Detroit, MI – MICHauto Executive Director Glenn Stevens Jr. released the following statement today in response to trade actions by the White House relating to tariffs on imports of Canadian aluminum:
“MICHauto strongly opposes the re-imposition of 10% section 232 national security tariffs on $2.7 billion of aluminum imports from Canada that is already causing retaliation against U.S. imports, as it has before. Canada is our nation’s largest export market, and year over year we’ve seen increases in U.S.-Canada trade as the country buys more from Michigan than all countries in the world combined. Anything that would thwart this growth is particularly damaging to Michigan and the automotive and manufacturing base here.”
“At a time when business of all sizes depends on trade for economic growth and job creation – amid an ongoing economic downturn due to COVID-19 – decreasing the value of our cross-border partnership that has shown resiliency the past few months, is harmful to manufacturing and the economy. Today, more than ever before, the federal government should be a strong advocate for free and fair trade. It is unfortunate to see an action that will also adversely impact the already suffering American consumers by raising the cost of a U.S.-built car tremendously.”
A recent article in The Detroit News highlighted that over the next four years the automotive industry will face a critical transformation with new innovations and investment in automated vehicle development. MICHauto Executive Director Glenn Stevens Jr. was asked for his analysis of the industry’s future as well as the current outlook amid the ongoing pandemic.
“Over the next four years, the automotive industry faces a critical transformation with an explosion in the number of electric nameplates available, continued investment in automated vehicles and the impact the shift could have on jobs.
Foremost, however, will be addressing the issues from economic uncertainty resulting from the COVID-19 pandemic: whether government will coalesce around financial support for struggling suppliers; how the retail market will be impacted by high unemployment and retrenchment; whether business will be exposed to liability claims over COVID-19 claims; who — if anyone — will fund infrastructure improvements to support alternative propulsion systems; how trade policy will affect costs and investments.
‘The industry is looking forward as they design vehicles, as they decide where to build vehicles,’ said Glenn Stevens, executive director of the Detroit Regional Chamber’s MICHauto group. “What is the climate for increasing manufacturing jobs? Is there an opportunity for reshoring jobs?’
Amidst the uncertainty, automakers will be looking for uniform regulation at a national level and stability in policy when it comes to trade that affects their supply chains, carbon emission and fuel economy standards, and the deployment of automated technology.”
MICHauto recently partnered with Dykema and The Right Place to survey automotive industry businesses and professionals to better understand the challenges they are facing as a result of the COVID-19 pandemic. The survey results linked below analyze these responses and discuss the impact of COVID-19 on automotive operations and revenues framed by the outlook for the U.S. economy and automotive industry moving forward.
Join a Discussion of Survey Results, Aug. 13
Hear from these teams’ experts an analysis of the survey results and what they mean for the automotive industry Thursday, Aug. 13 at 11 a.m.
Key findings include:
46% of total respondents have a negative outlook of the U.S. economy over the next year, dropping to only 13% over the next 24 months.
56% of total respondents believe U.S. light vehicle production will strengthen in 2021 compared to 2020.
50% of total respondents have accessed the Paycheck Protection Program.
84% of automotive industry respondents were required to suspend or curtail operations in the U.S. due to a government-ordered shutdown, along with nearly 50% shutting down operations in Mexico.
20% of automotive industry respondents were required to suspend or curtail operations in the U.S. due to COVID-19 related issues after reopening, compared to only 5% in Mexico and 5% in Europe.
44% of total respondents believe company revenues will decline more than 20% over the next year, and another 44% expect declines between 1% and 20%.
A leading lineup of automotive industry experts discussed the economic impact of COVID-19 on automotive and the ongoing work required to help the industry recover from the COVID-19 pandemic. The two-part discussion focused first on the industry outlook and then on the policy response.
Panel One: Economic Outlook
Recovery was top of mind for the first panel conversation with IHS Markit’s Kristen Balasia, Magna International’s Eric Wilds, and General Motor Co.’s Doneen McDowell. All agree that there is a spirit of resilience in automotive in Michigan. OEMs like Ford and GM were able to step quickly into learning to produce much-needed PPE and, as a result, learned a tremendous amount of what would be required for their return to work as they came back online in May.
“I, along with an army of folks, went to Kokomo, Indiana to make ventilators,” said McDowell. “We got a good understanding of what our COVID playbook should be and I think everyone recognizes our priority is first to keep our employees safe so that they can go home and keep their families and communities safe.”
In addition to keeping employees healthy, there are positive signs on the economic road to recovery. OEMs are really tracking the data and sales rates to focus and prioritize on the production of high-margin pickups and SUVs, where there continue to be strong sales and returns. The IHS Markit forecast for U.S. light vehicles currently sits at 13.3 million, down 21% from the beginning of the year.
