Automotive / Aerospace Special Industry Report 2017

Special Industry Report

AUTO INDUSTRY: ON THE EVE OF DISRUPTION

IMPLICATIONS OF RENEGOTIATING NAFTA

PERSONAL VTOL AIRCRAFT TAKE OFF

WHO’S LEADING IN THE A AUTONOMOUS DRIVING RACE?

A Special Supplement to

AREADEVELOPMENT

2017

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uccess depends upon moving things that need ld or frozen, you want the es in the business. That’s e Warehousing turned to nty REMC and Hoosier eir operation in Franklin, only did they get a key they also got a team that erstands their need for 24/7 energy and the ability to adjust load demands as needed. And Hoosier Energy has been there every step of the way. Including four expansions. If you’re in logistics, we’re the logical call.

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Editor’s Note Landing an auto plant has always been a coup for state economic development agencies, and the race is on to win the latest project announcement — a $1.6 billion, 1,000-acre, 4,000-employee factory to be built in the U.S. by a joint venture of Toyota and Mazda. And that’s not the only news coming out of the auto industry. The push to develop autonomous vehicles has placed established automakers in America’s Heartland in competition with companies in Silicon Valley.

Meanwhile, the ride-sharing company Uber and traditional aerospace firms like Airbus are taking that industry to new heights with plans to develop VTOL (vertical takeoff and landing) aircraft.

Aerospace OEMs and suppliers need to find their place in this new environment.

And both the auto and aerospace industries will be affected by the proposed renegotiation of NAFTA. Companies in these industries must be proactive so they’ll be prepared for whatever lies ahead in terms of trade agreements.

The articles contained in this special Automotive/ Aerospace supplement to Area Development magazine explore those issues related to the auto and aerospace industries in more depth. Additionally, the organizations sponsoring this publication can provide your company with more information to help with your next location or expansion decision.

Their contact information is provided at the back of this magazine.

Table of Contents 4

The Automotive Industry: On The Eve Of Disruption

Electrification and autonomous driving are just two of the forces disrupting the auto industry, as incumbent automakers compete with new entrants into the field.

10

Personal VTOL Aircraft Take Off: What It Means for U.S. Manufacturing

Aerospace and defense players are recognizing the potential opportunity of leveraging their existing capabilities to create and then dominate the emerging VTOL market.

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Who’s Leading in the Autonomous Driving Race?

Established automakers in America’s Heartland are now competing with Silicon Valley technology companies for the lead in supplying self-driving vehicles and systems.

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Implications of Renegotiating NAFTA on the Auto and Aerospace Industries

The prospect of NAFTA renegotiation leaves automotive and aerospace OEMs and suppliers uncertain about the future.

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Sponsors

As always, if you have comments or further questions about the material contained herein, please feel free to contact me at gerri@areadevelopment.com.

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©2017

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~ 2017 3

The Automotive Industry: On The Eve Of Disruption

By Dennis Cueno, President, DC Strategic Advisors LLC; Partner, Fisher Phillips LLP

late 1960s, the auto industry is on the eve of disruption. The incumbent automakers face five forces that are reshaping the industry: electrification, autonomous driving, connectivity, shared mobility (ride sharing), and new entrants.

1. Electrification:

Ride-sharing companies like Uber are among those investing in autonomous-driving technologies.

The auto industry is changing faster today than it has in 100 years.

— Mary Barra, CEO, General Motors.1

ELECTRIFICATION AND AUTONOMOUS DRIVING ARE JUST TWO OF THE FORCES DISRUPTING THE AUTO INDUSTRY, AS INCUMBENT AUTOMAKERS COMPETE WITH NEW ENTRANTS INTO THE FIELD.

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The (auto) industry is at an inflection point for massive change… not just evolutionary change.

— Tim Cook, CEO, Apple2 By 2030, 25 percent of miles driven in the U.S. could be in shared selfdriving electric cars…automakers and parts suppliers would face the most profound challenge to their business models in a century.

— Boston Consulting Group3 THE COMMENTS BY Mary Barra,

Tim Cook, and BCG underscore the dramatic changes that confront the auto industry. Paraphrasing a popular song of the

Ten years ago, Tesla introduced it all-electric roadster. It was a new design, from the ground up, that caught the fancy of high-end motorists.

The Tesla Model S, introduced in 2012, outsells several rival luxury models — and in its “ludicrous” mode can go from 0 to 60 mph in less than three seconds. Some 500,000 customers placed a $1,000 deposit for the right to purchase Tesla’s new Model 3, which recently went on sale, and has a range of over 300 miles. As of this writing, Tesla’s value, as measured by its stock market capitalization, was higher than GM, Ford, Honda, Nissan, and Fiat-Chrysler.

In the neighborhood where I live in northern Nevada, Teslas are more common than Chevys or Camrys. The Tesla Gigafactory, with a projected investment of $5 billion and 6,500 jobs, is transforming the economy in Reno, Nevada.

To be sure, Tesla has its doubters and detractors. Its CEO, Elon Musk, has acknowledged the challenges the company faces as it scales up to 500,000 vehicles per year. Nevertheless, Tesla has disrupted the auto

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Industry is at a Crossroads.

It’s called Woodstock, Ontario, Canada.

On highways 401 and 403, at the junction NE "@M@CH@M /@BHƥB @MC "@M@CH@M -@SHNM@K Q@HK RDQUHBD Ŕ @S SGD KNFHRSHB@K BQNRRQN@CR NE -NQSG America – Woodstock sees enough business to know how much – and how rapidly – our world is changing. At the intersections of industry and agriculture, productivity and sustainability, and the last economy and the next one, here’s a place that doesn’t just support how business is done today – here’s a place that also supports how business will be done tomorrow.

519-539-2382 x2115 information@cityofwoodstock.ca cometothecrossroads.com

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MITSUBISHI’S SUCCESS CONTINUES AT DUAL PURPOSE PLANT

Indiana’s rich history in automotive excellence continues to set the pace for innovation in the industry. The state’s reputation for advanced auto manufacturing is well earned as Indiana now ranks second in the industry in the United States.

The growth of the automotive industry serves as a roadmap for continued success. An abundance of interstate, highway, and rail access as well as Indiana’s probusiness climate and favorable tax rates are attracting both domestic and international investment. The Indiana Economic Development Corporation reports that more than 500 Tier 1, 2, and 3 auto suppliers employ 100,000 Hoosiers.

Now, Mitsubishi Heavy Industries (MHI) group is continuing that success story for the state. The company’s location in Franklin, Indiana, is home to two of the group’s companies in a shared facility that employs 300 people.

Johnson County REMC and Hoosier Energy, a generation and transmission cooperative with 18 electric distribution cooperatives across central and southern Indiana, adds to Indiana’s robust infrastructure and has been an important part of the Franklin Mitsubishi facility for more than a decade.

“Power supply is incredibly important for our operation,” said Kent Smith, Mitsubishi Heavy Industries Climate Control, Inc. (MCCA) senior manager for Environmental and Facility Maintenance. “We have a great partner in Johnson County REMC and Hoosier Energy. In fact, this site was one of the first in the area where Hoosier built a dedicated substation to help power our plant.”

MCCA began operation in 1996 and serves as the North American manufacturer of compressors for car air-conditioning systems. The original 193,000-square-foot facility was expanded to 245,000 square feet to accommodate the addition of production lines for Mitsubishi Turbocharger and Engine America, Inc. (MTEA) in 2015. MTEA produced its one-millionth turbocharger in June 2017, which allow automakers to give a 1.6-liter engine the same horsepower as a 2-liter engine.

Smith added that the facility is a model for how two companies can work together: “Under the shared factory arrangement MCCA and MTEA streamline resources for maintenance, materials, quality controls, and IT, allowing for increased operating efficiency. We are able to reduce redundancy and make the most out of our space and workforce.”

Mitsubishi Heavy Industries Climate Control, Inc. designs, develops, and manufactures components for automotive passenger car and light truck applications. The company is based in Franklin, Indiana.

