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The Automotive Communities ProgramThe Automotive Communities Program
Sean P. McAlinden, Ph.D.Vice President of Research and Chief Economist
Center for Automotive Research (CAR)Ontario Mayors for Automotive Investment
Cleary International Centre
Windsor, ONOctober 6, 2006
Motor Vehicle Production by Country, 2005
Millions of Units 11.98
10.80
5.76 5.71
3.70 3.552.75 2.69 2.53
1.80 1.67
0
2
4
6
8
10
12
14
US Japan Germany China S. Korea France Spain Canada Brazil UK MexicoSource: OICA, Ward’s Automotive
It’s All About Product…..
North American Production By Country Year to Date August 2006
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
8.00%
9.00%
10.00%
11.00%
12.00%
13.00%
14.00%
15.00%
16.00%
17.00%
18.00%US Production
Canada
Mexico Production
Canadian % Of North AmericanProduction
(In M
illio
ns)
North American Production By Country Year to Date August 2006
70.00%
72.00%
74.00%
76.00%
78.00%
80.00%
82.00%
84.00%
86.00%
88.00%
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
20.00%U.S. % Of North American Production
Canadian % Of North AmericanProductionMexican % Of North American Production
Canada Becomes More Expensive
1.11
1.60
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
Jan-99Ju
l-99
Jan-00Ju
l-00
Jan-01Ju
l-01
Jan-02Ju
l-02
Jan-03Ju
l-03
Jan-04Ju
l-04
Jan-05Ju
l-05
Jan-06Ju
l-06
CDN $
U.S. $ Down 31% Against the Loonie
The Automotive Communities Program• Funded for Development by the Mott Foundation• Based at Center for Automotive Research• Program is beginning its FIFTH YEAR of assisting communities• A Joint Industry-Community Information Outreach and Conference
Program• Self-funded through Community Contributions
• 32 US/Canadian Upper Midwest Traditional Automotive Communities• 5 states, 1 province, 6 utilities
• Top Five N. American Vehicle Firms and 8 of the Largest Suppliers (GM, Ford, DCX, Honda, Toyota)
• Only program of its kind bringing multi-national communities and auto companies together to address common issues related to the ever-changing automotive industry
• To serve as a not-for-profit auto advisory and information service to traditional automotive communities
• Provide real time communication with automotive firms – and contacts
• Advise communities on local policies that impact auto renewal.• Share product change and opportunity information• Perform impact joint research
ACP Assistance to Specific Communities
Ontario
MO
MI
INOH
IL
The ACP Region
OEM and Supplier Facilities
ACP Member Communities 2006 - 2007Ministry of Economic
Development & Trade - Ontario
Canada
Windsor-Essex County
Development Commission
London Economic
Development Corporation
Greater Toronto Marketing Alliance
Nottawasaga Futures
Canada's Technology
Triangle
The Indy Partnership
Allen County Department of Planning (IN)
South Central Indiana
Economic Development
Group
Town of Normal (IL)
The Right Place, Inc.
Bay Future, Inc. (MI)
City of Bay City (MI)
Saginaw Future Inc.
Michigan Economic
Development Corporation
(MEDC)
Flint-Genesee Economic
Growth Alliance
Economic Development Alliance of St. Clair County
(MI)
Missouri Department of
Economic Development
St. Louis Regional
Automotive Partnership
City of Hazelwood (MO)
City of Fenton (MO) City of Wentzville
(MO)
Regional Growth
Partnership (Toledo, OH)
Ohio Department of Development City of Lima (OH)
Wood County Economic
Development Commission
(OH)
Defiance County Economic
Development (OH)
Perry County Development
Corporation (IN)
Indiana Economic
Development Corporation
City of Ft. Wayne
Grant County Economic
Growth Council(IN)
Project Future -Economic
Development for South Bend, etc.
ACP Member Companies/Utilities/Misc. 2006 - 2007
Consulate General of
Canada
Indiana Municipal Power Agency (IMPA)
American Electric Power (AEP) Hoosier Energy Duke Energy CMS Energy
FirstEnergy
Denso International America, Inc.
