DETROIT—From Tesla to the Google driverless car to the aluminum 2015 Ford F-150 pickup to active safety systems that promise zero fatalities, the auto industry is changing at an unprecedented pace.
For auto suppliers, that means relentless pressure to innovate at warp speed, all the while collaborating with manufacturers in ways never before seen, panelists on the recent Automotive News World Congress Innovation panel agreed.
The transformation has rapidly come to an industry that just five years ago was mired in recession and saddled with overcapacity.
Julie Fream, president of the Original Equipment Suppliers Association, kicked off the panel discussion with a call to arms:
“As a result of this pace, our industry is experiencing constrained resources throughout the value chain. I urge both OEs and suppliers to use these constraints to challenge our traditional processes and find new and innovative ways of working together.”
Phil Martens, a longtime Ford executive who is now CEO of aluminum supplier Novelis, said change that brings innovation can come from many sources: “In my experience innovation comes from some sort of collision, from an outside party or regulatory environment or the founder of Tesla (Elon Musk).”
Panelist Doug Patton, senior vice president engineering division Denso International America Inc., said innovation doesn't mean anything if companies can't successfully transform it into a commercially viable proposition.
“Speed is the biggest change that has occurred recently,” he said. “It's not just the speed it's execution. If you don't execute you don't get the benefit of innovation.”
CAFÉ requirements have driven auto makers to adopt new powertrain and lightweighting strategies. The new aluminum F-150 pickup has created a big opportunity for innovation.
“There's been an absolute explosion in innovation and product development to help meet lightweighting,” said Blake Zuidema, director of automotive product applications at steel maker ArcelorMittal.
Said Novelis's Martens, which is supplying aluminum for the new F-150: “Innovation is a result of collision. There's one between aluminum and steel right now. Which is better? The aluminum industry is alive coming up with new products and the steel industry is too. It's great for everybody.”
And factors such as the recent unforeseen plunge in fuel prices have made it more difficult than ever for industry executives to look in the crystal ball when making crucial decisions several years before production.
In the boardroom
Said Martens: “You put yourself in a boardroom. You're making decision for 2018. Oil goes into a distortion. What happens if the Chinese government really does make 5 million electric vehicles?”
To sustain innovation, companies need people and that means luring top talent.
“I think we don't do as good a job as other industries to attract the talent,” said Swamy Kotagiri, chief technical officer for Tier One supplier Magna.
Said ArcelorMittal's Zuidema: “There needs to be a lot of work on keeping those kinds of educational disciplines alive, to make sure we have a good crop of engineers.'
The panelists agreed that change often comes from disrupters, whether government regulations or outside innovators who bring new business models. One such disrupter is Tesla's Musk, who spoke at the World Congress Tuesday.
Novelis's Martens said: “This guy to me is single-handedly the most impressive business executive I've seen in my lifetime. His ability to take a concept and bring it into reality is unbelievable. He has challenged conventional wisdom in every aspect from the dealer network to the giga-factory."
He added: "My next car will be a Tesla.”