The 47-acre site also houses a 17,000-square-foot R&D facility for environmental vehicle testing. The facility is one of the only sites of its kind in the Midwest that can subject vehicles to temperatures from -25 to 110 degrees as well as wind, rain, and humidity.

“Our central location, dedicated workforce, committed community, and a site with room for expansion are the main reasons that MCCA and MTEA have found a great home in Franklin,” Smith said.

Copy supplied by Hoosier Energy

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TOGETHER, HYBRID AND FULL ELECTRIC VEHICLES ARE EXPECTED TO COMMAND UP TO 33 PERCENT OF ALL AUTO SALES BY 2027 — WITH HYBRID VEHICLES ACCOUNTING FOR MOST OF THAT PERCENTAGE.

industry in a big and significant way.

While the internal combustion engine will continue to be the dominant mode of propulsion for many years to come, all of the major auto companies are spending more on electrification — and plan to introduce more hybrid electric (which still has a combustion engine) and full electric vehicles. Tightening emissions requirements across the globe and the disruptive success of Tesla are pushing automakers in this direction.

Over the next decade, hybrid electric vehicles will see the most growth, as the mass adoption of full electric vehicles is still some time away. Together, hybrid and full electric vehicles are expected to command up to 33 percent of all auto sales by 2027 — with hybrid vehicles accounting for most of that percentage. Within two decades, with continuous improvement in the cost and performance of batteries and charging technologies, full electric vehicles will likely command a significant percentage of new car sales — something even the oil companies acknowledge.4

2. Autonomous Driving: In 1908, when Henry Ford introduced the Model T, the primary mode of intra-city transportation was the horse. Within a decade, horse-powered transportation was obsolete. The automobile transformed the American economy and our very way of life.

Today, we are on the cusp of autonomous driving — cars that drive themselves. Not all forecasters agree with the aggressive timing forecasted by the Boston Consulting Group (above), as current autonomous technology is not yet ready for nationwide, all-weather driving.

But the question is when — not if — autonomous driving will become ubiquitous.

Incumbent automakers, Silicon Valley giants, and high-tech startups are all seeking a piece of the autonomous pie. Apple recently confirmed that it is “focusing on autonomous systems” for vehicles, which Tim Cook dubbed “the mother of all AI (artificial intelligence) projects.”5 With its massive cash hoard and software expertise, Apple has the resources to make a significant impact in autonomous systems.

Google’s autonomous car division, Waymo, has spent the past several years developing and testing autonomous software. Its vehicles have accumulated over three million miles of testing on public roads. And Intel recently paid $15.3 billion to acquire Mobileye to “accelerate the

WE ARE DRIVEN Mississippi’s highly skilled workforce rolls out 500,000 new vehicles annually. World-class automotive leaders like Nissan, Toyota and PACCAR are thriving in Mississippi.

Our business climate is supportive, and the state’s location suits both domestic and global sales. Nearly 200 automotive-related manufacturers call Mississippi home, including the state’s newest automotive partners and commercial tire giants, Continental Tire and Yokohama Tire Corporation.

More companies keep rolling into Mississippi. Discover why.

MISSISSIPPI AUTOMOTIVE mississippi.org/automotive

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The automakers know that they are future of autonomous driving,” and will next to face this disruptive force, as peocreate a fleet of 100 self-driving cars, ple move away from riding in vehicles which will be on the road by the end VEHICLES ARE they own to ones that they “share,” of this year. The CPU powering Intel’s RAPIDLY prompting vehicle manufacturers to redo autonomous system will be able handle CONNECTING TO their future business plans. Many of the 20 trillion operations per second.6 EACH OTHER AND auto companies have made substantial TO THE INTERNET Cities and states are aggressively investments in ride-sharing and rideOF THINGS, competing to host autonomous drivhailing services. In a decade or two, the ALLOWING CARS ing testing and attract companies in widespread adoption of shared, autonoTO SHARE this space. Pittsburgh, once known for mous vehicles will cause a broad change INFORMATION its steelmaking, has become a hub of in public and private transportation.

ABOUT SPEED, autonomous driving research. Uber has ROAD CONDITIONS, partnered with Volvo and set up a fleet TRAFFIC FLOW, of autonomous vehicles, with backup 4. Connectivity: AND THE LIKE. drivers who are currently picking up Vehicles are rapidly connecting riders in the Steel City. Ford recently to each other and to the Internet of invested $1 billion in Argo AI, a startup Things, allowing cars to share informaheadquartered in Pittsburgh with ties to tion about vehicle speed, road condiCarnegie Mellon that focuses on artifitions, traffic flow, and the like. Toyota, cial intelligence. And the Reno, Nevada, Intel, and other technology and auto regional transit authority is partnering companies recently announced a consorwith University of Nevada researchers, tium to create an ecosystem for big data electric bus builder Proterra, the Goverfor vehicles, and to support apps based nor’s Office of Economic Development, on cloud computing. Toyota anticipates and the Fraunhofer Institute to test autonomous that the data volume between the cloud and vehicles systems in public transit. will reach 10 exabytes per month by 2025 — 10 times The impact of autonomy is huge, and extends becurrent data.7 yond the auto industry. McKinsey and others predict In a report on vehicle connectivity, IBM notes that that full autonomy will lead to up to a 90 percent a new vehicle produces almost 25GB of data every reduction in auto accidents, reduce congestion, hour. This has the potential to create an array of new change car ownership patterns, and free up billions digital services, new economic value, and new busiof square feet of developable space now devoted to ness opportunities “that we are only just beginning parking. First responders, hospital emergency rooms, to understand.”8 insurance companies, developers, and even state DMVs will all be affected.

5. New Entrants: Industry forecasters, ranging from management consulting firms to Wall Street analysts, forecast that 3. Shared Mobility: new business models — based on shared mobilRide-sharing is not a new phenomenon. In the ity and connectivity — could increase automotive analog era, many of us in urban areas car-pooled revenue pools by over a trillion dollars. Thus, it is no to take advantage of HOV lanes. The advent of the surprise that the auto industry has attracted new ensmart phone 10 years ago enabled ride-sharing and trants from Silicon Valley, such as Google, Apple, and ride-hailing to expand, and led to the creation of Intel, that want to share in these revenues, and are companies such as Uber and Lyft, which have disputting pressure on the incumbent automakers. rupted the taxi, rental car, and public transportation Some are calling Silicon Valley ”the new Detroit,” industries.

8 AutoAeroSiteGuide

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but the incumbent automakers don’t want to repeat the mistakes of Kodak, and are aggressively pushing ahead on autonomy, electrification, and connectivity. As noted by Dieter Zetsche, chief executive of Daimler, incumbent automakers such as Mercedes “do not plan to become the Foxconn of Apple.”9 It is likely that Silicon Valley and the incumbent automakers will interact as “frenemies” — cooperating on some projects and competing on others. Partnerships between Silicon Valley firms and automakers are emerging at a rapid pace, as neither industry can go it alone in the new and disrupted auto industry. As noted by Geoff Colvin of Fortune, the coming synergy of traditional auto manufacturing and technological innovation presents the auto industry with many opportunities for growth.10

Economic Development Opportunities What does this disruption mean for communities seeking new economic opportunities in the auto industry? Many automakers and suppliers are deploying resources to adapt to the changes caused by the move to electrification and autonomy. On the hardware side, the growth segments in the disrupted auto industry include batteries; electric motors; semi-conductor chips; cameras, radar, laser, lidar, and other sensors; and advanced materials such as high-strength steels.

On the software side, as the auto industry moves to a software-based digital car, regions with strong software talent will attract new economic opportunities.