Federal-Mogul Corporation
Ford Motor Company
General Motors Corporation
Honda of American Mfg.
Inc.Lear Corporation
TRW Johnson Controls
ArvinMeritor, Inc. DaimlerChrysler Corporation
Dana Corporation
Toyota Motor Manufacturing
Inc.
Delphi Corporation
Three Major Activities
• Automotive Information Outreach
• Automotive Communities Studies
• ACP Membership Meetings Forums
Automotive Information
• Industry updates• Product timing information• Investment and dis-investment alerts• Database and analysis of major automotive investments• Partners with JD Power, CSM Worldwide, Elm Intl., Polk• Major supplier contract activity• Arrangement of special meetings• Significant technology developments• New productivity developments
Major automotive investments from 1993-2005
Source: Book of Deals, CAR
4 out of Top 10 Global Transportation Sector Investments are in ACP Region--2005
What Are a Company’s Options?
1 Close
2 “Warm Idle”
3 Update current products
4 New Product(s)
5 ??????
Lessons Learned
• Strong and persistent leadership• Building partnerships• Focus on industry & job retention
– Success produces new jobs/investment• Maintaining the right business environment• Adopt proactive strategies• Automotive Action Groups
ACP Meetings to Date• January 22, 2003 - General Motors World Headquarters, Detroit, MI• May 28, 2003 - Daimler Chrysler Technology Center, Auburn Hills, MI• August 3, 2003 - Grand Traverse Resort, Traverse City, MI (MBS)• October 28, 2003 - Ford World Headquarters, Dearborn, MI• December 16, 2003 - Delphi Corporation, Troy, MI
• May 10, 2004 - General Motors World Headquarters, Detroit, MI• August 2, 2004 - Grand Traverse Resort, Traverse City, MI• November 9, 2004 – Johnson Controls Inc., Plymouth, MI• January 19, 2005 – Automotive News World Congress, Detroit, MI• April 29, 2005 – Denso Manufacturing Michigan Battle Creek, MI
• August 3, 2005 – Grand Traverse Resort, Traverse City, MI (MBS)• September 7, 2005 – Honda of America Manufacturing, Marysville, OH• January 11, 2006 – Cobo Hall, Detroit, MI (North American Intn’l Auto Show)• April 13, 2006 – Toyota Motor Manufacturing, Princeton, IN
• June 28, 2006 – Dana Corporation, Maumee, OH• August 9, 2006 – Grand Traverse Resort, Traverse City, MI (MBS)• October 12, 2006 – Ford World Headquarters, Dearborn, MI• January 2007 - TBD
Stuck on a Plateau or Worse! Total U.S. Sales of Light Vehicles:
1992 - 2007
8.2 8.5 9.0 8.6 8.5 8.2 8.2 8.8 9.0 8.7 7.7 7.9 8.0 8.1
2.5 2.6 2.8 3.0 3.1 3.4 3.8 3.8 3.9 4.2 4.7 4.8 4.42.6 2.9 3.4 3.3
4.3 4.1 4.4 4.6
8.6 8.4
7.88.3
2.5
4.03.74.4
3.64.64.6
0.02.04.06.08.0
10.012.014.016.018.020.0
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
Car MV/CSU/CUV Other Truck/Van
Mill
ions
Year
13.3 13.915.0 14.7 15.1 15.0 15.6
17.0 17.4 16.9 16.917.216.516.8 16.6 16.6
North American LV ProductionFord and GM NA production below recession levels
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
EGM Ford Chrysler Group Other
Thou
sand
s of
Uni
ts
Down Below 54% “Detroit 3” U.S. Market Share1986 – 2006/1st 8 Months
(Sales of Detroit 3 N. American “owned” production)
25.521.8
39.2
33.5
11.414.7
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06/1st8 Mo.
