Auto industry is recovering, but the future looks uncertain

Massive, if not staggering, changes are dramatically affecting the Manufacturing arena. The production for the Automotive industry, from afar, looks stellar in that a 17M Unit SaaR is virtually assured. However, most within the Automotive industry would agree that no one is sitting back, resting on laurels, watching metal leave factories while sipping on expensive champagne. The industry is not getting a breather. In fact, the work required to attain this production may never have been more arduous. The competitive landscape for automakers keeps shifting, all the while, becoming more difficult.

New Entrants

The first wave of competitive forces for the Automotive Industry arrived in the early ’70s when advanced nations, rebuilding from the effects of WWII, regained their manufacturing footing and began to tap into the American car market. These advanced nations – countries like Japan, Germany, France and England – provided a different experience from the US automakers. And soon after their initial entre, foreign automakers were establishing a reputation about quality – some more than others – that would eventually pose a long-lasting perception that some US Automakers still cannot erase, justified or not.

The second wave of competitive forces came from low-cost countries – there is no better example than South Korea – that offered comparable styling and better warranties than their US-based competition. Behind Korea are China and India who continue to evolve in their aspirations to become relevant in the global automotive arena. Because of Wave 1 and Wave 2, the market share of the traditional “Big Three” continued to erode, contributing to lower revenue, a smaller workforce and eventually, for some, bankruptcy.

The latest trend, or third wave, comes from non-traditional competitors who are using their very large sums of idle cash to expand their capabilities from pure technology into the automotive industry. As these companies – enterprises like Google and Apple – enter the industry, what they may lack in an automotive heritage with vast backgrounds in manufacturing, engineering and marketing, they gain with an entrepreneurial mindset and increased flexibility to bring products to market more quickly.

The trend of technology companies transforming into manufacturing companies also has its own counter-punch. For example, General Electric’s CEO, Jeffrey Immelt, stated that he expects GE to become a “Top 10 software company by 2020.” Without a doubt, the intermixing of these industries is underway.

The Future of the Automotive Industry

Some automakers are struggling in their efforts to create a forward-looking vehicle portfolio that exceeds a five-year timeframe. One can argue that there has never been greater uncertainty in the industry than today. How much autonomous driving capabilities should be incorporated in future production? Should vehicles be designed more towards a millennial mindset that focuses on connectivity than vehicle comfort and luxury? How much of the vehicle will consist of metals versus electronics? How will new government standards impact design? Fuel economy? Safety?

As companies, automotive or otherwise, continue their quest for productivity enhancements, they must consider the future of their labor force. Following their emergence from bankruptcy, General Motors and Chrysler were able to reach reasonable agreements with the United Auto Workers. Ford followed suit. Other foreign automakers – Toyota, Volkswagen and Honda, for instance – have their own set of ongoing challenges to building high-quality vehicles at a competitive price. However, automakers are keen to move production outside of the US in order to make profitable vehicles. While politically problematic particularly in an election year, this makes sound business sense. Similarly, all OEMs are searching for ways to automate manufacturing and stretch every ounce of efficiency from existing plants.

One can’t help wonder when the “Uberization” of the work force will start to have a profound effect for all enterprises, manufacturing or otherwise. Instead of having a dedicated payroll, is it possible that corporations could put work requests out to the bidder yielding the greatest value, on demand and real time? Will our future work schedules be scheduled by an app on a smart-phone? In this scenario, corporations would not have to pay for idle time. Nor vacations. Nor sick time. Nor pensions.

Solutions for Manufacturing

Everyone is well aware of the scores of large manufacturing companies that did not evolve quickly enough to survive, only to become insolvent or be gobbled up by nimbler competition: General Foods; Standard Oil; Compaq, and; MCI WorldCom. Today, perhaps more than even, given the unprecedented change in the manufacturing, companies must have the ability to adapt to known challenges. Even more pressing is to have the flexibility to move in directions that are not yet known. CSC can help companies with this challenge.

CSC has been helping companies transform their business and IT environments for over 50 years. We recognize the need to help companies shed the burden of inflexible applications, data repositories, servers and networks while allowing them to establish the Information Technology foundation to adapt to the unknown needs of tomorrow.

We have thousands of consultants who help clients transform into a flexible, digital enterprise. We assist companies to build mobile applications that are relevant to their customers. We provide cyber solutions that prevent unwanted intrusions into their data, manufacturing machines and vehicles. A recent study by the global consulting firm, AlixPartners, discovered that only 17% of potential customers would trust automakers to program the car’s software versus 41% of respondents preferring the programming be done by expert programmers. While automakers are intensely focused on quality products, CSC is a leading partner that would help transform all areas of information technology.

By moving to a Digital Enterprise, OEMs will be able to uncover the invaluable information found within their data stores. Cloud and other next-gen solutions can help manufacturers reduce capital expenditures and improve interactions with shoppers. A transformative digital enterprise will allow clients to build products more quickly and with greater certainty while addressing emerging threats. It will provide for a competitive advantage and position clients for the uncertain road ahead.

Jeffrey DymmJeff Dymm is General Manager of Manufacturing in the Americas for CSC. With more than 30 years of experience in IT services, consulting, outsourcing, service delivery and relationship building, he is responsible for solutions to Automotive, Chemical and industrial Manufacturing firms. He formerly led CSC’s Consulting organization in the Americas. He previously served as Global Client Partner for Wipro, Consulting Partner for IBM and a technology architect at EDS. Based in Rochester, Michigan, he holds a Bachelor’s degree in Computer Science from the University of Windsor (Canada) and an MBA from Michigan State University. Connect with him on LinkedIn or Twitter.

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