Southern Automotive Alliance Magazine Dec.18/Jan.19

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DECEMBER 2018/JANUARY 2019

CANADA’S VIEW OF THE NEW TRADE DEAL Atlanta-Based Consul General Nadia Theodore Takes A Positive Outlook

SAC 2018 Bigger, better and more international

mobility

A deep dive into a self driven future

Executive Q&A Nora Roper takes a global perspective on GM

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Faces of the Industry 52 Ilker Subasi This former apprentice is the prime mover behind VW Chattanooga’s internal workforce development

Supplier Profiles 54 Systems Electro Coating The company protects metal from rust, but as part of a family-owned family of businesses, this Mississippi firm aspires to touch its community

56 Morrison Industries In a competitive small town, the Tennessee company founder’s son is protecting his parents’ legacy and growing their business

58 WKW Automotive Its all about the team at this Alabama plant honored as an AAMA’s Supplier of the Year.

Departments Todd Green, President of WKW Automotive, leads a team recently named Supplier of the Year by Alabama Automotive Manufacturing Association.

Features

10 From the Editor 12 Benchmarks/NewsHub 51 Industry News 60 Regional Reports 68 Kudos 70 Industry News 71 Industry Indicators & Stocks 72 By the Numbers 73 Career Notes 74 Index 76 Vintage

20 EXECUTIVE Q&A

31 EXPERT VIEW

24 INDUSTRY OUTLOOK

38 SPOTLIGHT

Nora Roper brings a world of experience to her role managing GM’s Corvette plant

Trade Canadian Consul General Nadia Theodore weighs in on the trade pact that replaced NAFTA

28 INDUSTRY OUTLOOK

Mobility seems to be the way of the future in automotive with all signs pointed toward a future with more options than just driving

Continuing our look at mobility, ARK Invest believes coming changes will change the industry and the economy

SAC 2018 was the largest edition of the Southern Automotive Conference yet. Here are a few things we learned in Atlanta.

66 WORKFORCE DEVELOPMENT

With the bold aim to SAAV Manufacturing, an Auburn University based center is putting students front and center in solving problems for automotive

ON THE COVER: As a veteran treaty negotiator, Canada’s Atlanta-based Consul General Nadia Theodore says her country looks forward to finalizing the United States-MexicoCanada Agreement. But questions remain for the automotive industry. 8 | Southern Automotive Alliance | DECEMBER/JANUARY 2019


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From the Editor

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ehind the scenes at Southern Automotive Alliance magazine we talk a fair amount about “community,” as in the community of people who make up the automotive sector in the region. As each issue so far has demonstrated, that community is diverse indeed. If you didn’t know that already, the recent Southern Automotive Conference, or any number of the other, smaller conferences put on by the manufacturing associations during the year would make it pretty clear. One aspect of that diversity is the variety of ways that members of the automotive community are finding to reach out, and to demonstrate their commitments to being good corporate citizens. Which brings us to Tim Sensenig. Tim, the CEO of TMSFirst, handed out the most recent Southern Manufacturing Awards at SAC2018. Rick Walker, president of the Georgia Automotive Manufacturers Association, which put on this year’s SAC, explained later that he asked Tim to hand out the awards because of his service to the industry. “Tim is a very successful technology innovator and leader in logistics,” Rick says. “I have known him for several years. He was a sponsor of the SAC and a speaker in the Innovation Zone. He is also a graduate of the inaugural class of ASLA, the Automotive Supplier Leadership Academy, so he is definitely committed to the success of the automotive industry in the South.” And yet, in the few moments he had at the microphone before handing out the manufacturing awards, Tim chose to talk about something else, something dramatically different than many probably expected: fighting the evil of human trafficking. Tim is passionate about doing something about that serious societal problem and it drives him to reach out to the wider community in a very specific way. You can read more of his inspiring story in Kudos— the feature where we regularly shine a light on the good work members of the automotive community are doing beyond their day jobs. It’s on page 68. Speaking of day jobs, though, in Industry Outlook we take another look at the evolving picture surrounding trade which has been on the minds of many in the automotive business. In this issue in particular, we hear the view from Canada — by way of Atlanta-based Counsul General Nadia Theodore. The second Industry Outlook piece this issue is part of a deeper dive into what it means as automotive companies embrace the idea of “mobility” as a driving force. Our Expert View picks up where that leaves off with an interesting forecast of what a brave new world of mobility might mean for the industry bottom line and the economy in general. Our expansive look at SAC 2018 also touches on autonomy and mobility. No look at the automotive community would be complete without talking about workforce development. Ever hear about the SAAV Manufacturing Center at Auburn University? What about Ilker Subasi’s vocational training program at VW in Chattanooga? Those two stories alone demonstrate just how diverse workforce development can be in the southern automotive sector. There’s more to this community than wheels and gears. We hope you enjoy this issue. Nicholas Patterson, Editor Southern Automotive Alliance

By the way, if you’re getting this magazine, why not subscribe? It’s easy and just as free as the magazine itself. Just visit our website, www.southernautomotivealliance.com and click on one of the easy subscription buttons or popups. Drop me a line and let me know how well that worked – or tell me what you think about the magazine and what we ought to be writing about, at npatterson@ pmtpublishing.com. To subscribe at no cost and receive future issues via mail, visit southernautomotivealliance.com

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PUBLISHER: Walker Sorrell EDITOR: Nicholas Patterson npatterson@pmtpublishing.com ART DIRECTOR: Rebecca Reeves WEB PRODUCER: Abby Parrott COPY EDITOR : Christine Gordon CONTRIBUTORS Dave Helms, Cara D. Clark, James Clark, Joe DeSciose, Tasha Keeney, Nick F. Nelson, Christine Prichard, Lynsey Weatherspoon, Bill Gerdes, Carla Caldwell, Michelle Love, Lawrence Elizabeth Knox, Amile Wilson, Myron Levin, Megan Boyle ADMINISTRATION: Molly Lipski Powell CIRCULATION: Anita Miller ACCOUNTING: Keith Crabtree ADVERTISING SALES: Chandler Busby 205-802-6363 Ext. 103 cbusby@pmtpublishing.com DIRECTOR OF AUDIENCE DEVELOPMENT Mark Singletary msingletary@pmtpublishing.com INTEGRATED MEDIA & EVENTS Sheila Wardy swardy@pmtpublishing.com 2204 Lakeshore Drive, Suite 120 Birmingham, AL 35209 (205) 802-6363 southernautomotivealliance.com T.J. Potts, President PMT Publishing, Inc. 3729 Cottage Hill Rd H • Mobile, AL 36609 pmtpublishing.com • 251.473.6269 Southern Automotive Alliance is published bimonthly by PMT Publishing Inc. Copyright 2018 by PMT Publishing Inc. All rights reserved. Reproduction in whole or in part without written permission prohibited. Address all correspondence to Southern Automotive Alliance, 3729 Cottage Hill Road, Suite H, Mobile, AL 36609 or 2204 Lakeshore Drive, Suite 120, Birmingham, AL 35209. Phone (251) 473-6269 in Mobile or (205) 802-6363 in Birmingham. FAX in Birmingham is (205) 8026393 and e-mail address is info@pmtpublishing. com. Letters to the editor are welcome or e-mail to npatterson@pmtpublishing.com. Please query the editor before sending unsolicited articles or photographs. Moving? Please note US Postal Service will not forward magazines mailed through their Bulk Mail unit. Please send old label along with your new address 4-6 weeks prior to moving.

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TEXT BY: DAVE HELMS

Industry Benchmarks Next-Generation Toyota Engines Roll From Alabama

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xactly one year after Toyota Alabama announced a $106 million investment to build next-generation engines under the mystical aegis of Toyota New Global Architecture, the first 4-cyliners are now lining off in Huntsville. What’s coming out of the factory represents a complete replacement of the 4-cylinder engine, company officials say, from the only Toyota plant in the world that builds the 4-cylinder, V-6 and V-8 under one roof. It’s an opportune time for a better 4-cylinder engine, according to Experian Information Solution’s Market Trends and Loyalty report, which recently highlighted the popularity of the smaller engine. Despite America’s love of SUVs, vehicles with four-cylinder engines have outpaced any other light-duty vehicle type, Experian says. Automakers like Toyota have successfully boosted their power—a modern 4-cylinder generates about the same 188.1 horsepower as a V8 from 20 years ago—while getting significantly improved gas mileage. The mpg target for 2025 has been 54.5 miles per gallon, though the Trump administration has backed away from more stringent Obamaera mpg requirements. Toyota’s next-generation 4-cylinders have a repositioned and lower center of gravity for powertrain components. The weight of certain components has been trimmed, while overall body rigidity has been strengthened with new laser welding methods and higher strength materials. The 4-cylinders will be an option for RAV4 and Highlander models, providing about 10 percent better power performance and approximately 20 percent better fuel economy. Among Toyota’s company goals are reducing fuel consumption and CO2 emissions. Toyota Alabama now builds about 3,000 engines a day and

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JOBS FOR GEORGIA South Korea-based auto parts supplier SEWON America recently announced it will invest $160 million and add 100 jobs with an expansion of its headquarters and manufacturing facility in LaGrange, Georgia. A subsidiary of SEWON Precision Industry Co., SEWON America makes metal body frames and other automotive components.

STUDY PRAISES S.C. GROWTH A recent Brookings Metropolitan Policy Program study on South Carolina’s automotive sector concluded that 22,000 upstate residents are employed in auto-related fields across 223 companies. Statewide, 66,000 residents hold auto-related jobs, with 20,000 jobs being created between 2011 and 2017.

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employs 1,400 workers, representing a total plant investment of nearly $1 billion. “I could not be prouder to reach this milestone,” says David Fernandes, Toyota Alabama president. “Launching our new TNGA engine is a true testament to our highly-skilled workforce. They are leading Toyota Alabama into the future of advanced engine production.” n

GM PARTS WITH TRUMP Instead to going with the Trump administration plan to drop California’s requirement to automakers to sell more electric cars in the state each year, General Motors has its own idea. GM wants California’s plan to go nationwide. Based on the Golden State’s zero emission vehicle sales mandate, the push for more electric cars would start in 2021.

MORE STEEL ON THE WAY SSAB will invest $109 million in SSAB Americas’ steel mill in Mobile, Alabama to increase production capacity for quenched and tempered steels, the company said in October. Capacity will increase from 300,000 tons to 400,000 tons. MSU TAKES CHALLENGE Mississippi State University has again been invited to participate in the nation’s


Georgia Recognizes Top Automotive Leaders

Hurricane Florence Throws Wrench Into Port Of Charleston Output

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utomotive supplier Constellium, located in White, Georgia, was selected in October as the 2018 Innovator of the Year by the Georgia Department of Economic Development. The honor was announced at a breakfast in advance of the Southern Automotive Conference in Atlanta. The honor goes annually to companies that demonstrate a commitment to excellence and innovation in the automotive industry. Constellium’s operation in White produces aluminum automotive Crash Management Systems and structural components. The plant, opened in 2017, delivers solutions that make vehicles lighter, safer and more fuel efficient. The White plant utilizes Constellium’s newest highstrength alloy for structural components, Constellium HSA6™, which was recognized at the 2017 Altair Enlighten Awards as runner-up in the Enabling Technology category for its contribution to vehicle light weighting. Georgia Department of Economic Development Commissioner Pat Wilson said the state works hard to cultivate the nation’s best business environment, and Georgia’s automotive sector continues to remain a top industry” due to the vast resources and incredible workforce we have to offer.” Constellium was picked for the honor by representatives from the Georgia Automotive Manufacturing Association, Georgia Tech, Georgia Economic Developers Association and other organizations. n

top automotive engineering competition. MSU is among 12 North American universities to undertake the EcoCAR Mobility Challenge, sponsored by the U.S. Department of Energy, General Motors and Mathworks. Over four years the students will retool a 2019 Chevrolet Blazer to make it a leaner, better connected and designed machine.

A MOVE FOR CHINA BMW recently announced plans to spend $4.16 billion to increase its stake in Brilliance Automotive, an increase to 75 percent of shares compared to its previous 50 percent. The move, made shortly after China relaxed rules for foreign car companies, is designed to increase production capacity and sales in China.

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he Port of Charleston, South Carolina was only closed down for three days after Hurricane Florence struck in September, but officials there predicted that the short downtime might still cost it a record for monthly cargo. Port CEO Jim Newsome told The Post and Courier that the port moved 98,462 boxes through its terminals in September, a 3.4 percent decline from 101,902 containers shipped the same month last year. The storm was slow moving but finally came ashore Sept. 14 near Wrightsville Beach, North Carolina. China is South Carolina’s leading trade partner, with BMW luxury vehicles accounting for more than one-third of $6.3 billion in goods moving to that country annually. The newspaper reported that BMW exports have slowed for three consecutive months at the port, but the drop is seen as an anomaly linked to the debut of the new X5 model. BMW has said that retaliatory tariffs made by China on U.S.-made vehicles will cost South Carolina more than $500 million a year. South Carolina’s new Volvo Cars plant doesn’t plan to export vehicles until early next year. n

SLOW MERCEDES? The National Highway Traffic Safety Administration has complained that MercedesBenz is slow to mail safety recall notices and filed reports on recalls of its products involving 1.4 million vehicles. The agency questioned the company’s process and cadence in recall activity.

AUTOPILOT DISENGAGED Tesla quietly dropped its “Full Self-Driving Capability” option this fall from its online design studio. Introduced with Autopilot 2.0 hardware in 2016, it was described as a fluid plan that would include over-the-air updates as the technology advanced. The updates and related regulatory approval didn’t meet the estimated timeline.

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APMM To Create 50 New Jobs With $100M Mississippi Investment

Industrial Project Innovation Picked To Manage Construction At South Carolina Rolling Mill

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ier 1 supplier Auto Parts Manufacturing Mississippi announced in October that it would invest $100 million to expand its Guntown, Mississippi facility and create 50 new jobs. The company produces stamped parts, body weld parts and plastic parts. The expansion is primarily to feed the line at Toyota Mississippi in Blue Springs, and APMM is actually owned by Toyota Auto Body Co. Ltd. “We appreciate the state of Mississippi and Lee County for their continued support to APMM,” APMM President Hidehiro Kuwabara told Area Development. “This investment is very important to our future and our commitment to our community.” APMM employs 400 people in Lee County and hopes to fill the new positions by the end of 2018. Mississippi Development Authority is assisting with workforce training. “Auto Parts Manufacturing Mississippi’s growth in Lee County is a strong indicator the state’s automotive industry continues to gain momentum and will be a major economic driver in North Mississippi and throughout the state,” Governor Phil Bryant says. n

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raidy Industries in October selected Industrial Project Innovation as construction manager for its $1.6 billion aluminum rolling mill in Ashland, Kentucky. The Greenfield aluminum rolling mill will be the first built in the United States in the last 35 years. IPI is charged with program planning, construction management, project cost and schedule control, among other things. The facility will help meet the rapidly growing demand from automotive and aerospace industries for lightweight exposed sheet aluminum and will assist efforts to rebuild Appalachia. Braidy Atlas broke ground on its 2.5 million squarefoot, fully integrated aluminum rolling mill in Eastern Kentucky in June 2018 and expects its completion in 2020. “We are honored Braidy Industries chose us to work with them on the management of such a significant project that will have an enormous positive economic impact on eastern Kentucky,” says Russ Braasch, owner and operations manager for IPI. “Bringing our unique experience to every stage of industrial planning will help enable Braidy Industries to become the leading high-quality, low-cost producer in the aluminum sector with one of the most advanced rolling mills in the world.” n

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EISSMANN UPDATES ONLINE Eissmann Group Automotive of Pell City, Alabama has finished a $14.5 million expansion project in Pell City announced in June 2016. The company’s new 130,000-square-foot building featuring advanced manufacturing equipment will allow for a new production line with up to 200 more workers, making built-to-print trim components, shifter modules and other parts for Audi, Jeep,

Tesla, Porsche, Volkswagen and Mercedes-Benz.

BLOOMBERG BALKS When Hyundai Motor Co. announced an almost 67 percent drop in net income in October, blamed mostly on one-time costs to address quality issues, business website Bloomberg issued an opinion piece urging the company to rethink its strategy, particularly in China. In its defense, many automakers

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are still trying to sort out how to tackle the world’s biggest automotive market.

Toyota’s Motomachi assembly plant and talks with members of the Toyota USA executive team.

PLANNING A PLANT Alabama Commerce Secretary Greg Canfield and Huntsville area officials met in Japan in mid-October with executives of Mazda and Toyota to trade information as the automakers prepare to move forward with a $1.6 billion Alabama assembly plant. The trip included a visit to

NEW STEEL PACT U.S. Steel Corp. and the United Steelworkers have a new agreement on four-year contracts covering thousands of employees around the country. The contracts involve 14,000 union-represented employees in flat-rolled facilities and tubular operations in Fairfield, Alabama;


Daimler’s Alabama Plant Rolls New GLE, Breaks Battery Ground

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op members of Mercedes-Benz were in Alabama in October to take part in a groundbreaking ceremony of a new battery plant in Bibb County and to witness the new Mercedes-Benz GLE SUV coming off the line. The battery plant, part of a $1 billion investment the company announced last year, is one of only eight the company is building around the world. “We aim to play a pioneering role in the development of e-mobility and are well-prepared to accomplish this mission,” Markus Schäfer, member of the Divisional Board of Mercedes-Benz Cars, Production and Supply Chain, told those in attendance. The Tuscaloosa-area plant is one of six sites being prepared for EQ models. Alabama Gov. Kay Ivey and Jason Hoff, president and CEO of Mercedes-Benz U.S International, were among the distinguished guests at the Oct. 5 event. The new production site for batteries—along with a new Consolidation Center—is located in Woodstock, seven miles from the Mercedes-Benz Cars vehicle production site in Vance. The Consolidation Center, also announced as part of the 2017 investment upgrade, will assemble kits with all parts necessary to put together a Mercedes vehicle for export overseas, and consist of three major areas, including the body parts preparation area, the assembly parts preparation area and the empties storage. It is expected to be operational in 2019. Once completed, these investments will create more than 600 additional jobs in Alabama. The Tuscaloosa County factory supplies the current GLE, GLE Coupé and GLS models to customers worldwide. These models are made exclusively in Alabama and two thirds of them are exported to almost every country in the world, thus making MBUSI the second largest automotive exporter in the U.S. The new GLE boasts a variety of performance enhancements and also offers an optional third row of seats. The new E-active-body-control chassis offers a new dimension of a smooth ride. The new Alabama battery facility under construction, meanwhile, is part of a global battery production network tied to Kamenz, Germany; Stuttgart-Untertürkheim, Germany; Sindelfingen, Germany; Beijing, China; and Bangkok, Thailand. The global arrangement allows Mercedes-Benz to react flexibly and efficiently to market demands and requirements. The different sites supply local vehicle production and are ready to export batteries, if required. Mercedes-Benz Cars expects to offer at least one electrified vehicle in each model series by 2022 totaling up to more than 130 models. Mercedes-Benz is about to start the production of electric passenger cars as part of its worldwide electric initiative. This includes the production of an all-electric SUV in the U.S. n

Lorain, Ohio; and Lone Star, Texas. Also covered are 2,000 more employees who are laid off, on sick leave or disability. NISSAN ALTIMA STEPS UP It’s a tough segment, led by Toyota and Honda, but Nissan wants to increase its market share for mid-sized sedans. It plans to do so with a redesigned Altima for the 2019 model year. The model is among the top 15 best-selling cars of the year, with

254,996 units sold. Production has begun in Canton, Mississippi and Smyrna, Tennessee. WE’RE NOT CALIFORNIA Jon Pritchett, CEO of the Mississippi Center for Public Policy, recently penned an editorial hailing the proposed new standards for the automotive industry, dubbed SAFE (Safe Affordable Fuel Efficient Autos). Calling Obamaera car rules too expensive and

controlling, Pritchett wrote that Americans should get to decide what kind of car they drive, not bureaucrats in Washington or California. PLEASE HUSH, MUSK Tesla chief Elon Musk had an interesting fall, being accused by the Securities and Exchange Commission of lying to investors when he tweeted that he had secured funding to take the company private. “Musk’s

false and misleading public statements and omissions caused significant confusion and disruption in the market for Tesla’s stock and resulting harm to investors,” regulators said. NOT TRUMP FANS Ford Motor Company said in late summer that steel and aluminum tariffs imposed by the Trump administration have cost it about $1 billion in profits. Honda Motor Co.,

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Mazda And Toyota Officials Get Started Building Their Joint Plant In Alabama

Nashville-Based Hankook America Expands OE Business

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meanwhile, said higher prices for steel generated “hundreds of millions of dollars” in new costs.

was made by the Alabama Department of Commerce and AIDT.