Year
Perc
ent
Ford GM Chrysler
17.0%
12.8%
22.8%
Source: Kim Korth, IRN presentation to OESA 2005 Nashville Regional meeting
1999 2000 2001 2002 2003 2004 2005
BREED Technologies
(9/99)
Key Plastics(3/00)
Cambridge Industries(5/00)
Mexican Industries
(7/01)
A.G. Simpson(10/01)
Federal Mogul(12/01)
Harvard Industries(2/02)
DCT(8/02)
GenTek(10/02)
Exide Technologies
(4/02)
Talon Automotive
(7/01)
Hayes Lemmerz(12/01)
Aetna Industries(2/02)
Insilco(1/03)
Valeo(1/02)
Venture Industries
(5/03)
Atchison Casting(8/03)
Precision Tool & Die
(12/03)
Veltri Metal(1/04)
Citation(9/04)
Amcast Industrial(12/04)
Oxford Automotive(12/04)
Intermet(11/04)
Tower(2/05)
Collins & Aikman(5/05)
Meridian(4/05)
EaglePicher(4/05)
2006
Dana(3/06)
Delphi(9/05)
Hayden(2/06)
Major Supplier Bankruptcies . . .and now the largest, Delphi, and another large one, Dana
?
So . . .GM Will be the Size of Ford, and Ford the Size of Chrysler
and Chrysler the Size of . . .
6.2
4.3 4.63.3 3.1
3.2
0
1
2
3
4
5
6
7
8
GM-2004 GM-2008 Ford-2004
Ford-2010
Chrysler-2004
Chrysler-2008
Mill
ions
(Capacity equal to the size of Chrysler will be closed . . . (Capacity equal to the size of Chrysler will be closed . . . About 22% since 2004, or 3.2 mil. units.)About 22% since 2004, or 3.2 mil. units.)
2004-2010 Change in North American Vehicle Production Capacity
Chrysler!
Oklahoma City-2006
Lansing Craft Centre-2006
Spring Hill - 2006
Atlanta – 2008
Oshawa 2 - 2008
Moraine - 2006
Lansing Metal - 2006
Pittsburgh Metal - 2007
Portland - 2006
Ypsilanti SPO - 2007
St. Catherine’sPowertrain -2008
Flint Engine 1 - 2008
Baltimore - 2005
Linden - 2005
Lansing M - 2005
Lorain - 2005
GM, Ford, Delphi & ACHU.S. Plant Shutdowns and Line Trimmings
Announced and Executed, 2005-2008
St. Louis - 2006Doraville - 2008
Wixom – 2007
Batavia – 2008
Windsor Casting – 2008
Ford Shutdowns, +7 More TBDDelphi Plant Shutdowns
ACH Plant Shutdowns
GM and Ford Job Cuts: 22 Plants and Lines61,500 Hourly (28,783 in Plant Shutdowns), 17,000 Salaried to start
Delphi Job Cuts: 21 Plants23,000 in Plant Shutdowns and Selloffs600 other salaried
ACH Job Cuts: 14 Plants27,600 in Plant Shutdowns and Selloffs500 other salaried.
Total = 120,200 Jobs
Twin Cities - 2008
Norfolk - 2008
Essex Engine – 2007
Maumee Stamping – 2008
0.2
4.6
10.5
-13.9
-8.0
-11.0
10.9
-4.2
-20 -15 -10 -5 0 5 10 15 20
Small Car
Middle Car
Large Car
Luxury Car
CUV
SUV
Van
Pickup
Percentage Change
Segment Breakdown - U.S. LV SalesYOY % Change1st Half, 2006
Growth Segments TotalNearly 75% of the Market by 2012
0%10%20%30%40%50%60%70%80%90%
100%
2005 2006 2007 2008 2009 2010 2011 2012
Large RWD B-Segment C-Segment CUV/MAV Other*
* Mostly SUVs, pick-ups & vansSource: CSM Worldwide
CUVs Built in the Upper MidwestOakville, OntarioFord Edge, Lincoln MKX:October, 2006Ford Fairlane,Lincoln CUV: Mar 2008
Alliston, OntarioAcura MDX: Sep 2006
Honda MAV: Jan 2009
Delta Township, MIGMC Acadia, Saturn Oulook: Nov 2006Buick Enclave: April 2007Chevrolet CUV: June 2008
CAMI—Ingersoll, OntarioSuzuki XL7: August 2006
Chevrolet Equinox: July 2009GMC CUV, XL7: Jan 2010
East Liberty, OHElementJuly 2008
Belvidere, ILDodge Caliber
U.S. Sales of RWD Independent Suspension Passenger Cars
2001 – 2012
0.60.7
0.7
0.91.1
1.2 1.1 1.11.3
1.4
1.8 1.8
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Uni
ts (M
illio
ns)
Source: CSM Worldwide
An Integrated Industry
TXMS
ALGA
SC
TN
KY
INIL
MI
MITSUBISHI-NORMAL
TOYOTA-PRINCETON
TOYOTA-SUBARU
HONDA EAST LIBERTY HONDA MARYSVILLE
TOYOTA
SPARTANBURG-BMW
I-65
NISSAN-CANTONHYUNDAI-HOPE HULLHONDA-LINCOLN
TOYOTA-SAN ANTONIO
MERCEDES BENZ-VANCE
TOYOTA-HUNTSVILLE
OH
NISSAN
I-75
Roads Heading South …?
