Automotive sector innovation:

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18 Νοε 2013 (πριν από 3 χρόνια και 7 μήνες)

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Automotive sector innovation:
L
ow carbon solutions for
growth


Philip Amison

West Midlands Economic Forum, 21
st

June 2013

Outline


The automotive sector is changing



P
roviding a stimulus to innovation and growth



The Midlands is benefiting because of its historic and continuing
strength in automotive and advanced engineering technologies




This analysis is based on
ongoing

research covering the ‘low
carbon vehicles’ sector in the Midlands

The automotive sector is changing


Change is being driven by:


Rising CO2 emissions


Resource depletion


G
rowing congestion
and
pollution


Policy
(
national
and
international)



Creating
an increasing challenge to
the existing
automotive
industry
paradigm …

Ford’s “Blueprint for mobility”


The
number of cars on the world’s roads is forecast to grow from 1
billion now to up to 4 billion by mid
-
century



“No
one company or industry will be able to solve the mobility issue
alone and the speed at which solutions take hold will be determined
largely by customer acceptance of new
technologies”



“We’ll
increasingly take advantage of the car as a rolling collection of
sensors to reduce congestion and help prevent
accidents”




Ford Motor Company Executive Chairman Bill
Ford’s
keynote address at the
2012 Mobile World Congress in Barcelona

A stimulus to innovation and growth


The range of technologies that
are
-

and
will
be
-

important
to
success in the industry has
expanded, including:


Electronics


Digital/Communications


Materials and structures


Fuel and powertrain



The
role of specialist suppliers of knowledge, R&D and
components has become crucial for innovations of a more
systemic
nature (
Köhler

et al, 2012).

Open innovation


I
n some
industries, the process of innovation has become increasingly ‘open
’,
shifting from taking place within a single
firm,
across firm boundaries


involving other firms, universities, research institutes and end users
(
Chesbrough
, 2003
)


Particularly
relevant for industries or technologies where knowledge is widely
distributed and firms cannot establish or maintain sufficient in
-
house
capabilities


Can
raise profits, increase speed to market, enable firms to expand their
markets and is seen as desirable at times of rapid technological change
(
Chesbrough

and
Crowther
, 2006)


Marks a change in innovation processes within the automotive industry
which were traditionally shaped
by the
large vehicle
makers
and largely
undertaken
in
-
house

Phoenix industries


Characterised as clusters
of small and medium
-
sized
businesses,
working with
broadly similar
technologies,
that have sprung up in former industrial areas
(
Christopherson
, 2010)



They benefit
from the historic, relatively immobile, investments in industry
knowledge and workforce skills that have taken place over a long period of
time in these
areas



Benefiting
from 'initial advantage'
-

“... personal networks, technical skills and
market knowledge that have developed over a long time, giving them an edge
over less 'rooted' clusters in the same industry.”

The West Midlands car industry


A brief history:


Previously prosperous region (2nd to South East in 1960s)


Major deindustrialisation since the 1970s


Lost all volume car production, now reliant on production of luxury
vehicles and specialist niche firms


The industry
today:


Vehicles manufacturers (premium/upper premium segments)


Cluster of Tier 1 and Tier 2 suppliers


Niche vehicle manufacturers


Concentration of design, R&D and engineering consultancies


University research expertise


The research


Interviews with firms


80 possible candidate Midlands firms initially identified


32 firms contacted so far


13 interviews completed


Interview duration ranged from 25 minutes to 2 hours


most
interviews lasted around 45 minutes



Also interviewing policymakers/other stakeholders (2 interviews
completed so far)

Structured interview format

1. Nature of the firm’s
business

-

Main products/services, turnover, main
customers and
suppliers



2. The firm’s ownership and
origins

-

Ownership
status and
origins
,
reasons
for
choice
of
location



3. Nature of the firm’s
workforce



Workforce size, occupational groups,
industrial/technical
background, commuting distances



4. The firm’s external
linkages

-

Relationships
with other firms, with universities and/or with R&D
centres, membership of industry networks



5. The firm’s approach to learning, knowledge transfer and
innovation

-

How
the firm keeps
up to date with the latest developments in
technology/the industry, approach
to
innovation (internal,
‘inbound’ or ‘outbound’ R&D/innovation)


6
. External influences on the firm and the role for public
policy

-

Main
external influences on
the
firm, development
needs and the
role for
public
policy.

