Présentation au colloque du Gerpisa

Mobility : A (R)evolution Which players, which business models

Payen, Philippe (2011).  Mobility : A (R)evolution Which players, which business models. Gerpisa Colloquium. Is the car it’s own worst enemy? 53% recognize that their opinion of the car is changing 82% believe the number of cars in the city has to be reduced 17% of homes do not have a car, of which: 9% « de-motorized » due to cost, difficulties parking, change in family arrangements 8% have never owned a car, primarily under 35 and with tendancy to rent for occasional use 1) TNS Sofres study of 7000 car owners, France, February - 2011

MOBIVIA GROUPE, Sustainable Mobility Driver

Mélis, Olivier (2011).  MOBIVIA GROUPE, Sustainable Mobility Driver. Gerpisa Colloquium. For 40 years, A comprehensive solution to the changing needs of motorists (new technologies: vehicle maintenance, design and distribution of components and accessories, services... Our core business: Making vehicles and their uses more widely available: Economically, practically, locally An alternative offer to the car manufacturer networks, giving users freedom of choice at the best price and offering them eco-maintenance solutions Leading brands that are complementary to each other (Midas, Norauto, etc..), 4 existing business sectors

Automotive mobility in the world. What alternatives ?

Feillard, Pascal (2011).  Automotive mobility in the world. What alternatives ?. Pascal Feillard Head of Marketing Intelligence & Foresight Secretary General of IVM Mobility :  Ability of individuals to set up a physical link between their activities (i.e. social/economic/cultural) and their housing and to manage the changes of state and location Some data 70-75% of European Mobility is done with automobile 60% of European Mobility is urban or peri-urban In 2009, 50% of the world population lives in urban areas, 80% in the developed countries In 2020, 60% of the world population will live in urban areas, 80% in the developing countries Of the 20 largest urban areas, only 3 will be in developed countries (Tokyo, New York et Los Angeles) What automobile for what cities in 2015/2020 ?

Reconfiguration of the value chains: old and new actors in the automobile system

Jullien, Bernard (2011).  Reconfiguration of the value chains: old and new actors in the automobile system. Gerpisa Colloquium. The assumption made before the crisis was that the development of the car industries’sustainability requires a rupture or a ‘revolution’: – Probably less for ecological reasons... – ...than for economic and geopolitical ones. • Oil prices will increase because the demand from BRIC markets will grow. • BRIC’s access to automobiles requires alternative energies. • BRIC’s car industries’actors may perceive the constraint as an opportunity to contest the dominant position of incumbent firms. • Reversely : the new landscape building around the triad BRIC/New products/New engines is an opportunity to rebuild the status quo of car industries, car expenses and car uses in developed countries.

Between greening and BRICs: trade-offs and synergies

Jullien, Bernard (2011).  Between greening and BRICs: trade-offs and synergies. Gerpisa Colloquium. Research program objectives defined in 2007   • Such a program has to describe and to analyse (conceptualize) : – How the three main dimensions interact • Environmental preservation pressures (tighter emissions’ standards, requirement for ‘recyclables’...) • Corporate Social Responsibility requirements (Road safety, employment relationship, ability of car manufacturers to cope with the upstream and downstream consequences of their decisions...) • Competitiveness of the industries and of their different components – In different geographical areas – At different levels within the value chain – How are these interactions balanced in terms of: • Synergies (= positive interactions between different dimensions) • Trade-offs (= negative interactions between different dimensions)

The Second Automobile Revolution is underway! Three scenarios in confrontation

Freyssenet, Michel (2011).  The Second Automobile Revolution is underway! Three scenarios in confrontation. Gerpisa colloquium. Since 2008, many changes confirm the second automobile revolution is underway. Three of its four conditions are fulfilled. Three scenarios of transition to cleaner cars are in confrontation: scenario of diversity, scenario of progressiveness, scenario of rupture. The last, that appears the rikiest, could impose, because the second is changing in its exact opposite: the scenario of "all at once". The first is not supported by coalized actors.

The demand for cars in Russia: before and after recession

Starostenkova, Elena (2011).  The demand for cars in Russia: before and after recession. Gerpisa colloquium. The demand for cars in Russia was growing rapidly during pre-recession years (2005-2008). This could be partially explained by the fact that household incomes and wages were rising faster than productivity. However, in general, the share of wages in GDP remained lower than in developed market economies, as well as Brazil and China. Income growth and expansion of car loans (up to 50% of the total sales volume) were the main drivers of the sales growth in all segments of the Russian car market. The period between 2005 and 2008 was called “the consumption boom”. To some extent, this was really so. Rosstat (the Russian statistical agency) reported some reduction of the share of savings and, consequently, an increase in the share of consumer’s expenditures of Russian households. Growing consumer confidence was mirrored by various opinion polls. The level of indebtedness remained low - it didn’t exceed 13% of the total household income (in comparison with, for instance, about 120% in the USA). The recession, which began in Russia in October 2008 (later than in most of the developed market economies), caused a dramatic reduction in the demand for cars and the auto market hasn’t recovered since then. In 2008 Russia ranked fifth in the top 10 countries in terms of car sales volume, in 2009-2010 the country moved to the last place in this list. A sharp fall in demand for cars in 2008-2009 was a consequence of the following processes: • Consumer ‘s shock as a result of recession – dramatic reduction of consumers expenditures; • reduction of the volume of car loans given by banks (from 50% of the total volume of sales in 2007 to 20% in 2009 and less than 40% - in 2010); • Growing protectionism of the state economic policy. Main arrangements of the above policy are as follow: • the increase of custom duties up to the prohibitive level stopped the import of used cars, which used to be high (stated in 2009, still effective) • scrappage program; • the preferential lending program (started in Russia in March 2009, the loan is granted for the purchase of cars or LCV of Russian production at a price less than $20.000, the rate subsidized by Government is 6%). That is, the factors, which provoked a drastic reduction of the car purchases in Russia were (at least partly) quite specific. Sales reduction was not associated only with the dynamics of household expenditures, but with custom duties increase. The car sales have started to grow quickly in the first quarter of 2011. It is rather probable that the annual volume of sales will exceed the pre-recession level. However, it is unlikely that Russia’s share of the global car market (today it amounts to only 3.2% in comparison with China’s 21.1% and 20.5% of the USA) will grow fast. The main reason – low income of 70% of the Russian households and the high income inequality (only 25-30% of households have incomes sufficient to buy a new car). It should be remained than in Russia share of wages in household incomes is high (up to 70 %) as well as differentiation of the wage levels. In terms of the market perspectives it also means that the demand for public transportation vehicles will remain high in the country. This segment of the market has the biggest potential for green, hybrids and electric vehicles of new generation. Some important facts about the Russian car market • High proportion of cars in Russia is of 10 years-old (and even older). Most of old cars are owned by low-income households. Theirs expenses on maintenance are quite substantial (up to 5% of total expenses of the low-income groups); • Before recession old cars were usually replaced by used foreign made cars. Such import was significant during the pre-recession years but it has completely stopped thereafter; • Low level of the financial services in Russia in general, low volume of mortgages and consumer and car loans; • No demand for foreign- made "green" cars and hybrids. So far, hybrid cars (like Chevrolet Volt or Nissan Leaf) haven’t been even presented in Russia by foreign car manufacturers. These models are too expensive for most consumers and they cannot be used as premium class models because of the lack of necessary infrastructure.

