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Technology Will Help to Smooth Auto Industry's Rough Road

Despite the fact that the auto industry has fallen on hard times, development of innovative technologies holds promise for renewed growth in this sector.

Feb/Mar 10
According to the OESA, from 2008 to 2012, foreign automakers’ market share will increase, while domestic automakers’ share (except for Ford) will decrease.
According to the OESA, from 2008 to 2012, foreign automakers’ market share will increase, while domestic automakers’ share (except for Ford) will decrease.
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What's on the Horizon?
While the future of the automotive industry is uncertain, a November 2009 presentation by John Murphy, senior director of Bank of America Merrill Lynch, for the Original Equipment Suppliers Association Conference, was quite optimistic. According to Murphy, "The recovery is just beginning to recover," with the upside to auto demand and supply greater than most expect. The leaders, he noted, are Hyundai, Ford, and Honda, which will be the ones to follow.

As to the supplier landscape, "It should get better from here," he noted, but consolidation will continue to accelerate. "Success hinges on proprietary technology, diversification, and a strong balance sheet," Murphy pointed out. "Restructuring, recapitalization, and reorganization of the value chain have made significant progress with more to come. We are not `cautiously optimistic'; we are flat out bullish."

There are several examples of positive news, including some developments coming out of Canada. For instance, Magna International -in conjunction with the National Research Council Canada - is setting up an R&D facility to develop lightweight, strong composite parts for the next-generation vehicles. Called the Magna-NRC Composite Center of Excellence, it will be located at Magna's Exteriors & Interiors facility in Concord, Ontario. The Center is expected to be operational by summer of this year.

And, in the United States, there's also light at the end of the tunnel for ailing GM. At the recent Detroit Auto Show, GM's President Mark Reuss said that plants that build the Cadillac SRX, Chevrolet Equinox, and Buick LaCrosse are at full capacity and can't meet demand. To help that situation, GM is considering reopening some closed facilities. The company, said Reuss, has placed its Janesville, Wis., and Spring Hill, Tenn., plants on standby in the event it needs more capacity when the U.S. auto industry begins to improve. The Spring Hill plant was recently upgraded, at the cost of millions of dollars, to build the Chevrolet Traverse. The facility is flexible and can build other models as well.

Automakers are holding out hope for alternative-fuel and "green" vehicles. Delphi announced plans in December to implement an $89.3 million award from the U.S. Department of Energy (DOE) to support expansion of engineering capabilities in the manufacture of advanced "green" technologies.  A vacant manufacturing site in Kokomo, Ind., has been selected for production of power electronics components for global customers, with initial products to be built for Allison Transmission in partnership with two Indiana technology leaders. Delphi will match the award for a total of $178.6 million to advance the development of low-cost manufacturing of electric-drive vehicles (EDV) in the United States.

"Electric-drive vehicles hold the promise of meeting two critical government and industry goals - reducing dependence on petroleum and reducing greenhouse gas emissions," said Delphi Electronics & Safety President Jeff Owens. "Delphi has a long history of successfully developing and commercializing automotive electronics. With this DOE partnership, we will apply our proven expertise to develop technologies and processes that will help lower the cost of electric-drive vehicles and make them more attractive to a broad range of consumers."

Additionally, General Motors has high hopes for hydrogen vehicles. Daniel O'Connell, director of fuel cell commercialization for GM, is working to make hydrogen vehicles a reality.  "We currently have 100 hydrogen fuel cell Equinox cars on the road that to date have accumulated 1.2 million miles in customers' hands," he said in a recent interview. 

The company has 30 of these hydrogen vehicles in New York State. The big challenge, noted O'Connell, is putting in the filling stations. Currently, there are five hydrogen filling stations in New York City and three in Rochester. "We're exploring ways we can put enough stations from Buffalo to Long Island, a route that will be called the NYSERDA Hydrogen Highway," he explained. Since the cars only have a 200-mile limit, customers testing the cars are constrained to driving within a 100-mile radius of a filling station. Other challenges, said O'Connell, include getting the cost of the vehicles down to make them affordable for large numbers of consumers and increasing the durability of the vehicles.

GM's hydrogen R&D facility is located in Honeoye Falls, N.Y., where the company employs 400 people. Currently, said O'Connell, there are nearly 1,000 people working on the hydrogen technology in various areas. "These are the kind of jobs you want - high-skilled, high-tech jobs," stated O'Connell.  "We have a world-class employee base worldwide that we've brought to the New York area to work on this technology for GM. We also have close relationships with all the colleges in the area. Rochester offers a unique opportunity thanks to companies like Kodak and Xerox; there's a lot of talent in this area. And there's also a lot of hydrogen in New York State. This technology - wells to wheels - will result in an 85 percent reduction in CO2 from a renewable source - Niagara Falls."

It is hoped more positive automotive news is on the horizon for 2010.

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