Europe de l'Ouest
Are industrial policies possible within the European Union? The case of Spain in the automobile sector (1986-2012)
(2012). Are industrial policies possible within the European Union? The case of Spain in the automobile sector (1986-2012).
Gerpisa colloquium. The request for an active intervention of the State in industrial sectors has become a recurrent feature of socio-economic actors during times of economic crisis. If such policies were clearly used in the NIC’s in the 1980s and 1990s, the BRICs followed a similar path strategy of attracting FDI in order to become industrial countries. When looking at the European Union, it is often argued, that the pooling of sovereignty since at least the Single European Act made very difficult for member states to develop such active policies typical of the state-enhanced model of capitalism. Departing from a critical analysis of the varieties of capitalism debate applied to the Spanish case, this paper aims to explore in which way European integration has transformed the capacity of the European nation-state to develop a successful industrial policy. To such purpose, it will analyse one of the main industries which have flourished in Spain since its accession to the EU in 1986: the automotive industry. The paper will use as starting hypothesis the existence of a European government of industrial affairs which may be fragmented and incomplete, but still coherent with the political conditions required by its dominant institutional order. The trajectory of automobile policies will be integrated within this framework in order to find out whether it is typical of the industrial policies derived from the Spanish type of capitalism.
Session 11
Session n°:11-
Renault trough the crisis: commercial bets and political tensions
In the name of consumer: The social construction of innovation in the European automobile industry and its political consequences
(2012). In the name of consumer: The social construction of innovation in the European automobile industry and its political consequences.
Gerpisa colloquium. The paper questions the conventional representation of innovation and product policies dynamics in the European automobile industries. It shows that the proliferation of models, their faster renewal and the increasing technological content of new cars have not been pulled by the “postfordist” demand of the new “king consumer”, but pushed by corporate strategies within a well defined conception of control. The paper focuses in particular on the political consequences of this innovation dynamic. At the market level, it shows that this trend has led to an increasing inegalitarian access to new cars reinforced by the rising cost of ownership of second hand cars. At the production level, it shows that in order to manufacture and sell profitably this wide range of new models carmakers have increased work productivity while reducing the cost of work. The paper argues that this double antifordist dynamic has locked-in the sector in a conception of control that is both economic and socially unsustainable.
Session 13
Session n°:13
Le besoin d'un plan B pour défendre le site France
La chronique hébdomadaire de Bernard Jullien directeur du Gerpisa et conseiller scientifique de la Chaire de Management des Réseaux du Groupe Essca.
L’incapacité foncière des stratégies de rétablissement des comptes publics à obtenir seules les résultats escomptés a fait, dans les dernières semaines de la campagne présidentielle, l’objet d’un consensus de fait. Elle a conduit à promettre de rechercher, avec l’Allemagne et la BCE, les conditions d’une inflexion de la stratégie macroéconomique européenne qui permettrait de faire la place requise à la quête d’une croissance plus forte. La même semaine en France, l’automobile a fait sa véritable entrée – tardive – dans la campagne via la question d'Aulnay que les salariés du site menacé sont venus poser à Bercy lors d’une réunion tripartite qui, comme on pouvait s’y attendre, les a laissés sur leur faim. Déçus par le candidat sortant, les responsables syndicaux se sont empressés d’interroger son principal challenger faisant ainsi du sort de leur usine une des possibles clés du second tour. read more
Optimum Car Life in an Era of Technological Transformation: Public Policy Issues
(2012). Optimum Car Life in an Era of Technological Transformation: Public Policy Issues.
Gerpisa colloquium. This paper explores the distinction between economically optimum car life from the viewpoint of a profit seeking Original Equipment Manufacturer (OEM) and from the viewpoint of social and environmental imperatives. In particular, it is sometimes assumed that environmental viability implies extending the working life of a car (for an application of this premise, see for example Ceschin and Vezzoli 2010). In this paper we explore this proposition, while considering possible public policies – including tax and subsidy policies – that might better reconcile private and social benefits. The context of this paper is one of projected and growing eco-austerity combining with the transformative potentials of non-ICE technologies in an era of technological change.
Taking as given the imperative to accelerate the profitable introduction of sustainable (non-ICE) car technologies, the paper is organized in progressive stages as follows.
(a) Assuming a traditional or conventional organization of the market for used cars, the question of the socially or environmentally optimum car life is isolated from its preferred determination by profit seeking manufacturers: the paper considers the role which tax and subsidy policy might play to better reconcile the two.
(b) Assuming a non-traditional or non-conventional organization of the used car market, the paper then considers how the first set of conclusions might change. In this part of the paper, the design of the used car market, and the organization of after sale services, is brought to the foreground. The implications for auto retail, distribution and services provision are emphasised.
(c) The overall conclusion to emerge is that in a period of technological transformation optimum car life from a social or environmental perspective is more likely to be shorter rather than longer, with a faster rate of turnover of existing vehicle fleets a reasonable goal of policy; and the organization of the used car market emerges as a key feature of the industry, requiring closer study.
The paper as a whole is a further development – with applications – of an exploratory paper presented at the 18th GERPISA Colloquium. It builds on discussions undertaken the following year, in a seminar held at ENS Paris, organised for this purpose. To illustrate its analysis, the policy implications of the paper are contrasted with the policy trajectories currently observed in the particular case of the UK (recently reviewed in papers by Berkeley et al (2012) and Harper and Wells (2012)). Here, as perhaps elsewhere, it can be observed that question of optimum car life, and the organization of the used car market, are subordinated to other concerns. The paper concludes by considering how practical changes to influence public policy might then be effected.