“We definitely see some positive signs,” said Balasia. “We think that this is going to be a deeper recession than we saw in the last dip and financial crisis of 2008 and 2009, but hopefully shorter….It’s going to be really important that OEMs stay close to the sales rate and on which specific vehicles and that they have the right production plans and worker availability to support the demand.”
Wilds concurred with Balasia on an optimistic second half of the year, explaining that fluctuation in product segments is a challenge, but no different than during the normal course of business. Suppliers like Magna International continue to focus on the successful ramp-up of high performing products and mitigate some of the lower-volume segments.
With the average age of vehicles on the road at 11.9 years and a possible extension of another four to six months due to COVID-19, strategic planning is critical for the supply chain to meet consumer demand when customers are ready to buy. It is also important to continue focusing on long term trends like electrification and ADAS for a strong future.
When asked by “Autoline” host and panel moderator John McElroy about how productivity and quality are impacted on the assembly lines with the new safety protocols in place, McDowell was clear that there will not be an impact on quality of parts. Team members understand why masks, gloves, and physical separation are in place and continue to support those requirements.
“To address the pandemic is a team sport,” said McDowell. “We all need to do our part. This is not just at work, it’s when you’re home and in the community; and the more we as individuals can protect the herd or the whole, I think it will be better for everyone involved.”
Panel Two: Policy Response
When asked by Mcelroy how Michigan could be more like South Korea, Germany, or New Zealand in terms of COVID-19 recovery, Sen. Mallory McMorrow noted that a full recovery is a matter of will. At any given moment, we are only four to six weeks away from containing the virus. The community and industry need to continue to be diligent, reflect on what we did well, and keep going.
The state’s priority is keeping Michigan the best place to do automotive work. The Michigan Economic Development Corp.’s (MEDC) Josh Hundt and Center for Automotive Research’s Kristin Dziczek reinforced economic recovery goes hand-in-hand with health and safety. Strategic actions to support small automotive and mobility businesses across the state have been a significant focus for the MEDC. The Pure Michigan Business Connect Access and Retooling Grant helped 12 small businesses quickly retool to manufacture 5.5 million pieces of PPE. Further, campaigns like #MaskUpMichigan and Work Smart, Play Smart to Keep Manufacturing Open spread the message about health and safety beyond the workplace.
On the distinctly complex, global nature of this industry, Dziczek noted the importance of keeping a healthy flow of parts, healthy workers, a healthy supply chain, and healthy demand to keep the industry going. And beyond the automotive business tactics involved for recovery, McMorrow explained the need for bipartisan collaboration on budgetary and Federal funding matters.
Another critical component will be a robust talent pipeline. The state need to build on its strengths with the high concentration of engineers, strong manufacturing and skilled trades, and growing technology talent, especially in terms of software engineering. Key to maintaining Michigan’s leadership in these areas is education funding. As part of the MI Safe Schools Roadmap, the state allocated $256 million in funding for K-12 schools, with continued pushes for additional Federal funding to ensure student, teacher, and staff safety.
As the industry’s future continues to unfold and new macro trends emerge, Michigan’s economy post-COVID-19 will be poised for recovery and long-term growth, despite the challenges along the way.
Yesterday, MICHauto sent the following letter to Gov. Gretchen Whitmer on behalf of the automotive industry. The letter shares with the Governor industry efforts to implement safe practices to keep manufacturing facilities open and operational.
Since December of 2016, MICHauto has convened the Detroit Mobility Solutions Coalition to gather key voices and industry stakeholders to share information, ideas, and generate synergy. Since the initial meeting, a wide array of important initiatives and projects have come to fruition through this collaboration. MICHauto continues to convene this original group along with a host of partner organizations to provide an update on what is going on in Detroit’s mobility landscape and discuss potential collective action moving forward. On July 8, this group hosted its first virtual meeting and heard from speakers including:
Adam Jansen, Plug and Play Detroit
Stacey Matlen, Senior Mobility Strategist, City of Detroit Office of Mobility Innovation
Trevor Pawl, Chief Mobility Officer, State of Michigan
Dexter Sullivan, Program Manager, Michigan Mobility Institute
Eric Thomas, Chief Storyteller, City of Detroit
Topics ranged from equity and inclusion in the mobility sector to bringing a new global startup accelerator to Detroit (Plug and Play). Participants also heard from Trevor Pawl, who will be leading the new Michigan Office of Future Mobility and Electrification.
MICHauto and the Center for Automotive Diversity, Inclusion & Advancement (CADIA) are partnering to drive change throughout the automotive industry. Historically considered a homogeneous industry, barriers are being broken down across OEMs and Tier 1 suppliers in recognition of the importance of employing a diverse and inclusive workforce. New momentum is emerging to force a change that has been talked about for decades with minimal action.
CADIA presents diversity, equity, and inclusion as an organizational evolution across five phases, with companies coming to the table at various stages, asking what needs to happen next. So, where does your company fall? And what do you need to do now to achieve a sustainable and embedded culture of diversity?