In the words of one of my favorite singers, Bob Dylan, “The times they are a changin’.” Those who understand and embrace the changes taking place in the auto industry can make lemonade out of disruptive lemons. <> 1

https://www.forbes.com/sites/joannmuller/2016/01/18/davos-2016-gm-boss-sees-a-revolution-inpersonalmobility/3/#3c1a68732e8e http://www.businessinsider.com/apple-ceo-tim-cook-massive-change-is-coming-auto-industry-carproject-titan-2015-10 3 https://www.bcg.com/d/press/10april2017-future-autonomous-electric-vehicles-151076 4 https://www.bloomberg.com/news/articles/2017-04-25/electric-car-boom-seen-triggering-peak-oil-demand-in-2030s 5 https://www.bloomberg.com/news/articles/2017-06-13/cook-says-apple-is-focusing-onmaking-anautonomous-car-system 6 https://www.extremetech.com/extreme/240335-chips-ahoy-intel-joins-delphi-mobileyeself-driving-collaboration 7 https://www.reuters.com/article/us-toyota-consortium-idUSKBN1AQ2GF 8 https://www.ibm.com/multimedia/portal/H752407R29967B14/IBMCAI-Digital-disruption-inautomotive.pdf 9 https://www.cultofmac.com/389286/mercedes-wont-become-foxconn-for-theapple-car/ 10 10http://www.detroitchamber.com/adapting-to-disruption-fortune-magazines-geoff-colvinassesses-michigans-leadership-inthe-technology-race/ 2

ROCKET SCIENCE Whether it’s as big as a battleship or visible only with a microscope, Mississippi manufactures it. If it’s going into outer space or coming in from overseas, Mississippians make it move.

Companies collaborate with our community college system for workforce training and utilize the nationally recognized centers of excellence at our universities for R&D. Mississippi is building one success story after another. That’s why companies like Rolls Royce, SpaceX, Northrop Grumman, NASA, Huntington Ingalls, GE Aviation, Airbus Helicopters, Aurora Flight Sciences and Raytheon have operations in Mississippi.

Write your success story in Mississippi.

MISSISSIPPI

LEADING

DENNIS CUNEO is a former senior vice president of Toyota.

He operates his own consulting firm and is a partner in Fisher Phillips’ automotive practice group. He sits on the boards of three auto suppliers and the Center for Automotive Research in Ann Arbor, and has served as an advisor to several Silicon Valley firms.

mississippi.org

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18/07/17 4:38 PM

Personal VTOL Aircraft Take Off: What It Means for U.S. Manufacturing

courtesy Airbus

By Doug Gates, Global Head of Industrial Manufacturing; and Tom Mayor, Principal, Strategy Practice Leader, Industrial Manufacturing; KPMG

Rendering of Vahana, a single-passenger autonomous personal VTOL aircraft, to be developed under Airbus’ “Urban Air Mobility” programs

IN ONE OF THE MORE ICONIC SCENES from the hit movie Back to the Future, the character of “Doc,” played by Christopher Lloyd, turns to Marty McFly (Michael J. Fox) and says “Roads? Where we’re going, we don’t need roads!” Fastforward to 2017 and over the past several months we have seen some very serious players announcing the development of personal vertical takeoff and landing (VTOL) aircraft. The flurry of news has left many wondering if we are about to enter the future envisioned in the movie Back to the Future. Does this portend the end of the aerospace market as we know it? Or is it an opportunity for the sector to drive convergence and build new markets?

Competition Heats Up

AEROSPACE AND DEFENSE PLAYERS ARE RECOGNIZING THE POTENTIAL OPPORTUNITY OF LEVERAGING THEIR EXISTING CAPABILITIES TO CREATE AND THEN DOMINATE THE EMERGING VTOL MARKET.

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In October, Uber laid out its plans for developing an “on-demand aviation” system using a network of small, electric VTOL vehicles, and in April announced a partnership with Aurora Flight Sciences to deploy an initial fleet of 50 eVTOL aircraft by 2020. In parallel, Airbus has launched a series of “Urban Air Mobility” programs including CityAirbus, a multi-passenger autonomous commuter VTOL aircraft; Vahana, a single-passenger autonomous personal VTOL aircraft; and Skyways, a collaboration with the National University of Singapore for parcel delivery using unmanned aerial systems. Similarly, Intel is investing in a series of drone businesses, including Volocopter, whose VC200 is expected to begin pilot-test operations offering an Autonomous Air Taxi service in Dubai during the fourth quarter of 2017.

As the competition continues to heat up so too are the time lines for production. For example, Uber Elevate believes it will have operational vehicles in the sky within the next five years. And most experts seem to agree. Uber does not plan to build its own drones. Rather, it expects that — given the current market trajectory and activity — the commercial VTOL market will rise to the challenge and deliver a variety of vehicle options by 2023. And there is certainly demand for new forms of transport, particularly in congested cit-

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ies. According to a recent report by KPMG LLP, mobility services are expected to become a $1 trillion market by 2030. As noted in the KPMG LLP report titled “The clockspeed dilemma,”1 consumers are now looking for a “sexy, dynamic experience” from their personal transport choice. There’s no doubt that a VTOL aircraft will be sexy and dynamic. But for now the company is more worried about the various regulatory, technical, and infrastructure problems than about the development of the aircraft themselves.

EXCELLENCE

BY DESIGN

A Potential Disruptor While most of the players now leading the personal VTOL charge were born from either the auto sector or the technology sector, Airbus’s participation in the race toward a Back to the Future world suggests that some of the traditional aerospace players may see the emerging VTOL market as a potential disruptor.

Keeping this in mind, the fundamental question remains: does the investment represent a pre-emptive strike against a technology that threatens to erode the commercial airline market? The answer is likely not. The reality is that VTOL aircraft will be limited to inner-city and very short-haul routes, not only for technical reasons (electric batteries can only lift so much weight for so long), but also for purely financial reasons. Notwithstanding a massive and sudden change in the price of oil, commercial aircraft will remain the most cost-efficient form of air travel for many years to come.

Perhaps the investment is intended to demonstrate technological prowess. That is certainly possible. All of the aerospace original equipment manufacturers (OEMs) and suppliers are being challenged to remain on the cutting edge of innovation. Demonstrating the capabilities to bring together multiple new and untested technologies would certainly prove to customers that the company is serious about remaining at the forefront of technology.

However, the more likely answer is that Airbus — like so many aerospace and defense (A&D) players — has recognized the potential opportunity of leveraging its existing capabilities to create and then dominate a new and emerging market adjacency. The personal VTOL business may be in its infancy, but it is clear that it will be a big market. And if it is going to meet the growth expectations outlined by the likes of Uber, it is going to require hundreds and hundreds of new craft. Why should that business be ceded to a technology start-up when the OEMs have the experience, technology, and capital to win the market?

Mississippi’s world-class research universities drive innovation across a broad spectrum of industries. The University of Mississippi’s Center for Manufacturing Excellence works directly with the state’s manufacturers to develop the next generation of leaders. At Mississippi State University, the Federal Aviation Administration’s Center for Excellence for Unmanned Aircraft Systems pioneers the next generation of UAV technologies and policies. The University of Southern Mississippi’s Polymer Institute provides development, prototyping and testing services to Mississippi companies.

Research Mississippi’s partnership advantages.

MISSISSIPPI

RESEARCH mississippi.org/research

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The suburban city of Rochester is home to leading-edge new technology sectors such as composite materials, medical devices, and aerospace equipment, including the next-generation LEAP-X engine. The engine components, as well as the 343,000-square-foot facility, are the result of a unique partnership between Albany Engineered Composites, a division of U.S. Albany International Corp., and Safran Engineered Composites, a division of the French firm Safran, a global leader in jet engines and aerospace components.

COMMUNITY CITES QUALITY-OF-LIFE STRATEGY TO ATTRACT & RETAIN AEROSPACE WORKFORCE

The company recognizes that attracting as well as retaining a large number of skilled employees is one of the many priorities in the site selection process. According to NH Business Review, “The demographic dilemma facing U.S. manufacturers is simple: as older workers retire, many of whom are in the baby-boom generation, the next generation of workers is unprepared, ill-trained, or uninterested in taking their place.”