References
Berkely, N., Jarvis, D. and Bailey, J. (2012) ‘Phoenix from the ashes: can low carbon vehicles ensure the long-term of the West Midlands Automotive Cluster’, International Journal of Automotive Technology and Management, vol 12, 2 (forthcoming)
Ceschin, F. and Vezzoli, C. (2010) ‘The role of public policy in stimulating radical environmental impact reduction in the automotive sector: the need to focus on Product-Service System innovation’, International Journal of Automotive Technology and Management, vol 10, no 2/3, pp321-341
Coffey, D. and Thornley, C. (2010) ‘Extended Producer Responsibility in the Auto Industry and Durable Goods Leasing: some economic implications for sector policy’, 18th GERPISA Colloquium, June.
Harper, G. and Wells, P. (2012) ‘Diverse regional sustainability strategies: template for the future or squandered resources?’ International Journal of Automotive Technology and Management, vol 12, no 2 (forthcoming)
Session 18
Session n°:18-
Making Fiat-Chrysler a viable carmaker
Fiat as a Multinational: Strategies and Performances
L’ADLC en Marie-Antoinette du pouvoir d’achat
La chronique hébdomadaire de Bernard Jullien directeur du Gerpisa et conseiller scientifique de la Chaire de Management des Réseaux du Groupe Essca.
La reine est réputée avoir prononcé les paroles historiques "s'ils n'ont pas de pain, qu'ils mangent de la brioche", un soir d'octobre 1789, à Versailles, alors qu'une manifestation pour le pain se déroulait aux grilles du château. C’est aussi ce que semble dire aux français sevrés d’augmentations de salaires l’Autorité de la Concurrence (ADLC) : "s’ils n’ont pas de vraies augmentations de pouvoir d’achat, qu’ils aient la concurrence !". Sans surprise étant donnés les termes dans lesquels avaient été définis l’auto-saisine avant l’été sur le fonctionnement de la concurrence sur le marché français de l’après-vente automobile, l’Autorité de la Concurrence, qui était d’avance persuadée qu’il devait y avoir un problème de concurrence (puisque toutes les orientations libérales de Bruxelles n’avaient pas été validées en droit français), croit en trouver un et suggère, sans pouvoir rien démontrer, qu’en renonçant aux dessins et modèles en particulier, celui-ci serait résolu et les ménages français allégés d’une charge indue. read more
The persistent role of proximity in vertical relations: Evidence from the European car industry
(Submitted). The persistent role of proximity in vertical relations: Evidence from the European car industry.
Gerpisa colloquium 2012. It is sometimes argued that in a global economy many of the traditional
roles of proximity have become less important. Yet there is persistent evidence
that proximity still shapes economic activity. This paper investigates the role
of proximity in the choice of external suppliers in the European automotive
industry. We conceptually break it down into three complementary dimensions:
physical proximity, cultural proximity, and proximity to clusters. Using
a supplier choice model, we find that each of the three dimensions has strong independent
explanatory power for the formation of buyer-supplier relationships
and that cultural proximity has the strongest e ffects. The eff ect of geographical
proximity has become stronger over time at very short distances, but weaker at
longer distances. The positive e ffect of clusters is limited to vertical clusters of
suppliers that do not produce direct substitutes.
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Session 22
Session n°:22
Creative accumulation in a mature industry - Understanding the current transformation of the automotive industry
(2012). Creative accumulation in a mature industry - Understanding the current transformation of the automotive industry.
Gerpisa colloquium Krakow May 30 - June 1. The automobile industry constitutes a paradox for established innovation theories. Few sectors have displayed such stability in their dominant product designs and incremental improvement of core technologies as the automotive industry, making it an archetypical example of a capital-intensive, oligopolistic sector competing on process efficiencies along stable trajectories.
Emerging economies and state support have added a few new actors, and hard-pressed “old economies” have seen the demise of some older firms, but the basic industry structure has remained unchanged for a long time. Repeatedly researchers have expected this stable pattern to break down and open up for new radical departures, for example in the aftermath of the oil shocks in the early 1980s (Altshuler 1984), following rising environmental concerns (Nieuwenhuis and Wells 1997), or the Californian zero emissions vehicle (ZEV) mandate (Pilkington and Dyerson 2005). But the incremental trajectory prevailed and researchers forecast that the industry would fail to accommodate new technologies or regulation.
Extrapolating previous trends, Fontaras & Samaras (2010:1832), for example, argued that the European industry would have great difficulties in achieving EU´s emissions targets for 2012/15, since their technologies were already “being pushed to their limits”. In the same vein, the innovation theorist Clayton Christensen predicted that electrical vehicles implied a disruptive threat to established automakers “…the electric vehicle is not only a disruptive innovation, but it involves massive architectural reconfiguration as well, a reconfiguration that must occur not only within the product itself but across the entire value chain…”(Christensen, 1997/2003, p. 252). In the tradition of industrial life cycle studies, innovation and change was expected to come from new firms enjoying an “attacker´s advantage”, which incumbents with their “core rigidities” would have a hard time to match.
And yet, the last five years have witnessed a remarkable vitality among automotive incumbents, both car makers (OEMs) and component specialists. Improvements in established technologies have accelerated, and far from being ”pushed to the limit”, a report from Transport & Environment, 2011 shows that automakers will comply with EU´s new CO2 emission limits well ahead of time. At the same time a range of new modular innovations are introduced, from multi-speed gearboxes and dual-clutch transmissions, advanced valve management systems and regenerative braking, to collision avoidance systems and other proactive safety equipment. Ten years after corporate lawyers succeeded in winding down the Californian Zero Emissions Mandate, electric vehicles have re-emerged on the back of advances in lithium-ion technologies. The new EV industry includes startups, such as Tesla and Fisker. But far from being caught off-guard, incumbents dominate sales and production. Whereas the highly publicized Tesla sold 2,500 roadsters 2008-2011, Nissan’s produced 10,000 Leaf cars in its first fiscal year ending in March 2011, and Mitsubishi 5,000 EVs in 2010. Rather than being a breakthrough opportunity for “attackers”, the surge in interest for electric vehicles offers Japanese incumbents who failed to compete with Toyota´s hybrid cars a new chance, making use of economies of both scale and scope. And far from implying a “massive architectural reconfiguration …across the entire value chain” the new technologies involve a dynamic expansion of supplier networks, with ample opportunities for incumbents such as Bosch, Continental and Valeo to augment product lines with profitable high-tech modules.