Impact of Economic Crises on the Thai Automobile Industry

Techakanont, Kriengkrai, & Sittisak Leelahanon (2011).  Impact of Economic Crises on the Thai Automobile Industry. Gerpisa colloquium. This paper analyzes impacts of economic crises on the Thai automobile industry at both demand and supply sides. On the demand side, this study will offer descriptive and statistical analysis on demand for automobile at micro and macro levels. At the micro level, based on questionnaire survey, we analyze the determinant of consumers demand for a car. At the macro level, we estimate determinants of automobile demand, using data from1970s to 2009. We found that demand for automobiles drop during economic crises in 1997-1998 and 2008-2009. However, the impact of the crisis in 2008 was not as serious as in 1997. This is because car manufacturers in Thailand had undergone business restructure and increased their activities in Thailand since 2000. Thus, on the supply side, this study discusses evolution of the Thai government policies to shed light on how the industry been transformed to be a global production network of one-ton pickup trucks and, recently, a production hub for eco-friendly vehicles of several assemblers. We found that industrial policies were crucial in making Thailand's specialization in automobile production, of which has slightly shifted from one-ton pickup trucks to more small passenger cars.

Nissan: Sustaining Revival

Stevens, Merieke, Takahiro Fujimoto, & Takahiro Tomino (2011).  Nissan: Sustaining Revival. Gerpisa colloquium. In this presentation we will cover the period of 2008-2011 at Nissan. The three main topics we discuss are the focus on electric vehicles Nissan has taken, the importance of the Chinese market, and the alliance with Renault. Nissan has heavily bet on electric vehicles (EVs) as its answer to the increasing demand for more environmentally friendly automobiles. In our chapter we question the likelihood of the widespread diffusion of EVs in the near future, mainly for cost reasons. We look into niche applications of EVs, which we expect to be more likely in the European market rather than the Japanese or United States markets. China is the largest single market for Nissan, representing nearly a quarter of its total global sales. Nissan markets its vehicles to rising middle classes such as China’s as “an important symbol of freedom, status and personal achievement.” We investigate Nissan’s success in this regard, and discuss future developments that are important for Nissan’s strategy in this respect. The Alliance between Renault and Nissan has continually be hauled as one of the exceptional successes of this scale. Renault and Nissan proved that cross cultural alliances can work. We identify several key aspects of this success. The main point we raise in this respect is that Renault and Nissan did not chase scale, but sought complementarities in markets, capabilities and product architectures.

Alternative powertrain strategies and fleet turnover in the 21st century

Belzowski, Bruce, & Walter McManus (2011).  Alternative powertrain strategies and fleet turnover in the 21st century. Gerpisa colloquium. The changes taking place in the global automotive industry related to alternative powertrains and fuels are affecting each country or region differently. Each country or region has its own policies in place to monitor and manage vehicle fuel consumption and emissions. Countries or regions also have different numbers of new vehicles sold annually and the total numbers of vehicles in their fleets. This analysis looks at the current and future direction of alternative powertrains/fuels across four developed economies (United States, Western Europe, Japan, and South Korea) and four developing economies (Brazil, Russia, India, and China) in order to measure the impact of increasing the number of alternative powertrains/fuels in their fleets. In particular, the analysis looks at how much of each country’s fleet will turn over to vehicles based only on alternative powertrains/fuels by 2050 by introducing three different alternative powertrain/fuel models (less aggressive, moderately aggressive, and very aggressive). A less aggressive approach will yield fleet turnover rates of 60 percent or more for most countries, a moderately aggressive approach will yield fleet turnover rates of over 80 percent for most countries, and a very aggressive approach will yield fleet turnover rates of nearly 90 percent or more for most countries.

Developing a new Plug-in Electric Vehicle ecosystem for automotive distribution

Waller, Ben (2011).  Developing a new Plug-in Electric Vehicle ecosystem for automotive distribution. Gerpisa colloquium. The European Commission has recently stated an intention to cut the use of oil and gas fuelled cars in urban areas in half by 2030 and boldly aimed to ‘phase them out by 2050’. Whilst it is difficult for industry to plan for these extended horizons and timescales, it is clear that many carmakers are following a power-train diversity strategy that includes purely electric and plug-in hybrid vehicles. The establishment of an electric car infrastructure prompts the arrival of new entrants into the traditional automotive ecosystem of industries and businesses, and energy companies in particular will have a key role to play in the development of new business models. From interviews with selected industry experts and secondary data on the early stage experiments by carmakers, governments, energy companies and data integrators, a qualitative analysis is made of the implications of power-train diversity for the structure of the automotive industry and the nature of the secondary markets such as residual values, infrastructure development and energy prices that support it.