Albany International CEO, Joe Morone, praised the City of Rochester for the educated workers, the high quality of life, and the diverse housing options, stating it “is critical to our success.” At the Rochester site, the roles of Albany and Safran employees are clearly defined, yet Morone pointed out there are no walls or floor markings to separate the two companies’ work areas: “This is one unified plant, with one unified work flow,” said Morone. “It’s one team, with one mission, with one set of objectives.”

This is appealing to the workforce of the future. New Hampshire is rated #1 State for Opportunity and #2 Best State to Live Overall by McKinsey & Company.

Rochester, N.H., has hundreds of approved affordable living spaces connected by regional bus service to eight business parks and six commercial centers.

Based upon approved housing construction as of July 2017, Rochester’s population will grow an estimated 7.2 percent by 2020. In response, Clark Brook Apartments by Anagnost Development has 144 apartments, pre-leasing for a September 2017 Grand Opening.

Business and industry point out the correlation between population growth and hiring. According to the U.S. Census, job-related relocation accounts for 19.4 percent of all moves. With affordable, attractive, and available housing options, stability and steady workforce is the result for generations of business to come.

Copy supplied by City of Rochester, N.H

Preparing for the Future Based on this view of the future, we believe there are five things that aerospace players should be doing to prepare for a future like the one envisioned in Back to the Future: 1. Find your place in the world. Aerospace manufacturers — both OEMs and suppliers — must carefully consider where they want to play in the new

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environment and then invest in the right areas and capabilities to achieve that objective. Take a longterm view of market disruption.

2. Look around for opportunity. Massive new markets are being created and commercialized all the time. Think about how your existing capabilities and technologies may answer a new need in adjacent markets.

for free site information, visit us online at www.areadevelopment.com

3. Make smart friends. Developing a VTOL aircraft — or any other new transportation technology — will require aerospace players to develop and cultivate an ecosystem of partners and suppliers that can innovate with them.

THE REALITY IS THAT VTOL AIRCRAFT WILL BE LIMITED TO INNER-CITY AND VERY SHORT-HAUL ROUTES.

4. Talk to the boss. Likely the biggest barrier to the commercialization of new forms of aircraft is regulation. It will take time for the FAA to get comfortable with the idea of personal VTOLs, particularly in an Uber-like model. Aerospace players will want to start working with regulators to define the market early on.

5. Keep innovating. While the aerospace sector has never been an innovation laggard, it is clear that some companies are already investing into driving entirely new ideas and technologies through innovation and technology. Aerospace players will need to keep innovating if they hope to remain ahead of competitors from other sectors. <> The views expressed are those of the authors alone and do not necessarily represent those of KPMG LLP. 1

http://www.kpmg-institutes.com/institutes/manufacturing-institute/articles/2016/12/the-clockspeed-dilemma.html

Indiana’s

low energy costs, proximity to automotive manufacturers and availability of skilled labor provide several advantages for doing business.

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22/08/17 11:50 PM

Who’s Leading in the Autonomous Driving Race?

By Dale Buss

Michigan Gov. Rick Snyder introducing the Chrysler Pacifica Hybrid minivan with Waymo selfdriving technology at the Detroit auto show. Waymo is the automotive subsidiary of Google.

ESTABLISHED AUTOMAKERS IN AMERICA’S HEARTLAND ARE NOW COMPETING WITH SILICON VALLEY TECHNOLOGY COMPANIES FOR THE LEAD IN SUPPLYING SELF-DRIVING VEHICLES AND SYSTEMS.

AN EPIC BATTLE FOR CONTROL OF the future of the U.S. auto industry is in full swing as Silicon Valley technology titans attempt to use selfdriving digital wizardry as a means to wrest the wheel from traditional automakers in Detroit. Much of the fate of the economy of the industrial Midwest hangs in the balance.

The struggle between the writers of software and the benders of metal is occurring on the global level as well, as the foreign companies that make cars across the South are competing in the same race with their own approaches to autonomous driving — so count the entire American Heartland as having huge stakes in the outcome.

“We want to win and we will win,” said Jessica Robinson, Ford’s director of City Solutions (Ford

Smart Mobility), at the Detroit auto show earlier this year. “For the region and our employees and our shareholder value, we will move forward.”

Many automakers as well as tech companies such as Google, Apple, and Uber have pledged the commercial feasibility of self-driven automobiles by around the middle of the next decade. U.S. regulators have promised to shape a transportation infrastructure and trafficsafety system that keeps pace with the technological possibilities.

American consumers have indicated a hesitance to embrace autonomous automobiles, but slow acceptance by the general public is a hallmark of many new, transformative technologies. Besides, current car buyers readily have adopted many of the specific automated-driving features that will become components of the completely autonomous vehicles of the future, including radar-guided cruise control to keep cars safe distances from traffic in front of them, the use of sensors to keep wayward drivers in their lanes, and handsfree systems that make easy work of parallel parking.

So the bigger question isn’t whether cars and commercial vehicles someday will drive themselves. It is, which companies and even which industries and regions will supply selfdriving vehicles and systems?

Jockeying for Position Silicon Valley companies are positioning themselves to create and

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ALUMINUM INDUSTRY SEES EXPLOSIVE GROWTH

In the classic Dustin Hoffman film The Graduate, a well-meaning neighbor pulls aside young Benjamin Braddock at his college graduation party to offer a little career advice.

“Just one word,” he says, oozing with certainty. “Plastics…There’s a great future in plastics.”

If the film were remade today, perhaps set in Kentucky, chances are the commodity recommended would be “aluminum.” That’s because as the federally mandated fuel economy regulations, known as CAFE standards, grow more stringent, automakers are increasingly turning to lighter-weight aluminum for body panels, structural components, mechanical parts, and housings. While aerospace manufacturing, construction, and consumer goods are significant drivers, new demand from the automotive industry has propelled the surge in Kentucky’s aluminum industry.

The latest example emerged in May when Tri-Arrows Aluminum Inc. unveiled a 60-job, $125 million Phase II investment at the already massive Logan Aluminum Inc. rolling mill it jointly owns near Russellville, Kentucky.

That came atop the 190-job, $250 million Phase I expansion at Logan, announced in 2015 and currently under construction. The projects are preparing Logan to make automotive-grade, flat-rolled sheet, while continuing to service the beverage can market.

Just the month earlier, Braidy Industries Inc. rocked the state with an announcement of its planned $1.3 billion rolling mill in northeast Kentucky’s Greenup County to serve primarily the automotive and aerospace industries.

“In my 24 years of public service, [Braidy Industries] is the project I have waited for,” Greenup County Judge-Executive Robert Carpenter said after the deal was announced in April. “This project will change the entire region going forward.”

The Industry’s Range A recent market report from the Kentucky Cabinet for Economic Development counts nearly 200 aluminumrelated facilities in Kentucky, employing more than 20,000 people. The sector is broad, with smelters, recyclers, rolling mills, injection molders, extruders, die-casters, machine shops, and companies manufacturing a galaxy of finished products including Reynolds Consumer Products in Louisville, which makes the world’s supply of aluminum foil.

Craig Bouchard, CEO of Braidy Industries, and Kentucky Gov. Matt Bevin on the day Braidy Industries announced its planned $1.3 billion rolling mill in northeast Kentucky’s Greenup County.

Other companies that have announced investments in the state, or plans to do so, include ConstelliumUACJ, Gibbs Die Casting, Kobe Aluminum Automotive Products, Kobe Steel, Novelis, Rane (Madras) Ltd., UACJ Whitehall, and Pride Industries. This growth brings Kentucky’s total aluminum-related corporate investment to an eye-popping $2.6 billion across 90 announcements since 2014.