ERNST TO LEAD RTP Chuck Ernst, a former Honda manufacturing executive, has been appointed to lead Alabama Robotics Technology Park as it embarks on a strategic plan to prepare the training facility for new technologies and additional capabilities. The announcement

BIG BAMA FANS Daimler’s supervisory board recently nominated two former Vance, Alabama plant managers to the highest echelon of its executive ranks. Ola Källenius, head of group research and Mercedes-Benz Cars development, was chosen to replace veteran Dieter Zetsche

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Photo: Christine Prichard

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ankook Tire America Corp., based in Nashville, Tenn., recently announced a deal to provide original fitment tires for the 2018 Volkswagen Tiguan R-Line. VW will offer Hankook Tire’s Ventus S1 noble 2 in two sizes: 255/45R19H and 255/40R20V XL. The Ventus S1 noble 2 is an all-season ultrahigh-performance tire renowned for its handling and low rolling resistance. It is also designed for increased fuel efficiency and reduced road noise. The Tiguan R-Line, one of the best-known Volkswagen models globally, is powered by a turbocharged engine and includes changes to the front for a sportier and stylish look. Hankook Tire’s original fitment for the R-Line provides sporty handling to match the vehicle. Hankook Tire and Volkswagen’s relationship dates back to 2001 when the company started to produce tires for the Jetta. The partnership continued providing OE tires for Volkswagen Polo in 2003, and expanded to other Volkswagen’s popular models such as UP!, Beetle, Golf, Passat and many more. “Hankook Tire is happy to deepen its partnership with Volkswagen by supplying the Tiguan R-Line with our highperformance tires,” said Hyun Jun Cho, Head of OE Division. Hankook America markets and distributes a complete line of high-performance and ultra-high-performance passenger tires, light truck and SUV tires as well as medium truck and bus tires in the United States. n

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ear press time in November, officials broke ground — with a robot — on the joint venture plant between Mazda and Toyota in Huntsville, Alabama. The Mazda Toyota Manufacturing, U.S.A., Inc. (MTMUS) operation is expected to have the capacity to build 300,000 vehicles a year, beginning in 2021, and to create 4,000 jobs, with a $1.6 billion investment split by the two companies. The plant will build Toyota’s Corolla, whose all-new 2020 model was unveiled Nov. 15 in California, and Mazda’s yet-tobe revealed crossover model. “We are proud to be here with Toyota, with whom we share the bond of pride in manufacturing,” says Kiyotaka Shobuda, Mazda’s senior managing executive officer. “We are proud to be breaking ground on a new ‘home’ here in Huntsville — a city that believes in the possibilities of technology and manufacturing, and has striven to realize mankind’s greatest dream.” Officials from both companies hope the alliance will assure competitiveness in manufacturing, letting both automakers respond quickly to market changes and helping to ensure sustainable growth toward the future of mobility. “It is extremely special to have a partner like Mazda to team up with not only to make the highest-quality cars, but also to create a plant that team members are proud to call their own,” said Jim Lentz, chief executive officer, Toyota Motor North America. n

as CEO. Källenius, 49, will also become head of Mercedes-Benz Cars. Meanwhile, his old job goes to Mercedes production boss Markus Schäfer, 53, another Vance veteran.

addition to allow for 12 new injection molding machines, a paint line and other equipment. Work on the facility was set to begin in October and should be complete by July.

MITCHELL PLASTICS EXPANDING Automotive interior parts supplier Mitchell Plastics Ltd. is expanding its Huntsville, Alabama production site with an estimated 130,000-square-foot

GEORGIA GETS A BRAKE Georgia Gov. Nathan Deal recently said another Japanese auto supplier expansion is heading to the state, bringing another 100 jobs with it.


Volvo Doesn’t Plan To Push American-Made Angle

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olvo’s first American-made vehicles are just now arriving in showrooms around the country, but the company doesn’t plan to emphasize their country of origin, according to Fortune magazine. An article by Jaclyn Trop in October quoted Anders Gustafsson, president and CEO of Volvo Car USA, who revealed a bit of the marketing plan for S60 sedans rolling out of the new $1.1 billion plant 35 miles northwest of Charleston, South Carolina. “We will take away focus on where the cars are built,” he said, citing a sensitive political climate amid the Trump administration’s efforts to revamp North American trade relations. The company plans, instead, on emphasizing traditional Volvo strengths, like safety and comfort. “A Volvo is a Volvo no matter where it is built,” spokesman Jim Nichols told Fortune. Volvo plans to export half of the vehicles made at its South Carolina production facility to Europe, China and South America. Production of the V60 wagon is expected in 2019, with the XC90 full-size SUV to begin in 2021. n

Auto Writers Name Ram 1500 the 2019 Truck Of Texas

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t took two days of evaluation, likely with an adult beverage or two thrown in once the driving part was finished, but in October the journalist members of the Texas Auto Writers Association picked the 2019 Ram 1500 as Truck of Texas. The honor was bestowed at the conclusion of the Texas Truck Rodeo, presented by the Steel Market Development Institute, during which 69 journalists test-drove 57 vehicles and voted their favorites across a range of consumer categories. The 2019 Maserati Levante GTS won SUV of Texas and 2018 Alfa Romeo Stelvio Quadrifoglio took home CUV of Texas. “TAWA journalists know their trucks, and they picked the new Ram as the clear winner,” said Michael Marrs, TAWA president. “Our members said the truck performed well even in challenging weather conditions during the Hill Country floods this year. It was also noteworthy that Fiat Chrysler Automobiles swept all the overall awards at this year’s competition.” After a morning of off-road driving on Monday, torrential rain and safety concerns forced the remainder of the event to move to on-road evaluations. Still, journalists said they enjoyed their brief time driving four-wheel-drive vehicles on slippery Texas hills and through deep mud — conditions that challenge even the best 4x4s and uncover strengths and weaknesses of off-road products. n

Brake pad maker Nisshinbo Automotive Manufacturing Inc. will invest $72 million to expand a factory in Covington, east of Atlanta, to make environmentally friendly brake pads. ‘HEAVILY AMERICAN’ NISSAN Nissan Motor Co.’s North American division chief said recently that it was unworried by potential changes to the U.S.-Mexico trade agreement,

noting that the “heavily American’ company assembles about a million vehicles each year in the United States. FASHIONABLE KIA The all-new 2020 Kia Telluride SUV got a splashy unveiling recently at New York Fashion Week, where the hotly anticipated large SUV was received enthusiastically. Kia and designer Brandon Maxwell decked out a special

Telluride with a Texas theme and plenty of off-road gear. The eight-passenger, three-row SUV will also be seen in Detroit in January. MUSCLE CARS SOFTENING Like many of their owners, sales for American muscle cars have softened somewhat, with Baby Boomers advancing in age. Car analysts say high-performance cruising that dates to before the 1950s has fallen victim to the

American taste for SUVs, which began a decade ago. ROILING IN RECALLS Ford Motor Co. has seen two major recalls in the last half of 2018. Roughly two million Ford F-150 pickup trucks were recalled following 20 reports of smoke or fire in Regular Cab and SuperCrew Cab models made for 2015-18. The problem was traced to seat belt pretensioner devices. Ford also

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Next-Gen Auto Safety Systems Still Need A Good Human Behind Wheel these systems. Findings from this new research show that there is still a lot of work to be done in educating drivers about proper use of ADAS technologies and their limitations.” The study utilized University of Iowa scientists to survey owners of 2016 and 2017 vehicles with ADAS. It found: • Nearly 80 percent misunderstand what blindspot monitoring systems were capable of. Some drivers believed, for instance, that the system could detect bicycles and pedestrians, which isn’t always the case. • About 40 percent of those surveyed confused forward collision warning systems and automatic emergency braking systems. One in six owners, the researchers found, didn’t rivers are already relying too heavily—and failing to understand the know whether their vehicle was equipped with limitations—of next-generation auto safety systems such as blind-spot automatic emergency breaking. detection and lane-keeping assist, a new study suggests. • Truly terrifying: One in four respondents was The study, from the AAA Foundation for Traffic Safety, concludes that many confident enough in electronic blind-spot and drivers aren’t doing their homework in trying to understand Advanced Driver rear cross traffic alert systems that they didn’t Assistance Systems. do visual checks or look over their shoulder for “When properly utilized, ADAS technologies have the potential to prevent 40 oncoming traffic or pedestrians. percent of all vehicle crashes and nearly 30 percent of traffic deaths,” says Dr. Drivers in the survey generally agreed they David Yang, executive director of the AAA Foundation for Traffic Safety. “However, were open to more education on the safety driver understanding and proper use is crucial in reaping the full safety benefits of systems if it were to be made available. n

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Car Supplier Expanding In Kentucky, Adding 250 Jobs exico-based auto parts manufacturer Metalsa S.A. plans to expand its plant and warehouse in Elizabethtown, Kentucky, in a move expected to create

250 jobs. The company, founded in 1956, manufactures structural components for light and heavy vehicles. It offers light duty frames, space frames, safety systems, suspension structures, fuel

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recalled 1.46 million Focus cars in North America to fix a defect that could lead to stalling.

SKIP LEVEL 3 Volvo wants to sell autonomous cars by 2021 that would skip Level 3’s semi-dependence on humans and offer full autonomy, meaning the driver could sleep, watch movies or “do whatever.” Their electric 360c would also have a system of lights and sounds to clearly

indicate its intentions to those outside the car.

MOTUS SHUTS DOWN Motus Motorcycles, Alabamabased maker of highperformance motorcycles, has shut down operations. The company’s financial backers reportedly halted their funding in August.

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tanks, hinge systems, transmission modules for light vehicles, customized side rails and crossmembers for both the automotive and commercial vehicle market. The company’s operation in Elizabethtown is among its largest in North America. Elizabethtown plant manager Matthew Carter told the Associated Press that the new positions will become available in 2019 and 2020. n

AN ANSWER TO TESLA Mercedes-Benz, the world’s largest maker of luxury cars, recently unveiled a series of battery-powered models in Stockholm. The Mercedes EQC crossover will be manufactured starting in the first half of 2019, as part of the EQ line. DECODING ‘NEW NAFTA’ If Congress ratifies it, President Trump will have made good on his pledge to shelve NAFTA for

a “better” North American trade deal. The United States, Canada and Mexico have updated the deal that governs $1.2 trillion in trade among the three nations, though its requirements don’t drop until 2020. It requires 75 percent of a vehicle’s value to be produced in North America, up from NAFTA’s 62.5 percent. FORD PLANS JOB CUTS Ford Motor Co. recently announced plans to cut


Oops, Looks Like Your Tailgate’s Open, There, Partner

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t’s really no joking matter. Ford F-Series Super Duty trucks of the 2017 model year are being investigated by the National Highway Traffic Safety Administration for tailgates that open unexpectedly. As one commentator on autoblog. com noted, this is a big deal. His 2007 Ram had the same problem and one day fell open at the store, smashing the hood of a Chevy Impala that was parked behind him. Both Ford Super Duty trucks feature power tailgates operated with a key fob. Ford issued a service bulletin a year ago instructing dealers to check connectors and wire harnesses for water intrusion, but the problem of the tailgates opening has apparently persisted. Autoblog reports that NHTSA has fielded complaints from drivers who said the falling tailgate has caused damage to items that were being towed. The investigation could eventually lead to a recall. n

70,000 white-collar jobs as it redesigns to be leaner and simplify decision-making and the design process. No word yet on specific cuts. Ford sells 32.8 vehicles per employee, according to CNBC, which puts it at the back of the pack. TOYOTA TO TRIPLE? Toyota Motor Corp. wants to triple car production in China by 2030, according to automotive sources. The plan would be to

VW Hits Milestone Of 100,000 Atlas SUVs In Chattanooga

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olkswagen Chattanooga reached the production milestone of assembling 100,000 Atlas SUVs in October at its LEED Platinum-certified production facility in Chattanooga. The record-making vehicle was a 2019 Atlas SEL premium, finished in Pacific Blue, with Shetland V-Tex leatherette interior. The Atlas has a 3.6-liter direct-injection VR6 engine, 8-speed automatic transmission. “Our objective for the Atlas has been to assemble an SUV in America for Americans and we have been very encouraged by the success of the vehicle so far,” said Antonio Pinto, CEO of Volkswagen Chattanooga. “This is just the first of many production milestones we anticipate celebrating for the Atlas, and it would not have been possible without the world-class team here in Chattanooga.” Atlas for 2019 comes in seven trim levels, the top being the SEL Premium. Front Assist, Blind Spot Monitor, and Rear Traffic Alert are now standard on all models. Volkswagen Digital Cockpit—the high-tech configurable instrument cluster—is standard on SEL models. Manufacturer suggested retail for the 2019 Volkswagen Atlas 2.0-liter starts at $30,895 for the S model; 3.6-liter models start at $34,095 for the S 4Motion. The destination charge for all Atlas models is an additional $995. Volkswagen Chattanooga currently assembles the Volkswagen Passat, a midsize sedan specifically designed for the North American market, and the Volkswagen Atlas, a midsize sport utility vehicle which went on sale in May of 2017. In March 2018, Volkswagen Chattanooga was announced as the future production home of a five-seat SUV, representing an additional $340 million investment. n

assemble 3.5 million vehicles annually in China, as well as boosting imports. Toyota’s current production in China is 1.1 million cars annually. HWASHIN AMERICA EXPANDS Auto supplier Hwashin America Corp. will expand its Butler County, Alabama manufacturing operation with a $26 million investment in new equipment, creating 50 new jobs. The company produces body parts

for Hyundai. MERCEDES HAS EDGE Mercedes-Benz appeared likely in November to again take the annual crown for U.S. luxury car sales. Mercedes delivered 27,537 vehicles in October, pushing its lead over BMW to 3,964 units from just 319 in September. UA GETS CHALLENGE The University of Alabama will join with 11 other schools to

participate in the EcoCAR Mobility Challenge, an Advanced Vehicle Technology Competition designed to find more sustainable and smarter transportation. SOLAR PANELS TO GET COOLER Hyundai and Kia are planning solar panels on roofs and hoods soon for “selected” vehicles. The panels will charge electric engines but also have a role with standard combustion engines.

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EXECUTIVE Q&A INTERVIEW BY: NICK PATTERSON // PHOTOS COURTESY OF GENERAL MOTORS

After years with General Motors, Nora Roper talks about opportunity, the company’s operations across the world, and how her lifelong love of Chevy’s most famous sports car followed her to her current role at the Corvette plant

a uniquely global perspective orvette may be “America’s Sports Car,” but one of the leaders in the facility that builds them brings a world of experience – as well as a longtime love for the product. Nora Roper, the assistant plant manager at GM’s Corvette Assembly Plant in Kentucky, has worked for the company across the globe and through several progressive career moves. As she looks forward to upcoming developments - GM is

working on autonomous vehicles and acquiring Cruise Automation, as well as offering car sharing through the Maven service, and developing a network of on-demand autonomous vehicles with Lyft – Roper shares her wide-ranging perspective in this issue’s Executive Q&A. Q: If I’m reading your Linked In profile correctly, you’ve been with GM for more than 20 years and through several postings. Tell us,

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did you always know you wanted to work for General Motors? NR: I can say that I have always wanted to be an engineer and solve problems. I have always had a curiosity of wanting to know how things work and function. General Motors gave me an opportunity to study engineering and practice my engineering skills by hiring me on as a co-op student. That opportunity grew into my first full-time position as a manufacturing engineer in a GM facility.


My job is to empower the team, break down barriers and provide resources – people and money, when necessary. Q: What makes GM the best place to work, from your perspective? NR: One saying I have is “performance equals freedom” and freedom means opportunities. General Motors has offered me many opportunities with challenging assignments of increasing responsibility across four states and two countries. That’s why General Motors is the best place to work and why I have over 30 years with the company. Q: What do your duties as assistant plant manager entail at the Corvette Assembly plant? What’s your day to day routine? NR: As an APM, I am responsible for the day-to-day business of running the plant. The people, parts and processes of building the Corvettes and engines. The day starts early with reviewing the production shift data, preparing for the day’s activities and strategizing with the plant manager. Early in the shift, I have a production meeting with the staff which allows all of the functional departments (Production, Material, Quality, Maintenance, Engineering, Human

Resources and Information Technology) to hear the issues and take the necessary actions to enable us to have a successful day. As with all of our meetings, this meeting begins with a safety message – safety is always first and foremost at General Motors. There’s nothing more important than the safety of our people; every person, every site, every day. Many of the standard meetings throughout the day are held on the production floor and are designed for engagement with the teams. They typically incorporate some sort of informal check to ensure that systems are being followed and allow for people to offer help, where needed. My job is to empower the team, break down barriers and provide resources — people and money, when necessary. Other portions of the day are dedicated to looking ahead – what are the new best practices in manufacturing and how can we incorporate across the entire plant? What are the process

improvements currently planned and how do they affect the people and parts? It’s all about supporting the teams that build the Corvettes and engines. Q: Does the single-focus of the Corvette Plant make its operational requirements different from other GM plants? NR: No, the operational system requirements are not different for Corvette. “GM-GMS” is the Global Manufacturing System for all GM facilities. This system drives consistency across General Motors and allows us to leverage our size and diversity. What’s different at Corvette, compared to the other six GM facilities I’ve worked for,

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E X E C U TI V E

Q& A

After years of leadership roles around the world for GM, Nora Roper is managing a team at the Corvette plant in Kentucky, building a car that she loves.

is our size. With lower volume than typical GM assembly plants, it means less square footage and less people. Q: Are you a big Corvette fan? How much is test driving America’s Sports Car a part of your work? NR: I’m a HUGE Corvette fan! I absolutely love driving Corvettes – it’s been a privilege and a thrill!! Let me tell you when my love of Corvettes started… I was probably seven years old. My neighbor had a really cool car with an engine that absolutely roared. Whenever he got his sportscar out (of course, I would hear it), I would literally run to the window to get a glimpse of it as he drove by. It wasn’t until years later that I realized his Corvette happened to be a 1963 since it had the split rear window. I have the privilege of driving “Captured Test Fleet Corvettes.” A couple of years ago, when I was driving a 2017 Grand Sport Coupe, I enjoyed it so much so that I actually bought the car. So, now I own a Corvette. For the last 8 months, I have been driving the most powerful production Corvette ever built – the ZR1 with 755 hp. It is awesome and has unbelievable power and handling.

Q: I see that you used to be the organizational lead for PFMEA North America. What exactly was that role? NR: This was a headquarters assignment and I was working out of the GM Technical Center in Warren, Michigan. I was responsible for implementing quality systems in all of the GM assembly plants in North America, one of which is called PFMEA or process failure mode effects analysis. PFMEA is a proactive process that considers the failure modes in manufacturing and mitigates the risks by designing out the failure mode or adding detection to ensure quality in the workstation. I had a team of people that supported the assembly plants by creating and maintaining the PFMEA process. It was always rewarding knowing that my team and I were making a difference in the quality systems in our plants, and it allowed me the opportunity to network across the [North American] organization. Q: You’ve managed or assisted in managing engine plants, quality control and in the Opel plant in

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Hungary. What did you take from those experiences that prepared you for the current role? NR: The APM in the Romulus Engine Plant prepared me for the APM role at the Corvette Plant in that the tasks/ decisions of an APM are the same whether it’s dedicated to engines or cars. I would say that looking back, many of my roles and assignments have prepared me for my current responsibilities. The quality manager role I had allowed me to utilize my mechanical engineering degree along with practical production experience to put the right quality systems in place to ensure sound quality of the products we build. Because of my knowledge of the product and production and quality systems experience, I was uniquely qualified to lead the startup of building Allison transmissions at Opel Hungary which, at the time, was a GM facility. The experience at Opel was all encompassing, giving me the opportunity to learn more about other functional areas of the business such as material planning, scheduling, delivery,


finance systems and sales/marketing. Putting it all together — engineering, production, quality, finance, prepared me and qualified me for the APM role. Q: When it came to working in Hungary, how was that different than a plant in the U.S.? NR: First, I would say the experience in Hungary allowed me to grow both personally and professionally. It had a positive impact on my family (husband and children) and on my career. Hungarian people are very welcoming and respectful. They needed my help and my experience with the Allison transmission product and manufacturing systems. The people were very grateful for their jobs and were willing to do whatever it took to make a quality product. Therefore, the workforce tended to be more flexible when it came to schedule changes. I am grateful to have had the opportunity to represent GM overseas. Q: What’s the part of your work that’s most gratifying for you? NR: Knowing that we have a nearly impossible task or metric but then seeing the team pull together, comes up with a plan, and makes it happen. Great things are accomplished by a great team! Of course, you also have to have the right leadership with a clear direction. The work and the accomplishment is through the team! Q: Are there any trends in the industry as a whole that you’re excited about or looking forward to exploring? NR: Yes, absolutely — utilizing technology to make our cars and roadways safer! Specifically, I’m looking forward to the future of personal mobility. GM is looking at global trends and societal changes like urbanization, sustainability and the sharing economy. These are the changes that are driving the rapid transformation of our industry. n

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INDUSTRY OUTLOOK

NAFTA REPLACEMENT TREATY WILL BRING CERTAINTY TO AUTO INDUSTRY

Atlanta-based Canadian Mission Head Nadia Theodore says our northern trade partner is committed to signing the USMCA TEXT BY: BILL GERDES // PHOTO BY: NICK F. NELSON

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here still is a lot of ground to cover before the United States-MexicoCanada Agreement (USMCA), the revamped North American Free Trade Agreement (NAFTA), goes into effect and questions remain about exactly how the deal will impact the auto manufacturing world. But most industry observers say the agreement brings a key

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ingredient to the automotive business: a degree of certainty. “What businesses need more than anything else is a degree of certainty,” says Consul General Nadia Theodore, Head of Mission, Canada, a veteran treaty negotiator now based in Atlanta. “They create their business models based on rules that they know exist and they need to know that those rules are going to exist for the next 20 years for their business cycles. So we know that this modernization means that businesses can be certain that they have duty-free access, that the rules of engagement have not changed and they can continue to do business with their friends and partners in all three countries as they did before,” she says. Theodore joined the Canadian civil service in 2000 and has made a career in the Trade Agreement and Negotiations Branch of Global Affairs, holding leadership positions on several recent and major trade initiatives of Global Affairs Canada, including serving as one of the two Deputy Chief Negotiators for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and as the Executive Director of Canada’s Secretariat for the CanadaEuropean Union Comprehensive Economic and Trade Agreement. With more than 10 years of trade policy experience, Theodore’s appointment to the Atlanta post came as Canada, Mexico and the United States launched negotiations to modernize NAFTA. That said, one of the key roles of the Consulate General of Canada in Atlanta is to serve Canadian interests across the six states of Alabama, Georgia, Mississippi, North Carolina, South Carolina and Tennessee, all of which are heavily involved in the


automotive industry sector which is impacted by USMCA. Theodore says the recent negotiations were finished very quickly, as trade agreements go. “My background is in trade policy and negotiation so I can tell you that the pace of the negotiation was quite unprecedented, frankly. In my view it really was the leadership of Canada and the United States and Mexico and the commitment to getting it done that allowed us to get it over the finishing line this fall,” she says. “In terms of next steps, what happens after folks conclude the actual text of the agreement, is all three countries will now finalize all the technical issues, do the legal review of the agreement in English, French and Spanish and then, each of the parties have to proceed to the domestic procedures in order to have the authority to sign and ratify the agreement,” she says. Theodore adds, “From Canada’s point of view, we are certainly committed to signing and have this agreement come into force as soon as possible.” After the parties agree on a date for signing the text of the agreement, she says, the procedure in Canada calls for the agreement to go through the parliamentary system. “In parliament we have 21 days when the agreement is tabled, and during that time the members of parliament can debate the agreement, they can request a vote regarding the agreement if they wish, and then the legislation goes through parliament for all of the normal parliamentary proceedings and then once parliament approves the agreement, the government seeks legal authority to ratify the treaty,” she says. Theodore says she does not anticipate any problems with ratifying the treaty. “What I will say is that during the modernization of NAFTA, now USMCA, all political parties in Canada really understood the benefits of modernizing

In my view it really was the leadership of Canada and the United States and Mexico and the commitment to getting it done that allowed us to get it over the finishing line this fall. — Consul General Nadia Theodore, Head of Mission, Canada.