1. Nature of the firm’s business (
i
)


Products/Services:


LCV designers, developers and low volume manufacturers


LCV servicing, repair (and retailing)


Mechanical and electrical engineering consultancies/low volume
manufacturers


EV powertrain design, development and manufacture


Designers, developers and manufacturers of lightweight structural
components


Designers and developers of advanced engineering components


Designers and developers of fuelling infrastructure products


(A number were Tier 1 suppliers to major automotive OEMs)


Location of the 13 firms

Birmingham

2

Shropshire

1

Coventry

6

Staffordshire

1

Leicestershire

2

Worcestershire

1

1. Nature of the firm’s business (ii)


The most
f
requently named automotive customers included:


JLR, Mercedes Benz, Aston Martin, Bentley, Toyota, ‘major German and
Japanese auto firms’, TRW, F1 teams; Vehicle fleet
owners; Also
-

production
for vehicle
trials


The most
-
named non
-
auto customers were in aerospace and defence


Suppliers dependent on the product/project concerned, but
typically:


Preferred local suppliers where possible


Only used overseas suppliers where necessary (e.g. specialist component
or ‘directed source’)


Turnover ranges from 0 to £44 million (see chart)


growth
expected by many

Turnover

50,000

250,000

400,000

420,000

600,000

750,000

0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
50,000,000
Firm 3
Firm 4
Firm 11
Firm 7
Firm 8
Firm 9
Firm 1
Firm 6
Firm 10
Firm 5
Firm 2
Firm 12
Firm 13
Turnover (£)

2. Ownership and origins (
i
)


Typically private limited companies, with ownership still in the
hands of those who founded the company (only two exceptions
in terms of ownership)


Start dates vary from 19
th

Century to 2009


excluding the
outliers, most started in the period 1999


2009


Most frequent origins include:


Owner/MD with a Rover background/link
-

3


Owner/MD with a motorsport background


3


Owner/MD with an other automotive background


3


Other


4 (includes the two older firms)


2. Ownership and origins (ii)


Reasons for choice of/staying at current location:


Proximity to most important customers


Local specialist skills base in suppliers/workforce


Retain existing workforce


Ease of commuting for owner/MD


Want to be based in the UK/locally for brand reasons


Central location (good for logistics)


University linkage

3. Nature of the firm’s workforce


Workforce size ranges from 2 to 560 (see chart)


Tend to employ (plus use contractors):


Science and engineering professionals


Associate professional and technical


Skilled trades


Process, plant and machine operatives


Mostly male workforces


Most live close to the firm


Several of the older firms had traditions of long service (15


40
years service not uncommon)

Workforce

2

4

5

6

9

10

10

33

52

141

150

186

560

0
100
200
300
400
500
600
Firm 4
Firm 7
Firm 3
Firm 8
Firm 11
Firm 1
Firm 9
Firm 6
Firm 10
Firm 2
Firm 5
Firm 12
Firm 13
Workforce

4. The firm’s external linkages


Most firms involved in collaborations of one form or another:


Collaborative R&D projects


Informal collaborations with suppliers


Formal collaborations with suppliers


Most were members of/involved with networks:


Niche Vehicle Network


Automotive Council


SMMT (few)


University linkages were typically project or specific
-
topic
related (division between those using local universities and
those picking universities by specialism, UK
-
wide)

5. Learning, knowledge transfer and innovation


Keeping up to date with technology/industry developments:


“We are at the leading edge



Links with suppliers


Use of internet


Conference/seminar/trade show attendance


Innovation:


Largely undertaking internal R&D or in collaborative projects


Some patenting/licencing of technology but not considered worthwhile
by most firms


“Whole company is set up to do R&D”; “Need to be constantly innovating
to attract the attention of customers”; “Whole business is driven by
technology”

6. External influences and the role for public policy

Most used types of ‘support’:


Grant funded R&D projects
-

NVN, TSB, EU


Generic
business support
-

Business Link/MAS/UKTI


R&D tax credits



5 firms mentioned some contact
with their LEP/Local Authority

What more could be done?:


More R&D grant funding


but need
for greater continuity/progression
(support beyond prototype stage,
for commercialisation)


‘No finance available in the UK for
manufacturing’


Lower taxes/tax breaks/Less red
tape


Role for MTC/Proving factories


Public sector procurement role


Need for a more strategic approach
to transport/LCV policy

Emerging themes (
i
)


Role of innovation in driving the sector:


Smaller firms can innovate more quickly/more cheaply than the major
auto firms


Interaction across technologies; up and down the supply chain; and
between large and small firms (enormous breadth of technologies)


Hybrid firms providing services, plus prototyping/low volume
manufacturing

(largely in niche vehicles)



Role of historic (and relatively immobile) investments:


Past/
ongoing

importance of Rover/JLR


Depth of skills and experience in suppliers and in the local workforce


Emerging themes (ii)


Role of public
-
private sector cooperation:


Establishment of the Automotive Council UK and its work in:


Developing a technology
r
oadmap


Informing regulation


Supporting development of the UK supply chain


Earlier role of Advantage West Midlands, for example working with JLR to
secure investment at i54, plus wider support for the automotive cluster



Possible future trends:


If mobility, rather than the car, becomes the focus


could it open up
major opportunities for (disruptive) cross
-
sector investment (i.e.
investment from outside the automotive sector as traditionally defined)?