Monday, June 8, 2009

Industry Week, June 2009 Interview

BMW plant located in Leipzig, 1 and3 series cars are made there.
One of the most modern car plants in the world

Future VW Plant located in Chattanooga, TN

Roger Penske, and a new future for Saturn?

Before I left for Germany, I was interviewed for an article that was ultimately entitled "A Tale of Two Industries." At the time (early May) I saw things this way:
What does the future hold for the U.S. auto industry?

"In some cases, national industries that are a leading sector for a time tend to fall off and don't come back -- like the British auto industry," says John Heitmann, a professor of history at the University of Dayton and U.S. auto industry history expert. "I'm not quite that pessimistic on things. In the long run in this country, there will be a great demand for personal vehicles. The question will be: Will it be the type of internal combustion engine that once dominated the industry for 100 years?"

Heitmann believes U.S. auto manufacturers will be broken up in into smaller, more nimble units with more distinguishable brands. But, he cautions, U.S. automakers and their suppliers will have to be wary of foreign competitors establishing their ground in the United States while they retool.

"All of this instability is creating opportunity for Asian manufacturers to come in and fill the gaps, and I'm thinking of the coming Chinese industry over the next decade," he says. "That's my concern in all of this as things shake out and we move into the new era. So much of this depends on what is going to be the price of energy over the next five to 10 years, and are these manufacturers going to respond appropriately?"
After spending the past 4 weeks in Germany, however, my sense is not to worry so much about the Chinese in the short run, but rather the Germans and Japanese. For example, within the past two weeks, BMW here in Leipzig transitioned from one shift making the 1 and 3 series to two, and will bring in 300 workers from another factory to ramp up production. They are obviously smelling blood in the U.S. VW has changed its initial plant capacity plans for the Chattanooga, TN, facility that will open in a few years, for undoubtedly the same reason. "Car wars" is now being fought on American soil in a way quite different from the past, prior to the credit crisis and recession that began in late 2008.

It is encouraging to note, however, that Roger Penske has entered the fray by taking on GM's Saturn operation. Penske's leadership and competitive spirit may just be what is needed to take on competitors who largely work in large, collaborative teams. Management systems that rely on forging a consensus among 200 people may prove too slow and unable to read properly the needs of the market.

After all, the American automobile industry was forged by strong individuals, and may be reborn by that same type of person, distinctly American in character and spirit.

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