Flowchart Approach to Industrial Cluster Policy from the point of Sequence Economics

Kuchiki, Akifumi (2011).  Flowchart Approach to Industrial Cluster Policy from the point of Sequence Economics. Gerpisa colloquium. Background: At the beginning of the 2000s, the west side of the Delta in southern China began to develop as Honda, Nissan and Toyota responded to the industrial cluster policy of Guangzhou municipality, creating an automobile industry cluster based around plants constructed by the three Japanese firms in Guangzhou. In 2001, the Shanghai municipality established Shanghai International Automobile City in 2001 as a base for auto production. Within the Tianjin Bohai New Area, the Tianjin Economic Development Area is crucial to attracting foreign investors to Tianjin. Toyota began to manufacture Vios-type automobiles in Tianjin in 2002, and its related firms began to agglomerate there. Purpose: This paper attempts to establish ‘sequence economics’ in which time plays a crucial role. Our flowchart approach to industrial cluster policy proposes a practical method of the sequence economics to explain the automobile industry clustering in China. Based on the experiences of industrial cluster policies in China and other Asian regions, the flowchart approach is established to generate externality such as the backward linkage in the manufacturing industry in a region. The sequence of policy measures will change the investment environment for the clustering of firms in the labor-intensive manufacturing industry by implementing the sequence of policy measures. The model can be applied to other regions such as regions in Africa. Review: Holt (2004) designed a method called branding genealogy by studying several thousands of advertisement on several major brands such as Coca-Cola and IBM. The model of Holt (2004) was derived by both inductive and deductive methods. Our flowchart approach is extracted by successful cluster policies by inductively studying the cases of cluster policy. But we cannot prove our hypothesis of the flowchart approach by inductive or deductive methods. We propose sufficient conditions for the success of industrial cluster policy. We can form an industrial cluster if we follow our flowchart approach that satisfies the condition. Porter (1998) constructed a diamond model finding four attributes. However, every region is not easy to satisfy the four attributes at the same time. Kuchiki (2005) proposed the flowchart approach of the industrial cluster policy by sequencing the policy measures of factors in a line for the practical policy. The aim of the flowchart approach is to prioritize the policy measures in order, not on a diamond plane but on a line. Fujita, Krugman and Venable (1999) established the models in spatial economics to discuss agglomeration. Our sequence economics analyses the dynamic processes of spatial economics and proposes a policy of the sequence of policy measures in practice for attaining the agglomeration of a region. The sequence of policy measures can change the attributes given to a region that determine the models in spatial economics. As a result, the region becomes competitive with other regions in inviting foreign investors in the labor intensive manufacturing industry to the region at the stage of agglomeration. Flowchart approach: The flowchart approach to the sequence of policy measures consists of the following three steps. First, we will find ingredients or factors. In the case that the factors in the manufacturing industry are A, B, C, D, and E, the permutation of 5 is 120. Second, we will select the minimum number of factors from the factors above in order to succeed in industrial cluster policy. Suppose that A is an anchor firm, C capacity building, and E an industrial zone. Then the number of permutation is 6 even though the number becomes smaller. We can implement only one industrial cluster policy. Third, we will sequence the factors along a flowchart based on the successful cases of industrial cluster policy in the automobile industry policy. Industrial clustering of our flowchart approach consists of two stages. The first stage is the process of agglomeration of firms in the same industry or different industries. The second stage is the process of innovation by the firms. Hypothesis: The sequence satisfying a sufficient condition at the first stage of agglomeration in China is an industrial zone, capacity building, and an anchor firm. We found the above sufficient condition for the success of the automobile industry cluster policy at the first stage of the agglomeration (Its proof is at Appendix 1). The elements(1) of building capacity for the stage of agglomeration include the construction of physical infrastructure, institutional building, human resource development, and the facilitation of living conditions amenable to foreign investors. Reference: Fujita, M., P. Krugman and A. Venables (1999), The Spatial Economy: Cities, Regions and International Trade, Cambridge, MA: MIT Press. Holt, D.B. (2004) How Brands Become Icons: The Principles of Cultural Branding, Boston: Harvard Business School Press. Papers: Kuchiki, A. and T. Gokan (2011, forthcoming), “On the Sequence of Policy Measures in Industrial Cluster Policy for Creating Spatial Advantages, ” Kuchiki A. and M. Tsuji (eds.) Industrial Clusters, Upgrading and Innovation in East Asia, Cheltenham: Edward Elgar. Kuchiki, A. (2011, forthcoming), “Promoting Regional Integration through Industrial Cluster Policy in CLMV, ” Kuchiki A. and M. Tsuji (eds.) Industrial Clusters, Upgrading and Innovation in East Asia, Cheltenham: Edward