InternationalSupplierAndManufacturerLocations
KIA-TROUP COUNTY
New International Assembly Facilities in U.S. & Canada: 2006-2009
Source: Automotive News, Harbour Report, CAR research
Company Location WorkersInvestment ($ million)
New Capacity
TMM-TexasTMM-Canada
Toyota-SubaruKia
Honda
San Antonio, TXWoodstock, ON
Lafayette, INTroup County, GA
Greensburg, IN
2,0001,300
7002,5001,500
8509503001,200550
200,000150,000100,000300.000200,000
New Vehicle Total 8,500 950,000$3,850
Total International Capacity by 2009 = 7.3 mil., 40.3%Big Three Capacity by 2010 = 10.9 mil., 59.7%
Honda in the Midwest—Minimize Costs, Logistics, Supplier Upheaval
Source: Honda of America, 2006
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Toyota in the Midwest (and beyond)—
Minimize Costs, Logistics, Supplier Upheaval?
• Toyota Pursuing:• Increased Local Sourcing• Additional Engine plant• Additional Assembly plant(s)
Average Incentives Compared to Kia and Toyota 2006
Announcements$409.2
$130.0$68.0
$22.2$0.0
$50.0$100.0$150.0$200.0$250.0$300.0$350.0$400.0
Toyota-Lafayette, IN
North Average South Average Kia, GA
Toyota-Lafayette, INNorth AverageSouth AverageKia, GA
Mill
ions
Source: CAR research—Book of Deals
Average Incentive Comparison(OEM Plants 1993-2005)
$57.1 $44.2
$61.1
$24.7
$6.8
$4.1
$0.0$20.0$40.0$60.0$80.0
$100.0$120.0$140.0$160.0$180.0$200.0
North SouthTax Abatements Infrastructure Employee Recruitment, Trg., Screening
Source: CAR research—Book of Deals
Mill
ions
OEM Facilities in ACP Region
Type NA Facilities ACP Facilities ACP % NATransmission 13 11 84.6%Engine 24 16 66.7%Stamping 39 30 76.9%
NA Prod. 2003 ACP Prod. 2003 % ProductionTransmission 10,765,687 10,162,492 94.4%Engine 11,637,291 8,310,735 71.4%Stamping (pc/hr) 24,758 19,326 78.1%
Source: The Harbour Report, 2003
U.S.Assembly Plant
2,000 Jobs
.56 Powertrain Plants or 560 Jobs
.56 Stamping Plants or 850 Jobs
3,800 Parts & Component Jobs or a Total of
7,210 Manufacturing Jobs!
And another 7,700 Non-manufacturing Supplier Jobs
Vehicle Assembly is Huge Driver of Economy
Source: CAR Research
7.5
Approximate National Automotive Manufacturing Multiplier
of
6.5 U.S. Jobsfor each Job at a
U.S. Motor Vehicle Firm
Source: Contribution of the U.S. Motor Vehicle to the Economies of the United States, California, New York, and New Jersey, Center for Automotive Research, 2003, Contribution of Toyota to the Economies of Fourteen States and the United States in 2003, Center for Automotive Research 2005
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