NAFTA. All political parties in Canada really understood that nearly nine million U.S. jobs depend on the two-way trade investment with Canada, and that really spoke to the fact that Canada and the United States have been the most successful economic partnership in the world and it is largely due to this trade agreement,” she says. In Mexico, the legislative process to ratify the deal and enact the enabling legislation is expected to be fairly quick. Agreement and release deadlines were timed to get the USMCA approved by outgoing Mexican President Enrique Peña Nieto who left office Dec. 1. In the U.S., the Congress is considering the USMCA under the Trade Promotion Authority (TPA) rules which set out milestones that are required to “fast track” the legislation, which means it will receive an up or down vote in the Congress without amendments. A critical milestone is that the TPA requires a report on the economic impact of the trade deal from the U.S. International Trade Commission (ITC). That report is due within 105 days after the agreement is signed. According to a report by the Center for Automotive Research (CAR) in Ann Arbor, Michigan, Republicans in Congress are considering trying to pass the bills this year during a lame duck session of Congress, but it is not certain that the ITC report would be available that quickly. The Congress could vote to modify the rules and not require the ITC report for passage to meet a more aggressive timeline. Without strong bipartisan support for the deal, the normal timeline is more likely, and the 116th Congress that takes office in January 2019 will likely be the one that considers the agreement, according to CAR. “While there is a lot that is different in this new agreement about automotive

trade, there are some things that remain the same,” CAR says. “It is also important to keep in mind that while the text offers greater certainty about the future of North American automotive production, trade, and investments, the USMCA still must be signed, ratified, and the enabling legislation must be passed in each of the three countries before the agreement can go into effect on the target date of 1 January 2020. The CAR analysis also says there are important changes in the document concerning the auto industry. “Instead of the 62.5 percent North American content hurdle in NAFTA, the USMCA sets forth a regional value content (RVC) threshold for vehicles and three categories of automotive parts: core, principal, and complementary. There is a new RVC for North American steel and aluminum content and a new labor value content (LVC) rule that states that 40 percent of a passenger vehicle and 45 percent of a pickup or cargo vehicle must be made by hourly workers who earn a wage of $16 an hour or more. Automakers can earn up to 10 percent credit toward the LVC from R&D and information technology work done in the region where the production takes place, and a 5 percent credit toward the LVC for assembling the vehicle in a high-wage region in North America.” “Back home in Canada,” Theodore says, “we really support the idea of strengthening the Canada-US-Mexico trade relationship and protecting the supply chains that have really allowed us to compete and win globally with the rest of the world, which then results in higher wages, and better standards of living for all of our citizens in all three countries. “A lot of people don’t know that the U.S. actually exports more to Canada

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While there is a lot that is different in this new agreement about automotive trade, there are some things that remain the same. — Center for Automotive Research. than it does to China, Japan, and the UK all combined and beyond that, a lot of people don’t know that it is not just U.S. companies selling finished products to Canada. The trade actually includes components of parts that move across our borders back and forth as part of this highly efficient supply chain, and that is part of the reason that in the automotive sector you see these automotive manufacturing companies — the Kias, the Mercedes’, the BMWs, coming here to the Southeast to take advantage of those supply chains that we have created among the three countries. “The next thing on our plates would be to return to the 232 tariff on steel and aluminum, which cancels out much of the good that comes from the agreement on USMCA, especially in the auto industry,” Theodore says. Last February the U.S. Department of Commerce concluded that the

quantities and circumstances of steel and aluminum imports “threaten to impair the national security,” as defined by Section 232 of the Trade Expansion Act of 1962. The reports found that United States steel imports were nearly four times the nation’s exports, and that aluminum imports had risen to 90 percent of total demand for primary aluminum. The Commerce Department recommended that President Trump take action to protect the viability of the nation’s steel and aluminum industries by imposing tariffs on non-North American imports. The Section 232 auto and parts tariffs are not yet in effect. However, the European Union and Japan have won a reprieve from the impact of the tariffs while they work to negotiate new trade deals with the United States. If the EU and Japan deals lead to a more long-term exemption such as the ones negotiated by Canada and Mexico,

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the overall impact of these potential tariffs will be greatly diminished. Most of the USMCA rules have a three-year transition period, and if all goes smoothly in the three countries’ ratification process, the target effective date is Jan. 1, 2020. According to CAR, the current Section 232 steel and aluminum tariffs and the ongoing Section 301 trade dispute with China is already raising prices for consumers and suppliers — including those that rely on domestically-sourced inputs due to increased demand for these sources. A Section 232 auto and parts tariff that exempts Canada and Mexico is better for the U.S. auto industry than one that does not, according to CAR. However, the potential for there to be even more tariffs will likely cause changes in the North American industry. CAR’s preliminary analysis of the imposition of Section 232 tariffs shows that widespread imposition will be a net negative for the U.S. industry, the overall economy regarding employment and gross domestic product, and will raise consumer prices even further. n


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INDUSTRY OUTLOOK

UBER ON OVER AND GIVE ME A LYFT Mobility is gaining momentum and carmakers are taking notice

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he average American over the age of 18 spends 18 hours and 31 minutes per week in their car, which averages out to 2 hours, 38 minutes per day, according to a study by Arbitron. The rest of the time that $25$30,000 vehicle sits idle. A recent article in The Atlantic says, “As an investment, the car is a massive waste of opportunity, the world’s most underutilized asset, the investment firm

TEXT BY: BILL GERDES

Morgan Stanley calls it. That’s because the average car sits idle 92 percent of the time. Accounting for all costs, from fuel to insurance to depreciation, the average car owner in the U.S. pays $12,544 a year for a car that puts in a mere 14-hour workweek. Drive an SUV? Tack on another $1,908.14.” So it is no wonder Americans, especially younger ones, are slowly eschewing the idea of car ownership as a necessity and are looking at new options of mobility, a term being

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increasingly used in the automotive manufacturing field. Steven Jones, a professor of engineering and a researcher with the Alabama Transportation Institute at the University of Alabama in Tuscaloosa, says that from his standpoint there are two concepts people need to understand when talking about “mobility.” What’s the difference? “There’s mobility and there’s


accessibility,” Jones says. “Think about the interstates — that’s moving people, moving stuff, getting things from one place to the other, bringing regions together, connecting cities coast to coast.” Mobility, Jones says, “is more of a macro term. Accessibility is really more the human side of it. Accessibility is, you leave your house and you drive to the hospital or you drop your kids at school, or you can ride your bike to the grocery store. Accessibility is getting to the place you need to get to every day.” There is some confusion about the various terms used in the mobility discussion. According to Carsplain. com, ride hailing services are the ones you’ve probably heard the most about, companies like Uber or Lyft. You download the app, and so does the driver. You open the app, input your payment info, and hail a ride. A driver will answer that request in a personal car, not a taxi. The app tells you both where the pickup will happen, and you tell the driver where to drop you

off. When the ride is over, you pay via the app. Ride sharing is like organized carpooling. A service arranges for riders to share a trip. In car sharing members can unlock a car anywhere in the service area and drive around paying by the minute, with or without making a reservation in advance. They only have to park the vehicle inside the service area when they’re done, even if that’s miles from where they started. For the carless, there are numerous new passenger transportation options. Zipcar, RelayRides, Car2Go, Lyft, Uber, and many others, available for a quick trip home from the local bar or to a cross-town restaurant. “Ride sharing is more about accessibility than mobility. Nobody is taking an Uber or Lyft across country,” Jones says. “I personally don’t own a convertible but I could go on an app and find somebody who has a convertible and we could do a transaction and I could use their convertible for the weekend.”

IMS will have a profound effects on how people think about mobility, on the way people relate to vehicles and how transportations services are organized and paid for. — Center for Automotive

Research.

These new transportation options, collectively called Innovative Mobility Services (IMS) include car sharing, ride hailing, bike sharing, ride sharing and scooter sharing programs. It’s getting around According to the Center for Automotive Research in Ann Arbor, Michigan, ride hailing is now available in more than 300 U.S. cities, and one in four people in major U.S. metropolitan areas has used this type of mobility option. The Center says that as of January 2017, the United States had nearly two million car sharing users for almost 25,000 vehicles. While

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Ford is really beginning to position itself as more of a mobility company, not just a car company. —Steven Jones,

transportation researcher

North American car sharing programs have grown slower than ride hailing programs, they still averaged a 26 percent annual membership growth between 2007 and 2017. CAR also says IMS “work best in denser and walkable areas with good transportation networks” and when used in combination with other modes of transit. Jones says the increase in IMS would “ideally mean fewer cars on the road. In reality, maybe not so much. There are studies that say Uber and Lyft are actually increasing traffic.” Jones says. “If people are sharing cars or using transportation network companies, the logical thing would be fewer cars would be purchased. But I would say the jury is still out on that and a lot of that would depend on where you live.” The CAR report also notes that the “early adopters of IMS tend to be younger, with higher education and income levels and own fewer vehicles than the U.S. average.” In fact, the IMS are becoming

increasingly popular on college campuses where parking is scarce and a number of students live within two or three miles from campus. Justice Smyth, outreach director for the Alabama Transportation Institute, says the University of Alabama and the Student Government Association recently partnered with Lyft to provide discounted rides for students, faculty and staff within a two to three radius of campus. The Road To Disruption Most auto industry observers say the growth of Innovative Mobility Services will likely cause only a small decrease in vehicle sales in the near future, but says the CAR report, “IMS will have a profound effects on how people think about mobility, on the way people relate to vehicles and how transportations services are organized and paid for.” The report also says “these startups are disrupting automakers and threatening vehicles manufacturers’ share of auto industry profits.” Auto makers are looking at

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ways to meet the IMS challenge if there is a significant shift from private car ownership to multimodal transportation. Ford, along with Volkswagen, is moving to position itself as a mobility company offering IMS along with the traditional products. “Ford is really beginning to position itself as more of a mobility company, not just a car company,” Jones says. “You go out to San Francisco and their bike share program – all those city bikes have Ford logos on them.” Auto makers have also started hooking up with mobility and tech companies, the latter of which offer the apps needed by the IMS. According to CAR, Daimler owns car2go and moovel, General Motors has Maven and BMW has ReachNow. Toyota has invested in Uber, Getaround and Grab. Ford acquired Chariot and TansLoc and GM has agreements with Uber and Lyft, Ford with Lyft and Nissan with Scoot. The deployment of innovative mobility services, Jones says, has only scratched the surface. “It can be getting a millennial from their apartment to a bar or vice versa. Uber just recently rolled out something call UberHealth, an app specifically to help people who cannot drive to get healthcare,” he says. According to a recent IBM study, more changes are likely in the car/ driver relationship. The study found that 42 percent of those surveyed would consider alternative ownership modes such as subscription pricing, while another 24 percent of respondents were very interested in fractional ownership of vehicles. Thirty-nine percent of consumers would consider a carsharing model and 36 percent surveyed would choose the on-demand ride sharing option. “The successful companies,” Jones says, “are the one that can adapt to the new reality.” n For another look at how mobility may disrupt the automotive industry, see the Expert View later in this issue.


EXPERT VIEW

Mobility-As-A-Service Why S elf-Driving Cars C OULD Change Ever ything

TEXT BY: BY TASHA KEENEY, ANALYST AT ARK INVEST

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RK expects that before 2020 fully autonomous vehicles will become commercially available, enabling the rise and rapid growth of autonomous taxi networks. These networks should decrease the cost and inconvenience of point-to-point mobility dramatically and spurring a transformative boost in economic productivity. As a result, the traditional automotive industry may be subsumed by mobility-as-a-service (MaaS) platforms that could become one of the most valuable investment opportunities in public equity markets. Perhaps most importantly, consumers stand to benefit from cheaper, safer transportation... and fewer stranded assets. Fully autonomous vehicles could be available to consumers as early as late 2018 if Google’s Waymo follows through on its promised commercialization timeframe. Shortly after, GM plans to launch autonomous ride-hailing in

2019, and Tesla plans to release full selfdriving capability to eligible customers within the same year. In the early days we can assume that autonomous taxi systems will have third party operators that will control the car remotely when the autonomous system fails. In the event that an autonomous car becomes confused by its surroundings, it will pull over safely to the side of the road and a teleoperator will direct the car to proceed. Further, the business owners of these taxi platforms probably will control geographic monopolies because they will use their fleets to collect the data necessary to create autonomous maps and train autonomous systems. This data reservoir will provide barriers to entry against competing service providers. Most importantly, ARK estimates that autonomous taxis will be extremely affordable, driving consumer acceptance and adoption.

Tasha Keeney is an analyst for ARK Investment Management LLC, a New York-based investment firm focused solely on investing in disruptive innovation. She covers autonomous cars, additive manufacturing, drones, and infrastructure development. Tasha has appeared on CNBC, BNN, Bloomberg, and frequent webinars with Robotics Business Review. She has been quoted and had her research featured in The Wall Street Journal, Forbes, Wired, the Verge, Bloomberg, CNNMoney, and Marketwatch, among other publications. ©2018, ARK Investment Management LLC. All content is original and has been researched and produced by ARK Investment Management LLC (“ARK”) unless otherwise stated herein. This material is for informational purposes only and should not to be relied on in making investment decisions. All statements made herein are strictly beliefs and points of view held by ARK. Any reference to a particular company or security is not an endorsement or a recommendation by ARK to buy, sell or hold such security.

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roadway to be devoted to driving. Even without shorter drive times, we think passengers may not mind waiting in traffic if they can watch online streaming services, browse social media, or catch up on emails while doing so.

Waymo is a self-driving technology development company. It originated as a project of Google. Waymo is currently running a trial of an autonomous ride-hailing business in Phoenix, Arizona.

The Cost of Mobility is Likely to be Radically Reduced Even at a lofty $150,000 price tag for autonomous systems, if prototypes were ready today Google’s Waymo could offer mobility-as-a-service (MaaS) profitably for roughly 70 cents per mile, matching the cost to own and operate a personal car currently. The current cost of auto ownership includes depreciation, gas, parking, financing, insurance, maintenance, registration, taxes, and tire replacement. Typically, consumers do not internalize all expenses in their calculation of annual transportation costs. While autonomous taxis will be cost competitive with personal vehicles thanks primarily to higher utilization rates, they should be superior to taxis given the elimination of labor costs. Today, the average price a taxi charges per mile in the U.S. is roughly $3.50. Given their much higher technology content, autonomous taxis will become more compelling over time as costs fall. Autonomous sensors and computer systems, which cost Google roughly $150,000 in 2012 and could be $10,000 — $20,000 now should drop to $1,000 —$2,000 by the time autonomous cars are commercialized. The higher utilization rates of autonomous taxis compared to personal cars will enable

the feasible cost per mile of Google or a competitor’s autonomous taxi to drop by more than half to roughly 35 cents per mile in 2020. Global Vehicle Miles Traveled Should Increase ARK expects that vehicle miles traveled could increase dramatically. For example, the non-driving population, including the blind, the elderly, and young teens, will have access to inexpensive, convenient transportation. In addition, the convenience of mobility-as-a-service (MaaS) should prompt existing drivers to travel more miles. Based on ARK’s research, an increase in miles will not correlate perfectly with an increase in congestion: autonomous vehicles will operate more predictably, allowing higher throughput on existing infrastructure, and autonomous taxi services will reduce the need for parking infrastructure significantly, allowing more lanes of

Global Auto Sales Should Be Lower Than Anticipated While the demand will increase autonomous taxi fleet sales, consumers will forgo buying cars, eventually selling or discarding the ones they no longer use. In North America, the net impact of autonomous cars could cut auto sales in half by the late 2020s. Initially, car sales probably will increase modestly in the developed world after the introduction of autonomous taxis. Thereafter, total sales should descend precipitously as autonomous taxis gain share, obviating the need for personally owned cars in urban areas. Used car sales and prices are likely to plummet as drivers give up their personal vehicles. In sum, ARK expects global auto sales to be much lower than most forecasters anticipate. Growth rates implied by IHS forecasts would suggest global auto sales will reach roughly 109 million units by 2025, roughly 20 percent higher than ARK’s estimate. Ten years later in 2030, ARK believes that auto sales will be almost a third lower than implied by IHS forecasts. Autonomous Taxis Should Boost U.S. GDP Given the macroeconomic importance of auto production in the U.S., losing auto sales would seem to be terrible economic news. Not so. Yes, in the year that the consumer decides

FIGURE 1

All-In Cost Per Mile of Vehicle Services

$3.50

Average U.S. Taxi

$2.86

Uber San Francisco

Source: ARK Investment Management LLC

32 | Southern Automotive Alliance | DECEMBER/JANUARY 2019

$0.70

$0.35

Personal Car

Autonomous Taxi 2020


convenience, productivity, and down time, not to mention safety.

