The automobile and petroleum were the trend setters in the 20th century as it revolutionized the railroads and coal industries of the 19th century: acting as stimulant for exhaustive change in industry and civilization in general. The automotive industry not only revolutionized the way we live our lives by broaching transportability to the masses, but also pave the way for many new management practices. Today, the industry remains the world’s largest manufacturing activity, monopolizing 15 percent of global steel, 40 percent of global rubber, and 25 percent global glass; earning its name, “the industry of industries.”
As the industry tees off the 21st century, notwithstanding, it is clear that its existence has to change once again. Many original equipment manufacturers (OEMs) and their suppliers are in a seemingly never-ending struggle to survive, as the industry battles chronic overcapacity and price wars. We are also seeing a rapid shift in the global economy’s equilibrium and the advent of a multipolar world in which the U.S. and Europe will share economic power with the rising Asian economies.
Incorporate and build an unequivocal global organization
The evolution of a global organization requires the calculated creation of a culture that comprehends this new economic order. The industry leaders of the future will be those organizations that are capable of figuring out how to align capital, strategies, talent, and operating cost structures globally.
Win the global war for human capital
As borders soften, connecting and bargaining globally circulated talent will become an increasingly important focal point within automotive organizations. Winning this war for talent requires a well-thought-out people strategy driven from the highest level in the organization.
Proper alignment for energy diversity
The current drive toward energy diversity and conservation has major implications for the automotive industry. First, huge investments have to be made to develop the powertrain technology for alternative energy sources. Second, and perhaps, more important, it is unclear at this stage which alternative will win out in which markets. Will it be biofuels? Diesels? Hybrids? Plug-ins? Hydrogen? Will any one win out? Since lean businesses cannot afford to design everything, leaders need to make sound judgments and alliances to effectively map out a plan that places operations in position to prosper when the future does become clear.
As one of the leading management consultants to the emerging markets automotive industry, Reinvent Rebuild help senior executives at OEMs and suppliers in North America, Europe, and Asia address such critical strategic, operational, and systems issues, helping clients turn marginal market returns into exceptional returns.