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control the vital brains of autonomous vehicles, and also perhaps the powertrains of all-electric versions, with the idea of essentially commissioning traditional automakers and their huge base of installed capacity to handle the engineering and production of the actual vehicles. But General Motors, Ford, Toyota, Honda, BMW, and other auto companies are pushing back

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against this scheme, recognizing that to cede control of the digital essence of the automobile of the future would cut them out of adding the most important value to the product, and probably reduce them to competing with one another to offer commoditized mechanical shells to the technology companies that would own the market.

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“It’s incredibly important in Detroit that we don’t rest on our laurels around manufacturing practices or supply chain and that we think about what the mobility world is going to be,” said Chris Thomas, founder and partner of Fontinalis Partners, a Detroitbased venture-capital firm, at the Detroit auto show earlier this year.

“West Coast people would say we have the wrong people here to do that. But we have tremendous expertise in Detroit, and we need to leverage what we were to what we’re going to be,” said Thomas.

“Detroit is well positioned to win in mobility.”

Indeed, the companies themselves are signaling how enormous they believe the consequences of this struggle will be. When Apple CEO Tim Cook disclosed in June that the company’s highly secretive automotive project indeed is concentrating on developing autonomous systems, it shook both the high-tech world and the auto industry. “We’re focusing on autonomous systems, and clearly one purpose of autonomous systems is self-driving cars,” he told Bloomberg. ”We sorta see it as the mother of all [artificial intelligence] projects … It’s a core technology that we view as very important.”1 And former Ford CEO Mark Fields paid the ultimate professional price for not having his company well positioned for this battle. He was ousted last spring by Executive Chairman William Ford Jr., whose family still controls the company, because Fields had failed to move quickly and adroitly enough in the areas of automated driving, ride-sharing, and other “mobility services.”

In fact, Ford Jr. installed as Fields’ successor the head of Ford Smart Mobility, James Hackett, whose biggest professional achievement had been to turn around office-furniture manufacturer Steelcase as its CEO, and whose second major career accomplishment had been to hire Jim Harbaugh as the University of Michigan’s football coach when Hackett was the university’s interim athletic director.

Meanwhile, GM’s CEO Mary Barra already has been hailed as one of the company’s best CEOs ever, partly because of how assertive she has been about moving the company into the self-driving future during her three years at the helm. She directed GM to invest $500 million in Lyft, the major competitor to Uber in the ride-sharing space; to start its own car-sharing experiment, called Maven; and to use the new Chevrolet Bolt all-electric vehicle as a platform for testing 100 self-driving vehicles in the vicinity of the GM Technical Center in Warren, Mich.

CLUSTERING/JOINING FORCES The time when this battle climaxes may be years away. For now, automakers and technology companies are clustering together in various ways to test ideas and relationships. Fiat Chrysler Automotive, for example, is supplying Chrysler Pacifica Hybrid minivans that Waymo, the automotive subsidiary of Google, has been using to test its self-driving technology on the highways and byways of greater Phoenix. And most major auto companies have expanded or opened their own research centers in Silicon Valley to be close to tech-company allies as well as to create their own outposts for development work and magnets for attracting the digital-savvy talent they must recruit to remain relevant in the self-driving era.

Even at the American Center for Mobility, a new testing ground for autonomous vehicles taking shape around an abandoned airport tarmac in southern Michigan — and heavily funded by the state of Michigan — the talk is of how the two industries can cooperate to create the future. “The bigger picture is that the United States is in competition with other countries and regions more than competition inside the U.S.,” says John Maddox, president and CEO of the American Center for Mobility. “We’d like to cooperate with Silicon Valley and with other states and places that want to establish real, meaningful proving grounds. We need multiple such facilities, just as there are many traditional proving grounds around the United States.”

But have no doubt that Maddox would like his center to become the premier hub for testing the self-driving technology of the future. The $80 million proving ground for automated vehicles, connectedvehicle platforms, and vehicle-to-vehicle communications covers 335 acres that feature legacy roadways full of potholes, wide-open spaces, variable weather, and even a double-decker bridge.

And U.S. Rep. Debbie Dingell (D-MI) notes that while cooperation with other sites will be important, “Silicon Valley isn’t the only place that innovation is happening, and we have to make sure we stay at the forefront in Michigan. Everyone is enamored of Silicon Valley, but we’ve got the knowhow and the brains here in Michigan too.”

In fact, the American Center for Mobility and the Michigan Department of Transportation also have joined their counterparts in Ohio and Pennsylvania, as well as marquee institutions such as the University of Michigan and Carnegie-Mellon University, to form

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SKILLED, MOTIVATED WORKFORCES CONTINUE TO LURE AUTO COMPANIES

Automotive-related companies continue to seek sites in states with highly skilled and motivated workforces. Having such a workforce has solidified Mississippi’s status as an automotive manufacturing magnet as it continues to recruit top-tier companies. Efforts to enhance the state’s workforce are evident through initiatives such as the Mississippi Works Fund, as the state continues to experience economic growth in the automotive sector with companies announcing milestones, new locations, and expansions.

For example, in April, Toyota announced plans to build a nearly $10 million visitor and interactive training center to showcase how nearly 2,000 Mississippians produce Corolla vehicles shipped the world over. This announcement celebrated the 10-year anniversary of the Japanese automaker locating a state-of-the-art manufacturing facility in Blue Springs, Miss. The team members at the plant assembled 500,000 vehicles faster than any other Toyota plant in North America. The company is on track to produce its one-millionth vehicle later this year.

“This is an opportunity to tell the story of the quality work Mississippi team members put forth daily,” said Sean Suggs, vice president of manufacturing for Toyota Mississippi. “The interactive visitor and training center allows us to spotlight the Corolla’s rise to the best-selling car in the world, as well as delve into the history of Toyota and our Blue Springs facility. It represents a continued commitment to our team members and the Northeast Mississippi community.”

Further south in the state, another major Japanese automaker spurred economic growth, allowing another automotive supplier to seek expansion.

Calsonic Kansei has been a long-time supplier to Nissan, employing more than 500 at the automaker’s Canton plant. In need of more space, Calsonic Kansei expanded to another facility within Madison County, representing an investment of $16.33 million and creation of 98 additional jobs.

“We are very excited about the new Calsonic Kansei North America Canton facility,” said Calsonic Kansei North America Vice President Nancy Rice. “Manufacturing began in May and we have plans to increase the volume shipping from this site over the next year.

The America’s region is the single largest contributor to Global CK and we are excited to be able to enlarge our manufacturing footprint in the U.S. We will continue to strive for excellence in maintaining a strong workforce in the Magnolia State.”

Nearly 2,000 Mississippians have produced more than 500,000 Corollas at the Toyota plant in Blue Springs, Miss., hitting the milestone faster than any other Toyota plant in North America.

Mississippi is strengthening the state’s productive workforce to help manufacturers meet and exceed their production goals. The Mississippi Works Fund, signed into law in 2016, commits $50 million to train the next generation of skilled workers. The fund supports training through the state’s network of 15 community colleges and workforce partners. The initiative enhances the collaborative efforts of the post-secondary education institutions to create a robust workforce and thriving business climate. It also strengthens the state’s status as a powerhouse automotive manufacturer.

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what they’re calling the Smart Belt Coalition, aimed at establishing just this sort of regional dominance.

“We know [collaboration] will be necessary as mobility evolves at an exponential pace,” Michigan’s State Transportation Director Kirk T. Steudle said in a press release. “Working closely with our colleagues in

18 AutoAeroSiteGuide

neighboring states will pay dividends for us while we continue to leverage our existing partnerships.”2 <> 1 2

https://www.bloomberg.com/news/articles/2017-06-13/cook-says-apple-is-focusingon-making-an-autonomous-car-system http://www.michigan.gov/som/0,4669,7-192-47796-402603--,00.html

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Implications of Renegotiating NAFTA on the Auto and Aerospace Industries

By Clare Goldsberry

Should the United States:

10% 16%

Not Sure

Keep NAFTA as is

12% Withdraw Completely

62%

Renegotiate the Agreement

Source: Mfg.com’s Dec. 2016 combined survey of Buyers (OEMs) and suppliers (small to mid-size manufacturers)

THE PROSPECT OF NAFTA RENEGOTIATION LEAVES AUTOMOTIVE AND AEROSPACE OEMS AND SUPPLIERS UNCERTAIN ABOUT THE FUTURE.

