Swirling global trends stimulate local investment

Lindsay Chappell is Automotive News Mid-South bureau chief.

The world sometimes gets the impression that the auto industry is slowing down, or even receding. Onlookers assume that the entire economic sector is moving collectively in the same direction, or reacting with the same responses.

But rarely does such a thing happen. Rarely does the global auto business move in tandem when chasing opportunity. No single track of behavior can explain the movement of automotive capital spending. Individual manufacturers and supply chains invest according to their own plans, pursuing individual strategies, seeking different opportunities, introducing unique technologies, answering to distinct shareholders and customers with unique outlooks.

At this moment, regardless of what new-vehicle sales are doing in any given month, diverse trends are generating jobs and investment and local economic development activity around the world.

  • The push for lighter-weight parts, materials and vehicles is causing manufacturers to invest in new processes, new plants and often new locations.
  • The awakening of electrification, still in its infancy, is sending producers scrambling - not merely for electrified components and vehicles, but for entire electric vehicle strategies. In which country should they be produced, and with what supply chain?
  • The plunge into advanced autonomous-drive technologies is requiring a new universe of research and development resources. Automakers and their supply chains are hungry for pools of new engineers, and opening new tech centers where they are available.
  • The disruption of industry business models - the sobering notion that future mobility services could render ordinary components like steering wheels and instrument panels obsolete - has manufacturers rethinking their entire product portfolios. Producers are designing the next decade's revenue generators, while urgently imagining ways to rethink production of their older technologies. How might declining products be made with less cost? Where could they be outsourced? Might their supply chain be redesigned to allow manufacturing in a new location, with new tools?

When it comes to investment, a delightful swirl of investors, inventors, innovators and marketing wizards is taking place around the world, all of it predicated on creating wealth. One manufacturing plant slows down, another plant speeds up. An unused industrial building attracts a new owner in a new segment. One global company changes its course and another company steps into its vacancy to make a go of it.

Nations, states, provinces and municipalities know this. Governments and local authorities and utilities understand that there is always opportunity. For every force in the industry, there is a contrarian, competing force. And for cities and nations, benefiting from the activity is only a matter of resolving to be part of it and making themselves ready for it.

“The industry is evolving worldwide to create a new era of products that are reliant on new technologies…”

Automakers, suppliers, technology providers, research and development entities, logistics companies and raw material producers are already poised to invest for the next business cycle. Government leaders and policy-makers across the world are keenly aware of this. Billions more in new factory spending and new generations of jobs are in the offing for communities and nations – and civic leaders are positioning their states to catch the wave. Is that a contradiction?

If the industry is slowing down, why would companies spend on new manufacturing and engineering capacity?

The simple explanation is that what comes next is not the same as what came before.

The industry is evolving worldwide to create a new era of products that are reliant on new technologies, made of different materials, addressed to changing social demands, built by different processes, and sought by new competitors and partnerships looking for market opportunities that are just dawning.

All of that entails work – roads, real estate, infrastructure, factories, capital equipment, jobs, worker training, services and administration.

Automobiles do not spring magically from the mind of their designers. They are built by communities, paid for by the international flow of capital, fostered by nations, and facilitated and supported by both public and private initiatives. That makes for a multi-partner symbiotic supply chain – ultimately a win-win for all concerned: a location attracts auto industry investment. The investment thrives. The location itself thrives in return.