FIGURE 3

Global Vehicle Miles Traveled Trillions Non - Autonomous Miles Autonomous Miles 45 40 35 30 25 20 15 10 5 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Source: ARK Investment Management LLC

not to purchase a personal vehicle, the economic impact will be net-negative, but in each subsequent year that decision will generate an economic surplus. In total ARK’s research demonstrates that autonomous taxis could add roughly $2.3 trillion to annual economic output by 2035, as shown in Figure 4 below. To illustrate this economic benefit, imagine a person decides not to buy a car and instead starts to use an autonomous taxi service. In the first year, there will be a net economic loss from the forgone auto sale. The lost car sale will be offset by the following factors, pushing the cumulative economic impact positive within three years: 1) A significant productivity boost as drive time shifts to leisure or compensated work time; 2) Service revenue from, and sales of, autonomous taxis; 3) Capital returns as unnecessary and unused parking spaces convert to offices, retail stores, or residences; and 4) a reduction in the $28 billion of annual costs associated with traffic congestion

from car accidents, not to mention lives saved as the accident rate drops by over 80 percent. According to ARK’s research, these benefits will offset the lost revenue from gasoline and insurance sales, as well as the medical and repair costs associated with car accidents every year. The net present value of the economic impact over 15 years associated with every driver in the U.S. who forgoes buying a personal car and instead rides in an autonomous taxi is roughly $120,000. Consumers should benefit from a shift to autonomous taxis in other ways as well. Driving a personal car costs roughly 70 cents per mile today. According to ARK’s research, autonomous taxis could charge roughly half that cost, saving on average $4,700 per driver per year. Moreover, sitting in the backseat catching up on work or watching online streaming services, consumers should enjoy more

Auto Accident Rates Could Decline By More Than 80 Percent Sadly, a majority of the tens of thousands of people who die in car accidents in the U.S. are young and full of potential. The total loss of life from traffic deaths is devastating, and on average costs America at least $77 billion per year in forgone economic contributions. This amount is equal to the entire GDP of New Hampshire. Computers react more quickly than humans as they do not text, drive while drunk, or daydream. ARK estimates that autonomous vehicles ultimately will reduce accident rates by over 80 percent, contributing to a transformational public health gain. ARK has quantified the expected magnitude of this safetyadvance by analyzing the introduction of another automation technology that has saved tens of thousands of lives: the airplane’s autopilot. If autonomous vehicles contribute to a similar improvement in safety, the introduction of the autonomous car could be one of the great public health advances in history. Over time, the introduction of autopilot technology has reduced pilot-attributable crash rates by 90 percent. By contrast, in a completely driverless world, a reduction in driver-errors consistent with those experienced by the airline industry would reduce motor

Computers react more quickly than humans as they do not text, drive while drunk, or daydream. ARK estimates that autonomous vehicles ultimately will reduce accident rates by over 80 percent, contributing to a transformational public health gain. DECEMBER/JANUARY 2019 | Southern Automotive Alliance 33


E X P ER T

V I E W

FIGURE 4

Forecasted U.S. GDP With Autonomous Taxis GDP Without Autonomous

In $ Trillions

Additional GDP From Autonomous Taxis

31 29 27 25 23 21

-841M

19 17

20T

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1B

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vehicle accident rates by 83 percent, from Source: ARK Investment Management LLC 1.1 deaths per 100 million vehicle miles traveled, to 0.2. Given ARK’s expectations for autonomous adoption, nearly five million fatal accidents are likely to be avoided by 2035. Mobility-As-a-Service May be Undervalued By Investors As in the PC market, software and services should prove to be a more attractive part of the value chain than hardware. According to ARK’s research, the autonomous mobility-as-a-service (MaaS) market will exceed $10 trillion in gross sales by the early 2030s. Sales from autonomous vehicles will total about $900 billion at that time, or roughly one tenth of the services market. Autonomous taxis will enjoy substantially higher utilization rates than will personal cars, increasingly depressing the number of unit auto sales per year. ARK believes that the net present value of the mobility-as-a-service (MaaS) opportunity is much larger than investors appreciate. MaaS players, like Lyft, Uber, Didi, Grab, and Ola, share a

Players that manufacture key enabling components for autonomous driving, as well as Tier one integrators that package autonomous sensor suites, may be well positioned to gain a share of the autonomous hardware market.

23

20

28B

23T

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49B

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649B

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market valued at roughly $240 billion today. ARK thinks that when accounting for the potential cash flow from autonomous taxi services, the market today should be valued somewhere between $600 billion and $3 trillion, depending on an investor’s time horizon. Of course, this opportunity may not accrue to the benefit to tech companies alone. Google partnered with Fiat and Jaguar Land Rover, Aptiv is running an autonomous vehicle pilot with Lyft in Las Vegas, and several OEMs, notably Tesla, Volkswagen (VW), BMW (BMW), Daimler (DDAIY), and Toyota, have detailed plans for both autonomous vehicles and shared autonomous services. While services will become more valuable, hardware manufacturers still will be able to tap into growth opportunities as MaaS takes off. Automakers with successful electric vehicle (EV) and autonomous strategies should benefit disproportionately. ARK estimates that battery cost declines will

1.6T

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drive higher EV and autonomous EV sales volumes, outpacing the growth of traditional gas-powered car sales. Lastly, players that manufacture key enabling components for autonomous driving, as well as tier one integrators that package autonomous sensor suites, may be well positioned to gain a share of the autonomous hardware market. The shift to MaaS should create profound opportunities in financial markets. Relative to the $70 trillion in global equity market cap, MaaS could move the needle by more than 10 percent over the next decade. ARK anticipates that MaaS platforms will proliferate across the entire income spectrum as well as across all geographies quite rapidly. We may be at the cusp of a substantial transformation in the mode of transport throughout the world. n Read ARK's white paper in full at http:// research.ark-invest.com/self-driving-carswhite-paper

FIGURE 6

Global Revenue For Autonomous Cars And Services $ Trillions 12 10 8 6 4 2 0 2020

Autonomous Mobility-as-a-Service Revenue (Gross)

Revenue from Autonomous Vehicle Sales 2025

34 | Southern Automotive Alliance | DECEMBER/JANUARYSource: 2019 ARK Investment Management LLC

2030

2035


Who covers them all and more?

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DECEMBER/JANUARY 2019 | Southern Automotive Alliance 35


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2018’s SAC brought together the best and brightest in automotive from the South and beyond TEXT BY: CARLA CALDWELL // PHOTOS BY: LYNSEY WEATHERSPOON

The 11th annual Southern Automotive Conference, held at Cobb Galleria Centre in Atlanta Oct. 3-5, was the largest SAC conference to date with more attendees, square feet of exhibit space, exhibitors, sponsors and international pavilion participants. 38 | Southern Automotive Alliance / DECEMBER/JANUARY 2019

T

he 2018 Southern Automotive Conference provided a showcase for the innovative ideas, products, manufacturing and technology that are driving the auto industry. More than 1,200 registered to attend the three-day event hosted by the Georgia Automotive Manufacturers Association (GAMA), making it the largest SAC yet, according to Sheila Wardy, director of events for PMT Publishing, which serves as planner of the Southern Automotive Conference and publishes Southern Automotive Alliance magazine. For the first time, the annual conference was held in Georgia. The event is presented jointly each year by the automotive manufacturing associations of Alabama (AAMA), Georgia (GAMA), Mississippi (MAMA) and Tennessee (TAMA), with support from the Kentucky Automotive Industry Association (KAIA), South Carolina Automotive Council (SCAC) and Southern Automotive


Women’s Forum (SAWF). The Peach State has been added to the rotation of host states, and will host again in 2022, Wardy says. Tennessee will host in 2019, Mississippi in 2020, and Alabama in 2021. SAC 2018 was designed to fuel careers and grow business through networking opportunities, according to Rick Walker, founder and president of GAMA. The event featured numerous panel discussions and breakout sessions. Topics included autonomous vehicle technology, workforce development, issues that affect original equipment manufacturers (OEMs), and the Occupational Safety and Health Administration’s (OSHA) impact on the industry. Keynote speeches were presented by industry leaders including Ken Koch, a principal in KPMG LLC’s Advisory practice; Linda Hasenfratz, CEO of Linamar Corp.; Raj Batra, president, Siemens Digital Factory Division; Dr. Hagen Radowski, president and CEO of MHP Americas – A Porsche Company, and Jonathan Smoke, chief economist at Cox Automotive. Georgia Gov. Nathan Deal opened the final day of the conference with a keynote speech spotlighting the state’s strong ties to the automotive industry. Deal noted that Georgia is the No. 1 place in the U.S. to do business, according to Site Selection magazine. The magazine has ranked Georgia No. 1 for six consecutive years. The most recent rankings were released in November. Deal says he is particularly proud of workforce development programs that serve the automotive manufacturing and parts industries and other businesses. Site Selection cited “workforce skills”

as the most important factor when the magazine compiled its 2018 state rankings, followed by transportation infrastructure and workforce development. New to the automotive conference this year was a large Workforce Development Zone. Exhibitors included major universities, technical schools and companies that are working with the South’s growing automotive industry to identify employment needs and provide education and training. The event’s popular Innovation Zone was expanded to display more of the latest in automation, robotics, products and services. The annual Innovation Test Track competition featured four companies selected from a field of 18 contestants. Companies with a new technology, innovative product or service that could be valuable to the automotive industry are invited to participate. Finalists are invited onto the main exhibition stage to pitch to a panel of judges. The winner receives $2,500, a two-page advertisement in Southern Automotive Alliance magazine, and follow-up pitch opportunities with each judge. This year’s winner says it can use artificial intelligence to help manufacturers avoid unnecessary purchases that can add up to millions of dollars. Throughout the conference, attendees, exhibitors, and sponsors packed the exhibit hall to gather and provide information about goods, services and workforce development opportunities. Several states, regions and cities were represented by officials who promoted infrastructure and

incentives designed to attract and support the auto industry. A highlight of the conference was the annual awards ceremony for the Stars of Southern Manufacturing, hosted this year by Nick Patterson, editor of Southern Automotive Alliance magazine. Winners include Natasha Hall of Lear Corporation (Alabama); Kimberly Sears of Kia Motors (Georgia); Kanesha Jackson of Toyota Motor Manufacturing (Mississippi); and Wendell Williams of Nissan Powertrain Assembly Plant (Tennessee). The first Southern Automotive Manufacturers Alliance (SAMA) Hall of Fame award was given to Don “Stogie” Stoegbauer, former executive director of the Mississippi Automotive Manufacturers Association. Check out our special section for more highlights from SAC 2018. n

Contents 40 A changing U.S. auto market — Cox Automotive‘s chief economist provides a look at what’s ahead for manufacturing and sales 43 A world of opportunities — new international pavilion attracts more foreign manufacturers and suppliers 45 Autonomy will provide opportunities — and force industries to make major changes to survive 47 Innovation is exciting — but don’t be distracted by every shiny object that floats by advises a Tier 1 industry leader 49 Georgia governor discusses state’s booming auto industry and new inland ports that speed delivery of goods and will remove 100,000 18-wheelers from roads each year 50 Innovation Test Track — Winner says it can predict inventory needs and help manufacturers avoid wasting millions of dollars on unnecessary parts

DECEMBER/JANUARY 2019 / Southern Automotive Alliance 39


The Outlook for a Shifting Auto Market

Opportunities, challenges and the vehicles consumers want to buy TEXT BY: CARLA CALDWELL // PHOTOS: LYNSEY WEATHERSPOON

A

strong economy — and the threat of rising interest rates and tightening credit fueled auto sales in 2018. The forecast for 2019 is solid, but as loans become more expensive and harder to secure the types of vehicles purchased could change, according to Jonathan Smoke, chief economist for Atlanta-based Cox Automotive and a keynote speaker at the 2018 Southern Automotive Conference in Atlanta. Smoke leads a team that mines data from Cox Automotive businesses on various platforms that include Autotrader.com, Manheim and Kelley Blue Book. Trends identified by the team reveal challenges and opportunities for the U.S. auto industry and for production of vehicles in the Southeastern U.S.

Economic Conditions Affecting U.S. Buyers Tax reform implemented at end of 2017 helped make 2018 “an incredible year” for the economy, and that worked in the automotive industry’s favor, Smoke says. “We had 4.2 percent (gross domestic product) growth in the second quarter. That is the strongest quarter in four years and we are destined to have close to 3.5 percent, at least, this quarter and likely will end the year at 3 percent for year-over-year growth,” Smoke says. Forecasts for 2019 continue to be solid and there is very low probability of a recession on the immediate horizon, he says. “When you look at demand for autos, of course the economic growth is important. It produces very low

40 | Southern Automotive Alliance / DECEMBER/JANUARY 2019

unemployment and continued steady job creation, and that boosts consumer confidence, which today is at an 18-year high. And as a result, that puts people in a position to be more willing and more able to make big-ticket purchases like vehicles, but also other things like houses, that are intimately connected to the demand for automobiles in the country,” Smoke added. Credit It is vital to pay attention to what is happening with credit. There, the story is starting to change, he says. “What we have been seeing for the last three years is a tightening of credit standards. While loan growth continues - we had almost 2 percent loan growth in the second quarter - all that growth is occurring in FICO credit


scores of 720 or higher. As a result, consumers who have lower credit scores are finding it more challenging.” Smoke says. That is starting to affect the pool of buyers in the new vehicle market. When affordability becomes a challenge in the new automobile market, the used vehicle market is there to take on that challenge, he says. Interest Rates The other important trend to consider is the rise in interest rates, Smoke says. “If I had to pick one negative to be worried about the most, is the degree in which interest rates have moved in the last two years and how much they are likely to move more in the next two years based on the guidance we are receiving form the Federal Reserve. As it stands today, we have had four fed increases over the last 12 months, three in this calendar year, and the fed has announced they are planning to move forward with another increase in December. “You can officially say the era of low interest rates is over. There is no question that low interest rates helped us sell more vehicles and get more people into automobiles just a few years ago. Now that becomes a bit more of a headwind and more of a challenge,” Smoke says. U.S. New Vehicle Production To determine the natural rate of new vehicle production, the team looks at population growth, licensed driver growth, the number of vehicles in operation and the amount of scrappage that is occurring. They determined that 16 million vehicles is the natural rate of production. “Well, we have had several years of almost 18 million new vehicles produced and sold in the United States. To make that happen you must have perfect conditions, such as extremely low interest rates, looser credit and much lower lease payments. hanThose things were favorable in 2014, 2015 and 2016, but are now starting to work against us,” Smoke says.

We continue to see phenomenal growth, and when you look at the volume of trucks and SUVs that are produced in the Southeast, these are some really exciting vehicles that represent the best that the industry produces and actually some exciting new model launches and refreshes that have been occurring this year and are expected to come next year. — Jonathan Smoke

But there is a positive side, he added. “History tells us that we are not likely to see new vehicle production fall under 16 million units unless we have a recession,” says Smoke, adding that manufactures must focus on units that are most in demand. It also becomes more important to keep the volume of new vehicle sales propped up through incentives and discounting, he says. New Cars SUVs are the dominant vehicle sold in the U.S., Smoke says. “We have seen correspondingly a massive decline in cars, which are currently 31 percent of the market. In fact, in August and September, for the first time in history, the share of new vehicles sold fell beneath 30 percent in each of those months. A key question many people are asking is, ‘How low can this go? It is going to go all the way to zero?’ “I actually thought that 30 percent would likely be a floor, or close to it, but it really is starting to look like, from price signals that we see in the used vehicle market, that the trend is likely soon to reach its bottom and the declines in car sales are likely to no longer decline relative to SUVS in a few months,” he says. Wholesale Market Cox Automotive’s Manheim operates 80 auto auctions across the U.S., which provides a strong picture of the wholesale market, Smoke says. “We touch over 5 million wholesale vehicles a year. It is a substantial view into what is selling in the wholesale market to feed used car sales. You can see that cars still dominate. Year-to-date they still are more than

50 percent of vehicles sold in the wholesale market. They are starting to decline somewhat, but it is going to take about three years for wholesale market to look like the new vehicle market. So that means we are going to see differences in price performance, especially if cars are unloved and SUVs are all the rage. And that is why I can tell you with confidence I don’t think that cars are going to continue to decline because the best performing vehicles in the used vehicle market this year have been cars. Compact cars in particular, and mid-size cars. Which again speaks to there is real demand out there and perhaps some of the declines in production coming from the manufacturers, including big ones like Ford announcing that they are exiting the space entirely, could mean that we have seen enough production to get that market much healthier that it has been for years. Used Cars Jobs are plentiful and consumer confidence is up, but, with higher interest rates and tighter credit, some consumers can’t quite afford the new vehicle they might have purchased before, Smoke says. “As a result of strong demand, and supply that’s no longer growing, we are seeing incredible price performance in the used vehicle market,” he says. Kelley Blue Book shows 2018 retention values are more than a full percentage point, and close to two full points, above the last two years, Smoke added. What’s Holding Dealers Back Cox Automotive conducts a dealer survey every quarter. This year, for the first time, dealers says the No. 1 issue

DECEMBER/JANUARY 2019 / Southern Automotive Alliance 41


You can officially say the era of low interest rates is over. There is no question that low interest rates helped us sell more vehicles and get more people into automobiles just a few years ago. Now that becomes a bit more of a headwind and more of a challenge. — Jonathan Smoke

holding them back is limited inventory in both the new and used vehicle markets. Dealers also says expenses are rising. Higher interest rates affect their floor planning and capital expenses, and payroll expenses are going as wages rise. Southeast Production, Trends and Outlook Smoke provided several statistics using 12 months of sales and registrations ending in June of 2018.

• 18 percent of U.S. vehicles sold are produced in the Southeast

• Mississippians are almost 45 percent more likely to buy vehicles produced in the Southeast

• Every state in the Southeast is about

25 percent more likely to buy vehicles produced in the Southeast

• Residents of Oklahoma buy almost

as many vehicles made in the Southeast as residents of Mississippi

Composition of Vehicles The Southeast produces every segment of vehicle but is heavily weighted to two segments - the crossover vehicle and the mid-size car, Smoke says. The crossover vehicle is the most popular vehicle, and the vehicle that continues to be the focus of growth for OEMs across all spectrums; but the South also has an outsize share of midsize cars, he says. “The reason why I bring that up – the decline in cars [sales] also impacts

42 | Southern Automotive Alliance / DECEMBER/JANUARY 2019

us,” says Smoke. The outlook is much different for trucks and utilities produced in Southeast, he says. “We continue to see phenomenal growth, and when you look at the volume of trucks and SUVs that are produced in the Southeast, these are some really exciting vehicles that represent the best that the industry produces and actually some exciting new model launches and refreshes that have been occurring this year and are expected to come next year,” Smoke says. What’s Ahead Giving consumers what they want and can afford is key to continued success, Smoke says. “I think we are in very good standing,” Smoke says, adding, “if we can continue to focus on how these trends are playing out and what’s going to support the manufacturing that’s going to deliver the vehicles that consumers want and that consumers can afford for the future.” n


First United Kingdom Delegation Attends SAC

UK trade officials say group made valuable connections with key stakeholders in the South’s automotive industry TEXT BY: CARLA CALDWELL // PHOTOS: LYNSEY WEATHERSPOON // UK DEPARTMENT FOR INTERNATIONAL TRADE

T

he United Kingdom was represented by a 20-member delegation at the 11th annual Southern Automotive Conference, marking the first time the nation officially participated in the event. SAC showcases the latest in automotive innovation, technology and manufacturing, and provides numerous opportunities to network with auto industry leaders throughout the South. The UK delegation included government officials, top manufacturers and suppliers, members of academia and two trade organizations - the North East Automotive Alliance (NEAA), which supports the auto sector in the

North East of England; and the Society of Motor Manufacturers and Traders (SMMT), the trade association of the UK motor industry. The delegation was hosted by the UK Department for International Trade (DIT) and the British Consulate-General Atlanta. “From our perspective, we understand that the U.S. Southeast has quickly become a globally renowned cluster of automotive innovation and manufacturing,” says Joshua Williams, vice consul, Head of Automotive, USA, UK Department for International Trade. “The UK is a world leader in innovative manufacturing technologies, lightweight materials, and advanced propulsion

systems. If the UK is going to maintain its own position as an automotive hub, we need to collaborate and conduct business with other automotive clusters. “We brought a diverse group of companies and organizations that collectively exemplify the UK’s cutting edge capability in manufacturing technologies, lightweight materials and low emissions solutions. We thought this event would be a fitting way for our group to build relationships with automotive stakeholders in the region, and we are encouraged by the valuable connections made by our group.” Williams adds that, “Several of our delegates were able to meet the relevant

TOP LEFT: Astin Martin TOP RIGHT: Her Majesty’s Consul General Andrew Staunton speaks with Sigmatex US Operations Director Craig Yingling BOTTOM LEFT: Peter Corby, with the UK Manufacturing Technology Centre, connects with Rob Krulac, with Clemson University International Center for Automotive Research (CUICAR) BOTTOM RIGHT: Rick Walker, president and CEO of Georgia Manufacturers Association, talks with Ian Stewart and Matthew Morris with the UK Department for International Trade DECEMBER/JANUARY 2019 / Southern Automotive Alliance 43


THE UK DELEGATION AT SAC

If not for this trip and being out here meeting with these terrific companies, we would not have discovered them. Just being able to link the two sides up across the pond is actually very useful going forward. We think it is a win-win partnership, potentially, for UK automotive companies and Southern automotive companies. — David Wong, senior

technology and innovation manager, Society of Motor Manufacturers and Traders, the trade association of the United Kingdom’s motor industry purchasing contacts at OEMs and Tier 1’s in the region, and we understand many had fruitful conversations. We will be following up in the coming months to learn if any business has yet been won.” In the UK, more than 30 manufacturers build more than 70 models of vehicles, supported by 2,500 component providers and some of the world’s most skilled engineers, according UK motor industry trade group SMMT. The trade group has advised, however, that UK auto manufacturers, Tier 1 suppliers and others associated with the industry could face significant challenges as the UK prepares for Brexit - the nation’s exit from the European Union in March 2019. Government officials, industry leaders and trade groups are working to address Brexitrelated issues that include trade and tax arrangements, customs procedures and employment law and immigration. A large portion of EU nationals are employed by UK suppliers, SMMT says. The auto industry continues to grow in the South. In the last five years, Georgia, alone, attracted 97 automotive companies that created roughly 7,400 new jobs, Gov. Nathan Deal says in a speech that kicked off the conference’s last day. In the days leading up to the conference, members of the UK

delegation toured automotive industry hotspots across the Southeast to strengthen ties with auto companies in the region. At the conference, several UK delegates were broadcast live from the UK pavilions. Videos of the broadcasts are accessible on Twitter under the hashtag #UKatSAC. David Wong, the senior technology and innovation manager for the motor industry trade group, is featured in one broadcast. Wong says the UK has come a long way since the economic downturn in the late 1990s, and that automotive is among leading industries with the annual manufacture of 1.6 million passenger cars and 2.7 million engines - a majority of which are exported primarily to Europe. He says new business opportunities and learning more about policies in the South, for example, in terms of electric vehicles and charging infrastructure, are reasons he attended the conference. “If not for this trip and being out here meeting with these terrific companies, we would not have discovered them. Just being able to link the two sides up across the pond is actually very useful going forward because we think it is a win-win partnership, potentially, for UK automotive companies and southern automotive companies,” Wong says. n

44 | Southern Automotive Alliance / DECEMBER/JANUARY 2019

• Academia • Warwick Manufacturing Group’s Cyber Security Centre (CSC) • Manufacturing Technology Center – Coventry University • UK Government • Office of Low Emission Vehicles • Trade Associations • Society for Motor Manufacturers and

Traders • North East Automotive Alliance • UK Companies • Avid Technology • Senseye Technologies • TR Fastenings • Wyvern • Master Mover • Sigmatex • Heraeus Noblelight • Womble Bond Dickinson

A World of Possibilities International pavilions grouping companies and organizations by nation were among highlights of the 11th annual Southern Automotive Conference. The United Kingdom’s 20-member delegation filled a block of exhibit space that included a sitting area for exhibitors and guests, and featured a crowd-pleasing Aston Martin DBS – super spy James Bond’s vehicle of choice. Canada and Japan also had a large presence. Canadian exhibitors included global automotive supplier Magna International Inc., one of that country’s biggest companies and the largest automobile parts manufacturer in North America by sales of original equipment parts. Nadia Theodore, Canada Consul General to the Southeast, introduced keynote speaker Linda Hasenfratz, CEO of Linamar Corp., a Canadian Tier 1 supplier to automotive markets in the southern U.S. In November, Hasenfratz was named Canada’s Outstanding CEO of the Year for 2018. The Japan External Trade Organization (JETRO), which helps Japanese companies grow export potential, doubled its presence over last year, says Trevin Dye, JETRO assistant director of international business development. A 13-company delegation attended the 2017 SAC in Birmingham. Jetro also organized a business matching event to support development of business between Southeast and Japanese auto parts companies.