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FOR MORE THAN FOUR DECADES, the U.S. automotive industry has been manufacturing in Mexico. That might surprise some people who have been led to believe that “offshoring” — or “near-shoring” in this case — is a recent phenomenon.

It was in the early 1990s that freetrade proponents in Washington, D.C., decided to carve out a path for the big North American countries — the U.S., Canada, and Mexico — to work together on trade policies to the benefit of all three countries.

Thus, in 1994 the North American Free Trade Agreement was born —

and the sky didn’t fall!

In a feature on “Trade Policy in the First 100 Days: Implications for Automakers and Suppliers,”1 the Center for Automotive Research (CAR) noted that President Trump’s first business day in office resulted in his pulling the U.S. out of the Trans-Pacific Partnership trade agreement, “and set the tone for his administration’s tough stance on trade issues.” And with his first declaration to pull out of NAFTA, it appeared as if the sky just might be on the way down. When President Trump’s tone modified somewhat to a “renegotiation” and now being called a “modernization” of NAFTA to obtain a more favorable stance for the U.S., the automotive industry leaders dared to sigh in relief.

It appeared that the 23-year-old North American Free Trade Agreement might be safe — in some form if not the original.

Auto-Related Production in Mexico The automotive industry’s supply chains run far and wide and “are deeply interlinked” in many countries where OEMs manufacture vehicles. CAR notes that “in 2016, U.S. vehicle exports to Canada and Mexico comprised 40 percent of total U.S. light vehicle exports, and these two countries represented

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industry in Mexico employs 600,000 half of all light vehicle imports. That “highly paid (for Mexico’s standards) same year, Canada and Mexico made up direct labor, technical and engineering 75 percent of U.S. motor vehicle parts jobs.” exports, and 51 percent of U.S. parts imports. Changes to NAFTA could significantly change the structure of the North Aero-Related Production American auto industry.” in Canada and Mexico Still, many argue that the terms of MANY ARGUE Canada has a big stake in any NAFTA NAFTA could use some tweaking given THAT THE TERMS “modernization” that might be negotithat it’s been more than two decades OF NAFTA COULD ated. When Canadian aircraft producer since it was put into play. Commenting USE SOME Bombardier opened up an assembly on any negative impacts that a reneTWEAKING GIVEN plant in Queretaro Aerospace Park in gotiation of NAFTA might have, Daron THAT IT’S BEEN 2007, it gave the aerospace industry a Gifford, partner and leader of Strategy MORE THAN TWO new opportunity to establish production and Automotive Industry Consulting at DECADES SINCE in that country. According to MexiPlante Moran, said, “The long-term risk IT WAS PUT INTO coNOW, “Mexico’s aeronautics parts and is that the U.S. auto industry is insulated PLAY. components manufacturing industry from global pressures and falls behind continued to grow at a healthy pace in in cost structure. It would make the U.S. recent years.” market even more vulnerable to lowerIndustry sources cited in Mexipriced imports in the future.” coNOW’s Aerospace issue (September/ Sergio L. Ornelas, editor of MexiOctober 2016)3 note,“For the last 10 coNOW, a publication that focuses on years, this sector in Mexico has managed the manufacturing economy in Mexico, to average about 15 percent annual reviewed the current state of the auto industry in growth in exports to reach US$6.7 billion in 2015.

Mexico as well as “the forces that are at play in the Mexico’s aerospace industry exported $7.6 billion in upcoming trade negotiations that may affect the 2016, 90 percent of that to the U.S.” structure of the auto players in Naftaland.” Ornelas Based on both new and expansion projects for the is well aware that a lot is at stake for Mexico in any aerospace industry currently being developed, Mexiupcoming renegotiations, but added that there are coNOW reports that the “forecast horizon considers risks — loss of auto jobs and investments and the rea conservative average annual growth of 12 percent sulting economic costs — for all three of the NAFTA during 2016–2020 for US$12 billion annual exports members.2 in 2020,” making Mexico “one of the world’s top 14 sources of aerospace parts.”

Mexico’s automotive industry is booming, and Other aerospace companies that now call Mexico according to data from the Mexican Automotive Inhome to manufacturing include Airbus Helicopters, dustry Association (AMIA), the actual output of light which came to the country just over five years ago to vehicles in Mexico for 2016 was 3.5 million units, open a component manufacturing plant in Quere40,456 units ahead of the projection made by IHS taro, as well as a maintenance hub in Mexico City.

Markit, a global consultancy in automotive industry Aeronova also joined the aerospace cluster in Quereconsulting. Every major automotive OEM (13 of them taro to serve the growing aerospace manufacturing in MexicoNOW’s chart) manufactures in Mexico. sector in that region.

The country’s exports in 2016 represented a “record Queretaro isn’t the only growing hub for aeroyear” as well with over 2.7 million units, of which space manufacturing in Mexico. Northern Mexico 77 percent went to the U.S. market and almost 9 is seeing its share of aerospace industry growth. percent to Canada, “signaling the continued and exTecma, which provides shelter services for manufactreme dependence Mexico has on NAFTA markets,” turers in Mexico to reduce production costs, recently said Ornelas. Additionally, he notes the automotive

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drug trafficking, and others. With the automotive industry growing so large so fast, with both OEMs and Tier 1 suppliers establishing new plants and expanding older ones, it’s unlikely that any modernization of NAFTA will unravel the whole system.

Benesch Law notes, “Few among BOTH CANADA’S Americans, Mexicans, and Canadians PRIME MINISTER want a total overhaul of NAFTA. Most AND MEXICO’S would prefer status quo on the overall ECONOMY structure and an update in various areas MINISTER such as stronger intellectual property AFFIRMED THEIR rights, and a commitment from Mexico COUNTRIES’ and Canada not to impose Customs WILLINGNESS TO duties on digital products is one area UPDATE NAFTA. which we may see an update.”7 Other issues which have long plagued the U.S. and Mexico in the agreement include government subsidies to certain industries, trucking rates and whether or not Mexican trucks and drivers meet the standard of safety on Canada and Mexico U.S. highways, and the mountain of onerous CusW i l l i n g t o U p d a t e N A F TA toms paperwork tracking the country-of-origin inBoth Canada’s Prime Minister Justin Trudeau and formation on components/parts headed into Mexico Mexico’s Economy Minister affirmed the willingto be assembled into finished vehicles. With the ness of those countries to update the agreement, twin plant (maquiladora) arrangement established said Benesch Law in their June 2017 update NAFTA through NAFTA, there is a lot of cross-border traffic Watch.5 And it’s getting support from industry leadbetween Mexican and U.S. facilities and warehouses, ers in the U.S. “On May 30, 32 chief executives from which means a lot to keep track of and that could be the automotive industry sent a letter to the Trump — probably should be — simplified. administration, urging the administration to move In a June 19 blog — What Will a NAFTA Reneswiftly on an update to NAFTA” emphasizing “the gotiation Look Like? 8 — the Alliance for American benefits they currently receive from the deal.”