The growth of Asian economies, in particular China, signifies an epochal shift in the centre of the industry, but so far this change has not threatened but created opportunities for Western incumbents. Taken over by Geely in 2010, Volvo Cars, for example, has embarked on its boldest expansion plans ever, doubling production capacity within a few years, and launching highly ambitious product and technology plans, with its Scalable Product Architecture for product development, a new platform for future power-trains (“Volvo Environmental Architechture”) and an ambition to take a lead in premium market for electrified vehicles, such as a plug-in diesel hybrids.
How can this “incumbent vitality” be explained in theoretical terms? Previous GERPISA studies, for example Freyssenet (2009) has analyzed different corporate trajectories within the industry. This paper purports to analyze dynamics at an industry level, which neither fits the “creative destruction” framework, nor the notion of incremental innovation in stable structures. Instead the paper will propose creative accumulation as a fruitful concept to grasp the composite and contradictory nature of current developments in the auto industrial (cf Bergek et al 2011). Creative accumulation stresses the tension between the creativity aspect, implying responses outside of the range of existing practice, and the accumulation aspect, implying knowledge development on the basis of established practices. Creative accumulation means that new and old technological disciplines and areas of expertise have to interact in novel ways to develop products with substantially improved or changed performance. New fields of knowledge have to be aligned with existing, rapidly evolving, technologies – there is no Archimedian fixed point. The paper ends by discussing organizational implications, in particular the challenge of managing creative accumulation processes by means of dynamic integration, instead of separation and isolation, as recommended in the literature on disruptive innovation.
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Session 13
Session n°:13
Lancement de la 208 et campagne présidentielle : le jeu des miroirs médiatiques déformant
La chronique hébdomadaire de Bernard Jullien directeur du Gerpisa et conseiller scientifique de la Chaire de Management des Réseaux du Groupe Essca.
Lire les journaux ou écouter les multiples débats entre "experts" ou "analystes" politiques que tous les médias nous proposent à toutes les tranches horaires revient à entendre les journalistes se désoler que Hollande ne soit pas plus flamboyant ou erratique dans son comportement et qu’il n’en pâtisse guère. On prête alors aux français le besoin de voir les campagnes et les hommes qui les animent rentrer dans une "dramaturgie" qui implique à la fois un suspens plus grand et davantage d’évènements ou de revirements. Le fait que la messe paraisse être dite depuis des semaines voire des mois, et que l’opposition n’ait qu’à cueillir les fruits qui ont poussé dans les arbres que faisait grandir le rejet du sortant est une damnation pour la corporation des journalistes politiques qui en fait un problème politique puisqu’il doit y en avoir un. Parce que cela les ennuie, alors cela doit ennuyer les français et poser un "problème de fond". read more
Le B2 en Europe : segment roi, segment damné ?
La chronique hébdomadaire de Bernard Jullien directeur du Gerpisa et conseiller scientifique de la Chaire de Management des Réseaux du Groupe Essca.
Autoactu nous faisait part cette semaine de l’importance des rabais consentis par les constructeurs sur le marché français : 44% sur l’Opel Corsa, 34% sur la Ford Fiesta. Et la liste ne s’arrêtait pas là puisque, sur le segment concerné – le fameux segment B2 -, cette guerre des rabais fait rage et s’étend à tous les constructeurs : l’usage de tous les anabolisants commerciaux par l’ensemble des compétiteurs fait ressembler la lutte concurrentielle dans l’automobile européenne à un tour de France des pires années. Si les coureurs sont les usines, dans chaque équipe-constructeur, chacun est allé recruter des coureurs à l’Est où l’on se montrait moins regardant sur les minima salariaux et la protection sociale et certaines nouvelles équipes – coréennes par exemple - se sont entièrement constituées de ces champions. Il en est résulté un peloton plus varié où ces nouveaux champions gagnent le plus souvent sans que le fait d’en avoir recrutés soit déterminant. read more
Le coût de l’immobilier et le développement de l’automobile : une question d’économie politique
La chronique hébdomadaire de Bernard Jullien directeur du Gerpisa et conseiller scientifique de la Chaire de Management des Réseaux du Groupe Essca.
Le Gerpisa recevait cette semaine un de ses membres allemands, Martin Krzywdzinski, qui, avec Ulrich Jürgens, a conduit ces trois dernières années, un travail comparatif sur les formes de gestion des ressources humaines qu’un grand constructeur allemand, d’une part et un grand constructeur japonais, d’autre part appliquent au Brésil, en Russie, en Inde et en Chine, dans leurs usines plus ou moins récentes. L’importance et les apports de cette recherche conduiront immanquablement à ce que, dès sa publication, il suscite un intérêt tel qu’il nous donnera l’occasion d’y revenir.
Un aspect spécifique retiendra ici notre attention : c’est l’importance des conditions dans lesquelles les salariés peuvent se loger. De l’aveu même des chercheurs, ils n’avaient pas prévu dans leur protocole d’enquête de s’y attacher pas plus – soulignent-ils – que les décideurs des grands constructeurs concernés n’avaient planifié leurs implantations en intégrant cette dimension. C’est le caractère récurrent des préoccupations exprimées à ce sujet chez les salariés comme chez les managers qui a conduit les chercheurs à en faire un des items clés de la comparaison. read more
Renault-Nissan et GM-PSA : similitudes et différences
La chronique hébdomadaire de Bernard Jullien directeur du Gerpisa et conseiller scientifique de la Chaire de Management des Réseaux du Groupe Essca.