Driverless Vehicles: An Amazing and Disruptive Transportation Mode consumer and business needs.

Autonomy will provide opportunities — and force industries to change to survive TEXT BY: CARLA CALDWELL

I

t is an exciting time to be involved in the automotive industry, but the rapid speed in which autonomy will transform and disrupt transportation will force companies to change how they think and do business, according to Ken Koch, a principal in KPMG’s Advisory practice. Koch was a keynote speaker at the 2018 Southern Automotive Conference in Atlanta. In 2012, KPMG began researching the future of autonomy and quickly predicted that self-driving cars and autonomous vehicles would ramp up significantly, and fast. The company has since invested heavily in studies to determine what that will mean for consumers and businesses, Koch says. The company’s most recent white paper on the topic is Islands of Autonomy. The research looks at many aspects of autonomy, including safety, investments in technology, pilot projects that are underway or planned, and

Safety Safety has improved significantly, but still there are safety issues that must be addressed, Koch says, noting the tragedy in Arizona in early 2018, when a pedestrian was hit and killed by a selfdriving car. Companies are using simulated environments to test what they refer to as “interesting miles,” which evaluate situations such as construction, drivers cutting off other drivers and other potential hazards, Koch says. Through February 2018, 9 million miles had been traveled on public roads using self-driving cars. Computersimulated miles traveled using “interesting miles” have produced 5 billion miles of travel, he says. Coming Soon — Autonomous Trucking and Car Service In November, Waymo, a subsidiary of Google’s parent company, Alphabet Inc., says it would, in December, launch the world’s first commercial driverless car service. The service will compete directly

with Uber and Lyft. In early 2018, Waymo started a pilot program in Atlanta that uses a small fleet of Peterbilt Class 8 trucks to transport cargo to Google data centers. Estimates indicate the technology could, in the future, address up to 80 percent of the $3 trillion global freight transportation market, Koch says. Another Waymo priority is licensing its technology to automakers for personal vehicles, Koch added. Islands of Autonomy KPMG’s research used cell phone ping data during commuter and noncommuter times to determine driving patterns in Atlanta, Chicago and the southern California region. The company found what it calls a new transportation market — 100plus “island markets” with their own commuter demands. The islands are not necessarily cities, but could be multiple cities in a geographic area, and each island has different needs, Koch says. “To understand and be able to compete in them, you are going to need in-depth research and analysis that

We believe vehicle sales in the U.S. have peaked and you will see a falling-off of non-AV vehicles, ‘pretty drastically.’— Ken Koch DECEMBER/JANUARY 2019 / Southern Automotive Alliance 45


we’ve really never done before. The focus is really on trip mission. There will be no one-size-fits-all vehicle for the island market. Each island market will absolutely need a unique mix of vehicles to meet consumer needs. So, It might be a small pod for city trips, but for longer commutes you might want more of a mobile office.” Challenges, Opportunities and Change Mobility services and self-driving vehicles will reduce consumer desire to own cars and bring a massive decline in sedan sales, Koch says. Consumers still will want sports cars, convertibles and SUVs, he added. “We believe vehicle sales in the U.S. have peaked and you will see a falling-off of non-AV vehicles, ‘pretty drastically,’” Koch says. The decrease in cars on the road will reduce the need for parking decks, and that will affect the parking

industry, he says. Fewer cars also means fewer accidents. That’s certainly a good thing, but fewer accidents affect the collision parts industry, Koch says. And as autonomous vehicles become more common, the insurance industry will change. Rather than insure the individual, insurance will be carried at the OEM level and the car will be insured, he says.

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“We believe the economic models must change,” Koch says. “You have to rethink your product, your service, your investment decisions. The market is no longer simply about GDP [gross domestic product] per capita; and a family of four, including two kids and a dog. Instead, it’s really going to be about trip origin, destination, duration, miles, occupancy, mission and velocity on each one of these Islands of Autonomy.” n


A Tier 1 perspective on innovation

Linda Hasenfratz - Canada’s CEO of the Year - says have a flexible plan and challenge assumptions about what’s around the corner TEXT BY: CARLA CALDWELL // PHOTOS: LYNSEY WEATHERSPOON

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s innovation and technology rapidly reshape the automotive industry, it can be difficult to map out a strategy, according to Linda Hasenfratz, CEO of Canada-based Linamar Corp. “The key point to make right now is we are certainly living in a time of uncertainty and a time of a lot of change, but I don’t think that is a bad thing. I actually think that uncertainty leads to opportunity with the right approach,” says Hasenfratz, who was a keynote speaker at the 2018 Southern Automotive Conference in Atlanta, and in November was named Canada’s Outstanding CEO of the Year for 2018. The right approach, Hasenfratz says, is to have a flexible plan and capital available as disruptions and opportunities arise, to keep innovating

every day, to make the most of data and new technology, and to think long term. “We need to stay focused and not let ourselves get distracted by every shiny object that floats past. I think it is tempting when we are surrounded by all these new technologies. But staying focused and getting things over the finish line is important. We need to think long term.” There’s a lot of speculation, for example, about propulsion and how vehicles will be powered in the future, she says. “No one knows for sure what is going to happen. Is it going to be internal combustion engines? Is it going to be hybrid? Is it going to be battery electric? Is it going to be fuel cell electric? Which, I think, by the way, is very interesting technology.

“We are trying to base our thinking around facts of what we know and challenge the consensus a little bit. I do think there is a lot of misinformation out there. Faulty logic and incorrect assumptions about the future,” Hasenfratz says. She does not think internal combustion engines soon will be replaced, or that battery-powered cars are necessarily what should replace them. “I do agree that we are shifting to new kinds of propulsion, but I think it is going to take a little longer than some people are assuming. There is huge investment and huge time that is required to retool vehicles into new types of propulsion. The idea that this is going to happen overnight is unlikely. I think it will take a little bit longer before we see major shifts.”

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The key point to make right now is we are certainly living in a time of uncertainty and a time of a lot of change, but I don’t think that is a bad thing. I actually think that uncertainty leads to opportunity with the right approach. — Linda Hasenfratz Sales of hybrid engines, which are internal combustion engines, will increase and then start to decrease as electric vehicles take over, she says. About 95 million vehicles are made a year, with about 90 million being internal combustion engines. About the same number of internal combustion engines are projected for 2030, she notes. The expectation is that growth of batterypowered vehicles will continue 1 to 2 percent globally per year over the next 15-year period, Hasenfratz says. Battery-powered vehicles are popular with some consumers, but it isn’t likely the mass market will adopt them soon, she predicts, adding that cost is one deterrent. A battery pack for a large sedan typically costs from $10,000-

$12,000, plus the cost of the electric system. The overall cost of an electric vehicle is approximately $5,000-$7,000 more than a comparative combustion engine vehicle, she says, adding that “A lot of investment is happening, but it is going to take a bit of time to do that.” Another misconception is that battery-electric vehicles will save the planet, according to Hasenfratz, who points out that most electric cars run off electricity, which is generated in most countries by coal-fired power plants. “I am a big fan of moving to new types of propulsion,” she says, “but I think we should understand what the right solution is. Right now, we are way too focused on battery-electric vehicles. And that is just one little slice

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of this spectrum.” A solution might be fuel cell electric vehicles, which run on hydrogen that can be produced from water using solar technology. More automakers, especially Japanese companies, are embracing the idea and are spending more time and money on fuel cell vehicles than seen in the past, Hasenfratz says. It’s also important to think about untapped markets, she points out. “There are few technologies that have been developed that have not created additional demand,” Hasenfratz says, adding that autonomy could make it possible for someone who could not drive before to have a car, such as a senior adult or someone with a disability. She points to “a study by the Boston Consulting Group that suggested automated driving will ease congestion, but it actually might result in more cars on the road — just playing more nicely together.” n


Georgia Governor Nathan Deal at SAC 2018

Automotive industry invests billions in the Peach State and provides tens of thousands of jobs TEXT BY: CARLA CALDWELL // PHOTOS: LYNSEY WEATHERSPOON

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ore than 300 automotiverelated facilities manufacture whole cars or components in Georgia, and provide tens of thousands of jobs, Georgia Gov. Nathan Deal says, making remarks during a keynote speech that opened the final day of the 11th annual Southern Automotive Conference in Atlanta. “Over the last five years, alone, Georgia has located some 97 automotive-related companies to our state, creating roughly 7,400 new jobs.” Deal added. The governor welcomed SAC to Atlanta and discussed the state’s strong ties to the automotive industry. During the past eight years, operations for Kia Motors and the headquarters of Mercedes-Benz USA and Porsche Cars North America located in Georgia. They joined other automotive companies with headquarters in the Peach State, including Cox Automotive, Genuine

Parts Company, Novelis and Exide Technologies. Deal listed several major investments made by automotive companies, including:

• Kia Motors — $2.9 billion in Georgia, since the company began mass production in 2009. • Mercedes-Benz — almost $100 million between its new headquarters in Sandy Springs and its Lab 1886 innovation center. The company also signed a deal with the Atlanta Falcons to name their home arena MercedesBenz Stadium. • Porsche Cars North America — roughly $100 million in its new headquarters and Porsche Experience Center, which opened in 2015.

Deal says that companies that locate in Georgia can benefit from highly trained workers, and graduates of

Georgia Institute of Technology, which is ranked among the top institutions in the country for innovation and technical expertise. Georgia is ranked No. 1 in the country for workforce training and has a program that pays 100 percent of tuition to those who enroll in a state technical college and study one of 17 high-demand fields, which include automotive technology, precision manufacturing and logistics, he says. Georgia’s Ports also received time in the spotlight. “Last year, trade between the state of Georgia and the world reached some 225 unique global markets and was almost $129 billion in economic impact. The automotive industry, in particular, was a significant component, accounting for $3.5 billion of Georgiamade products that went through the two ports here in Georgia,” he says. Deal announced the state soon will open an “inland port” in northeast Georgia. That port, and the state’s existing inland port in northwest Georgia, which opened in the summer, will accept containers from 18-wheelers and take them by rail to the Port of Savannah, and transport items back from Savannah. The inland ports will serve Georgia and border states. The process speeds delivery of goods, saves money and will remove more than 100,000 trucks from roadways each year, Deal says. n

Last year, trade between the state of Georgia and the world reached some 225 unique global markets and was almost $129 billion in economic impact. The automotive industry, in particular, was a significant component, accounting for $3.5 billion of Georgia-made products that went through the two ports here in Georgia.

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Innovation Test Track Competition

• Venturi, Mike Alvarez, president. Huntsville, Alabama.

Winner wants to help manufacturers avoid unnecessary parts purchases that can add up to millions of dollars TEXT BY: CARLA CALDWELL // PHOTOS: LYNSEY WEATHERSPOON

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he winner of the 2018 Innovation Test Track competition is AUTIT, an Atlanta-based startup that uses artificial intelligence to help manufacturers accurately predict inventory needs and avoid buying excess inventory. Stocking more parts — just in case the parts are needed — does not make a company more valuable, it wastes capital, according to Paul J. Noble, founder and CEO of AUTIT. The company prefers the just-intime approach to manage purchases, Noble says. AUTIT uses data to avoid overstocking inventory, which reduces working capital within the supply chain. For the typical Fortune 1000 manufacturing company that can equate to $40 million-$60 million in savings, the company says.

The Innovation Test Track contest is held each year during the SAC. Companies with a new technology, innovative products or services that could benefit the automotive industry are invited to enter. Contestants are asked to describe the unique aspects of their product or service, to provide a description of a customer’s problem the technology or service could solve, and to describe any competitors or potential future competitors. If there are competitors, contestants are asked to describe how their technology, product or service compares. The contest received 18 entries that were narrowed to AUTIT and three more finalists: • Cognosos. Steve Robb, CEO. Atlanta • ActionPLAN. Bob Hooper, president. Ontario, Canada

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During the conference, contestants were invited onto the main stage to make a quick pitch to a panel of judges who have a background in innovation. The contest awards the first-place winner $2,500, a two-page advertisement in Southern Automotive Alliance magazine and follow-up pitch opportunities with each judge. The runner-up receives a full-page advertisement in the magazine and a pitch opportunity with one judge. At least three of the four finalists had follow-up discussions with OEMs and Tier 1 companies, says Mike Stonecipher, organizer and emcee of the 2018 contest and senior project manager for the Georgia Manufacturing Extension Partnership (GaMEP), a unit of Georgia Tech’s Enterprise Innovation Institute. “Each of the finalists are technology leaders and demonstrate the passion required to make transportation and manufacturing innovative, safe and exciting. It was an honor for me to organize and emcee the event,” Stonecipher says. The judges’ scoring sheets show they liked all the finalists, he adds. “All of the finalists were good. The judges thought AUTIT met a need in the industry that had not been easily solvable,” Stonecipher says. n

Each of the finalists are technology leaders and demonstrate the passion required to make transportation and manufacturing innovative, safe and exciting. It was an honor for me to organize and emcee the event.— Mike Stonecipher, senior

project manager for the Georgia Manufacturing Extension Partnership (GaMEP), a unit of Georgia Tech’s Enterprise Innovation Institute.


INDUSTRY NEWS

Georgia Named Top Business State, Again Southern states dominate annual Top 10 lists of best places to do business - including automotive BY CARLA CALDWELL

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eorgia is the No. 1 state for business for the sixth consecutive year, according to Site Selection magazine. Georgia also tops Area Development magazine’s 2018 list of top business states. The Peach State is that publication’s No. 1 pick for the fifth consecutive year. The auto industry is among top industries in Georgia with more than 300 automotive-related facilities that manufacture whole cars or components, and employ tens of thousands in the state, according to Gov. Nathan Deal. Georgia also is home to the headquarters of Cox Automotive, Genuine Auto Parts Company, Mercedes-Benz USA and Porsche Cars North America. Southern states dominate the publications’ lists. Site Selection’s No. 2 pick is North Carolina, followed by No. 3 South Carolina, No. 4 Texas and No. 5 Tennessee. Area Development’s No. 2 pick is Texas, followed by No. 3 Alabama, No. 4 Tennessee and No. 5 South Carolina. Georgia’s consistency was applauded by Site Selection. “A six-year winning streak tells us that Georgia’s business climate is solidly competitive and enduring – it doesn’t fluctuate year to year,” says Site Selection Editor in Chief Mark Arend. “This ranking reflects actual projects announced, which result in new jobs, and the input of those deciding where projects should be located. Georgia’s first-place finish would not be possible without strong performances in both of

those areas.” Top-ranking states on both lists scored well for labor skills, workforce development, transportation infrastructure and cost of doing business. Area Development rated Georgia No. 1 in the category “Leading Workforce Development Programs.” Alabama is rated No. 2. Alabama is No. 1 in the category “Most Improved Economic Development Policies.” Georgia is rated No. 2. “Alabama has continued to pursue legislation aimed at boosting businessfriendliness and encouraging regional cooperation for the benefit of all,” the magazine says. “We’re experiencing tremendous momentum, and Alabama’s automotive industry is key to that momentum,” says Alabama Gov. Kay Ivey at an Alabama Automotive Manufacturers Association event in November. “Alabama’s automotive industry powers our state. In 2017 our auto sector attracted nearly 1.1 billion and created several thousand jobs.” Area Development rated South Carolina No. 1 for “Business Incentive Programs.” Alabama and Georgia tied No. 2 in that category, followed by Mississippi. Alabama and Georgia tie for No. 1 in the category “Favorable General Regulatory Environment,” followed by No. 3 Texas and No. 4 South Carolina. Tennessee is No. 1 in the category “Shovel-Ready Sites Program.” Georgia is rated No. 2, followed by Alabama at No. 3. Area Development’s rankings are

based on 11 criteria: Overall cost of doing business, Business incentive programs, Competitive labor environment, Leading workforce development, Shovelready sites program, Cooperative and responsive state government, Favorable general regulatory environment, Favorable utility rates, Most improved economic development, Corporate tax environment and Access to capital and project funding. n

Site Selection 2018 Top State Business Climate Rankings 1 Georgia 2 North Carolina 3 Texas 4 Ohio 5 South Carolina/Tennessee (tie) 7 Virginia 8 Alabama/Indiana (tie) 10 Kentucky/ Louisiana (tie)

Area Development 2018 Top States for Doing Business 1 Georgia 2 Texas 3 Alabama 4 Tennessee 5 South Carolina 6 North Carolina 7 Louisiana 8 Mississippi 9 Indiana 10 Florida Rankings Methodology: Site Selection’s rankings are based on the opinions of corporate site selectors who rank states based on their recent experience of locating businesses in them, and on factors that include total projects in 2017 per capita, total 2018 projects year to date, total 2018 projects year to date per capita and state tax burden on mature firms and on new firms according to this year’s Tax Foundation and KPMG Location Matters analysis.

DECEMBER/JANUARY 2019 / Southern Automotive Alliance 51


Faces of the Industry

Dream Car, Dream Job

Former VW apprentice Ilker Subasi trains young carmakers at Volkswagen Chattanooga TEXT BY: NANCY HENDERSON // PHOTOS COURTESY: VW CHATTANOOGA

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urious and always questioning “why”—“That’s my generation: Generation Y,” Ilker Subasi jokes. Subasi was working in the Volkswagen press shop in Hanover, Germany, when he was invited to share some of his improvement ideas during a 15-minute workshop presentation. “The 15-minute time frame turned into two and a half hours,” recalls Subasi, 35, who manages the apprenticeship program at VW Chattanooga. “I gave them three options for each

issue: savings, quality optimization and teamwork. They took [my recommendations] and says, ‘We have an opening on the planning team. Would you mind being an instructor?’” Flanked by towering Transformerlike machines in the spotless robotics room—Subasi is a stickler for cleanliness here, and at home—he takes a rare break to talk about his personal journey and the training program he now oversees. The middle child of Turkish

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parents whose families immigrated to Germany, Subasi attended a Catholic school in Hanover and celebrated both Muslim and Christian holidays. He loved cars, especially his dad’s Volkswagen Bus, and vowed to own one someday. Even before the high school senior internship that changed his life, he knew he wanted to work for VW. After completing two-week, mandatory internships at a telecommunications company and the local police department—he hated the latter because of the motion sickness from riding in the back seat of a patrol car—in 2000 15-year-old Subasi began the third and final one in the production department at VW. “I was so impressed, because it was exactly what I was thinking about,” he recalls. “And I says, ‘I want to be part of that.’” While there, Subasi did the machining for a simple vise project. An exact replica is currently showcased in the Chattanooga plant’s apprentice classroom. At the other end of the exhibit table, colorful 3-D components depict the way the computerized process is currently done. The year after his internship, Subasi applied for the VW apprentice program, finishing at 18 and receiving an automatic job offer. For two years, he worked in assembly, then two more in the press shop, earning his mechanical engineering degree from the University of Hanover in 2007 while attending night classes. With his employer’s permission, he also took a three-month paid leave to improve his technical English language skills in an ESL exchange program at Houston Community College. It was his first visit to the U.S. “Looking back right now, I really appreciate that four years in production and in manufacturing to understand the core business of the company, because we aren’t producing robots. We’re producing cars and making sure that the customer likes the cars,” Subasi says.