Elgar. Kuchiki, A. (2010) “The Automobile Industry Cluster in Malaysia,” in From Agglomeration to Innovation, A. Kuchiki and M. Tsuji eds., New York: Palgrave Macmillan, pp.15-49. Kuchiki, A. (2008a) “The Flowchart Approach of Cluster Policy,” International Journal of Human Resources Development and Management, Vol. 8, Nos. 1/2, pp.63-95. Kuchiki, A. (2008b) “Theory of a Flowchart Approach to Industrial Cluster Policy,” in The Flowchart Approach to Industrial Cluster Policy, A. Kuchiki and M. Tsuji eds., New York: Palgrave Macmillan, pp. 285-311. Kuchiki, A. and H. Tsukada (2008c) “Guangzhou’s Automobile Industry Cluster,” in The Flowchart Approach to Industrial Cluster Policy, A. Kuchiki and M. Tsuji eds., New York: Palgrave Macmillan, pp. 41-70. Kuchiki, A. (2007) “Agglomeration of Exporting Firms in Industrial Zones in Northern Vietnam: Players and Institutions,” Industrial Agglomeration and New Technologies: A Global Perspective, M. Tsuji, E. Giovannetti, and M. Kagami eds., Cheltenham: Edward Elgar, pp.97-138. Kuchiki, A. (2005) “Flowchart Approach,” in Industrial Clusters in Asia, A. Kuchiki and M. Tsuji eds., New York: Palgrave Macmillan, pp.169-199. Books: Kuchiki A. and M. Tsuji eds. (2011, forthcoming) Industrial Clusters, Upgrading and Innovation in East Asia, Cheltenham: Edward Elgar. Kuchiki A. and M. Tsuji eds. (2010) From Agglomeration to Innovation, New York: Palgrave Macmillan. Kuchiki A. and M. Tsuji eds. (2008) The Flowchart Approach to Industrial Cluster Policy, New York: Palgrave Macmillan. Kuchiki A. and M. Tsuji eds. (2005) Industrial Clusters in Asia, New York: Palgrave Macmillan. Note 1: (Capacity building) Physical infrastructure refers to ports, roads, communications, and so on. Institutional building, crucial to success in inviting foreign investors, includes the streamlining of investment procedures through one-stop services, the deregulation of laws, and the introduction of preferential tax system. Human resources include unskilled labor, skilled labor, managers, researchers, and professionals. Living environment, for example, includes the provision of hospitals and international schools in order to invite foreign firms. An anchor firm is expected to have a high value of the industrial backward linkage to use many parts and components. Appendix 1: The decentralization of the central government makes harder the competition of a local region with other regions in inviting investors. The optimal sequence of policy measures is a factor for the success of a region in industrial cluster policy. The sequence of policy measures is crucial to its success in inviting investors. In the case of the automobile industry clusters at Guangzhou and Tianjin, China, the order of the industrial cluster policy is E – C – A. That is, once that an industrial zone is established, capacity is built, and an anchor firm moves in the industrial zone, then its related firms of suppliers follow the anchor firm, resulting in the industrial agglomeration of firms at the zone. Among possible permutations, the flowchart approach to industrial cluster policy chooses the permutation that consists of the minimum number of factors to succeed in the policy. The sequence of policy measures: Suppose that a firm in an advanced country will invest in a region in an emerging country. There are two candidate regions of A and B. At an initial stage, the investment environment of A is better than that of B at an initial stage to be invested in. But the region B adopts its industrial cluster policy to change its investment environment by implementing the sequence of policy measures. The policy measures change the spatial condition of B. A simple model of Sequence Economics: The sequence of policy measures of industrial cluster policy changes the investment environment of region B for the firm to choose its location of a plant. 1. The flowchart approach: The sequence of policy measures to form a production function {s1 à s2 à s3} 2. Production functions at region A and region B, respectively: Y A and Y 1B. Production function becomes increasing returns to scale in region B (Y iB ) by implementing the sequence of policy measures: i= 1, 2, and 3. The production function after implementing the sequence of policy measures of {s1}becomes : Y 1B = f ({s1}), The production function after implementing the sequence of policy measures of {s1, s2}: Y 2 B = f ({s1, s2}), The production function after implementing the sequence of policy measures of {s1, s2, s3}: Y 3 B = f ({s1, s2, s3}) Production function in region A: Y A. 3. Preference conditions for choosing a location by a firm in an advanced country: L (Y 1 B) < L (Y A) L (Y 2 B) < L (Y A) Region A is preferred to region B due to the increasing returns to scale at region B. 4. The decision on choosing the location of a plant of the firm has been changed after implementing the sequence of policy measures. L (Y 3 B) > L (Y A). Region B is preferred to region A. It is noted that the inequality remains unchanged when the sequence of {s1, s2, s3}is different from the order of {s1, s2, s3}, say{s1, s3, s2}. That is, Y 3 C = f ({s1, s3, s2}) L (Y 3 C) < L (Y A). Proof of Hypothesis 2: The prototype of export processing zones was seen in Kaohsiung, Taiwan, which became a model for free trade zones in Malaysia (Kuchiki(2010)), eastern seaboard in Thailand (Kuchiki(2011)), northern Vietnam (Kuchiki(2007)), Guangzhou (Kuchiki and Tsukada(2008a)) and Tianjin (Kuchiki(2005)) in China . The model is suitable for other East Asian countries, provided that they satisfy the preconditions of political and macroeconomic stability and public security.

