The automotive industry needs to quickly develop a new roadmap and press harder for innovation to connect the industry’s great past with the needs of tomorrow, two Ford executives told industry leaders at the weekend.
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Mark Fields, Ford executive vice president and president of the Americas, and Anne Stevens, newly appointed executive vice president and chief operating officer of the Americas, made the comments at a Society of Automotive Engineers’ industry conference, attended annually by automakers, suppliers and business leaders.
“The auto industry events of the past week prove that the roadmaps our companies followed for 100 years are no longer valid,” Fields said. “Business models have changed. Consumers and markets have changed. We have to change, too. From now on, only those automakers and supplier companies that find new ways to work together – and strike down some new, uncharted paths – are going to survive.”
Fields said the auto industry faces seven specific and serious challenges.
Globalization is bringing more competition to the US, the “balance of power” in the industry has shifted with China and India emerging as top markets, market dynamics are changing, causing intense competition in every part of the market, customers are becoming even more demanding and their views of their automobiles are changing faster than ever, with cars increasingly becoming an expression of who people are rather than mere transportation, legislative pressure is increasing, oil production is peaking, and concern for the environment is growing.
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By GlobalData“We must grapple with all seven of these challenges,” Fields said. “Guts, grit and new ideas will be the key to winning in the automotive game today.”
Fields said he is bringing the lessons he learned from 10 years outside the United States – at Mazda in Japan and in Europe running the Premier Automotive Group and Ford of Europe – to his new role leading Ford’s American operations.
“The task is to fix the business and then seek competitive advantage through innovation,” Fields said. “All actions in North America are going to be fast, focused and fundamental. We will jettison excess bureaucratic baggage. We will break constraints. And we will make firm decisions.
“We are poised to win because we have a group of leaders who will not tolerate failure,” Fields added. “It’s going to be uncomfortable but exhilarating at Ford Motor Company in the months ahead.”
Newly appointed as Ford’s chief operating officer in the Americas, Stevens outlined the critical role of innovation in moving the auto industry forward. With its expansive scientific and technical knowledge, the auto industry has the opportunity to be the first generation to actually give back to the planet, she said. The Escape and Mariner hybrids, along with the lean, green and flexible Rouge Plant, are examples of the confident first steps Ford has taken toward this goal.
“Innovation is at the heart of American progress, and it is right up there with ‘individual rights’ and ‘liberty’ as attitudes that literally put this country on the map,” Stevens said.
Additional steps need to be taken by all automakers in areas such as alternative fuels, biodiesel, fuel cells and hydrogen powered vehicles, she said. The industry can accomplish the goals in a timely and orderly fashion by using “good old American innovation.”
But getting innovations off the ground requires engineers to breathe new life into new ideas. Stevens expressed concern that, with the declining number of students studying science and engineering, the future of the US auto industry runs the risk of being completely dependent on engineering knowledge residing abroad.
The building blocks of the auto industry are eroding at a time when such nations as China are gathering strength, she said, pointing to the fact that fewer students are studying science and engineering. Enrolment in first-year engineering programmes is down more than 5% since 2002, electrical engineering is starting to decline, as well. Computer science is even more alarming — with enrolment for first-year students off 31% from 2001.
China is graduating five times the number of engineers this year as in the US – and graduating an equal number of PhDs.
In the US, foreign nationals earned more than 50% of master’s degrees in engineering and 63% of PhDs.
Less than 20% of graduate engineering students in the US are women, and only 10% of the engineering workforce is female. This makes it the most segregated of all professions in the US today.
“This does not bode well for the manufacturing base in the United States – and that means us,” Stevens said. “If America is to maintain its manufacturing know-how, we must fill that engineering pipeline. We cannot afford to be slow to market because of an insufficient engineering base at home.
“We at Ford urge the entire auto industry to join together encourage our young people to pursue the studies that will prepare them to become our future colleagues. We need these engineers of the future if we intend to continue the spirit of American innovation that created our industry itself.”