Soon after he became an instructor, he began studying at the Technical University of Hanover to become a pedagogical training specialist. Then in 2010, the head of the VW apprentice academy asked him to transfer to a new plant opening in Chattanooga, Tennessee, and start a similar program there. “My task was to take the dual German system but make it better,” he says. But first, he needed an educational partner and some applicants, so he built on the city’s longstanding vocational relationship with Chattanooga State Community College and wrote most of the curriculum himself for the new program. “It was a matter of making all the improvements and getting it done,” he says. “I’m a hands-on guy. I’m driven by results. I want to be proud of what I’m doing on a high level. Otherwise, I will not put my name on it.” Overall, the initiative reflected the German culture of organization, punctuality and quality. “But it wasn’t easy just to copy-paste it,” Subasi says. “We have to respect that the educational system here is different. We have to respect how people act here, where they go, how they find jobs.” For four and a half years, Subasi traveled back and forth between Chattanooga and Germany, leading both programs and adding a high school contingency of young apprentices at the Tennessee plant in 2015. At the end of that year, he returned to Germany fulltime. He came back in March of 2018 to once again use his knack for change-making to revamp the focus of the VW Chattanooga Academy from Automation Mechatronics to the more technology-based Robotronics, a first for the global carmaker. “I think the challenge with students is always the same, but the environment changed,” Subasi says. “They grew up with tablets, smartphones. Social media is different. And we have to consider that in our training concept as well.”

In the past, for instance, a maintenance employee would physically carry a toolbox to a cell to troubleshoot. Now, a machine that isn’t working properly automatically shuts down and sends an electronic message to a cell phone. Giving another example of the shift to robotics, Subasi points out that in previous decades, a team member would have to cut a piece of metal from a sheet to make a replacement part. Now, it’s printed onsite, saving time and money. “We don’t need people anymore filing six weeks on a benchmark or running the machines,” Subasi says. “We need people who understand the equipment language and know how to program a 3-D printer.” Although students now rely on the internet to find information rather than trying to memorize instructions from a book, some things haven’t changed. Every graduate is paid during the apprenticeship, earns college credit, and gets a job offer on completion. Up to 48 students attend the academy at any given time—half in the firstyear classroom, half in the hands-on, second-year robotics center. Subasi oversees five teachers and two staff members. Although he spends much of his time parlaying VW’s evolving manufacturing needs into the training curricula, he still interacts with students who aren’t much older than he was when he did his own apprenticeship in Germany. “Always, when I come to them, I say, ‘I was sitting in the same chair. I know

exactly what you’re going through’.… I see [my role] more as a mentor, a coach, instead of standing in the front, reading a book.” Sometimes he finds himself motivating a student who seems destined to fail. In the first group of students in 2010, one young man didn’t do well at first but caught on as the program progressed. After graduation, Subasi offered to send him to Germany for a year of advanced training. Two weeks after he started there, however, the student called Subasi, wanting to come home. Subasi reminded him of how hard he’d fought to get where he was, urging him not to give up and putting him in touch with a few other guys with whom he could network. Months passed, and Subasis didn’t hear from the young man, until shortly before his mentee was scheduled to returned to the states. When he finally did get a call, the student asked, “Can I stay longer?” Always tinkering at home—“I keep my brain working,” Subasi says—he also enjoys hiking, traveling and practicing martial arts with his wife Cecilya. “She’s better,” he admits with a grin. “She’s light. She can go around my arm and just pull it down.” Now an automotive collector, he drives an Atlas, built in Chattanooga, of course. Back in Germany, he keeps a blue-and-white 1954 Safari Bus just like the orange one parked at the entrance to the apprentice classroom. Says the lifelong VW fan, “I have my dream car.” n

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Supplier Profile

Systems Electro Coating Automotive and more: the Systems approach is all about family, team and community TEXT BY NICK PATTERSON // PHOTOS BY AMILE WILSON

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he business of Mississippi automotive supplier Systems Electro Coating is making sure that the metal parts that go into cars don’t rust. But that barely scratches the surface. Even with a substantial and successful portfolio of connected businesses under the same banner, the business of business is not just business for Jackson-based Systems, says company President Toni Cooley.

Systems Electro Coating, LLC, Systems IT, Inc., Systems Automotive Interiors, LLC, and Systems Consultants Associates, Inc., all “honor the outstanding quality and low-cost imperatives,” Cooley says. “We do not see them as being at cross purposes with the business being socially responsible. Because at day’s end, without a healthy, vibrant community, consumers are unable to purchase

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your products and services…. The community’s success ensures our success,” she says. Cooley describes herself as being “driven by equity. So, I don’t see SEC as just making quality parts but also creating opportunity up and down the supply chain.” Passionate about quality educational opportunity for all, jobs and workforce development especially for populations that need it the most, promoting opportunities for minorities and women, Cooley says her family-run companies embody those values. The Systems companies began with the consultant business, founded 41 years ago by Toni’s father Bill Cooley. In time, Toni’s mother and Toni herself joined the business. “Unfortunately, now, it is just me and my dad. We lost my mom a little over a year ago,” Cooley says. “She was an integral part of the organization, seeing the best in people and causing them to be their best selves. Fortunately, my Dad and I share a similar global philosophy – one of social justice [and] equity. This was also a view shared by my mother as well.” Systems Consulants Associates began specializing in management training and consulting, leadership development, small and womenowned business development, program and project management, financial management, and vocational training, eventually growing to include businesses with other focuses. One of them is even a community-oriented nonprofit organization. All of it remains a family concern, although today, Toni Cooley is most responsible for most of it. “My dad and I are close friends, so we talk quite a bit,” she says, with a bit of pride. “While he is supposed to focus on the nonprofit and I, on the for-profits, lines often get blurred and we have to straighten each other out. Frankly, I attribute a large part of our success as a function of our differences.”


Automotive Systems Electro Coating, which dates back 17 years, has won the respect of an industry focused on quality and reliability, as seen by the evolution of its work with Nissan North America. “By design, Nissan continues to be SEC’s key customer. Under the administration of Emil Hassan, the first VP over Nissan Canton, several small businesses were selected to partner with a larger supplier, learn the industry and operate in the automotive space,” Cooley recalls. “When the facility opened, we provided only eight different frame types to the Nissan facility. Over the past decade, Nissan’s confidence in our ability clearly has grown, given today SEC is the sole provider of electrocoated frames for every truck and SUV Nissan manufactures in the US. So, every time you see a Rogue, Murano, Pathfinder, Kicks, Frontier, Titan, or NV, the electrocoated frame came out of our facility in Central Mississippi.” Today, with the goal of operating as close to 100 percent capacity as possible, SEC markets excess production capacity to other customers, including Tier 1 and Tier 2 Nissan suppliers including Matcor, Tower and Martinrea, and to other automotive customers including Ford, Mercedes, Chrysler, GM, and Honda. The company even offers rust proofing to antique cars. Electrocoating helps extend the life of metal parts by protecting them against corrosion, so Systems clients can be any industry that uses metal in their production. “Once electrocoated, metal going through our system is black,” Cooley says. “In the past, some customers have substituted electrocoating for black paint, given it leaves the shiny coating and is generally cheaper than using black top coat paint. And, it bears noting that we have the largest electrocoating facility in the Southeast… Our electrocoating system can accommodate full size parts, like car and truck panels and full bodies.” Systems Automotive Interiors works with another Japanese car brand, Toyota. The seven-year-old Tier 1

supplier is the sole provider of seats to Toyota Engineering & Manufacturing America’s Mississippi plant, building 200,000 units each year, Cooley says. Cooley is responsible for running the electrocoating, seating and consultancy operations as well as Systems IT, which for the last 16 years has been an “IT training and consulting firm, specializing in technical training and cyber security,” she says. On top of that, she serves on the boards of two publically traded companies, and leads the nonprofit called the Center for Social Entrepreneurship (CSE). The Value Of The Team Given the number of businesses under the Systems banner, keeping the workforce pulling together is critical to the success of the enterprise. Cooley says the team behind the name is important. “To me, the team is everything. The Systems companies would not exist without team members and managers. I fully recognize that I am merely a cog in a well-functioning team,” she says. “My goal is for each member of the Systems family to feel treasured and that she [or] he is on a trajectory to achieving success... “I see all of our business efforts as harnessing the untapped talent of individuals. Whether we are providing management training and consulting, finding efficiencies in processes of organizations, teaching people a vocation, developing the leaders in an organization, building cars, electrocoating parts or honing the technical skills of IT professionals. I want our team to know more than what we do, but why we do it. We do it to extract the best out of each person we come in contact with.” Cooley says that watching team members succeed brings her significant satisfaction. “The team makes me proud with every victory that we achieve,” she says. “For example, when our young guys achieve some success, like coming in number one in a seat building competition that involves other seat assemblers from across the

nation or receiving quality or safety awards, or to see someone at one of the companies master a task that they initially couldn’t perform. “To see the joy of success on that person’s face makes every obstacle that we might have encountered, worthwhile. Moreover, these successes tell the real story of Mississippi, helping to remove stereotypes.” In line with her hopes of seeing Mississippi succeed, Cooley says that she considers herself part of a team larger than the organizational chart of the Systems companies. “Community is team away from the work space,” she says. “I view myself as an integral part or team member of the local, state, national and international community. So, as a team member, I have a responsibility to help each team/ community succeed.” Given the stereotypes sometimes associated with the state of Mississippi, Cooley says she wants Systems to paint a different picture. “I love for others to know we are Mississippians, mainly because they expect the worst of us, based on some archaic notion. It warms my heart when the team performs well.” n

The Center for Social Entrepreneurship CSE demonstrates Cooley’s commitment to the community in which Systems does business. Cooley describes CSE this way: VISION: CSE has aided in creating a well-engaged, diverse community, known as the iVillage, with aesthetically pleasing homes, prosperous homes, and an excellent, educational system MISSION: The mission of the Center for Social Entrepreneurship (CSE) is to enhance the quality of life of all people in our targeted communities with a focus on community engagement, economic development, education and housing. PURPOSE: A proof of concept designed to visibly enhance the quality of life of people in a 13-block West Jackson area, that CSE calls “the iVillage.”

DECEMBER/JANUARY 2019 / Southern Automotive Alliance 55


Supplier Profile

Persistence Paves Way to Success

A Tennessee company is reaping the benefits of dogged determination and the growth in packaging returnable auto parts TEXT BY: CARA D. CLARK // PHOTO BY: JAMES CLARK

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rowing up, Morrison Industries’ CEO Jacob Wilson spent most summer days and school-year Saturdays working with his father, Ron Wilson, who bought a family-owned tool-and-die shop in 1994 and began building a legacy for his family. Ron Wilson transitioned the

company into manufacturing of parts packaging that could be repurposed, an industry niche that needed to be filled. “I was working in all different facets of the business from the time I was 7 years old,” Jacob Wilson says. “It was important to my dad for me to understand how it worked.”

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It was his father’s strong background in the automotive industry, working as plant manager for a Tier 1 auto supplier, that inspired the business which began in its namesake city, Morrison, Tennessee. Ron Wilson could see an industry shift coming, a move to returnable packaging, and that foresight gave him an edge. Adapting to the dynamic nature of that business is what keeps Morrison Industries on top, producing more than 50,000 racks per year, and poised for expansion into other industries. “As automotive companies moved labor from their assembly plants down to supply chains, the parts needed to come in more finished, and packaging has to be custom designed for each part,” Wilson says. “We started out only supplying to small Tier 1 suppliers and over the years have built a presence going directly to the OEMs and building a relationship with them.” From the time Ron Wilson took the leap into business ownership in 1994, Morrison Industries has grown from a 12-team-member, 9,000-square-foot company to 250 team members and 150,000 square feet. It is now a largescale fabrication business and leading maker of specialized shipping racks for the automotive industry Wilson inherited his father’s passion for creating excellent products and providing solutions to customers that they don’t even know they need. “In 1994, we had zero relationships,” Wilson recalls of his father’s efforts. “Now we have relationships with all major OEMs in America. In the early days, my father had a bulldog mentality. He just kept showing up, and they finally gave him a shot. He developed the first couple of those relationships with Nissan and Honda. “I took over in 2011 and, really, we try to add value for our customers and have grown mostly through word of mouth. Whenever we get an opportunity, we capitalize on it and have built


relationship with all of the OEMs.” He credits his father’s persistence in those early days with growing the company to its new capacity, expanding its footprint into southeast Michigan and the Detroit metro area. “We intend to continue to grow in the automotive sector with different products related to businesses we are currently in, and we are developing technology to grow our design and engineering business,” Wilson says. In June, Morrison held the grand opening of its new 50,000 square-foot facility in Novi, Michigan, designed to serve the company’s customer base, including the top 10 automotive manufacturers in North America. “The area is rich with diverse automotive talent and home to many of our customers,” Wilson says. “The Novi facility provides a strong geographic advantage to serve northern auto manufacturers and Tier 1 companies, and will also increase capacity at our Tennessee facility, which will benefit our customers nationwide.” Morrison’s growth outside the auto industry is on the upswing, as well, and includes product development, engineering and design, project management, and fleet service and repair. “We’ve already started diversifying into agricultural, utilities and cable, and the high voltage cable industry, developing custom material and off-the-shelf handling equipment for several different industries,” Morrison says. To be sure the company’s on track, Wilson spends a third of his time on the factory floor, keeping a finger on the pulse of operations. With the corporate office located in Lebanon, Tennessee, and two facilities, he’s never in one place for long. “I get spread out a little bit,” he says. “I like to spend as much time as I can in the plant, interacting with the team on the floor and learning about the problems they face or giving them a pat on the back for their successes. Our primary philosophy is to treat people on the team the way we expect them to

treat our customers.” That’s a lot to live up to with the company’s stated goal of treating customers like royalty. “Our philosophy is to offer ridiculous customer service,” Wilson says. “So, for employees, we want to be the best place they’ve ever worked.” Wilson says inside knowledge keeps him attuned to what it takes to attract and retain talent, the key, he says, to solid growth. “I try to treat everybody like family, and we go out of our way to do whatever we can to create a positive outcome for people. Overall, we don’t want to treat employees like a number. We want to get to know them as individuals and work hard to develop their talents.” Nurturing employee growth within the company allows Morrison to hire from within, creating what Wilson calls a domino effect in the company. When one person moves to a higher position, another automatically moves up. “Our philosophy is we only go outside if a company needs talent or expertise that we don’t have inside,” Morrison says. “When people join our team at entry level, it gives them a view of the opportunity in front of them. People who have been here a long time used to do the job they are supervising or leading. It’s a big thing in the industrial workforce to give employees a perspective that lets them feel they are not in a dead-end position. It really helps with engagement and retention of talent.” Wilson bought his parents’ portion of the company, not only to allow them to enjoy retirement, but to establish the sincerity of his mission to keep the company on a path of prosperity, and “to have a really vested interest in continuing to grow and promote so the

company didn’t plateau.” Morrison is the only major automotive shipping rack company originated and headquartered in the South, and since Wilson took on the role of CEO, the company has increased its yearly revenue from $11 million in 2011 to an annual average of $25 million during the past three years. Just as Wilson’s father knew in the beginning, relationship-building remains critical to success, whether with customers or employees. And retaining the right workforce is a piece of the puzzle he has solved for the most part. “People and talent are one of the only things money can’t buy,” Wilson says. “We also face the challenges associated with being a fast-growing, family-owned business. There’s the constant tug of war between resources and needs, time constraints and everything else.” Wilson is constantly looking ahead to opportunities, and the next level growth would probably be aimed at the Deep South. “It’s been exciting to have a front row seat to see the growth of automotive in the Southeast,” Wilson says. It’s something I’m really proud to be part of, and I want to continue to be part of that growth.” While he has three children, Wilson says it’s a different time and place from the days when he worked for his dad, learning the business from the ground up. And he’s quick to say his father wasn’t insistent that his son follow in his footsteps. “My dad let me know if this was my dream, he would accommodate it, but he didn’t want to push me into it,” Wilson says. “If Morrison Industries is my children’s dream, that’s fine, too, but I’m not going to press them to go into this business.” n

“I like to spend as much time as I can in the plant, interacting with the team on the floor and learning about the problems they face or giving them a pat on the back for their successes. Our primary philosophy is to treat people on the team the way we expect them to treat our customers. ­­­— Jacob Wilson DECEMBER/JANUARY 2019 / Southern Automotive Alliance 57


Supplier Profile

Chasing Excellence How WKW Automotive is forging its own path in aluminum manufacturing TEXT BY MICHELLE LOVE // PHOTO BY JOE DESCIOSE

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n the competitive world of the automotive industry, the team at WKW (Walter Klein Wuppertal) Automotive doesn’t bat an eye at their rivals. The company’s president says the reason is simple: WKW Automotive has spent approximately 176 years making and supplying quality aluminum and steel products for industry. “Our target customers have traditionally been in the past the higher end vehicles like MercedesBenz, Volkswagen, Audi, BMW, Porsche, Jaguar. Those are our biggest

customers, especially in Europe,” says Todd Green, company president. Ford is also on that list. In terms of specific models, WKW Automotive sees its work in the BMW X5, and the upcoming X7, the Buick LaCrosse, the Chevrolet Cruze and Impala, the Cadillac ATS, the Volkswagen Passat and Atlas, and the Mercedes C-Class, GLE-Class, and GLS-Class. Green says it’s common for higherend automotive manufacturers to lean towards aluminum because it’s a more

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expensive product and it lasts longer. “Aluminum, this particular metal, it has some of the properties of steel in that it’s very hard but it’s also very light,” he says. “Many vehicles are moving away from steel to aluminum every chance they get because the whole game, as far as the automotive industry is concerned, is in the fuel efficiency, the gas mileage.” OEMS “need a vehicle as light as possible, but it still needs to be safe,” he says. The Tier 1 supplier originally started in Wuppertal, Germany, where the extrusion plant still resides. In 2006 WKW Automotive opened its first plant in the United States, choosing Pell City, Alabama as the home base. The Pell City location includes the service facility, two warehouses, and the actual assembly factory, making the entire facility total approximately 300,000 square feet with approximately 400 people currently employed. Taking the extruded aluminum


supplied by its sister company in Wuppertal, the Pell City plant creates automotive window trim and roof rails through several processes that include bending, polishing out imperfections, and warping the aluminum extrusion to its desired form. On average, the factory produces between 10 thousand to 20 thousand units per day. “There’s no way for you to know [the work that goes into it] unless you work in the industry,” says Green. While WKW Automotive has branched out to other areas such as Troy, Michigan, Pell City has been a successful location for the company. Green credits this to the continued growth of the automotive industry in the south, something he says is great for the southern states as a whole. “If you look at the state of Alabama, we’re the fifth largest automotive producer in the United States now in terms of the number of vehicles that have been produced,” he says. Alabama is currently home to four major automotive manufacturers including Mercedes-Benz, Hyundai, Honda, and Toyota, with a MazdaToyota joint venture in the works. “Those facilities are pumping out well over a million vehicles per year and with that, as they grow the supply base grows,” Green says. “The Tier 1 suppliers grow, the Tier 2s, so it creates

more and more jobs for the economy in the state of Alabama.” Green considers it “critically important” for Alabama and its southern neighbors to focus on providing the proper knowledge and training it takes to be successful in the automotive industry. “I think we’re doing a much better job at the high school level, at the junior college – we have a really good community college system that does a really good job of pumping out experienced folks that we want to get into all of our various plants and operations,” he says. “I think we’re doing much better as a business community to try to work with our junior colleges and our high schools to… give prospective students the opportunity to learn what we’re about in automotive.” Green came to the Pell City plant three years ago. Then, he says, it was a less than ideal system with which to work. “I’ve kind of made a living here turning around troubled plants for several years. This is the third plant I’ve turned around,” he explains. One of the ways Green altered the plant, according to 10-year veteran employee Erica Davis, is by making teamwork a top priority. “Some of us have been here since the beginning and when Todd came in, he was literally a breath of fresh air,” Davis says, adding

I think we’re doing much better as a business community to try to work with our junior colleges and our high schools to… give prospective students the opportunity to learn what we’re about in automotive. — Todd Green, president of WKW Automotive

that Green is a true “team leader.” Since Green came aboard, WKW Automotive started a program that pays for their engineers to go to Jefferson State Community College to earn a manufacturing systems associates degree. The program started two years ago, and the first set of graduates is about to return to WKW Automotive. Davis says it will provide a more “advanced knowledge” of the machines and how they work. “In the end it’s all about the team,” she says. “We win together as a team and we lose together as a team. Losing is not an option,” Green says. Green says the future is bright for WKW Automotive in the coming year. “Right now we’re in the middle of the BMW launch of the new vehicles they’re building,” he says. “We also have the facelift, which means there are changes to the exterior of the model, for the Volkswagen Passat. That production starts January of next year.” WKW Automotive recently won the AAMA Supplier of the Year Award. Green says the award is a testament to the good work going on at the Pell City unit. “[Winning the award] showed all of us coming together as a team to make this happen,” he says. “In our daily business teamwork is essential. Whether it is cross departmental problem solving, the give and take of decision-making between individual department heads, or supporting each other during crunch time. We all come together as a team to make this happen every single day. WKW Automotive is not about any one individual but about all of us working here. We are WKW Automotive.” n

DECEMBER/JANUARY 2019 / Southern Automotive Alliance 59


REGIONAL REPORTS The Georgia Automotive Manufacturers Association, Inc. (GAMA) is a non-profit trade association which passionately promotes the interests of Georgia’s automotive and ground transportation industry. GAMA is a community of businesses with common interests and goals which provides a highly interactive forum to help members achieve the following: • continual improvement in their businesses • higher levels of innovation, quality, and profitability

GAMA’s primary focus this year has been on hosting the Southern Automotive Conference (SAC), which was held on October 3-5, 2018. The event, held at the Cobb-Galleria Convention Centre in Atlanta, Georgia, set all-time records as to registrations, attendees, exhibitors, and sponsors. Highlights included: The invitation-only VIP Reception on Wednesday, October 3, 2018, was a huge success, and featured a matchmaking session including buyers from nine OEMs and six Tier 1 suppliers, who were there to meet prospective customers. Deals were made. Invitations were extended only to registered Sponsors and Exhibitors. Members of the Boards of our regional

• professional success through unique educational opportunities • successful networking among customers and peers

associations were also in attendance. This year’s event also had several International and Trade Pavilions – Canada, JETRO (Japan), the United Kingdom, and the State of Georgia. New this year was the Workforce Development Zone which showcased the South’s best solutions for training and preparing manufacturing’s future workforce. The speaker line-up included world-class speakers on diverse topics. The feedback has been outstanding. This was the 11th year for the SAC, and one of the reasons for its continuing success has been the support of the other regional association executives – from AAMA, MAMA, TAMA, KAIA, SCAC, and SAWF.

