DETROIT, Michigan – During this decade, the automotive industry has been a bellwether in its development of leading-edge technology – offering the world commercial solutions that promote vehicle safety, new mobility platforms, environmental achievements, and measurable energy efficiency. Despite the weight of product recalls and intense global socio-economic uncertainties, the industry has contributed mightily to make things quite a bit better. Here are a few examples to consider as 2015 draws to a close and we begin 2016:
Over the past five years, the auto industry has driven impressive economic growth here in the U.S. The industry spreads wider and deeper than you might think. The auto ecosystem has a direct impact as a major employer throughout its value chain. According to the Center for Automotive Research, the auto industry provides 7.25 million jobs in the U.S. – 2.44 million at the automaker level, 3.16 million in the parts, components and materials supply chain, and 1.65 million in the dealer/retail segment.
Revenues from U.S. car sales alone topped $730 billion in 2013, an increase of 29% from 2010. Consider that each dollar invested in automotive manufacturing adds an additional $1.37 into the economy, and that 1.37 multiplier effect is the highest of any industry sector. Thus, sales and servicing of autos drive nearly $1 trillion into the U.S. economy every year.
Today, at its core the auto industry is all about the convergence of leading-edge innovation and manufacturing. Auto manufacturing deserves our respect and, more importantly, it is critical to our economic survival and even our national security. For that alone it is worthy of our highest esteem and appreciation. In partnership with the U.S. Army, the auto industry designs, builds and helps maintain a fleet of 250,000 wheeled military vehicles, according to Detroit-based Tank Automotive Research Development & Engineering Center (TARDEC) officers. Booz & Company’s 2014 survey of annual global research and development expenditures found five automakers among the Top 20 corporate R&D spenders. When you estimate the future impact that technology companies are having as they merge their products, increase their spending, and take a greater role in the shaping of the industry, it becomes an exponential calculation.
Google, Microsoft and Tesla are already significant auto partners and are making a rousing financial and creative impact on the industry. According to the Wall Street Journal, Apple is targeting 2019 to launch its maiden electric iCar platform, code-named Project Titan. Insiders say that Apple is serious about Titan, which would include advanced development of battery technology and in-car electronics. Of course Titan will ultimately complement and integrate with other Apple products like the iPhone and iPad.
Automakers lead the way in innovation as OEMs work to modernize new vehicles. Across the globe, the industry is showcasing technologies that provide unique solutions to meet the aspirational needs of consumers. According to Booz & Company, in 2013 automakers invested more than $100 billion globally on R&D – contrasted with only $25 billion spent on the entire global aerospace and defense sectors. That number will only increase as more tech companies arrive on the scene.
The crossroads where economic growth, security and manufacturing merge is vital to all Americans. For the balance of this decade, it is imperative to bring forward a national strategy, an energy policy and an overall public policy that strengthens manufacturing and sets us on a clear path forward. For example, we have electrification, plug-in hybrids, sustainability, CO2 impact, new EPA standards, complex global demand, scarce raw materials, and other issues and new technologies all converging on the auto space at once.
The auto investment curve is dramatically changing due to a growing ecosystem, with new cost, safety and regulatory requirements becoming the norm. The time has never been more critical for the U.S. government to forge a consistent, responsible industrial policy, one that enables a fair and predictable playing field for U.S. manufacturing to grow, and one that keeps middle class workers and technology here in America. No more heroes and villains, winners or losers…all the auto industry needs is a non-intrusive free market with consistent economic and energy policies and American ingenuity will win every time.
Most important of all, by committing to sustained growth and innovation this decade, the automakers have each year generated millions of paychecks and over $200 billion in state and federal tax revenues, and provided overall economic well-being for countless families. With this in mind I conclude that the industry delivered its share of Christmas presents, fostered more than a few New Year’s resolutions and helped to make things a little better in tough times.
Phil Biggs is Executive Vice President for the Nashville, TN-based technology company, NeXovation.