Même si ceci ne manquera pas de susciter quelqu’énervement chez PSA, les lumières qui nous ont été fournies cette semaine sur la forme que va prendre "l’alliance stratégique mondiale" GM-PSA font d’abord penser – comme Florence Lagarde l’a souligné déjà la semaine dernière - à Renault-Nissan. Le fait que les deux piliers de la coopération mise en avant soient le partage des plateformes d’un côté et la création d’une structure commune d’achat de l’autre, que la gouvernance de l’Alliance soit assurée par un "steering committee" composé de 4 top managers des deux entreprises, que l’identité des marques soit préservée et gérée hors de l’Alliance tout comme les outils industriels qui continueront d’être dédiés sont autant d’éléments qui rendent comparables les deux manières de procéder.
Cette démarche intermédiaire entre la fusion et la coopération ponctuelle s’explique dans les deux cas par la nécessité politique de respecter l’identité et la "nationalité" des parties d’une part et par la prudence stratégique et organisationnelle que les entreprises ont tiré de leurs expériences passées et de celles qu’ils ont vu d’autres faire d’autre part. read more
Change in the management of subsidiaries due to increasing value competition - as a starting point for a survey on the impact on employment and occupational qualifications†
(2012). Change in the management of subsidiaries due to increasing value competition - as a starting point for a survey on the impact on employment and occupational qualifications†.
Gerpisa colloquium.
Currently, automotive companies are increasing their value added in the growth markets of the BRIC countries, despite the risk of losing knowledge, especially in China. Protecting their global market position and handling the major markets, especially the Chinese market, require high levels of foreign investment, not only in production, but also in other value-adding activities such as research and development (R&D). A new form of value chain competition arises.
Therefore, global automotive manufacturers’ and suppliers’ management has to adapt to the changing importance of the foreign subsidiaries and now has to coordinate them at least on a regional basis, if perhaps not yet globally.
However, up to now, despite the regionalisation in East Asia, Latin America and sub-Saharan Africa, the value-adding activities of the subsidiaries have been largely confined to single foreign markets. In addition, the interactions between the subsidiaries compared to the exchange relationship between subsidiaries and the parent companies have been low. This has mainly been caused by inter-company transfer pricing and tight, centralized management by the parent companies.
Therefore, “integrating a (new) site into the value added network”, as a fourth step in traditional international market management (after 1. Identifying attractive markets and sites, 2. Deciding on the form of internationalisation and 3. Deciding on the form and timing of establishment), has had to be extended by a multi-market management to reduce product substitutability and the scale and scope disadvantages within and between multinational companies (as a first step, to prevent overcapacities) (cf. Proff 2007 and Proff, Proff 2008, based on Bulow et al. 1985). In a second step, the coordination of international value adding activities must be improved in order to further reduce scale and scope disadvantages. Multi-market management thus becomes coordinated multi-market management.
Coordinated multi-market management has to increase the exchange between subsidiaries through “strategies covering coordination needs” (cf. Peng, Meyer 2011, pp. 457), which is still low in the automotive industry compared to the exchange relationships between the subsidiaries and the corporate centre or parent company (cf. Fuchs, Apfelthaler 2009, p. 214).
Many different “strategies covering coordination needs” are discussed in the literature (cf. overview in Kutschker, Schmid 2011, p. 1035):
- Structural coordination strategies that attempt to “hold the international company together” by structural measures such as the design of departments, staff units and projects and by the centralisation and decentralisation of decision making (and thereby the distribution of decision-making powers),
- Technocratic coordination strategies that aim to impose routines and standards on operational inputs (e.g. execution of operational processes) and operational outputs (e.g. results) through rules and programmes, plans, budgets, reporting systems and formalisation,
- People-orientated coordination strategies that are carried out by personal instructions, autonomy, visits, executive transfers, standardisation of roles and culture-orientated coordination and
- Other “strategies covering coordination needs” such as transfer prices, knowledge transfer and self-organisation.
Although many studies examine which coordination strategy is most efficient, and under what contextual factors the use of a specific coordination strategy is particularly efficient, they have not yet succeeded in finding the answers. For this reason, international companies normally use a range of different coordination strategies simultaneously.
We used an oral survey as our empirical methodology, in order to identify first indications of future changes in the management of subsidiaries on the basis of increasing international value added competition, and conducted in-depth interviews with experts in the automotive industry using a structured interview guideline. The interviews lasted around one and a half hours on average. This methodology was selected because assessments of future developments, i.e. the strategic perspective of the respondents, were to be recorded. It was therefore impossible to use conventional hypothesis testing and an analysis by multivariate methods.
We conducted interviews of 93 industry experts (generally from leading automotive industry associations), well-known academics and top managers (generally managing directors) of subsidiaries of German automotive manufacturers and suppliers in the BRIC countries of Brazil, Russia, India and China – all in the year 2010 during research trips to all four countries – and in the German parent companies
The interviews showed that of the many “strategies covering coordination needs” discussed in the literature, four appear to be particularly important: 1. Regional management with extensive autonomy from the corporate centre and coordination based on value consensus, 2. Institutionalised knowledge transfer with coordination based on differences in know-how, 3. Personnel transfer with hierarchical coordination and 4. The offer of shared support functions, with coordination via transfer prices which exploit tax advantages.
The interviews therefore showed that these four “strategies covering coordination needs” appear important to the experts and are in some cases already pursued in the multinational automotive companies, but that they are not yet followed to an adequate extent. In China in particular, the many sites have not been coordinated so far in a Chinese or Asian network, but mostly remain autonomous value-adding units. With the fast growth in China and the other BRIC markets, coordination needs will increase (cf. Proff 2012 and Bernhard 2011, p. 31), the role of subsidiaries therefore has to be redefined.
