Management Briefing Seminars
TRAVERSE CITY, MI – The slight change in the car/truck sales ratio in July and recent decline in gasoline prices has some people looking forward to a return to how things were.
Industry-wide, light trucks rebounded to a 45% share of sales in the U.S. last month, up from 43% in June, according to Ward’s data, and gas prices have fallen to an average $3.80 nationwide after topping $4 per gallon earlier in the year.
But industry insiders shouldn’t get distracted by the short-term ups and downs of fuel prices and market shares, MaryAnn Wright, CEO of Johnson Controls-Saft Advanced Power Solutions, says at the Management Briefing Seminars here.
“Greenhouse-gas emissions and climate change (concerns) will transcend things like CAFE (corporate average fuel economy standards),” says Wright, whose company is making lithium-ion batteries at a factory in France. “What we have to do now is to get ready for the changes ahead of us.”
Dozens of companies have announced plans to go into the Li-ion battery business, but only a few will survive and they will be system integrators like JC-Saft, Wright predicts.
JC-Saft is in pre-production now and next year will begin making Li-ion batteries for Daimler AG’s Mercedes-Benz. It also has contracts with Ford Motor Co., General Motors Corp. and Chery Automobile Co. Ltd. and development contracts with other European OEs that Wright hopes will result in production.
Since taking over the reins 18 months ago, Wright has reorganized JC-Saft so that cell research is at the company’s Milwaukee headquarters, and system engineering is located in France for Volkswagen AG, Porsche AG, Audi AG, BMW AG and other customers.
JC-Saft also has development operations in Shanghai and has chosen, but not announced, the location of a battery manufacturing plant in China. In 10 years, Wright says, China will be the source of 40% of global lithium production.
To keep the U.S. auto industry focused on the future, she urges the U.S. to:
- Form OE-supplier-university consortiums to establish standards for plug-in hybrids, as Japan has done.
- Support battery research and provide incentives for consumers to buy new technology, as countries in Europe and Asia are doing.
- Prepare a strategy to have high-tech manufacturing in North America, as no one has done.
Today, the U.S. has some intellectual property for advanced electrical technologies, but the key suppliers, materials and manufacturing are centered in Asia. She says her company’s research and development center in Milwaukee is the only one outside Asia with complete R&D, assembly and cell-manufacturing capability.
In the past year, JC-Saft has added two development facilities in North America, but manufacturing will be near the customers, Wright says, and so far the big customers aren’t located in North America.
“We are looking at a regional operational structure,” she says. “We are aggressively working with OEs and transplants here to encourage them to help us develop a North American infrastructure,” but it has not yet started.
“Domestic OEs and suppliers have to act as partners, not competitors,” she adds. “You see it in Japan, where they work together to get the fundamentals down, then compete.”
The U.S. Advanced Battery Consortium and U.S. Council for Automotive Research LLC, two current U.S. consortiums, “need to be completely revamped,” Wright says.
“We need to take a new look, put all our cards on the table and take a look at what we need to become competitive. We need to look at how to get this stuff in production on a mass scale. What we need to do is establish advance manufacturing and infrastructure development.”
Working closely with suppliers not only leverages their technical capability but also can result in logistic improvements by encouraging a supply base to be constructed in concert with assembly plants.
For modern hybrids, Europe shares leadership with Asia, but otherwise Asia is alone with technologies that make up a hybrid vehicle, such as DC-DC converters, batteries, power electronics and electric motors.
Although GM rapidly is developing its Chevrolet Volt, in Japan 16 auto makers, suppliers and public units are in a consortium to reduce the cost of plug-ins by 97.5% in the next decade or two.
The Japanese consortium, she says, is “one of the critical factors that is going to allow them to dominate in the sustainable market. The Japanese are happy to compete against each other, but only after they have established a leadership position.
“We need the same thing in the U.S. and Europe, so we don’t find ourselves left behind again.”
The country must be committed to research.
“The key is long-term strategic investment,” Wright says. “The government has a role, the industry has a role and the public has a role. How are we going to compete?”
Wright doesn’t want companies to import key parts from Asia and bolt them together here, which would simply replace the oil cartel with an alternative-power cartel.
Toyota Motor Engineering and Mfg. North America Inc. executive Steve St. Angelo on Monday noted that while Toyota will produce the Prius in Mississippi in 2010, it will import the high-tech batteries from Japan.
Sustainable transportation is not only for the non-oil future, Wright says, it already is capturing public attention.
“Consumers are going to be voting with their dollars on who they spend their money with,” she says. “Americans have driven 30 billion miles (48 billion km) fewer this year.”