A roundtable of 12 automotive CEOs met with Cheryl Thompson and Margaret Baxter of CADIA and Glenn Stevens Jr. and Carolyn Sauer of MICHauto on July 8 to explore this dialogue.
In an industry driven by numbers and metrics, it was an interesting discussion about how to shape change and measure it, with some leaders being able to quantify progress in this area to date and others focusing on a softer message to “center on diversity of thought” to maximize their team’s impact. Some key takeaways from this conversation are:
Every supplier is at a different stage in the journey, and that is okay. It is important to first recognize where your company lies across phases one to five, so that you can identify the next appropriate action steps.
Diversity, equity, and inclusion do not happen overnight and are not necessarily numbers to achieve, but behavioral shifts across the organization that allow people of all backgrounds to be heard and valued on a sustainable basis.
OEMs are leading by example and setting the path for racial equity, and suppliers are on board with advancing their thinking and establishing plans.
There are a number of resources available to help companies on this path, regardless of their level. Learning from each other is key.
We still have work to do before the automotive industry is more reflective of the world around it in terms of diversity, especially within leadership ranks, but OEMs and suppliers are committing to make change. And commitment is just the first step we need.
Michigan’s automotive industry has been hit hard by the COVID-19 global pandemic. While the industry’s restart is now in full motion, there has been great debate about Michigan’s efforts to jointly protect community health and the health of the economy.
MICHauto and the Center for Automotive Research (CAR) are convening an hour-long, two-part discussion with industry and government leaders. The first discussion will provide insight on the industry’s response and restart as well as its economic outlook. The second discussion will review state’s policy response and its ongoing work to help the industry recover. Both discussions will be moderated by John McElory, host of “Autoline.”
Part One Panelists: Kristen Balasia, Vice President and Managing Director, Automotive Advisory Services, IHS Markit Doneen McDowell, Manufacturing Executive Director, GMNA, General Motors Co. Eric Wilds, Chief Sales and Marketing Officer, Magna International Moderator: John McElroy, Host, “Autoline”
Part Two Panelists: Kristin Dziczek, Vice President, Center for Automotive Research (CAR) Josh Hundt, Executive Vice President and Chief Business Development Officer, Michigan Economic Development Corp. (MEDC) Sen. Mallory McMorrow (D-Royal Oak) Moderator: John McElroy, Host, “Autoline”
Bank of America recently unveiled its 30th annual Car Wars report – a proprietary study that quantifies industry product trends, measures competitiveness of original equipment manufacturers’ (OEM) product plans, and provides historical perspective. John Murphy, Bank of America Global Research’s lead U.S. auto equity analyst shared this year’s finding with MICHauto stakeholders, painting a picture of what is in store for the industry as it moves through and beyond the impact of COVID-19.
COVID-19 is driving a decisive downturn across the industry. Globally, the industry is facing a 20% year-over-year decline in sales and production volume. Despite this globally synchronized decline, a v-shaped recovery – or return to pre-COVID-19 conditions – is expected by the mid-2020s. Companies are now forced to explore more aggressive cost-cutting measures. Murphy acknowledges that because the industry has been experiencing a boom in recent years, some discipline has been lost. These measures, though, will pay off by the mid-2020s, producing strong margins and renewed buy-in.
Product activity among OEMs will vary. Over the next four years, 50% of vehicles will be launched as internal combustion with the remainder being alternative powertrain variants (electric vehicles, hybrids, etc.). Consumer pull and market dynamics are driving pricing and production of these alternative powertrain vehicles and autonomous technology in the U.S., as opposed to the regulatory influence seen in Asia. Differences in these production rates will stem from allocation towards traditional model launches versus alternative powertrain development.
The technological evolution underway poses both issues and opportunities. Companies must remain diligent now in optimizing their core businesses. However, it is important to invest in future businesses to fortify their longer-term industry position. Projections show that volume levels will bounce back post-COVID-19 as electric and autonomous vehicle demand increases. These vehicles are being treated as a luxury technology in the U.S., so this surge of demand at higher price points will help support the U.S. market.
Ultimately, the report demonstrates that though the industry will endure a difficult few years, it will emerge stronger with increased production and advanced technology.
A deep dive into new structures driving automotive supplier strategies in the current and post-COVID-19 era was the focus of The Right Place’s “Navigate 2020 Webinar” on Wednesday. MICHauto Executive Director Glenn Stevens Jr. led a conversation with IHS Markit’s Michael Robinet, executive director for automotive advisory services, who provided data and forecasts that described challenges and consolidations for mid-level suppliers globally.
“The rebound from COVID-19 will be slow and paced differently throughout the world,” said Robinet, while also noting China “already has a head start.”
During a Q & A with Stevens, Robinet encouraged west Michigan-based suppliers to “expand their presence or reduce risk.” When Stevens asked about the likelihood of NAFTA’s replacement, USMCA, being enforced starting July 1, Robinet predicted: “There will be a little bit of leeway” given the pandemic.