it be smarter to invest in an information infrastructure that ensures the United States becomes the global leader in the design, development and manufacturing of sustainable transportation?
John McElroy is host of the TV program "Autoline Detroit" and daily web video "Autoline Daily". Every week he brings his unique insights as an auto industry insider to Autoblog readers.
There's a grassroots movement taking place involving automotive people in the Detroit area that want to see this sort of thing happen. You're going to hear more about this effort in the months to come.
They're talking about a system that plays to America's strengths: an open-source, internet-based, interactive, information portal that allows anyone and everyone in the automotive community to use. Yes, it would allow foreign automakers and suppliers to use it, too. And they will likely end up developing portals for their own countries. But if such a system first emerges in the United States, it will give us an enormous head start, just at a time when climate and energy security issues are going to force the automobile to go through its most comprehensive technological change in a century. Whoever gets there first will dominate the automotive industry for a generation.
For now, the system they're talking about is called Product Creation 2.0. It encompasses all aspects of creating a product, from the initial spark of an idea all the way through product launch and manufacturing.
Imagine an automaker having an information portal that allows it to tap into the institutional knowledge of its global supply base, in real time, as part of its daily routine when it develops a new car. Such as system would provide an automaker with the absolute latest ideas and technology while still in the concept phase, a time where critical trade-offs, if made early, can be made cost effective and implemented quickly.
Obviously, a system used this way would have to provide absolute security and secrecy. But not in every case.
Imagine a small job shop just landed a contract to stamp out panels that require a deep draw, where the steel is stretched out longer than normal, and it's running into problems because the steel it tearing. Imagine if this job shop could turn to an information portal where it could quickly tap into the knowledge of experts, academics, even retirees, and solve the problem that day.
An information portal like this is going to require investments on several levels. The system will have to be designed and developed with our best programmers and information technology companies. We will have to develop high school and university level curricula that teach people how to use it effectively. We will need incentives for companies to quickly underwrite the cost of implementing this technology. And there have to be specific targets that we want to achieve with it.
For example, the goal should be to enable the design and development of a four-passenger car that gets 60 mpg yet only costs $6,000 and is on showroom floors in only two years time. Impossible? They don't think so and here's why.
Nearly 100% of the value that's generated in creating an automobile actually takes place in the product development process (PD). A car's design has to reflect the latest styling trends to make people aspire to own it. It has to be engineered with the latest technology and features that people need and want. And it has to be developed in a way where it all meshes seamlessly. This is what the product development process is all about. This is where the auto industry generates the greatest wealth for the economy.
Yet, 80% of all activities in the documented North American PD processes represent waste. Coming out with a just one new car involves thousands of people, from thousands of companies, working on thousands of components, and doing all this from locations scattered around the world. As a result there are many overlapping activities, miscommunications, trial-and-error efforts, meetings, learning curves, more meetings, and an overall lack of transparency. This kind of waste gets magnified in today's industry where much of the engineering effort is done on a 24/7 basis.
The technology exists to eliminate much of this waste. The problem is that it's an issue that can't be solved by any one car company, industry association, university, or government. Not on their own, they can't. It can only be solved by all of them. But who's going to bring them together to develop an e-manufacturing infrastructure? We need a Federal effort to spearhead it.
The United States has never had an industrial policy that specifically targets the health and growth of its automotive industry. E-manufacturing could be the backbone of such a policy, yielding tangible results in just a couple of years. The benefits will spread well beyond the automotive industry. If ever there was a time to undertake this kind of effort, this is it. It's a legacy that could pay off for all of America for decades to come.
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