For further information about GAMA, please go to www.GAMA-Georgia.org, or contact Rick Walker, GAMA President, at rwalker@GAMA-Georgia.org or 770-314-9040. 60 | Southern Automotive Alliance / DECEMBER/JANUARY 2019


DECEMBER/JANUARY 2019 / Southern Automotive Alliance 61


REGIONAL REPORTS

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DECEMBER/JANUARY 2019 / Southern Automotive Alliance 63


REGIONAL REPORTS TAMA helps Tennessee automotive companies, especially suppliers, react to the challenges of the global automotive marketplace. TAMA is a membership organization with a mission to strengthen and expand Tennessee’s automotive industry. TAMA’s diverse membership includes OEMs, Tier 1, 2, and 3 suppliers, government agencies, and professional service organizations that have expertise in the automotive industry. Members enjoy access to some of Tennessee’s top automotive executives, strong support from the state’s economic development team, and discounted fees to membership meetings and other TAMA events.

TA M A’ S ANN U A L S P ON S OR S

TAMA 2018 BOARD OF DIRECTORS President, Rick Youngblood, Nissan North America Vice President, Daniel Davidson, Calsonic Kansei North America, Inc. Treasurer, Jim Leyhew, Kasai North America, Inc. Dex Battista, Magna International Luca Bovalino, Magneti Marelli Ed Carter, C&S Plastics

Andre Gist, Manufacturers Industrial Group Victoria Hirschberg, TN Dept. of Economic & Community Development Barry Owens, Bridgestone Americas, Inc. Marius Sipos, YAPP USA Automotive Systems, Inc. Kim Williams, Tenneco

To join TAMA, visit www.tennauto.org. For questions about membership, contact Ashley Frye 615-525-4533 email: ashley@tennauto.org 64 | Southern Automotive Alliance / DECEMBER/JANUARY 2019


REGIONAL REPORTS

Alabama Automotive Manufacturers Association

AAMA’S MISSION is to promote growth and continuous improvement of automotive manufacturing in Alabama.

ALAUTOINDUSTRY.ORG

GET MORE MILEAGE WITH AAMA MEMBERSHIP! AAMA HELPS YOU BE COMPETITIVE. Work with statewide partners who represent your interests to further job creation and develop a promanufacturing economy.

AAMA HELPS YOU CONNECT.

Get connected to the people, programs, information and resources that can help you improve your business and grow your team.

AAMA KEEPS YOU INFORMED.

AAMA delivers events, newsletters and training opportunities focused on the issues that have the greatest impact to Alabama’s automotive manufacturers and suppliers. Gain access to the biannual survey of the automotive industry in Alabama, the AAMA “members-only” website, and Southern Automotive Alliance magazine.

AAMA SAVES YOU MONEY.

AAMA’s efforts focus on eliminating unnecessary cost burdens while low cost training programs are offered to AAMA members through ATN, AIDT, Alabama Community Colleges and Universities. You can also request a plant assessment or training program within your facility.

AAMA GIVES BACK. AAMA awards

scholarships annually to students enrolled in automotive manufacturing programs at Alabama’s two-year colleges. Members can participate in the AAMA Supplier of the Year Award with our partner, the Business Council of Alabama (BCA).

AAMA LETS YOU ENGAGE.

AAMA’s Corporate Partners and Board Members are among Alabama’s most respected thought-leaders for our industry. Active AAMA members can work alongside these automotive icons to make a difference for our state and industry.

BENEFITS OF AAMA MEMBERSHIP INCLUDE: • Business networking opportunities • Leadership opportunities • Sharing of manufacturing best practices • Information on issues impacting the industry • Information on advances in technology and continuous improvement • Access to internet database of Alabama automotive-related companies • Listing on AAMA website • Members Directory • Promotional opportunities for company news • Factory floor assessments (participating companies are eligible for AAMA Supplier of the Year Award) • Member discounts for training • Membership to AIAG • Membership to BCA • Invitation to annual Appreciation Dinner

Join AAMA today! Start now taking part in Alabama’s dynamic automotive manufacturing association. If you are interested in learning more about AAMA and how you can help advance Alabama’s automotive industry, please visit ALAutoIndustry.org. Contact: Lynsey Delane | 256.824.6407 Ron Davis | 205.657.5101 DECEMBER/JANUARY 2019 / Southern Automotive Alliance 65


WORKFORCE DEVELOPMENT

SAAVing Manufacturing

An Auburn University-based center is problem solving hub for auto industry in virtual space and real life TEXT BY: CARA D. CLARK // PHOTOS COURTESY: AUBURN UNIVERSITY

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little-known organization is quietly, and virtually, incubating in a cozy college town in South Alabama and quickly gaining momentum in bringing solutions to the automotive industry. Still basically in its infancy, the Southern Alliance for Advanced Vehicle (SAAV) Manufacturing Center, began just two years ago but hopes to make an indelible mark on process improvement in known industry brands. SAAV (it’s pronounced, “SAVE”) is a public-private partnership poised to deliver a trained workforce, anticipate and intercept potential problems in the industry and ensure a thriving, productive environment for automotive in the south. The organization is spearheaded by Greg Harris, Ph.D., an associate professor of mathematics and statistics who arrived at Auburn University in June 2016 after leaving the U.S. Army civilian ranks. By that fall, SAAV was a going enterprise.

“I came to Auburn to teach and took over the effort to create SAAV,” Harris says. “It had been going on for about a year and a half or so before I got here, mainly because the people that were here were trying to do it in their spare time, and you really don’t have a lot of spare time to create something like that.” Harris immediately made it a priority to get the center up and running, working on real industry problems in what he terms a “virtual center” rather than a lab or university. With Auburn University faculty members who work in the industry, there’s a depth of knowledge that allows SAAV to place graduate students in year-long internships in the auto industry, learning in a “real world” environment with the safety net of support of faculty members on campus, when needed. The model places students in a position to work out problems firsthand and enables them to work on a graduate thesis with factual

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data rather than a fictional scenario. It’s a win-win. “The company gets a true benefit out of it because they’re fixing a problem, improving productivity, improving quality, improving lead-time,” Harris says. “So both of us are getting the best out of all of this.” While Auburn University is major player, the endeavor began with the idea of starting a National Science Foundation Industry/University Cooperative Research Center, including the University of Alabama in Huntsville, Auburn University, and Clemson University. Initially, the logistics didn’t work out for multiple colleges, but Auburn was committed to the project and pushed on without submitting for the proposed NSF/IUCRC designation. Currently, the intent is to manage SAAV, which offers memberships, the same way a cooperative would have been run so that a future endeavor will have detailed statistics and a progress report. Already, a research team at UAH has agreed to run a portion of the center with the same protocol as a National Science Foundation organization and is actively pursuing memberships and projects. Of the eight projects SAAV has taken on to date, three have been completed and five are in the works. “And the companies just are ecstatic about … the types of problems that are being solved,” Harris says. Through word of mouth and networking, SAAV’s Auburn team also has five members of industry on board, including Honda, Borbet, Brose, Arkal and University Instruments, a New Yorkbased company that saw the benefit in being part of this Alabama organization. Honda, of course, is an OEM, while Borbet is a supplier, making wheels for Honda and Mercedes. Brose manufacturers seat frames and internal systems, and Arkal is involved in plastic ejection molding for automotive applications.


“We have faculty members that are utilizing the center to help expand research and solve problems in the automotive industry,” Harris says. “That’s just a pretty neat process because, at any given time; we’ll have three or four faculty membersupporting projects.” Students are proving to be valuable in working with these members, and word is spreading about how their talents benefit the auto industry. When Honda joined, SAAV had a small-scale project with the Radio Frequency Identification (RFID) lab in Auburn including evaluations on what could be done. Honda reaped some benefit from that effort, but not what the company hoped. But from that effort, one Auburn graduate student went to work in a Honda paint and assembly area and has proven a tremendous asset, from finding issues and identifying problems to putting together flows, Harris says. That’s led to SAAV planning simulations for the company and setting up to relay an entire assembly area with them. Honda also is beginning to work with students in senior design for Auburn’s undergraduate industrial systems engineering department. When Harris asked whether Honda would like to use a student for smaller projects that are not typically funded by the company, Honda was quick to accept. The company is kicking off five new projects on the production floor, working with Auburn students, who spend three days a week on the efforts. “We’ll have about 30 students up there at different times throughout the semester working with their engineers and their production guys on true issues in the Honda plant,” Harris says. “Typically, they have some idea of what the problem is and what the approach should be to solve it. But we go about it in a very structured manner. We use the Six Sigma DMAIC process for evaluating problems.” The team works through the data-driven cycle of phases – Define, Measure, Analyze, Improve and Control – to ultimately stabilize business

processes and designs. After defining the problem, the students come up with an element of measurability, which is crucial in establishing a benefit. “How are we going to assess it?” Harris says. “How are we going to figure out if we’ve made process improvement or not in the analyze phase? And then in the implementation phase, they go in and actually make the change. And then you figure out in the last one what kind of controls are you going to put in place to make sure that this stays in place. So we teach them a very structured problem-solving approach. By using a problem-solving approach like that, we typically find that most of the time the problem wasn’t exactly what they thought it was, but it can be … it was probably one of the great symptoms of what the problem was.” Once the students reach the analyze and implement phase in which the actual change will take place, they work with the sponsors at the plant to reach the best solution, Harris explains. In that way, it’s a brainstorming session among students and industry pros. According to Harris, “One of the benefits of this consortium is that when you sign up in the membership, you’ve got a project going on in your area, in your plant. Yet every other member has a project going on also. You get to see what the other teams are doing and what kind of problems they’re solving, and we get some synergy. “And they may be very different parts of the industry that are working on this, but they see a similar problem and

they can go back and implement that because we share all the information.” For example, one team worked with a company with a 50 percent scrap rate that impacted the bottom line. The students spent a year working on the problem and measuring the quality performance of the operation, ultimately reducing the scrap rate to close to 20 percent and saving the company time, material and improving the financial results. One of the most significant successes to date has been with Brose, a German company responsible for technology in doors and liftgates, adjustment systems for front and rear seats and electric motors and drives. Brose took a process on how to manage continuous improvement that was taught in a SAAV lab and adopted it for Brose’s Tuscaloosa plant. The business also published the method as a best practice for its worldwide corporation and now is using the procedure in all 83 of its plants. Brose employs more than 2,000 people in its U.S. operations with strategic locations in Michigan, Illinois, South Carolina, Alabama, and California. In fewer than 18 months since its inception, SAAV is making the industry impact that was its goal. But the center is not stopping there. “We’re still standing the organization up,” Harris says. “We had our first industry consortium meeting, and we elected a chair and a vice chair. So we’re still getting our feet up under us, but we’ve taken the position that the projects are the primary focus.” n

We’ll have about 30 students up there at different times throughout the semester working with their engineers and their production guys on true issues in the Honda plant. Typically, they have some idea of what the problem is and what the approach should be to solve it. — Greg Harris, Ph.D. DECEMBER/JANUARY 2019 / Southern Automotive Alliance 67


KUDOS

Beyond Business: Fighting A Monster Far Bigger Than Himself

TMSfirst CEO Tim Sensenig takes on human trafficking STORY & PHOTO BY LAWRENCE ELIZABETH KNOX

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he mind of software pioneer Tim Sensenig is always running, as are his feet, traveling from one place to the next trying to transform the transportation industry. In October, the chief executive officer of TMSfirst, a logistics provider offering supply chain technology to increase revenue and reduce operating costs, presented the Stars of Southern

Manufacturing Awards at the Southern Automotive Conference in Atlanta before taking care of other responsibilities in Texas and Louisiana, all within a matter of two weeks. His professional experience is extensive, with a resume boasting top positions in companies like Wells Fargo, DLJ/Credit Suisse, BluJay Solutions, and Supply Chain and Logistics Group, and

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his list of awards and accomplishments is equally impressive. Yet, he is most recognized for co-founding G-Log, a global market leader in transportation software that he sold to Oracle in 2005. Recently, however, he is using his strengths as a businessman for a greater purpose – to end human trafficking. He used his platform in Georgia to discuss the multi-layered global issue. “When I got up and spoke, I says, ‘Let me be really clear. It can happen to you. It’s happening to somebody like me and everybody else out there, so it’s not somebody else’s problem, and the sooner you wake up about it, the better. All I’m asking you today to do is do something.’” At SAC 2018, Sensenig raised over $150,000 for Redeemed Ministries, a nonprofit organization based in Spring, Texas offering a long-term restoration program for female adult victims of sex trafficking who suffer from psychological, physical and social trauma. He hopes to raise another $300,000 by the end of the year. Some of that will come from TMSfirst itself. The company donates about 10 percent of any one deal to charity. In Atlanta, he met an attorney who serves on the board of an 18-person battered women’s shelter. “He says, ‘We’re the number one human trafficking city in the United States,’” Sensenig recalled, but it was a statement that caused him to hesitate, thinking, “Now wait a second, Houston says it’s number one.” Houston is certainly an epicenter. The city has more brothels than Starbucks, according to Dr. Robert Sanborn, president and CEO of the Texas-based nonprofit Children at Risk, in a Houston Chronicle article published in January 2018. But who cares, Sensenig concludes. “Quite honestly, if every city wants to be the number one, I think that we would all


agree to do something and make a point of it.” Eradicating a global $32 billion business is not going to happen overnight, but it won’t stop him from trying to do exactly that. His mission — one that consumes his waking hours both in and outside of the office — began four years ago when he crossed paths with Bruce Mann, director of freight mobility for the Port of Houston Authority and director of Stephen Ministry at Lakewood Church. Two years later, he met David Reid, chief marketing officer for National Oilwell Varco, and the three men bonded over a shared desire to make an impact for the greater good. They quickly formed a team of passionate advocates supporting Redeemed Ministries, for which Reid serves on the board. The men use every opportunity to educate people about the illegal practice and encourage them to join the fight against it. They never decline an interview, and they work directly with Governor Greg Abbott to change, and strengthen and enforce the law. One prominent issue, Sensenig explains, pertains to corporate bylaws that contain regulations against endorsing politically or religiously affiliated initiatives or organizations. “We’re here to save mankind,” Sensenig says, regardless of whether a recovery program has a Christian, Muslim or Jewish orientation, etc. The trio also supports likeminded individuals and companies, such as Truckers Against Trafficking, a nonprofit organization that has trained more than 600,000 truck drivers to recognize and report instances of human trafficking. Its website specifies that truckers have made 2,221 calls to the National Hotline, resulting in 606 likely cases generated and 1,123 victims identified since the hotline first became operational in December 2007 by Polaris, a leader in the global fight to combat modern-day slavery. As owner of TMSfirst, Sensenig uses his company to host an annual supply chain event (SCMenergy.com),

which he uses to spread the word and gain more corporate memberships. Not only is a portion of ticket sales donated to help a recovery program for female victims, a large majority of those who attend also become further involved in the fight against human trafficking. Last year, the event brought in about 30 new corporations, including DistributionNOW, SYSCO, Transocean, Newpark, Hess, SNC Lavalin, Pinch, Mitsubishi Caterpillar, BP, Express Energy, SWN, Beaver Drilling, Conoco Phillips, Shell, Microsoft, C&J Energy, Apollo Global, BMC, Rowan, PESA, IADC, and Strike among others, as well as donations from the Astros, Rockets and Texans. “We just kept going and going and going until it became a fire marshal issue that we couldn’t bring anymore people,” he says, laughing. Having worked on Wall Street before getting into software, Sensenig has an analytical mind that acknowledges and accepts the limits of what he realistically can and cannot offer, and he encourages volunteers everywhere to do the same. “I know I can make my impact by raising capital, spreading awareness into the community and putting money in as well,” he says. “I don’t take a salary so you know where my money is going. It’s pretty obvious. I know what I can’t do. I can’t be people that are really needed, and that’s the people who are helping these women.” With Redeemed Ministries, these women reside with the female victims in a home that sits on 4.5 acres of land – an undisclosed location in Houston donated by a Christian family who left it as if they were still living there, Sensenig says. At the moment, there are eight available beds, accommodating four women and each of their counselors throughout the yearlong program, the length of which has been proven to yield better outcomes than shorter-term treatments. The organization’s goal is to expand the capacity of these living quarters to shelter 25 women and then 100 and then 1,000 – a project requiring a $5 million building budget, Sensenig says

Let me be really clear. It can happen to you. It’s happening to somebody like me and everybody else out there, so it’s not somebody else’s problem, and the sooner you wake up about it, the better. Recently, Redeemed Ministries hit quite a milestone, celebrating its 100th woman to complete the recovery program. The sad part is that’s the largest number in the United States, Sensenig says, adding that human trafficking is the world’s second largest criminal enterprise behind the illegal drug trade. According to an infographic on the Redeemed Ministries website, there are over 6,500 animal shelters in the country, but only 400 beds dedicated to victims of human trafficking. Both of these numbers have increased since 2011. Statistics are difficult to obtain, but a study released by the University of Texas at Austin in early 2017 estimated that there are more than 300,000 human trafficking victims in the state, five of whom are daughters of oil and gas executives, Sensenig says – proof that it can happen to anyone at anytime. There is still much work to be done, and effort is needed everywhere, even if that means volunteering at a gala event or donating a small amount. “It’s not about us,” Sensenig says. “It’s about helping the women, nothing else.” For the last few years, the CEO has split his time between Raleigh, North Carolina and Houston, but having recently hired more sales people throughout the country, he and his wife decided to permanently settle their family – including 4-year-old twins, a 19-year-old and a 23-year-old – in Spring, which is conveniently located where Redeemed Ministries is based. “She didn’t realize what she was doing was lighting a fire underneath me,” he says. “Eighty hours some weeks, I’m working on Redeemed Ministries. I’ve found where I want to be, so this is where I’m going to stay, and this is what I’m going to do. When I’m all in, I’m all in.” n

DECEMBER/JANUARY 2019 / Southern Automotive Alliance 69


INDUSTRY NEWS

The Best Screen for your Dashboard? Study Finds Apple’s CarPlay, Google’s Android Less Distracting, But Still Not Safe BY MYRON LEVIN , FAIRWARNING REPORTS

A

utomakers have packed new models with distracting infotainment features that let drivers not only play music and get directions, but talk, text and use social media while tooling down the road. New research has found that two popular smartphone-based systems – Apple’s CarPlay and Google’s Android Auto – are somewhat simpler and safer to use than the built-in electronics. Even so, the study, sponsored by the AAA Foundation for Traffic Safety, is hardly a ringing endorsement of the smartphone-based systems, noting that they ”can still create potentially unsafe levels of distraction.” While CarPlay and Android Auto demand less of a driver’s attention, the study says the systems still ”should not be used to perform complex tasks when behind the wheel.” According to federal estimates for 2016, the last year for which data are available, driver distraction was a factor in 3,450 U.S. traffic deaths and in hundreds of thousands of injuries. The study teamed the nonprofit AAA Foundation with researchers from the University of Utah. It is the latest phase of their continuing investigation of distraction risks from mobile devices and built-in vehicle electronics–which use buttons, touch screens and voice

commands to access infotainment features. Last fall, the foundation rated the distraction risks of infotainment systems in 30 cars and truck from model year 2017. More recently, the AAA Foundation released distraction ratings for 10 additional 2017 and 2018 models. A Google spokeswoman declined to comment on the study. Apple did not respond to calls and emails seeking comment. The ratings were on a scale that considered the visual (eyes off the road), manual and mental demands of using infotainment features, as well as the time required to complete such tasks as getting directions, making calls and sending texts. Of the 40 vehicles overall, none was rated as creating a low demand on drivers, which would be similar to the demand from listening to the radio or an audiobook. Eleven of the vehicles generated moderate demand and 29 high to very high demand–which the researchers described as similar to balancing a checkbook while driving. In an email to FairWarning, Wade Newton, spokesman for the Alliance of Automobile Manufacturers, the leading industry trade group, said vehicle makers “all agree that hands on the wheel and eyes on the road continue to be critical

70 | Southern Automotive Alliance / DECEMBER/JANUARY 2019

to safe driving.” But he questioned the AAA Foundation’s research methods, saying there was “no attempt to tie research results to actual crash risk and researchers do not fully–or accurately– simulate how drivers may actually use these systems out in the real world.” CarPlay and Android Auto are software platforms on iPhone and Android smartphones, respectively, allowing drivers to pair their phones with the vehicle to perform many of the tasks of the built-in systems. For the new study, testers performed a set of tasks while driving five 2017 and 2018 model vehicles equipped with cameras along a two-mile stretch of a residential street at about 25 miles per hour. Using all three options — the in-vehicle controls, CarPlay and Android Auto — they played music, made calls, sent texts and programmed navigation. Most tasks were performed more easily and quickly with the smartphonebased systems. For example, sending a text was, on average, 5 seconds–or 24 percent–faster with CarPlay and Android Auto than with the built-in systems. Programming navigation was 15 seconds — or 31 percent — faster with the smartphone systems. However, that meant programming navigation still took an average of 33 seconds with the smartphone-based systems. In 33 seconds, the AAA foundation noted, a car travelling at 25 miles per hour covers the length of three football fields. The AAA Foundation said “improvements are necessary before any of the systems can be considered safe to use while driving.” In the meantime, the group said, “AAA urges drivers not to use in-vehicle infotainment technology to perform non-driving related tasks when behind the wheel.” n This story originally appeared on the nonprofit news site FairWarning.org


I N D U S T R Y I N D I C AT O R S

electric cars in the south How many electric cars are currently (no pun intended) registered per state, not including hybrids and plug-in hybrids? Numbers below are from Autoalliance.org.