A report in April’s Politico noted that then White Manufacturing (AAM) provided some recommenHouse press secretary Sean Spicer offered a brief dations to the administration’s trade officials. The outline of what the three countries might be seekauthor of the blog, Matthew McMullan, made refering in any renegotiation.6 For the United States there ence to a Wall Street Journal interview of U.S. Commerce Secretary Wilbur Ross, in which Ross stated are “some trade imbalances,” i.e. the deficits the U.S. that some of NAFTA’s “manufacturing provisions are runs with Mexico and Canada. For Canada, “the pritotally obsolete. In automotive, they put in a procemary goal is maintaining the access it currently has dure which in concept is a good one, called rules of to the U.S. market” and, in particular, access to U.S. origin. Namely, what percentage of the content of a government contracts. However, Politico notes, with finished product can come from outside NAFTA and Trump’s “Buy American” mantra, this is not likely to yet get the favorable tariff treatment as though it be an outcome of any renegotiation. were all 100 percent from within NAFTA?” For Mexico, “the primary strategy for now apThe Center for Automotive Research (CAR) repears to be wait and see what Trump is asking for leased a report in January of this year on NAFTA’s before coming forward with any demands, while importance to the industry and the impact of any also emphasizing that the two countries’ bilateral dramatic changes.9 That report noted the global relationship encompasses far more than just trade,” hinting at border issues such as illegal migration, nature of the automotive manufacturing indusannounced two of the more notable investments in aircraft manufacturing in that region. One is the new Ion Aircraft facility being opened in Tijuana, just south of San Diego. The 300,000-squarefoot plant will manufacture airframe component parts for its AS aircraft and employ more than 1,000. According to Tecma, “Tijuana’s aerospace industry currently employs more than 11,000 skilled laborers,” a number which has grown steadily since 2007. In addition, Spectrum Aeronautical just announced that it would invest US$300 million in a new facility in Mexicali, Mexico, to manufacture its S-40 business jet.

Tecma notes Mexico is now the 12th-largest exporter of aerospace and defense products in the world and the sixth-largest supplier to U.S. markets.4

22 AutoAeroSiteGuide

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NOVA STEEL EXPANDING TO MEET AUTO AND OTHER INDUSTRIES’ DEMAND FOR STEEL PRODUCTS

The Province of Ontario is partnering with Nova Steel Inc. to invest in new equipment and expand its production capabilities, creating 20 new jobs and retaining 47 positions at its Woodstock manufacturing facility. Nova Steel Inc. is a leading manufacturer in the North American steel industry. The company makes a variety of steel products such as tubes, pipes, and flat roll products. Nova Steel’s products are used primarily in the auto industry as well as in sectors such as transportation, construction, agriculture, and heavy equipment.

With support from the Southwestern Ontario Development Fund, the company is investing in state-of-the-art equipment and process improvement to access new markets and diversify its product offerings. Ontario is investing $602,100 from the Southwestern Ontario Development Fund, supporting an additional investment of $5,418,900 from Nova Steel Inc., for a total value of $6,021,000. The project is expected to be completed in December 2020.

“Here at Nova Steel, we’ve built a highly skilled and dedicated team to become a leader in steel tube manufacturing and the production of tubular parts. We are pleased to partner with the Ontario government as this investment supports the continued growth and continuous improvement initiatives of our company,” said Rick Roest, general manager of Nova Steel Inc. Since 2013, the Southwestern Ontario Development Fund and Eastern Ontario Development Fund have helped to create and retain more than 36,500 jobs and attracted approximately $1.73 billion in investment. The funds cover up to 15 percent of eligible project costs, with the recipient company funding the remainder from its own resources.

“Today’s announcement is an excellent example of what can be accomplished when industry and government work together, creating good jobs and boosting Ontario’s manufacturing sector. Our partnership with Nova Steel through the Southwestern Ontario Development Fund is helping them invest in new technology and grow their business, a key priority of our government,” said Jeff Leal, the minister responsible for Small Business.

(pictured in center; left to right) Rick Roest, General Manager, Nova Steel; Liz Sandals, MMP and President, Ontario Treasury Board; Tom Stearns, Corporate VP, Nova Steel; and Woodstock Mayor Trevor Birtch.

“Ontario is pleased to support ambitious companies like Nova Steel that are contributing to growing the economy. This project will create more good jobs for people in Woodstock and the surrounding region,” added Liz Sandals, MPP for Guelph and president of the Treasury Board.

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try with its “incredibly complex web of corporate relationships and supply chains, and products with parts content sourced from multiple automotive regions,” resulting in extremely high transportation costs. “NAFTA allows automakers to take advantage of best cost production and lower supply chain risk,

thus ensuring automotive production remains in North America. Without NAFTA, large segments of the U.S. automotive industry would have moved to other low-wage countries like Asia, Eastern Europe, or South America.” The near-shore opportunities that Mexico provides to automakers — rather than

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PROACTIVELY WORKING TO ADDRESS WORKFORCE DEMANDS

It’s no secret that there is a national shortage of skilled workers in the precision machining and advanced manufacturing industry.

At the same time, there is a high rate of unemployment among veterans. Many communities are looking for solutions to this issue and the City of Lebanon, Indiana, is no different.

Lebanon, Indiana, has a rich history of manufacturing, but after receiving encouragement from the business community, local officials wanted to ensure that the businesses have a strong workforce pool to choose from. City representatives contacted the Vincennes University to share their vision for workforce development and the idea grew from there.

Officials from the City of Lebanon, machine-tool builder Haas Automation, and Vincennes University have opened their doors to a new advanced manufacturing Training Center. The 20,000-square-foot Gene Haas Training Center will offer CNC and robotics training programs using the latest state-of the-art machine tools and equipment.

This center will address both issues, as well as provide training for the general public. A 16-week intensive training program will also be offered for veterans. According to Doug Bowman, director of VU’s Haas Technical Education Center, “Indiana alone will need 7,000 new machinists over the next five years. Providing this high-quality training on state-of-the-art equipment will help bridge the advanced manufacturing skills gap.”

City officials view this as a game-changer for the community. Not only will it serve as a resource for existing businesses, but they hope it will entice prospective businesses as well.

Dan Flick, site director for the Vincennes/ Gene Haas Training Center, said in addition to its normal classes, the facility would also offer companies training sessions for their employees. Once a company decides what it needs for its employees, the training center will build a session around what is desired. According to Flick, it could be a couple of days or a couple of weeks.

Copy supplied by IMPA

offshore options — mean that “Mexican automotive plants helped sustain a competitive automotive industry across North America.”

The CAR report also noted that NAFTA isn’t just about Mexico, and Mexican and U.S. and Canadian companies; Mexico is a manufacturing destination for automakers from Japan and Europe as well.

“Nearly 90 percent of the new Mexican light vehicle assembly plant investments announced since 2009 are for assembly plants of Japanese and European automakers,” said CAR. “These global companies are transitioning production for their home regions to North America, and will increasingly rely on existing North American supply chains, given the logistical disadvantage of sourcing parts and components from overseas.”

24 AutoAeroSiteGuide

AAM, in its letter to the U.S. Trade Representative, commented, “While we believe the NAFTA rule of origin on automobiles should be phased in over time to a higher level so that workers in signatory countries can enjoy more of the benefits, we must also update the regional value content rules regarding traced materials to maximize these benefits.”10 The AAM also submitted to the office of the U.S. Trade Representative its suggestions on how to order a NAFTA renegotiating strategy: “NAFTA’s labor and environmental standards should be strengthened; concessions on government procurement market access should be entirely reciprocal; and tough rules on state-owned enterprises and currency manipulation should be enshrined so this agreement can serve as a model for future trade agreements.”