Industrial Policies, the Business Model of BYD and the Chinese "Green New Deal"

Lee, Chunli (2011).  Industrial Policies, the Business Model of BYD and the Chinese "Green New Deal". Gerpisa colloquium. This paper aims to examine the industrial policies on new energy vehicles in China, while taking into account new changes in the US-China economic relationship in the context of the Chinese Green New Deal. There was remarkable progress in the US-China relationship in the fields of new energy and the environment, which are the centerpiece of the "Green New Deal" policy advocated by President Obama. Typical examples of agreements between the US and China is the series of agreements on the environment signed during President Obama's visit to China in 2009. In the latter case, the leaders of the two countries announced the launch of a US-China Electric Vehicles Initiative. This initiative will include joint development of standards, demonstration projects in a dozen or more cities, formulation of a technology roadmap, and citizen education projects—all based on the US-China Electric Vehicle forum first held in September 2009. The leaders emphasized that their countries have a shared interest in accelerating the dissemination of electric vehicles in order to reduce crude oil dependence and emissions of global warming gases, and to promote economic growth. The US and China will build a green partnership based on the mechanism of the Strategic Economic Dialogue. On the other hand, China has its own Green New Deal which takes new energy and environmental industries to be a field for future growth. A notable trend in 2008 was the "Green Car Project" implemented as one aspect of the "Olympic/New Energy Model Projects" during the Beijing Olympics, as part of the "Green Olympics." Chinese automakers such as Chang’an, Chery, Dongfeng, FAW and Foton collaborated with Tsinghua University and other universities, and provided new energy vehicles they developed themselves for the Olympics. These included 55 electric vehicles equipped with lithium-ion batteries, 25 hybrid microbuses, 75 hybrid passenger cars, 20 fuel cell vehicles, and 410 electric carts for use at competitions. The spirit of the Green Olympics continues at the 2010 Shanghai Expo. The concept of the Shanghai Expo is to be a low-carbon, green expo, and the Expo makes extensive use of low-carbon technology. This automobile industry promotion policy which was announced in 2009 should be highly praised as an industrial policy which is cognizant of the future development of new energy vehicles. The Chinese government has also developed a series of incentives to promote purchasing and dissemination of new energy vehicles. In February 2009, the Ministry of Finance and the Ministry of Science and Technology announced a policy to provide subsidies for the use and dissemination of new energy vehicles. In order to promote energy efficiency and support the industrialization of new energy vehicles, the government will take the initiative in adopting new energy vehicles in the public sector, e.g., for city buses, taxis, government vehicles, environmental project vehicles and postal vehicles. The aim is to disseminate such vehicles nationwide, based on experience in demonstration cities. The first group included 13 demonstration cities and the second group doubled. At the moment, the competitive advantage of BYD's business model, which focuses on cost-performance and cost leadership, is clearly evident in both its battery business and automobile manufacturing. In terms of product technology, high added value engines are made by Shenyang Aerospace Mitsubishi Motors, but mass production models use engines developed or improved by BYD, and BYD is innovating to reduce costs by manufacturing in-house. For example, in the assembly plant for the gasoline powered F3, crucial press equipment is made by Fagor (Spain), welding equipment by Ogihara Manufacturing (Japan) and painting equipment by Durr (Germany). Assembly and inspection are done with machinery made by Banzai (Japan), and stamping dies are Japanese made. In March 2010, the German firm Daimler AG announced that it had signed a technical tie-up with BYD for development of electric vehicles for the Chinese market. Another bottleneck for dissemination of electric vehicles is development of charging infrastructure, but this must rely on the leadership of the government and the electric power industry. The 8 major goals for the Chinese automobile industry were stipulated for the three years from 2009 to 2011 in the "Automobile Industry Adjustment and Promotion Plan" promulgated in March 2009: We found finally that as a new industrial revolution unfolds based on new energy, the aim of China is to line up on the same starting line as the other major countries of the world. For the short term, China is taking bold fiscal action as a pump-priming measure to overcome the international financial crisis, and for the long term, this will serve as strategic investment to secure a strategic position in international competition.

Geely: a trajectory of catching up and multinational growth

Balcet, Giovanni, Xavier Richet, & Hua Wang (2011).  Geely: a trajectory of catching up and multinational growth. Gerpisa colloquium. In the last two decades, the car industry in China has been fast growing, and booming in the last years. It is diversified both in terms of competitors, (domestic and foreigner), of brands, range of products, innovation, and in terms of control and ownership, spatial localization. Foreign manufacturers have played a central role in bringing in technology, management know-how, marketing and selling networks, supplying chains. Domestic companies, (State-owned) in the first stage have served as platforms allowing foreign companies, through joint-venturing, to set up their business and to operate on the Chinese market, taking rapidly the lion’s share concerning sales on the domestic market. The competitive environment, relatively low entry barriers, State and local pro-market industrial policies have allowed domestic companies, both SOE and private to enter the market to increase market shares, first the low end, slowly moving upward to more sophisticated products (electrical vehicles, hybrid cars). Technology and know-how transfers through spill over have accelerated the pace of catching up and the development of new companies. The change of strategy by SOE enterprises from platform strategy to development of own designed brands, government policies to support the car industry sector have modified the conditions of competition on the domestic market. An higher domestic competitive pressure, the relaxation of government rules for exporting capital and the world financial crisis have facilitated foreign acquisitions, either to expand abroad or to acquire new technologies in China, in order to continue to catch up and to scale up on more complex segments. Geely (or Zhejiang Geely Holding Group) is an interesting case which highlights the strategy of non-State new comers car maker on the domestic market both in terms of entry, growth, diversification, up-grading, acquisition of technology and positioning. Our presentation will concentrate on the following topics : - reverse engineering and strategies of technological catching up - business model - before the Volvo deal: a consistent strategy of asset-seeking acquisitions: London Taxi and Australian transmission producer - bargaining the Volvo deal - financing the Volvo deal: the role of central and local governments - a two-ways internationalization process: Geely acquiring Volvo; Volvo investing in China: in manufacturing, R&D, education and training.

Reducing automotive emissions – The potentials of combustion engine technologies and the power of policy

Berggren, Christian, & Thomas Magnusson (2011).  Reducing automotive emissions – The potentials of combustion engine technologies and the power of policy. Gerpisa colloquium. Reducing transport emissions, in particular vehicular emissions, is a key element when mitigating the risks of climate change. In much of the academic and public discourse the focus has been on alternative vehicle technologies and fuels (e.g. electric cars, fuel cells and hydrogen), whereas vehicles based on internal combustion engine technologies have been perceived as close to their development limits. This paper offers a different perspective by demonstrating the accelerated improvement processes taking place in established combustion technologies in response to new EU emissions legislation and the ensuing competition between manufacturers and different technologies. Future regulation has a key role for driving continuous emissions reductions. Based on a comparison of four different regulatory approaches, the paper identifies the need for a long-term technology-neutral framework in Europe with stepwise increasing stringencies which will continue to drive innovation and diffusion in the most effective way.