581 1,137

779

10,615

796

21,

270

3,318

Southeast Auto Stocks Company/Security

Headquarters

S.E. U.S.

Ticker

Exchange

Closing Price 10/31/2018

Closing Price 10/31/2017

Stock Price Growth

BMW

Munchen, Germany

SC

BMWYY

OTC

28.72

34.2

i -16.02

Ford Motor Co.

Dearborn, Michigan

KY

F

NYSE

9.55

12.27

i -22.17

General Motors Co.

Detroit, Michigan, United States

KY, TN, TX

GM

NYSE

36.59

42.98

i -14.87

Honda Motor Co. Ltd.

Minato, Tokyo, Japan

AL, SC

HMC

NYSE

28.5

31.09

i -8.33

Hyundai Motor Co. Ltd.

Seoul, South Korea

AL

HYMLF

OTC

120

120

0.00

Kia Motors Corp.

Seoul, South Korea

GA

KIMTF

OTC

30.3

28

h 8.21

Mazda Motor Corp.

Hiroshima, Japan

AL

MZDAF

OTC

10.68

14.4

i -25.83

Mercedes-Benz (Daimler AG)

Stuttgart, Germany

AL, GA, SC

DDAIF

OTC

59.09

83.707

i -29.41

Mitsubishi Motors Corp.

Minato, Tokyo, Japan

KY

MMTOF

OTC

6.18

7.96

i -22.36

Nissan Motor Co. Ltd.

Nishi-ku, Yokohama, Japan

MS, TN

NSANF

OTC

9.23

9.5915

i -3.77

Porsche Automobile Pfd.

Stuttgart, Germany

GA

POAHF

OTC

64.19

73.55

i -12.73

Toyota Motor Corp. Ltd. Ord.

Toyota, Aichi, Japan

AL, KY, MS, TX

TM

NYSE

117.05

124

i -5.60

Volkswagen Ag Ord.

Wolfsburg, Germany

TN

VLKAF

OTC

163.03

182.18

i -10.51

Volvo AB ADR

Gothenburg, Sweden

SC

VLVLY

OTC

14.84

19.774

i -24.95

DECEMBER/JANUARY 2019 / Southern Automotive Alliance 71


BY T H E N U M B E R S

20,000 Number of Sprinter vans ordered by Amazon, to be produced at Mercedes-Benz’ new factory in North Charleston, S.C. southernautocorridor.com

4X The size of South Carolina’s automotive industry has quadrupled over the last two decades. sccommerce.com

400 Number of motor vehicle-related projects announced in Kentucky over the past 50 years. kyautoindustry.com

120 Number of jobs being created by Korea-based DAE-IL Corp. in connection with a new auto parts manufacturing facility in Murray, Ky. kyautoindustry.com

$170

MILLION 43,000 Investment by Nissan North American at its Tennessee and Mississippi plants. southernautocorridor.com

$200,000 20,000+ Amount by which costs have been raised each month at American BOA in Cumming, Ga. due to new tariffs. ajc.com

$250

MILLION Value of incentives offered by Alabama to bring in Mercedes-Benz in 1993. pri.org

72 | Southern Automotive Alliance / DECEMBER/JANUARY 2019

Number of solar panels at Toyota’s North American headquarters in Plano, Tx., as part of a sustainability initiative. corporatenews. pressroom.toyota.com

$30

MILLION Investment by automotive supplier Auto Parts Manufacturing Mississippi to increase production in Lee County, Miss. mississippi.org


CAREER NOTES BMW Manufacturing announced has named JEFFREY GAUDIANO the new Vice President of Production Control, Logistics, and VPS. He returns to BMW Manufacturing after spending four years as the Managing Director and CEO of BMW Plant Thailand. Gaudiano succeeds Gerald Degen, who has returned to Germany as the Vice President of Assembly at Plant Leipzig. Gaudiano was one of the first 100 associates hired at BMW Manufacturing in 1993 and has held a number of roles in the plant. He worked as Body Shop Coordinator, Assembly Department Manager and Continuous Improvement (VPS) Department Manager during his first nine years. From 2002-2014, Gaudiano was the Department Manager of Plant Structural Integration, Production Control and Distribution. Volvo announced that KATARINA FJORDING, previously Vice President, Purchasing and Manufacturing has been appointed Director, Volvo Car University. Volvo Car University will embody the customer-centric focus for Volvo Cars and its retail partners. It will become the cornerstone for training and leadership development for the entire Americas region. The Volvo Car University campus will be built in South Carolina and is anticipated to start construction later this year. In this role, Fjording will move from the manufacturing side of the business to the commercial organization to help lead the build out of the University. In her new role, Katarina will report to Riyhana Bey, Director Customer Experience. Hyundai recently named YONG-WOO “WILLIAM” LEE as interim president and CEO of Hyundai Motor America.

A 35-year Hyundai veteran, Lee has worked in sales, marketing and parts, in South Korea and elsewhere. Lee also heads the regional group Hyundai Motor North America, which includes Hyundai’s manufacturing plant in Alabama and sales units in the U.S., Canada, and Mexico. Automotive News reports that Lee previously headed Hyundai Motor Brazil as well as international sales at Hyundai Motor Co. in Seoul, and overseas sales for Hyundai Mobis Parts, which is based in San Francisco. The company is searching for a permanent appointment to the post of president and CEO. Nissan has appointed Tennessee native MARK STOUT, currently Global Vice President, Human Resources Operations, to Corporate Vice President, Global Human Resources. Stout will oversee all Nissan regional HR operations outside of Japan, Global HR business partner, and global talent management and development. Stout began his career at Nissan in 1989 as an HR representative at the company’s vehicle assembly plant in Smyrna, Tennessee. He has held a number of domestic and global HR positions of increasing responsibility. He attended Warren County High School in McMinnville and Middle Tennessee State University, where he earned a bachelor’s degree in public administration and economics. Before relocating to Japan, Stout was active with various community organizations, including United Way of Metropolitan Nashville and the Southern Tennessee Medical Center. He is currently a member of the Japan-America Society of Tennessee, Inc. Nissan North America (NNA) has promoted JARED HASLAM to the role of vice president, Product Planning, effective Nov. 1, 2018. Haslam was previously director, Advanced Planning, NNA. Haslam

joined NNA in 2007, progressing through roles of increasing responsibility in the product planning, marketing and manufacturing functions. From 2014-2016, he worked in key global product planning positions focused on Nissan’s zeroemission vehicle programs, based in Japan. He returned to NNA in 2016 as director, Product Planning – Brand Integration. Haslam replaces Michael Bunce, who was recently named to the new role of Nissan division vice president and Alliance global director, Mobility Services, Renault-NissanMitsubishi. TIMOTHY D. VARGO has been named to serve as President and Chief Executive Officer of Exide Technologies a global provider of stored energy solutions for the transportation and industrial markets. Vargo succeeds Vic Koelsch, who is stepping down as President and Chief Executive Officer. Koelsch will remain an advisor to the CEO through December 31, 2018. Vargo will remain a member of the Exide Technologies Board of Directors. Vargo brings more than 40 years of leadership and managerial experience in automotive supply chain and process improvement, the company says. He served as the president and COO of AutoZone where he was instrumental in formulating and executing the growth strategy that took the company from 1,000 stores to 3,250 stores and sales from $1.5 billion to over $5 billion. He has held a variety of senior executive and director positions at Auto Teile-Unger, TruckPro and Kele, Inc. Vargo is also a member of the board of directors for Motorcar Parts of America, Inc. Vargo will be located at the company’s global headquarters in Milton, Georgia. n

DECEMBER/JANUARY 2019 / Southern Automotive Alliance 73


Index AAMA...........................................................38, 65

Hodges................................................................ 3

Omnex.............................................................. 79

ABL-Technic....................................................... 9

Honda..........................................................15, 16

Onin.................................................................. 77

AIAG.................................................................... 2

Houston Community College......................... 52

OSHA................................................................. 39

AIDT.................................................................. 16

Hwashin America............................................ 19

Phil Bryant..................................................................... 14

Alabama Department of Commerce............ 16

Hyundai.......................................................14, 19

PMT Events...................................................... 27

Apple........................................................... 70,71

Ilker Subasi..............................................................52, 53

Porsche........................................................ 14,39

APPM................................................................ 14

Industrial Product Innovation....................... 14

Port of Charleston........................................... 13

ARK Invest......................................... 31,32,33,34

Jacob Wilson.............................................................56,57

ReachNow........................................................ 30

Assembly Tool................................................. 35

Jason Hoff...................................................................... 15

Reich.....................................................................

Audi.................................................................. 14

Jonathan Smoke.....................................................39, 40

RelayRides........................................................ 29

AUTIT......................................................36,37, 50

Joshua Williams............................................................ 43

Rick Walker................................................10, 39, 43, 60

Auto Alliance................................................... 71

Jeep................................................................... 14

Rob Krulac..................................................................... 43

BCA..................................................................... 4

JMF...................................................................... 5

SAAV Manufacturing Center .................... 66,67

BMW..................................................13, 19,26 30

KAIA.............................................................38, 63

SAMA................................................................ 39

Bob Hooper................................................................. 50

Kanesha Jackson.......................................................... 39

Savannah Economic Development

Braidy Industries............................................. 14

Kay Ivey.....................................................................15, 51

Authority..............................................................

Car2Go.............................................................. 30

Keeton................................................................ 9

SAWF................................................................. 39

CAVS.................................................................... 7

Ken Koch........................................................................ 45

SCAC.............................................................38, 61

Center For Automotive Research..25, 26, 29,30

Kia....................................................17, 19, 26, 39

Scoot................................................................. 30

Chariot............................................................. 30

Kimberly Sears.............................................................. 39

SEWON America.............................................. 12

Chattanooga State Community College....... 53

KPMG......................................................39, 45,46

Siemens............................................................ 39

Chevrolet....................................................13, 19

Leadec.............................................................. 11

SMMT................................................................ 43

Constellium..................................................... 13

Lear................................................................... 39

Southern Automotive

Corvette........................................... 20, 21,22,23

Linda Hasenfratz ......................................................... 47

Conference......... 13, 38,39,40,41,42,43,44,45,46

Cox Automotive............................... 39,40,41,42

Linamar..................................................39, 47,48

SSAB.................................................................. 12

Crestmark........................................................ 23

MAMA..........................................................38, 62

Steve Robb.................................................................... 50

Daimler..................................................15, 16, 30

Maven..........................................................29, 30

Staubli.............................................................. 35

David Fernades............................................................ 12

Mazda Toyota Manufacturing USA..........14, 16

Systems...................................................9, 54, 55

Dodge............................................................... 17

McAbee............................................................. 23

TAMA...........................................................38, 64

Don “Stogie” Stogebauer........................................... 39

Mercedes-Benz.............13, 14, 15, 16, 18, 19, 26

Tesla.................................................13, 14, 15,31

Donald Trump........................................................12, 18

Metalsa............................................................. 18

Tim Sensenig............................................................68,69

Eissmann Group Automotive........................ 14

Mike Alvarez.................................................................. 50

TMSfirst....................................................... 68,69

Fiat Chrysler.................................................... 17

Minact................................................................ 5

Todd Green..............................................................58,59

Focus Fab.............................................................

Mississippi Center for Public Policy.............. 15

Toni Cooley...............................................................54,55

Ford.............................................15,17, 18, 19, 30

Mississippi Development Authority............. 14

Toyota.......................................12, 14, 15, 30, 39

GAMA.....................................................13, 38, 60

Mississippi State University.......................7, 12

TransLoc........................................................... 30

General Motors........12, 13, 20, 21,22,23, 30, 31

Mitchell Plastics.............................................. 16

UA College of Continuing Studies.....................

George Preston Dorris..........................................76,78

moovel.............................................................. 30

Uber.......................................................28, 29, 30

Georgia Department of Economic

Morrison Industries................................... 56,57

UK DIT............................................................... 43

Development................................................... 13

Nadia Theodore................................................24,25,26

University of Alabama...............................19, 28

Georgia Economic Developers Association.. 13

NAFTA..................................................... 24,25,26

US Steel............................................................ 14

Georgia Manufacturing Extension

Nathan Deal.....................................................16, 49, 51

USMCA.................................................... 24,25,26

Partnership...................................................... 50

Natasha Hall ................................................................. 39

UTZ.................................................................... 46

Georgia Tech...............................................13, 50

NEAA................................................................. 43

Volkswagen..........................14, 16, 19, 19, 52,53

Getaround........................................................ 30

NHTSA............................................................... 19

Volvo......................................................13, 17, 18

Grab.................................................................. 30

Nissan....................................................17, 30, 39

Waymo..................................................31, 32, 45

Greg Canfield................................................................ 14

Nisshinbo......................................................... 17

Wendell Williams.......................................................... 39

Greg Harris.................................................................... 66

Nora Roper................................................... 20,21,22,23

WKW Automotive.......................................58, 59

GulfQuest...................................................... 6,14

NSF.................................................................... 11

Worthwhile...................................................... 80

Hankook Tire................................................... 16

NTSB................................................................. 13

ZF....................................................................... 16

74 | Southern Automotive Alliance / DECEMBER/JANUARY 2019


DECEMBER/JANUARY 2019 / Southern Automotive Alliance 75


VINTAGE

The Amazing Dorris Courtesy of the Dorris Family

A Tennessee native started building cars in his family’s shop and became an automotive engineering pioneer TEXT BY: NICK PATTERSON // PHOTOS: JAMES H. WHITE/ MUSEUM OF TRANSPORTATION

G

eorge Preston Dorris was born in Nashville Tennessee, and he knew early on that he wanted to build cars. So he started, like many a mechanic, at home. By about 1897, Dorris had built an experimental gasoline powered car in the Dorris family bicycle shop. Even though many have not heard of him, the Dorris legacy lives on today. But first, here’s how Dorris became a pioneer in the automotive industry. Hemmings Classic Car magazine reports that Dorris attended Vanderbilt Engineering school for a year before collaboratring with his friend John French and buying a steam excursion boat. They were too young to get a license to operate the boiler so Dorris started building gasoline engines to power the boat, going from smaller to larger engines. He finally designed and built a four-cycle, two stroke vertical gas engine which replaced the steam engine on his boat, Hemmings reports.

“In 1895, French moved to St. Louis to work for his father,” Hemmings’ story says. “Dorris seems to have kept running the boat as a source of income, but by the time French left, he had other interests.” The Hemmings article points out how Dorris got interested in auto racing, which was becoming all the rage in Europe. Because of that, he decided to build a car of his own. “Using a variant of his 196-cu.in. marine twin-cylinder engine, he had a test car running by the spring of 1897,” Hemmings says. His car was good enough for trips up to 60 miles. Soon, he and his friend French had founded the St. Louis Motor Carriage Company, one of several – more than 200 — automobile building outfits springing up in Missouri during the period. By 1899, the St. Louis Motor Carriage Company had delivered 2 cars, both based on the one Dorris had built in his parents’ bike shop. His original car, in fact, had been turned into a truck and was being used in service to

76 | Southern Automotive Alliance / DECEMBER/JANUARY 2019

the carriage company. In 1900 the company Dorris and French founded sold 30 cars, and Dorris branched out. While they kept selling the twin-cylinder engines in commercial vehicles, Dorris designed a single cylinder motor that powered their 1901 models. “But more importantly, the clutch and transmission were built en bloc with the engine, in what became a St. Louis signature,” Hemmings notes. Why was that so important? “Dorris’s patented unit powerplant was the first known American application of the idea,” Hemmings reports. “The clutch and sliding gear transmission were built into an extension of the crankcase--oil flowed freely between the two. The sturdy housing ensured bearing and shaft alignment, and you could check on gear condition and oiling from a top inspection port. The engine was horizontal, and as a marketing gimmick, power ratings seem to have varied


DECEMBER/JANUARY 2019 / Southern Automotive Alliance 77


VIN T AGE

James H. White Museum Of Transportation

depending on the car in which it was installed, but are generally eight or nine horsepower--not much.” As noted by Dorris’ namesake grandson, George P. Dorriss III, you have to view Dorris’ early engineering achievements in context of the times. “Remember, they were built to go farther than a horse, not faster than a horse,” says Dorris in 2012. Today, preserving his grandfather’s cars is his life’s work as Hemmings describes it. In an interview with the Webster Kirkwood Times, Dorris points out that his grandfather’s cars were handbuilt, unlike the more famous automobiles being factory made by Henry Ford at the time. As a result, they were considerably more expensive. “In 1924, a two-passenger Model T roadster was selling for about $290, compared to the sticker price of about $4,150 for a basic Dorris model.” Another significant fact: while many carmakers sprang up and quickly ran out of gas, Dorris was building cars successfully for years. Eventually, he was making 300 cars a year – quite a step up from that original output, but not enough, in the end, to compete with Ford. Still, some of the innovations Dorris engineered outlasted his car company. “A significant development was that of the float-feed carburetor, which

Dorris invented with A. L. Dyke. This carburetor was used on automobiles until replaced by electronic fuel injection systems in the late 1980s,” the Kirkwood Times notes. Hemmings points out that, “his design [the float feed carburetor] was later marketed extensively by St. Louis’s A.L. Dyke. Dorris never received a patent for it, however, and while he was probably the first in America to use what became the standard carburetor, it was Dyke (of Dyke’s Manual fame) who promoted the devices extensively for decades to come. Aside from its use on his cars, Dorris didn’t benefit from this development. Likewise, his unit powerplant patent was drawn so narrowly that the later bolt-on versions that came soon after, and which have endured to the present day, were not subject to royalties. The engine used a three-point mounting system, which was so successful that when StevensDuryea adopted it, they added the three points to their company logo.” Another Dorris big idea that might seem obvious in 2018, had to do with how to steer. “Starting in September 1901, all St. Louis cars were equipped with a steering wheel. This was cutting-edge stuff in the tiller era,” says Hemmings. In another offshoot of his work, Dorris and his friend Andrew Lee Dyke also wrote a book, Diseases of a Gasoline

78 | Southern Automotive Alliance / DECEMBER/JANUARY 2019

Automobile and How to Cure Them in 1903. That same year, French died from injuries sustained in an automobile accident that had occurred between a St. Louis model and a street car in Pittsburgh. French’s family moved the St. Louis Motor Carriage company to Peoria, Illinois. Spurring Dorris to forge ahead on his own path. In 1905 Dorris’ brother Duncan built a garage in Nashville, specifically to sell his brother’s cars. By that time, Dorris was building cars in his own name. Hemmings Daily, referring to a 1946 Nashville Tennessean newspaper story, notes that there were only 25 cars in the county at the time Duncan Dorris opened his garage as the first Dorris Motor Car Company dealer. “His friends told him that he was a fool for risking his capital in such a big business, that his garage was big enough for all the automobiles in the world, and that he would lose all of his money,” the z reported. That same article noted that a local salesman for White steam cars had closed up his business about the same time “in the belief that Davidson Countians had bought all the cars they were going to.” That building, originally built to sell George Dorris’ cars, was still on that spot in 2017, when a Nashville entrepreneur concocted plans to save it from demolition by moving it to a spot near the former Marathon Automobile factory. And in St. Louis the 1907 Dorris Motor Car Company Building still stands. “The building was originally constructed in 1907 as an automobile factory for the Dorris Motor Car Company and was modified in 1909 with the addition of a third story. It was the headquarters and manufacturing facility for the company until 1926, and the company played a significant role in the establishment of St. Louis as an automotive assembly and parts manufacturing center,” as reported in Wikipedia. That building went on the National Register of Historic Places in February 2000. n



80 | Southern Automotive Alliance / DECEMBER/JANUARY 2019