This finding gives rise to a need for further research. We therefore propose a subproject
“Changes in the management of subsidiaries of multinational automotive companies within a new international division of labour and changes in the employment relationship”
for the new GERPISA International Research Project in the field: New Demarcations in the Global Automotive Industry - Breakup of the Triad, as proposed by Ludger Pries and Antje Blöcker.
For this subproject, we can derive the following assumptions:
- Due to increasing value adding activities in subsidiaries operating in emerging markets, a change from a previously largely locally orientated management to a regional and even globally orientated management with increasing autonomy and accretive influence on the management of the parent company is probable.
- Parent companies need skilled workers, because branding, technical development and the production of central components still have to be done within the parent companies.
- Despite the shift of research and development activities into new growth markets, the Triad will remain a central location for innovation, because Asian manufacturers are investing heavily in the Triad.
In this subproject we will examine assumptions relating to the influences on employment and occupational qualifications in the foreign locations as well as at the parent companies in Germany. Therefore, case studies will be conducted with parent companies of German manufacturers and their subsidiaries in the BRIC countries (in collaboration with GERPISA colleagues in France and Italy, possibly with partners in the BRIC countries). The research framework will consists of theories on the role and coordination of subsidiaries in the international management and value adding activities of multinational enterprises.
Selected References
Bernhardt, W. (2011) Die Automobilindustrie im Jahr 2025 – heute die Basis für den Erfolg von
morgen legen, in: `Zeitschrift für die gesamte Wertschöpfungskette Automobilwirtschaft
(ZfAW)´, 14. Jg., S 26-33.
Bulow, J. I., Geanakoplos, J. D., Klemperer, P. D. (1985) `Multimarket oligopoly. Strategic substitutes
and complements´, in: Journal of Political Economy, Vol. 93, pp. 488-511.
Fuchs, M., Apfelthaler, G. (2009): `Management internationaler Geschäftstätigkeit´. 2. Aufl., Wien.
Kutschker, M., Schmid, S. (2011) `Internationales Management´, 7. Ed., Munich..
Peng, M., Meyer, K. (2011): `International Business´. London.
Proff, H. (2007): `Dynamische Strategien: Unterstützung der Erreichung der angestrebten Wettbe
werbsvorteile im internationalen Wettbewerbsprozess´. Wiesbaden.
Proff, H. (2012) `Managing the transition to electric mobility in Chinese automotive subsidiaries of
MNCs´, will be published in: International Journal of Automotive Technology & Management”,
Spcial Issue on China Strategies, 2012.
Proff, H., Proff, H.V. (2008) `Dynamisches Automobilmanagement. Strategien für Hersteller und
Zulieferer im Internationalen Wettbewerb´. 1. Aufl., Wiesbaden.
Session 12
Session n°:12-
Changed competencies of European automotive companies in the transition to electric mobility – as a starting point for a survey on the effects on employment and occupational qualifications
(2012). Changed competencies of European automotive companies in the transition to electric mobility – as a starting point for a survey on the effects on employment and occupational qualifications.
Gerpisa colloquium.
The aim of this paper is to investigate what competencies are changing in the transition to electric mobility. We attempt to estimate the expected changes in competencies in the European automotive industry in the transition to electric mobility by means of a forecast of the changes in the level and structure of factor-related value added. This forecast shows very clearly and robustly that value added can only be retained in Europe if new competencies are developed here. We then show how the competencies can be changed.
In economics, the term (gross) value added is understood to mean the turnover of a producing unit less inputs and depreciation (cf. Stobbe 1984, p. 385). In management science, the term has no uniform definition (cf. Schierenbeck 2003, p. 622). However, here, too, the total turnover less inputs and depreciation is taken as the basis, and the value added calculated in this way is assigned to types of use: outgoings to employees (wages and salaries, social insurance contributions, pensions), capital providers (interest) and the company itself (retained income).
In economic terms, an industry’s value added results from the degree of division of labour at given transport costs. In markets with high competitive intensity, companies constantly strive to reduce their in-house value added in order to tap suppliers’ specialisation advantages of scale and scope which they themselves cannot achieve. When value added is relocated abroad, additional comparative cost advantages (particularly payroll costs) can be utilised (cf. Grossman, Helpman 2002, 2003 and 2005 and Grossman et al. 2006). The option of international value added is limited by that value added which is regarded as a core competence and produced in house and by the degree of modularisability of the products (cf. Proff 2011).
With the technological change in the transition to electric mobility, the modularisability of cars will increase further, because an electric vehicle - similarly to a computer and unlike a vehicle with an internal combustion engine – will consist of isolatable modules, which will increase the pressure on value adding activities in Europe (e.g. Brusoni et al. 2001 or Sako 2005). At the same time, the competence base will change in the transition to electric mobility. For European automotive companies, this means a threat even to those value added components which they have so far produced themselves because they offer no comparative cost advantage compared to other companies and – because of the required coordination in product development – no specialisation advantages either. Since the automotive industry cannot compete with competences in battery production and high-performance electronics, there is a tendency towards outsourcing.
Technological change favours the suppliers, who can offer fabricated products for electric cars even today, and are most likely to offer scale advantages through their development lead (cf. Milgrom, Roberts 1990). Cost reduction is urgently needed for the introduction of the new technology. Since batteries, high-performance electronics and other important parts of the electric vehicles are mostly manufactured in Asia at the moment, a huge shift of value added from Europe to Asia will commence unless countermeasures are taken. European premium players, in particular, wish to prevent that (cf. Kagermann 2011). Their customers, however, are still only prepared to pay for a premium product if they can perceive superior value. If the necessary (technical) competencies are missing, only the brand remains as the image anchor, which will not be sufficient in the long term for a consumer durable like a car.
