1. Today’s Turbulence: A Foundation for Future Success Today’s Turbulence: A Foundation for Future Success David E. Cole Emeritus Chairman Center for Automotive Research (CAR) Leadership Detroit November 18, 2010

2. David is to be returned to Italy A bit of cultural news for a welcome change!

3. His Proud Sponsors were Fast Food Chains…

4. Title Date 4 NASA “Houston We Have a Problem”

5. Title Date 5 Auto “We Have a Problem” Mostly Revenue – with Depression Level of Sales

6. Title Date 6 GM & Chrysler – Debt Reduction, Lean Ford: Good & Bad News, No Bankruptcy but High Debt Suppliers – The Struggle Continues All Manufacturers & Suppliers are Hurting But, Things are Looking Up

7. Title Date 7 Pillars of Economy s Mining s Agriculture s Manufacturing

8. Title Date 8 Manufacturing Like Rodney Dangerfield – “Don’t Get No Respect”

9. Title Date 9 Across the Land – Amazing Level of Ignorance on Auto Industry

10. Title Date 10 The Perfect Storm Benefits Hyper Competition Competent New Players: China, India, … Auto Industry Tools Materials Policy Money

11. Title Date 11 Auto Industry of the Future A World of Vanishing Boundaries

12. Title Date 12 Economic Contribution of the U.S. Automotive Industry

13. Title Date 13 Auto Manufacturing Manufacturers.... 313,000 + jobs Parts Suppliers.... 686,000 + jobs R & D Spending... $16 + billion Source: BLS, NSF *includes NAICS 3361, 3362

14. Title Date 14 Economic Contribution Per Job Auto Mfr.$329,000 Average Job$112,000 Source: U.S. Census Bureau Annual Survey Manufacturers 2005

15. Title Date 15 Economic Multiplier Auto Manufacturers – 10 Auto Parts Supplier – 5.7

16. Title Date 16 Auto Employment 2010 – modest gains 2011 – 2013 + 100,000 per Year

17. Title Date 17 We Are Swimming a River That is Getting; Faster, Deeper, & Wider But!

18. Title Date 18 The Pot of Gold on the Other Side is Getting Larger s Labor Cost Reduction s Household Growth s Pent-Up Demand s Capacity Reduction s Scrappage s Return of Pricing Power

19. Title Date 19 The Challenge: Getting to the Other Side

20. PALE Meeting-March 19, 200920 However, Will It Come Back.. ? U.S. Light Vehicle Sales Forecast Source: CSM Worldwide, J.D. Power +4.4 M+6.8 M+8.9 M +2.4 M -9.3 M-5.2 M -8.0 M

21. PALE Meeting-March 19, 200921 U.S. Light Vehicle Sales History and Forecast Combined J.D. Power and CSM Worldwide Forecast 2007 - 2014 Source: CSM Worldwide, JD Power, Inc. Millions

22. 22 The New Break-even- 10 Million Sales

23. Title Date 23 Beware: The Aging of the Boomers.

24. Title Date 24 Demographics s Consumer Behavior s Socio / Political s Health Care s Skilled Workers s World Issue “Boomers go Boom”

25. Title Date 25 Auto Industry - Thousands of New Jobs – But Only for the Educated for the Educated

26. Automotive Communities Program 17 April 2008 Kristin Dziczek, kdz@cargroup.org Bernard Swiecki, bswiecki@cargroup.org Center for Automotive Research Ann Arbor, MI

27. Title Date 27 “This is Auto” “Building America’s Tomorrow”

28. Title Date 28 The Old Business Model is Broken

29. Title Date 29 BureaucracyPaperLinear SlowLean Individual Sequential Regional Physical Prototypes Job for Life Kings Talk CompetitionStructuredAcquisitions Vertical Integration Legalistic Old Business Model Control

30. Title Date 30 Anti-bureaucracyPaperless Collaboration Fast Lean Agile Team e-enabled Global Virtual Prototypes People Flow Coaches Listen Coopetition Parallel FlexibleAlliances Virtual Integration Trust New Business Model Empowerment

31. Title Date 31 Time Present Business Model New Business Model Real Desired Performance

32. Title Date 32 Global Integration- s Platforms s Components s R & D s Plants s Everything One Company World-wide

33. Title Date 33 Value of Global Economies of Scale are Huge

34. Title Date 34 Lean / Agile sInvestment sEngineering sManufacturing sEverything

35. Title Date 35 Collaboration Driven by Resource Shortage sNatural sFinancial sHuman sTime

36. Title Date 36 Knowledge The Competitive Edge

37. Title Date 37 It’s nice to be smart and rich, but smart is more important than rich.

38. Title Date 38 Customer Pull Cars and Trucks Product and Process Technology Push

39. Title Date 39 Time Knowledge Application Knowledge CompetitiveAdvantage Innovation

40. Title Date 40 Coming Soon: “Auto Harvest”

41. Title Date 41 Auto Technology At the edge of a revolution?

42. Title Date 42 Future Fuels  Petroleum  Bio  Hydrogen  NH 3 The Answer – ?

43. Title Date 43 Coming Fast – Plug-in, Series Hybrids or Extended Range Electric Vehicles

44. Title Date 44 Future Gasoline Price – $ 1.50 – $ 5.00 /gallon

45. Title Date 45 Annual Mileage 15,000 MPG

46. Title Date 46 Old Carbon Fuels Will Continue to be Used if they are Economic

47. Title Date 47 2 Key Developments s Lithium Batteries s Cellulosic Bio Fuels

48. Title Date 48 The Invention is Here

49. Title Date 49 Developments to Watch Developments to Watch s Vehicle/Infrastructure Integration s Auto/Utility Integration

50. Title Date 50 Future Direction It’s All a Matter of Economics

51. Title Date 51 World Class is a Moving Target