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David Leyonhjelm won’t join fight against car industry subsidy cuts

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Article source: http://www.theaustralian.com.au/national-affairs/politics-news/david-leyonhjelm-wont-join-fight-against-car-industry-subsidy-cuts/story-fn59nqld-1227134646810

The auto industry is not too big to fail yet

If there were any doubts that 2014 would go down in history as a turning point for auto safety, last week’s Senate Commerce, Science and Transportation Committee hearing on defective air bags erased them. Coming on the heels of the still-expanding investigation into General Motors’s faulty ignition switches, the congressional grilling of air-bag supplier Takata and customers Honda and Chrysler was yet another demonstration of the auto industry’s inability to find and fix deadly defects. This year’s scandals have not only shattered recall records, but they also have repeatedly exposed systemic failures by automakers, suppliers and regulators alike.

As with GM’s defective ignition switches, there were plenty of warning signs that Takata’s air-bag inflators could prove lethal. Engineers at the company’s Mexican factory identified a range of problems with the air-bag inflators as early as 2001, while Honda recognized the “unusual deployment” of a Takata air bag in a 2004 crash. Recalls of Takata’s air bags have been taking place since 2008, yet three people have died from the shrapnel propelled by these defective safety devices in the last 14 months alone.

The pattern emerging from the GM and Takata scandals is astounding: Not only are automakers allowing a record number of defects to slip through quality control, often with lethal consequences, but they also seem to lack the will or ability to identify and recall defective vehicles in a timely manner.

Lawmakers are considering several potential regulatory fixes for this shocking state of affairs, including new incentives for whistle-blowers, increased funding for National Highway Traffic Safety Administration investigations, and increasing fines yet again for automakers and suppliers who fail to promptly recall defective vehicles.

The rising tide of safety problems is a clear product of two of the most fundamental forces in the industry: scale and cost. The push to build competitive scale on a global level creates complexity and communications challenges, which allow for defects to persist undetected.

For decades, automakers have sought to offload their massive development costs onto their suppliers, which are increasingly taking the lead in engineering and designing the parts they produce. Unsurprisingly, the relationship between automakers and their suppliers is at the heart of both the GM and Takata incidents.

The bad news is that, although 2014’s Recallapalooza has made every automaker take a long look at its cost-quality balance, the underlying risks that caused it will get worse before they get better.

The good news is that the industry will not operate in its current paradigm forever, as maturing demand and new technology will ultimately break the tyranny of cost and scale.

The current rash of recalls is just part of the industry’s broader transition from a relatively low-tech, high-volume model into a higher-tech, lower-scale future.

Not only will this reduce defects and improve quality, but it will also remove the most dangerous factor from the automotive equation: drivers themselves. Until this transition fully takes place, however, expect more scrutiny than ever of an auto industry that has become too big not to fail.

Edward Niedermeyer, an auto-industry consultant, is the co-founder of Daily Kanban and the former editor of the blog The Truth About Cars.

Article source: http://www.delawareonline.com/story/opinion/contributors/2014/11/24/auto-industry-big-fail-yet/70058466/

Auto industry is too big not to fail

If there were any doubts that 2014 would go down in history as a turning point for auto safety, last week’s Senate Commerce, Science and Transportation Committee hearing on defective air bags erased them. Coming on the heels of the still-expanding investigation into General Motors’ faulty ignition switches, the congressional grilling of air-bag supplier Takata Corp. and customers Honda and Chrysler was yet another demonstration of the auto industry’s inability to find and fix deadly defects. This year’s scandals have not only shattered recall records, but they also have repeatedly exposed systemic failures by automakers, suppliers and regulators alike.

Explosive airbag recall increases to 7.8 million vehicles

As with GM’s defective ignition switches, there were plenty of warning signs that Takata’s air-bag inflators could prove lethal. Engineers at the company’s Mexican factory identified a range of problems with the air-bag inflators as early as 2001, while Honda recognized the “unusual deployment” of a Takata air bag in a 2004 crash. Recalls of Takata’s air bags have been taking place since 2008, yet three people have died from the shrapnel propelled by these defective safety devices in the last 14 months alone.

lRelated Honda Odyssey excels at minivan crash tests; Nissan Quest fails terribly
AutosHonda Odyssey excels at minivan crash tests; Nissan Quest fails terriblySee all related

The pattern emerging from the GM and Takata scandals is astounding: Not only are automakers allowing a record number of defects to slip through quality control, often with lethal consequences, but they also seem to lack the will or ability to identify and recall defective vehicles in a timely manner.

Lawmakers are considering several potential regulatory fixes for this shocking state of affairs, including new incentives for whistleblowers, increased funding for National Highway Traffic Safety Administration investigations, and increasing fines yet again for automakers and suppliers who fail to promptly recall defective vehicles. Though some of these efforts may help the situation — incentives for whistleblowing seem especially promising — none of them addresses the fundamental issue that keeps bringing automakers back to Capitol Hill for round after round of tongue-lashings.