We have developed a detailed model that describes the current structure of the value chain of the EU automotive industry. Based on assumptions derived from initial discussions with industry experts, we made a first attempt to estimate the development of the value chain structure in Europe up to 2020 and 2030. European production of electric vehicles will increase from 900,000 in the year 2015 to 4.5 million units in the year 2030. Their share of production will thus increase from five percent (2015) to 22 percent (2030). Value added will decline slightly. Automotive manufacturers and suppliers will reduce their vertical integration for traditional vehicles with internal combustion engines; manufacturers, for example, will go down from currently around 30 percent to less than 20 percent in 2030. Outsourced value added will shift increasingly to the new growth markets. If 2011 value added is taken as 100, it will fall to 90 by 2030.
Behind the changes in vertical integration lie changes in the structure of the value added. When the most important components of value added are considered (labour, capital and profit), a heterogeneous picture emerges, with a significant drop in total wages of around a quarter of the value added.
Value added can only remain in Europe if competencies are built up here (cf. Kagermann 2011). In that case, there would have to be a clear shift from traditional competencies and R&D resources in mechanical engineering and mechatronics to competencies in chemicals and battery technology. These competence changes result from the decrease in value added in the traditional internal combustion engine technology and the increasing share of electric vehicles from European production. As the importance of internal combustion engine technology declines, the share of mechanical engineering and mechatronic will fall while the share of electrical engineering and electronics will rise steeply. While in 2011 just under 90 percent of competencies in production and development focus on mechanical and mechatronic components and just over 10 percent on electricals and electronic components and chemicals, the share of mechanical engineering and mechatronics is likely to be reduced to 60 percent by 2025. Enormous growth of 900 percent is expected in chemicals, the share of electrics/electronics will double. Both fields of competence together will account for around 40 percent in the year 2025.
According to the explanations of competence building (see e.g. Proff 2005), organizational competencies can be created through “refinement” of individual capabilities as well as organizational assets. “Refinement” or competence building (cf. Rasche 1994) means that a benefit has to be created in the market for the consumer. Company-specific linkages to routines have to ensure that competences are untradeable and unimitable and that they correspond to the dynamics of the particular environment. In the largely stable environment (cf. Basil, Cook 1974 and Sanchez 1997) of the traditional internal combustion engine technology with few and relatively minor changes, single- and double-loop learning (Argyris, Schön 1978) are sufficient to scrutinize management processes and organizational goals. In contrast, in the dynamic environment of electric mobility with frequent and severe changes, deutero-learning in terms of process learning is needed to scrutinize repeatedly existing contexts.
As competencies lose value in the lapse of time (cf. McGrath et al. 1996), e.g. by unintended diffusion of knowledge, they have to be enhanced by a consistent progression of improving existing competencies and renewing competencies. Due to the assumption that most automotive companies have to close a competence gap in the transition to electric vehicles, the renewal of competencies is more important in relative terms than the improvement of existing competencies (see Volberda, Baden-Fuller 1998, Proff 2005).
Within the transition to electric mobility many companies lose their competencies in an extraordinary way (e.g. in the development of engines for vehicles with combustion engines) or do not have the necessary competencies so that it is impossible for them to improve them (e.g. battery technology). They need to jump (“leap-frog”) to a new s-shaped technology curve, either by co-operations or by acquisitions (see e.g. Brezis et al 1991).
Building on the findings produced by this paper on value added and competence changes in the transition to electric mobility, the subproject "new competencies of automotive companies in transition to electric mobility – effects on employment and occupational qualifications" is proposed for Theme 7 of the new GERPISA International Research Programme (A new international division of labour and changes in employment relationships). The subproject will focus on competence development and the influences on employment and occupational qualifications, as well as on ways to secure value added in Europe and to develop new competencies in the European automotive industry.
We will examine how automotive companies can build up required competencies in the transition to electric vehicles. In doing so, we will consider assumptions on the effects of competence development concerning the demands on occupational qualifications at locations in Germany as well as at the locations of the foreign subsidiaries. Our model will be further detailed, presenting the changes in value added in the transition to electric mobility as well as changes in assignments, resources, taxes and profits. The model will be tested on (8 to 10) different technical scopes (e. g. battery and power electronics) and on total vehicles. The subproject will analyse in depth four scopes of electrical vehicles which represent 80 percent of value added.
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Parallel Session 4
Session n°:4
Global quality production—new patterns of transnational division of labor of German automobile suppliers
(2012). Global quality production—new patterns of transnational division of labor of German automobile suppliers.
Gerpisa colloquium. The contribution will focus on changing transnational production systems of German medium sized automotive suppliers. In addition to the traditional strategy to integrate low wage locations into their transnational value chains (the “extended workbench” strategy), a new pattern is on the rise, which we call „global quality production“. This means, German automobile suppliers are upgrading low wage locations in Central and Eastern Europe (CEE) as well as in China in upgrade in competencies and capabilities, enabling them to enter higher value segments of production that up to now were thought to be an exclusive domain of German locations.
Based on case evidence the contribution will discuss how the process of upgrading at low wage locations in CEE and China is organized. This includes how German automobile suppliers ensure the local pre-conditions for upgrading strategies, such as a capable local supply base and the supply of a of qualified work force
With regard to Germany the contribution will discuss the ambivalent implications of this upgrading in CEE and China and the newly emerging new pattern of transnational division of labor. One hand automobile suppliers German locations may face new impositions, when firms use the new options for another round of cost oriented relocation. But there can be new opportunities as well, because the successful operation of transnational quality production systems also depends on the capabilities of German locations to newly direct their profiles to innovation and coordination tasks in global systems. For industrial production in German locations this structural change reduces the significance of its traditional function, but at the same time amplifies its direction to innovation functions. For works councils new options of codetermination open up in this process, but using them is bound to preconditions: adjusting their competence profiles, redirecting their organization structures, and reorganising their power base in a differently structured workforce.