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7

While Mexico may be taking a wait-and-see attitude, Plante Moran’s Gifford advises auto executives of the big carmakers and suppliers in an article for Automotive News, “Why Auto Suppliers Need War Game Thinking on NAFTA,”11 that they “simply can’t afford to default to watch-and-wait mode. Although Commerce Secretary Wilbur Ross (the longtime autosupplier investor who founded International Automotive Components Group, or IAC) has also indicated the desire to modify NAFTA, he has stated that it will likely be late this year at the earliest.” <> 1

http://www.cargroup.org/trade-policy-in-the-first-100-days-implications-for-automakersand-suppliers/ www.mexico-now.com (March/April 2017) 3 www.mexico-now.com (September/October 2017) 4 https://www.tecma.com/mexico-aircraft-manufacturing/ 5 http://www.beneschlaw.com/files/Publication/88281c12-d60b-4025-af2d-f6c6ae251b93/ Presentation/PublicationAttachment/b2aaea23-2d1f-4776-ac40-f76a79514bf7/NAFTA_ Bulletin_Vol4_060717.pdf 6 www.politico.com/magazine/story/2017/04/for-trump-nafta-could-be-the-next-obamacare-214979

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www.beneschlaw.com/The-Trump-Administrations-softened-Tone-on-a-NAFTA-update-06-06-2017 http://www.americanmanufacturing.org/blog/entry/what-will-a-nafta-renegotiation-l ook-like 9 www.cargroup.org/wp-content/uploads/2017/01/nafta_briefing_january-2017-public-versionfinal.pdf 10 www.americanmanufacturing.org/blog/P15 11 http://www.autonews.com/article/20170425/BLOG06/170429915/why-auto-suppliers-needwar-game-thinking-on-nafta 8

NOTE: After this article was filed, on July 17th, the U.S. Trade Representative’s office released its “Summary of Objectives for the NAFTA Renegotiation.” According to the release: The new NAFTA must continue to break down barriers to American exports. This includes the elimination of unfair subsidies, market-distorting practices by state owned enterprises, and burdensome restrictions of intellectual property. The new NAFTA will be modernized to reflect 21st century standards and will reflect a fairer deal, addressing America’s persistent trade imbalances in North America. It will ensure that the United States obtains more open, equitable, secure, and reciprocal market access, and that our trade agreement with our two largest export markets is effectively implemented and enforced.

05/08/17 5:23 PM

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27 Enterprise Florida, Inc. From a talented workforce to a strategic geographic location, Florida has the breathing room businesses need to grow. Freedom from high taxes and prohibitive regulations make Florida the #1 tax climate in the Southeast and 2nd-best state for business in the U.S. Learn how Florida can help your business thrive.

Tim Vanderhoof, Senior Vice President, Business Development Enterprise Florida, Inc. 800 N. Magnolia Ave, Suite 1100 Orlando, FL 32803 407-956-5600 • Fax: 407-956-5599 tvanderhoof@EnterpriseFlorida.com www.enterpriseflorida.com

ILLINOIS/INDIANA

2 Hoosier Energy Hoosier Energy is an electric generation and transmission cooperative providing electricity and value-added services to 18 electric distribution cooperatives, in central and southern Indiana and southeast Illinois.

The electric cooperatives power facilities for leading automotive manufacturers including Honda Manufacturing of Indiana, NTN, Faurecia, and TOA USA. The Hoosier Energy economic development team provides a wide array of economic development services including site and building searches, incentive guidance, site analysis, and electric rate estimates.

Harold Gutzwiller, Manager, Economic Development/Key Accounts Hoosier Energy P.O. Box 908 Bloomington, IN 47402 812-876-0294 • Cell: 812-360-4796 • Fax: 812-876-5030 hgutzwiller@HEPN.com www.HoosierSites.com

INDIANA

13 Indiana Municipal Power Agency (IMPA) IMPA is a wholesale power provider to 59 communities in Indiana and Ohio. IMPA is proud to partner with its member communities and their local economic development professionals, to support their economic and community development efforts.

MISSISSIPPI

7 Mississippi Development Authority 9 Consistently ranked as a top state for business, Mississippi’s 11 portfolio of national and global companies continues to grow.

From the state’s one-stop permitting process to its business-friendly climate, more companies are discovering how a Mississippi location and workforce give them a competitive advantage. Find out why Mississippi works at www.mississippi.org.

Billy Klauser, Chief Economic Development Officer Mississippi Development Authority P.O. Box 849 Jackson, MS 39205 800-360-3323 • Fax: 601-359-4339 bklauser@mississippi.org www.mississippi.org

NEW HAMPSHIRE

25 Rochester, New Hampshire, Economic Development Be the center of the action in the Seacoast’s Composite Material and Advanced Manufacturing region. More than 300 firms enjoy a business climate ranked 1st in the nation, 2nd-lowest business taxes, and 7,000+ STEM graduates adding to a work force of 130,350. Confidential assistance with site selection, incentives, financing, and permits is available.

Karen Pollard, CEcD, ED, Economic Development Manager Rochester, New Hampshire, Economic Development 31 Wakefield Street Rochester, NH 03867 603-335-7522 • Fax: 603-335-7597 Karen.pollard@rochesternh.net www.RochesterEDC.com

NORTH CAROLINA

14 ElectriCities of North Carolina, Inc. ElectriCities is a not-for-profit government service organization representing 70+ NC cities and universities that own electric distribution systems. A site selection professional can receive detailed reports from our extensive databases on dozens of NC sites, from mountains to coast, within 48 hours of a request. We’re your turnkey services partner.

Bryan Brackemyre, Director of Marketing and Economic Development Indiana Municipal Power Agency 11610 North College Avenue Carmel, IN 46032 317-575-3879 • Mobile: 317-903-9721 bryanb@impa.com http://www.impa.com

Brenda Daniels Manager, Economic Development ElectriCities of North Carolina, Inc. 1427 Meadow Wood Blvd.

Raleigh, NC 27604 1-800-768-7697 ext. 6363 Mobile: 919-218-7027 bdaniels@electricities.org www.electricities.com

KENTUCKY

ONTARIO, CANADA

28 Kentucky Cabinet for Economic Development Kentucky is working to become the engineering and manufacturing center of the U.S., and companies from all over the world are locating or expanding in the Bluegrass State. Our pro-business government, right-towork status, and ability to move at the speed of business are leading to record-breaking growth.

5 City of Woodstock Woodstock, Ontario, is located in the heart of southern Ontario at the crossroads of superhighways 401 and 403. With easy access to six Canada-USA border crossings, Woodstock enjoys the best ground transportation system in the province. With our relaxed and affordable lifestyle, you will see why your business belongs at the Crossroads!

Mandy Lambert, Commissioner for Business Development Kentucky Cabinet for Economic Development 300 West Broadway Frankfort, KY 40601 502-564-7670 • 1-800-626-2930 Econdev@ky.gov www.thinkkentucky.com

Len Magyar, Development Commissioner City of Woodstock 500 Dundas Street P. O. Box 1539 Woodstock, ON N4S 0A7, Canada 519-539-2382 x 2112 • Fax: 519-539-3275 lmagyar@cityofwoodstock.ca www.cometothecrossroads.com www.cityofwoodstock.ca

26 AutoAeroSiteGuide

for free site information, visit us online at www.areadevelopment.com

FOR AVIATION AND AEROSPACE COMPANIES IN FLORIDA, BUSINESS ISN’T JUST GOOD. IT’S SOARING. There’s a reason Florida ranks #2 in the US for aviation manufacturing attractiveness.

It’s because companies have the resources they need to succeed here, including an industry workforce of 89,000 and a badgeable talent pool of more than 70,000 active and separated military members. Florida is also ranked 2nd in aviation, aerospace and space establishments, which creates a robust supply chain network.

So when it comes to industry growth, the sky’s the limit.

Discover what a future in Florida means for your business at floridathefutureishere.com/aerospace, or call 877-YES-FLORIDA.

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MADE IN KENTUCKY WITH CARE At the end of the assembly line in Louisville, Ford F-series trucks must withstand the glare of bright lights while inspectors go over every inch of the vehicle, working to ensure perfection. It’s a great example of the precision and pride Kentuckians take in their work, and one reason Ford just announced another $900 million investment in Kentucky.

Kentucky also takes pride in the fact that we have been producing Ford vehicles for more than a century.

Ford, plus our two other OEMs and nearly 500 related facilities, are responsible for Kentucky’s ranking as the #1 vehicle-producing state per capita in the U.S. Our committed and passionate workforce and our unsurpassed quality of life are just a few of the reasons companies choose to locate or expand in Kentucky. Find out more at ThinkKentucky.com.

Making Business Strong.

Making Life Exceptional.

(800) 626-2930 • ThinkKentucky.com

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