Published in Economic Development
David Cole, Chairman of AutoHarvest Foundation David Cole, Chairman of AutoHarvest Foundation Courtesy Photo

AutoHarvest’s Cole: Auto supply chain must deal with unpredictable political environment

BY Sunday, December 24, 2017 04:35pm

The automotive industry faces many uncertainties heading into 2018. AutoHarvest Foundation Chairman David Cole said the industry is heading toward more unknowns than knowns, especially because Michigan manufacturers struggle to find proper talent as the visibility among consumers wavers. It all adds up to an unpredictable future for automakers, he said.

Where do you see the economy going in 2018 and how will that affect the automotive industry?

There are so many uncertainties … so many different things in play right now. We are talking autonomy, mobility, advanced powertrains, new materials, international relations, and you throw on there what I call the ‘Trump Effect,’ which could affect many of the factors — the economy, the talent. I’m afraid we don’t know the answer, and I believe one of the key things that we are dealing with now is the magnitude of uncertainty.

How is technology changing the industry dynamic?

It depends on the supplier. In fact, if you look both at the manufacturers and suppliers, one of the issues we are seeing is a divide emerge from what I call the haves and have nots. The haves (are) GM, Ford, Toyota and a few others, and there are some manufacturers that aren’t doing all of the different things that are going on. They are potentially in trouble. With the high-tech companies, one of the things we are seeing is what I call a commoditization of tech, and it’s moving so fast that you could be in great shape one day and out of the businesses the next. 

From your perspective, what’s the biggest issue for the supply chain? 

One of things we are concerned with is suppliers aren’t a very visible part of the auto industry. Even multi-billion dollar companies, most people don’t know about them, and one of the problems we are faced with is finding appropriately educated talent. If you are not known, it can be tough. With this lack of visibility, particularly of suppliers, it’s harder to recognize them as an appropriate place to work. 

How are automotive suppliers addressing those talent concerns?

We haven’t seen the worst of it yet because of the boomer retirements that are going on. It’s a huge problem. The number one shortage of talent in Michigan happens to be in skilled trades and technicians, and number two is engineers with electro-mechanical skills. We just don’t have a pipeline, and part of the problem is most people take manufacturing for granted. People tend to have a dated picture of what manufacturing is, and parents say, ‘I don’t want my kids to work in manufacturing. I don’t want them getting their hands dirty unless he’s punching computer keys.’ 

When do you anticipate the next downturn in the automotive cycle? What is the industry doing to prepare for it? 

The general consensus is that we could have a little fall off from sales. In reality, what we are doing is looking at a total restructuring of the industry. If you look at a company like GM, they make and sell cars and trucks. In terms of people who are looking at the big picture, (GM) is the furthest in the lead of redefining their company. It’s an extremely chaotic environment that is emerging. There are so many uncertainties gathered together. What do you do when you are in the middle of chaos? You try to stay alive. For the companies, they are trying to play all of the different games so as the pathway becomes clear, they are already playing it. 

How will issues like the ‘Trump Effect’ and NAFTA shape the industry next year?

The North American Free Trade Agreement is a policy between the U.S., Canada and Mexico, and they kind of work through that and pretty much optimize the manufacturing footprint. Anything that could change that, you’ve got a problem. One of the interesting aspects Trump’s been pushing is that he wants to bring jobs back, but we don’t have the talent for those jobs. Manufacturing in general — just to give you kind of a number that we’re looking at — has a shortage of over 2 million appropriately educated people.

Looking ahead to 2018, what’s keeping you up at night?

It’s the incredible level of uncertainty that we are facing. It’s talent, it’s technology, it’s all of the different policies that float out of Washington. Everybody likes a predictable picture of the future. We don’t have that.

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