The Strategic Importance of Supplier Relationships in the Automotive Industry

Brandes, Ove, Staffan Brege, & Per-Olof Brehmer (2011).  The Strategic Importance of Supplier Relationships in the Automotive Industry. Gerpisa colloquium. Which business strategy could be feasible for the development of the green car? After the financial crisis starting in Q3/2008, the US Government takeover of GM in 2009 and the global warming debate there are new rules of the game. The competition is not only between global companies but increasingly between national governments. We conclude that the winners in the automobile industry from 2010 on will be those who can organize long-term collaboration partnerships between the car makers, their suppliers, and the political stakeholders. This conclusion is drawn from our in-depth, longitudinal (1990-2010) case study of Volvo and Autoliv and is referring to the findings of Lorenzoni and Lipparini (1994) and Dyer and Nobeoka (2000), and Helper et al (2000, 2010).

Changing Industrial Relations in the Russian Car Industry

Krzywdzinski, Martin (2011).  Changing Industrial Relations in the Russian Car Industry. Gerpisa colloquium. The contribution examines the evolution of industrial relations in the Russian car industry on the institutional/regulatory and on the company level focusing on foreign car manufacturers in Russia. The institutional framework of industrial relations in Russia has been characterized by the coexistence of a “social partnership” rhetoric and formal recognition of the freedom of association on the one hand, and by efforts of the state to hamper the development of trade unions and to limit collective action on the other hand. The constellation of industrial relation actors is changing as the traditional post-communist trade unions are challenged by new merging union organizations. In this situation, the European, American and Asian car manufacturers arrive in the Russian market and introduce their home country models of industrial relations as an additional element to the already dynamic and contradictory setting.

China and México: competition for the United State automobile Market

Alvarez, Lourdes, & Francisco García (2011).  China and México: competition for the United State automobile Market. Gerpisa colloquium. China and México: competition for the United States automobile Market Lourdes Alvarez Medina Francisco Javier García Pando The emergence of the People´s Republic of China (China) in the global automobile industry has given way to a great deal of speculation on what strategies Chinese car makers will pursue in entering the United State of America (USA) market, threatening the established order among the automotive producers in México. Since the automobile industry is considered by the Chinese government as “the typical- capital- and technology industry , to encourage export of cars and components or investment abroad and good for enlarging exports and being significant for the transformation of foreign trade and economic cooperation” (Annual report, 2010). The aim of this paper is to study the trade of automobiles and components from China and Mexico toward the USA market. This country is the main partner of the automobile industry in Mexico; however China has been increasing its exports component in the last years and now it may be seen as a rival contending for the same market. The study is made using the methodology developed by the Comisión Económica para América Latina y el Caribe (CEPAL) and its data base Magic (CEPAL, 2010). Trade is studied at a 10 digits disaggregate level, according to the Harmonized Tariff System of the United States in order to understand which cars and components are being imported from each country, the dynamics and how they are contending. The export similarity index of exported autoparts from China and Mexico to the USA is calculated to compare the trade structure of the two countries.

The international expansion of Chinese auto producers: typology and trends

Amighini, Alessia (2011).  The international expansion of Chinese auto producers: typology and trends. Gerpisa colloquium. The paper examines the international expansion of Chinese auto producers over the last decade. Unlike what happened in other sectors, where production growth has been massively export driven, the role of domestic demand has been dominant in the auto industry, especially in the second half of the 2000s, and made China the largest market in the world, with over 13 million vehicles produced in 2009. More recently, in the early 2000s, a massive wave of internationalization began, as Chinese enterprises were encouraged to expand abroad looking for new markets, new resources and new technologies through direct investment, either in the form that the form of greenfield investment and of mergers and acquisitions with other companies. The automotive industry is currently the only manufacturing industry in the top positions, with more than 12 percent of the total value of the stock of Chinese FDI since 2003. A first research objective is to understand the host country determinants of Chinese FDI in the automotive sector. With data from FDIMarkets including several variables (date, company name, source country and state, investment size, number of jobs created and business activity), the paper will provide a detailed map of Chinese FDI in the automotive sector. A total of 33 Chinese manufacturers of motor vehicles (including both OEM and component suppliers) carried out FDI abroad since 2003 (for a total of 81 FDI), in 27 countries around the world. Although a large number of foreign direct investments are directed toward other Asian countries, the preferred destination by far for FDI in the Chinese automotive sector is Europe: 38 percent of the number of FDI since 2003 have been directed towards Europe, compared with 30 percent to Asia (of which around 12 percent to Japan), 12 per cent to North America, and around 9 per cent each to Africa and Latin America. The business activities of foreign branches are very different, ranging from headquarters to retail sales. The distribution of FDI activities is very different for OEMs and component suppliers. Overall, production is an important motivation for both groups, but relatively more for auto manufacturers, while logistics and distribution are critically important for component suppliers, but not for manufacturers. Among the Chinese manufacturers who made direct investment abroad, the majority (60 percent) achieved a maximum of only two projects (50 per cent only one). In the segment of auto components, all but one of the 15 companies that have invested abroad has created a single investment. Only a few companies are heavily internationalized. It is worth noticing that these companies are among the largest Chinese car manufacturers, but not the largest of all. In fact, the major Chinese manufacturers are primarily interested in the internal market and other markets of countries at a similar level of development, with small cars selling at low prices, and therefore their business strategy does not target the acquisition of market share in advanced markets, nor has the high technological capabilities necessary to compete in advanced markets. A second research objective is to investigate the relationship between motivation of FDI and business activity carried out in foreign affiliates. A few Chinese automotive OEM MNEs are heavily internationalised. Three companies have been engaged in FDI since 2003 and these are also those who invested most in terms of No. of FDI, but with very different investment strategies: SAIC Chery Automobile shows a great majority of FDI to developing countries and a few to the UK. All FDI for manufacturing purposes except UK and the Philippines. Nanjing Automobile Group made most FDI to industrialised countries with a concentration of FDI in the USA. In other industrialised countries FDI mainly for non manufacturing activities. For Changan Automobile Group FDI are more balanced between industrialised (for non manufacturing activities) and developing countries (for manufacturing activities).

The US automobile market after the crisis: back to business as usual or birth of a new industry?