Session 16
Session n°:16-
New business opportunities from crisis
(2012). New business opportunities from crisis.
Gerpisa colloquium. This study reveals the extraordinary history of a Norwegian automotive supplier that went bankruptcy during the financial crisis in 2009. The crisis swept through the industry and hit hard for those actors who already struggled to keep up with the cost pressure. A few people kept faith in knowledgeable workers and innovative ideas, and the company arose from the cumbersome situation to become a sole supplier of critical wheel suspension systems to European premium brands. The company managed to ascend and invest in R&D and developed a patented innovation that saves weight, reduces number of components and saves cost. For this innovation the company won the national innovation prize in 2012, one that not only means glory and acknowledge but also full order books ten years from now with a tripled capacity increase. We have followed the company over several years, from year 2000 and until today, through the financial crisis, with focus on close participation and frequent interaction, especially with people from manufacturing, product development and management. The data shows interesting features about how a supplier can adapt to a completely new market situation by focusing on R&D, customer relations and co-creation, employee competence, and visionary leadership. A unique combination of these aspects has turned the situation upside down, and made a profitable supplier from a high cost country like Norway. The essence is that the crisis was not entirely negative - it also gave opportunities for those who dared to invest in human capital, technology and niche markets. By human capital we mean knowledge, problem solving skills, enthusiasm, and loyalty to the company. The technology developed reduces number of components from 34 to 1 and thereby saves about eight kilograms. Niche markets are automotive premium segment where we find producers like Porsche, Rolls Royce, BMW and Daimler.
Is The Electric Car a Disruptive Innovation?
(2012). Is The Electric Car a Disruptive Innovation?.
(, Ed.).Gerpisa colloquium. Based on a literature review, we propose a conceptual framework clarifying the concept of disruptive innovation and defining criteria needed to identify all forms of strategic innovations. We then evaluate the electric technology to make a statement on its potentially disruptive nature. In addition, the future implications of electric cars are discussed to evaluate its potential mutations which can have an impact on its future innovative form.
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Impact of the Economic Downturn on the Geography of Vehicle Production in Europe and North America
(2012). Impact of the Economic Downturn on the Geography of Vehicle Production in Europe and North America.
Gerpisa colloquium. The sharp economic downturn of 2008/2009 resulted in substantial declines in light vehicle sales and production in Europe and North America. This paper utilizes detailed plant-level production data for North America and Europe to investigate how the recession impacted the footprint of vehicle production in both regions.
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Session 22
Session n°:22
Managing Innovation in a changing industry: the role of SMEs in the European Automobile Sector
(2012). Managing Innovation in a changing industry: the role of SMEs in the European Automobile Sector.
Gerpisa colloquium.
The automobile industry has experienced dramatic shifts over the past decade or so. Uncertain technological trends, changing consumer demand and de-regulation have subjected the sector to major transformations. Value chains now cross national and industry boundaries, globalization is irreversibly changing the industrial landscape by moving production to emerging markets, and new actors have been appearing along the value chain to participate, along with policy makers, in the development of new automobile ecosystems. The technological and organizational innovations related to these transformations necessitate research that can enhance our understanding of the characteristics of the new systems, evaluate the extent to which they are different to previous systems, and extrapolate the implications of these differences for the wider economy and society. We adopt the Open Innovation framework as a point of reference because it provides an overarching concept that has the potential to encompass various research streams and concepts, including outsourcing, collaboration, and networks. The study investigates the role of SMEs in the rapidly changing landscape of the European Automobile Industry through interviewing purposely selected knowledgeable respondents across seven European countries. The findings demonstrate that despite the efforts of regional authorities, SMEs operating in the car industry are largely restricted in their development choices by lack of adequate funding, limited access to expertise and technology, and prohibitive industry structure.
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Parallel session 7
Session n°:7
The new mobility paradigm – transformation of value chain and business models
(2012). The new mobility paradigm – transformation of value chain and business models.
Gerpisa colloquium. Four categories of innovations have been identified by Freeman and Perez (1) incremental innovations, radical innovations, new technological systems (systemic innovations), and technological revolutions or new techno-economic paradigms. New techno-economic paradigms represent changes in technological systems that are so far-reaching in their effects that they have a major influence on the behaviour of the entire economy. Scarcity of oil and external costs like global warming are the key arguments and the main drivers of the change of the current paradigm. They will affect especially the mobility of individuals and the interlinked business models.
Thus optimization of combustion engines, lightweight constructions of chassis and car bodies as well as the usage of biofuel are first developments that cope with these trends by achieving reduced oil consumption and carbon dioxide emissions. The following step of innovation is realized by hybrid vehicles with an electrified power train that combine gasoline with electric batteries or hydrogen using fuel cells as energy sources. Nevertheless the overall target is still to provide mobility with no local emissions from the vehicle and less energy consumption. Electrified vehicles do not produce any off-gases and show a better CO2-balance as well as the highest efficiency in using energy well-to-wheel compared with other drivetrain concepts. On a Well to Wheel basis, this is only true if renewables are used to produce electricity.(2)
Assumed that regenerative energy sources will be used – e.g. the roadmap of the European Union for moving to a competitive low carbon economy in 2050 (3) or the German energy concept (4) estimated that by 2050 their proportion will range at approximately 80% of the gross national consumption of electric energy – electromobility will dominate the market in the long run.
These trends and developments will lead to fundamental changes within the value chain of the global automotive industry.(5) Through these changes novel business models within newly created markets will raise e.g. extended mobility services, activities aiming at the infrastructure, new opportunities in the field of energy transmission and supply and even new strategies of recycling, reusing or reducing the use of resources in order to address global scarcity issues.
Especially for the established players of the automotive industry like original equipment manufacturers (OEMs) or 1st and 2nd tier suppliers this implicates opportunities and risks at the same time. But also new players will get the chance to create and enter new markets with new or extended products or services and lead the new value chain.