Jetin, Bruno (2011).  The US automobile market after the crisis: back to business as usual or birth of a new industry?. Gerpisa colloquium. The US automobile market after the crisis: back to business as usual or birth of a new industry? Bruno Jetin The US auto industry has suffered its worst crisis since the thirties. Since the spring of 2010, it is recovering progressively. GM and Chrysler emerged from bankruptcy as new slimmed-down companies with fewer brands, plants, workers, less debt and market share. It seems that the new “medium three” (GM, Ford and Chrysler) are now making profit in a market of 11 million vehicles sales a year in the US not only by selling high-margin light-trucks but also low-margin compact cars, among them hybrid cars. They have repaid their loans and have gone public again, a move that gives the government a way to progressively sell its stake in the companies' stock. They also seem better prepared to cope with the new gas price hike for they have changed their product mix to emphasize more small cars and fewer sport utility vehicles. But behind these goods news there are still factors of fragility. The US economy is recovering slowly and unemployment stays at a high level contrary to the previous recessions. A new jobless recovery as after the dotcom bubble burst in 2001 seems under way. The structural problems that have led to the crisis have worsened. Family income has dropped, poverty has risen and many have lost their health insurance. In this context, the rebound of the automobile market is no doubt fragile. The temptation is strong to use the traditional recipes such as indebtedness. Banks and captive finance automobile companies have started to issue loans more actively. Subprime auto credit is back. More than 859, 000 new cars were sold to consumers with a subprime credit rating in 2010, according to CNW Marketing research. Banks and auto loan makers are flushed with money and are making large profit on new loans since the policy of “quantitative easing” of the FED has lowered interest rates to nearly zero. GM has spent $3.5 billion to buy AmeriCredit, an auto subprime lender company, precisely to reap profits from this lucrative debt market. Another reason is to increase sales by lending to customers with a questionable credit rating. The danger is to be dependent again on bad loans to increase car sales. Our contribution will analyse these contradictory tendencies. In a first part, we will analyse the structural fragilities of the recovery on the demand side. In a second part, we will present the public policies and firms’ strategies in favour of hybrid cars and their impact on the product mix.

The US automobile market after the crisis: back to business as usual or birth of a new industry?
Bruno Jetin lire la suite

Regulating cross border restructuring in the Automotive Supply Industry – any Role for European Works Councils?

Hauser-Ditz, Axel, Valentina Mählmeyer, & Ludger Pries (2011).  Regulating cross border restructuring in the Automotive Supply Industry – any Role for European Works Councils?. Gerpisa colloquium.
For more than a decade the European automotive supply industry has been in a process of a deep structural change. Due to (1) growing competitive pressure within the industry, (2) high dependence on the automobile manufacturers (OEMs), (3) substantial reorganisation of supplier-OEM-relations and (4) rapid innovation cycles the industry has seen a major consolidation with mergers and acquisitions as well as bankruptcies. Internal restructurings and cross-border relocations of production characterise this industrial sector. Mass redundancies and plant closures in some of the Western European high wage countries go hand in hand with business expansion in Eastern Europe. The recent economic crisis may accelerate the ongoing restructuring processes. Moreover, the electrification of the powertrain will have profound effects too. It will create demand for certain product groups while reducing demand for others. This, in turn, will lead to a complex internal competition inside the country/division-matrix of large suppliers.
The article examines the response of the employee side to these developments. More specifically, it investigates the role of the European Works Councils (EWCs) in restructuring processes and analyses the conditions under which EWCs can function as effective bodies of cross-border interest and labour regulation.
Drawing on a typology of internationalisation of companies, the article first attempts to characterise the internationalisation strategy of selected first tier automotive suppliers[1]: Do supplier companies differ in their approach to shift production to low cost countries? If so, is this a question of product groups/sub markets, of the companies’ home country institutions or a result of the company-specific corporate governance?
Second, the article analyses the role of the EWCs in coordinating employee response to cross-border restructurings and production relocations: How effective is the coordination of employee representatives inside EWCs? To what extent do interests of the home country locations dominate these bodies?
Third, the article tries to identify systematic causes for effective or ineffective coordination of EWC activities and the ability to somehow influence the outcome of cross-border restructurings. It is argued that compared to their counterparts of the OEMs, EWCs of large suppliers additionally have to cope with the organisational complexity of their companies, which tends to impede the emergence of effective coordination mechanisms.


[1]  The article is based on findings of current research project "European Works Councils as Actors in the Structural Change of the Automotive Supply Industry" which complements previous research on EWCs of leading OEMs. (www.ruhr-uni-bochum.de/ewc)

Rethinking Kanban Systems: a complete formal exposition and assessment

Coffey, Dan, & Carole Thornley (2011).  Rethinking Kanban Systems: a complete formal exposition and assessment. Gerpisa colloquium.

Dan Coffey
Senior Lecturer in Economics
Leeds University Business School
University of Leeds, Leeds, LS2 9JT
+ 44 (0) 113 3434485
 
Dr. Carole Thornley
Director of Post-Graduate Research, Institute of Public Policy and Management
Senior Lecturer, Keele Management School
University of Keele, Keele, ST5 5BG
+44 (0) 01782 583608
 
Abstract
Since the first appearance in English of Taichii Ohno’s commentary on the distinctive features of Toyota Production System (TPS) (see Ohno 1988 [1978]), a very considerable body of literature – whether or not specifically focusing on Toyota – has referenced the so-called ‘kanban’ system as a major development in manufacturing practice. At the same time, on the practical front it is obvious that a diversity of versions exist, as described in operations management texts (for example, Bicheno and Elliot (1997)). In this paper we develop a complete formal exposition in the sense of a mathematical model encompassing in a single structure the properties of different kinds of kanban-system, as the basis for a thoroughgoing appraisal of the ‘systems’ strengths and weaknesses. The analysis in rooted more generally in terms of what is or is not implied for wider forms of industrial organization in the auto sector, including the spatial organization of production.
 
The paper is organized in three main sections as follows:
 
(i) A literary section, tracing the evolution of the idea of a ‘kanban’ system from the commentary of Taichii Ohno, at various times a Managing Director, Senior Managing Director, and Executive Vice President of Toyota, through both the Toyota specific literature and overviews of Japan’s auto industry (encompassing inter alia major contributions like those of Yasuhiro Monden (1998) and Koichi Shimokawa (2010)), the appraisals by academics seated outside the management science disciplines, and the policy prescriptive advice offered by consultancy (in all its forms) to manufacturers.
 
(ii) A formal section, which develops the mathematical structure (model) which will be used to assess the properties of, and compare, different kinds of ‘kanban’-system.
 
(iii) An applications section, in which we consider, in addition to the inferences arrived at by formal deduction, how the approach taken in this paper could be put to work for purposes of empirical application, in a variety of manufacturing contexts.
 
We consider how this fits more generally into the body of commentary developed by GERPISA, as well as some related points of analysis in Coffey (2006) The paper as a whole contributes to management science, is of direct interest and applicability to original equipment manufacturers and suppliers in the auto industry, and has a bearing more generally on a range of related topics pertaining to the organization of production.
 
 
References
Bicheno, J. and Elliot, B. (1997) Operations Management: An Active Learning Approach, Blackwell Business
 
Coffey, D. (2006) The Myth of Japanese Efficiency: the World Car Industry in a Globalizing Age, Cheltenham and New York: Edward Elgar
 
Monden, Y. (1998) Toyota Production System: An Integrated Approach to Just-in-Time (3rd Edition), Norcross, Georgia: Engineering and Management Press.
 
Ohno, T. (1978) Toyota Seisan Hoshiki: Datsu Kibo no Keiei wo Mezashite (The Toyota Production Method: How Can We Overcome The Managament Philosophy of Scale Economies), Tokyo: Diamond Sha
 
Ohno, T. (1988) Toyota Production System: Beyond Large Scale Production, Cambridge, MA: Productivity Press
 
Shimokawa, K. (2010) Japan and the Global Automotive Industry, Cambridge: Cambridge University Press
 

The role of experimentations in managing Electric Vehicle deployment

Charue-Duboc, Florence, Christophe Midler, & Rémi Maniak (2011).  The role of experimentations in managing Electric Vehicle deployment. Gerpisa colloquium.

Beyond the powertrain technological breakthrough, Electric Vehicle (EV) strategies raise systemic transformation issues, due to the renewal of the different dimension of internal combustion engine (ICE) dominant design (Beaume Midler, 2010): redesigning an integer electric mobility vehicle (the opposite of existing electrification of ICE vehicles); deploying a energy network to refill EV batteries; developing new customer usages that value the benefits and fulfill the constraints of electric mobility; redefine business models that can sustain EV development among new eco-systems: end users, national and local public authorities, OEM, energy and mobility service providers,…
 
Our goal is to highlight various dimensions of the systemic transformation and the role an automobile manufacturer can play in triggering this renewal. In the past, many EV projects have failed at addressing the renewal of these various dimensions of the ICE dominant design. A necessary condition to cross the chasm to reach EV mass deployment seems to associate an ambitious and durable strategy on one side, a cumulative but flexible learning process on the other.
 
We will study this strategy/learning duality on the case of Renault. This firm is clearly involved in a deep strategic move to EV. We will underline the main characteristics of his strategy with the ZEV program. We then focus on the role of experimentations in the learning process conducted by the firm. These experimentations lead to the utilization of prototype cars by pilot customers on roads in localized areas. Experimentations are stressed in the innovation management literature as building blocks for breakthrough innovation (Lynn, Paulson and Moronne, 1996, Thomke, 2003) and when irreducible uncertainties exist in projects (Lenfle 2008, Loch et al. 2006). We analyze how these experimentations address the various dimensions of the EV systemic renewal. We stress how these experimentations play a key role in coordinating various actors in this collective learning process: energy providers, cities, gas station, customers. We show how they contribute to the mobilization and mutual learning of the partners and to define new business models.
Our focus will be on European countries
 
Bibliography:

R. Beaume, C. Midler: “Project-based Learning Patterns for Dominant Design Renewal: The Case of Electric Vehicle” International Journal of Project Management 28 (2010) pp 142–150.
Lenfle, S. (2008). Exploration and project management International Journal of Project Management, 26(5), p.469-478.
Lynn, G.S., Morone, J.G., Paulson, A.S., “Marketing and Discontinuous Innovation: The Probe and Learn Process”, California Management Review, vol.38, n°3, (1996), p.8–37.
Loch, C.H., De Meyer, A., and Pich, M.T. Managing the Unknown: A New Approach to Managing High Uncertainty in Projects, New York: Wiley (2006).
Thomke S., Experimentation Matters. Boston: Harvard Business School Press, (2003).

Incremental and radical shifts in the automotive networks and innovative processes

Ravinet, Pierre, & Walter Pizzaferri (2011).  Incremental and radical shifts in the automotive networks and innovative processes. Gerpisa colloquium. During the last quarter of the 20th century the automotive industry has developed highly structured and highly mature value networks and production systems, similarly applied by practically all car manufacturers. Their innovation processes also tend to become uniform, essentially driven by common work division patterns, and by common practices regarding cycle time and risk management. This systemic equilibrium is currently disturbed by many change factors, such as: - a pressing need for disruptive innovations in the mature automotive markets; - industrial and market specificities in the emerging markets; - societal pressure demanding radical improvements in environmental performance; - pre-production cost both failing to be contained and squeezed by the profitability equation. In addition, electric vehicles and electric mobility come along with their own game changers, calling for a transformation (or at least an extension?) of the value network. After a review of these change factors, a vision of the possible trajectories is proposed, regarding value networks as well as innovation processes. Will systemic inertia set boundaries to what cars can be to their users? Can gradual evolutions provide adequate responses to societal and market needs? Or are radical paradigm changes a survival condition for what is known today as the automotive industry? Each question may receive a positive answer, within certain timing and market limits.
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