This paper compiles and evaluates current approaches and business models of selected OEMs together with upcoming players. Additionally their positions within the existing value chain are being analyzed and classified. Bringing together the identified drivers of changes with current trends within the automotive industry the authors also show new concepts of extended business models, e.g. the idea of an ecosystem, that have the potential to cause an additional shift of power within the global mobility value chain.
(1) Freeman, C., and C. Perez. "Structural Crises of Adjustment, Business Cycles and Investment Behaviour." In: Dosi. G., C. Freeman, R. Nelson, G. Silverberg. and L.L.G. Soete, eds.: Technical Change and Economic Theory. London: Frances Pinter, 1988; pp. 38-61. See also Schumpeter, J.A.: Konjunkturzyklen - Eine theoretische, historische und statistische Analyse des kapitalistischen Prozesses, Bd. I, (orig. engl.: New York / London 1939), Göttingen 1961; Schumpeter, J.A.: Kapitalismus, Sozialismus, Demokratie, (orig. engl.: 1942) Bern 1950)
(2) ifeu Institut für Energie und Umweltforschung Heidelberg GmbH: Umbrela – Umweltbilanz Elektromobilität, Wissenschaftlicher Grundlagenbericht gefördert durch das Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit (BMU), Heidelberg 2011
(3) European Commission: Roadmap for moving to a competitive low carbon economy in 2050, EU COM 112, Brussels, March 2011
(4) Bundesministerium fürWirtschaft und Technologie (BMWi), Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit (BMU): Energiekonzept für eine umweltschonende, zuverlässige und bezahlbare Energieversorgung, 28. September 2010, Berlin
(5) Fournier, G., Würzer, D., Seign, R., Hinderer, H.: Der Weg zur emissionsfreien Mobilität. Strategien der Hersteller im internationalen Vergleich, in: Proff, H./Schönharting, J./Schramm, D./Ziegler, J. (Hrsg.): Zukünftige Entwicklungen in der Mobilität – Betriebswirtschaftliche und technische Aspekte, Gabler Verlag, Wiesbaden 2012, S. 405-423.
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Session 18
Session n°:18-
Institutionalization of Environmental Innovation; Emissions standards and R&D Management in the heavy vehicle industry
(2012). Institutionalization of Environmental Innovation; Emissions standards and R&D Management in the heavy vehicle industry.
Gerpisa colloquium. This study aims to understand the institutionalization process of environmental innovation by identifying different actors, their roles and interactions within the institutional environment they are embedded in as well as implications on innovation and technological development of the firms in the heavy vehicle industry within Europe. The distinction between this study and the conventional firm-level theories on innovation is its inclusive approach that comprises not only firms and their innovation and technology development strategies but also a wider perspective on interactions among actors, the institutional settings for environmental innovation as well as industry dynamics into account. The outcome is thus a more comprehensive perspective of the activities and competencies needed for successful environmental innovation process that could be useful for the firms as well as policy makers in the future regulation of greenhouse gas emissions.
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Session 1
Session n°:1
Transplant Automotive Clusters and the Country of Origin in the Southern States of the United States
(2012). Transplant Automotive Clusters and the Country of Origin in the Southern States of the United States.
Gerpisa colloquium. This paper will examine the strategic role of each transplant in the parent company’s global strategy, investigate signs of subsidiary entrepreneurship, and examine technology flows between each transplant in the south and the Multinational Corporation as a whole, as well as determine the extent to which theses transplants in the south are creating “centers of excellence” within the MNC, and embedded clusters within the region that is so important for locational enduring competitive advantage.
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Session 23
Session n°:23
Managing Complexity: European Works Councils of Diversified Tier 1-Suppliers
(2012). Managing Complexity: European Works Councils of Diversified Tier 1-Suppliers.
Gerpisa colloquium. The European automotive industry and especially the supplier sector has been undergoing a process of a structural change in terms of increasing competition and cost pressure, closures, mergers and acquisitions, relocations, follow- and global-sourcing strategies, higher dependence on OEMs and a tougher vertical restructuring of first, second and third tiers, shorter innovation cycles and a shift from more electrical and electronic parts towards e-driven cars in the near future. These processes were associated with serious challenges for the employees of supplier companies and their representatives at the local, national and European levels. Therefore, plant closures, mass redundancies, pressure on wages, working time and other working conditions were to observe in almost every supplier company.
The paper examines the role of European Works Councils (EWCs) in the automotive supplier industry and the corresponding restructuring processes. It focuses especially on conditions under which EWCs could work as effective bodies or platforms of cross-border interest regulation. On the example of four Tier 1 suppliers (Bosch, Continental, Delphi, GKN), the article provides insights into different management strategies of diversification and (re)localisation of production and R&D activities the EWCs are confronted with.
Focusing on the issues of securing employment, hindering or (if necessary) co-managing mass redundancies, plant closures and/or relocation of production, the paper first demonstrates different roles and functions of EWCs ranging from marginal or inactive bodies up to proactive and powerful platforms of intra-organizational negotiations on the workers’ side and of inter-organizational bargaining with the European and local management. Secondly, the paper aims at explaining this EWC-outcome by referring to four different compounds of influencing factors: (1) configuration and type of company at the European level (multinational, focal, global, transnational), (2) cultural and institutional embeddedness in national environments, mainly of the headquarters, (3) path dependency and the ‘learning curve’ from earlier development and conflict resolution, and (4) the role of individual/charismatic leaders, their personal values and interests.
The paper will argue that, given the legal framework, there is some potential for influencing cross-border restructurings by EWCs at the European level, but due to a high degree of disparate and disperse structures of supplier companies the complexity of intra- and inter-organizational bargaining is rather high, and the qualification of a majority of EWC-members does not hold up with the corresponding challenges.