The rising tide of safety problems is a clear product of two of the most fundamental forces in the industry: scale and cost. The push to build competitive scale on a global level creates complexity and communications challenges, which allow for defects to persist undetected. The huge scale of parts purchasing, driven by the cost savings gained by using common components across as many vehicles as possible, gives each defect global reach. Because the industry has huge fixed development costs and relatively low margins, the need for scale will continue to push the risk of defects relentlessly higher.

For decades, automakers have sought to offload their massive development costs onto their suppliers, which are increasingly taking the lead in engineering and designing the parts they produce. Unsurprisingly, the relationship between automakers and their suppliers is at the heart of both the GM and Takata incidents. Takata’s cheap but volatile air-bag propellant and explosion-plagued Mexican production plant bear witness to the kind of cost pressures that have been blamed for the dysfunctional relationship between GM and Delphi, the supplier of its defective ignitions.

Takata execs ordered technicians to erase air bag test results: report

Takata execs ordered technicians to erase air bag test results: reportRead the story –>

The bad news is that, although 2014′s Recallapalooza has made every automaker take a long look at its cost-quality balance, the underlying risks that caused it will get worse before they get better. Increasing competition and consolidation will drive scale up and costs down, especially as the industry’s growth moves into developing markets. And if automakers can’t uncover their own defects due to their growing complexity, scale and supplier dependence, there’s little chance even a better-funded NHTSA would be able to.

The good news is that the industry will not operate in its current paradigm forever, as maturing demand and new technology will ultimately break the tyranny of cost and scale. With smartphones and (eventually) autonomous-car technology enabling new “mobility as a service” business models, the auto industry will lose huge numbers of drivers who only buy cars for occasional use and leave them parked 95 percent of the time. Indeed, some experts say a single autonomous vehicle could replace as many as 32 privately owned vehicles. And as this transition takes place, an industrywide shift toward better quality control will be absolutely necessary: The sight of auto executives stammering bewildered non-answers in congressional hearings over gross quality lapses will have to become far less common before the autonomous-car revolution can ever hope to take hold.

The current rash of recalls is just part of the industry’s broader transition from a relatively low-tech, high-volume model into a higher-tech, lower-scale future. Not only will this reduce defects and improve quality, but it will also remove the most dangerous factor from the automotive equation: drivers themselves. Until this transition fully takes place, however, expect more scrutiny than ever of an auto industry that has become too big not to fail.

Bloomberg News

Edward Niedermeyer, an auto industry consultant, is the co-founder of Daily Kanban and the former editor of the blog The Truth About Cars.

Copyright © 2014, Chicago Tribune

Article source: http://www.chicagotribune.com/news/opinion/commentary/ct-takata-honda-airbags-ignition-cars-perspec-1126-jm-20141125-story.html

Senate to block cuts to auto industry assistance

ScreenHunter_5113 Nov. 24 07.42

By Leith van Onselen

The Australian is reporting today that the Senate will block the Abbott Government’s bid to cut assistance to the automotive sector (known as the Automotive Transform­ation Scheme, or ATS) by $900m between 2013-14 and 2020-21, by bringing forward the end date for the scheme and lowering the amount that individual firms can claim:

Blocking the bill would reverse $500m in cuts to 2017-18 announced in last year’s Mid-Year Economic and Fiscal Outlook and a further $400m in savings announced in the May budget…

“All available evidence shows that decimating the Automotive Transformation Scheme, as the Abbott government wants to do, will spark an early exit of automotive manufacturers from Australia,” [Labor] Senator Carr told The Australian… “It will scuttle any chance of a successful transition for automotive workers and businesses.’’

Senator Xenophon said the cuts to the ATS would be a broken promise by the Coalition that would jeopardise more than 30,000 jobs in the components industry. “The Coalition just don’t get manufacturing,’’ he said.

…Greens deputy leader Adam Bandt said: “The Greens want a secure future for component and auto workers as Australia transitions to a clean economy, and we especially want to explore whether we can make electric cars.’’

The Abbott Government is certainly treading a fine line on automotive assistance.

With the three local automakers scheduled to close assembly operations by 2017, it would seem sensible for the Government to maintain funding for the sector at previously agreed levels up until this time, rather than cutting funding by $500 million, thereby securing the short-term viability of component makers and ensuring the industry does not close early, as already threatened by Holden if the component makers fail. However, the case for maintaining funding after the auto makers close in 2017 is obviously much weaker.

The last thing the Abbott Government would want is for local car assembly to shutter early as it seeks re-election in 2016. Such an outcome would likely decimate it at the ballot box, particularly in the manufacturing strongholds of Victoria and South Australia, and would be very bad timing given the structural headwinds for the economy.

After all, modelling by the Productivity Commission (PC) estimated that the closure of Australia’s car industry would cost up to 40,000 jobs, mostly in Victoria and South Australia. The PC’s findings were broadly similar to modelling undertaken late last year by the Allen Consulting Group, using economic analysis from Monash University, which estimated that the closure of the local car industry would cost around 33,000 jobs in Melbourne and around 6,600 jobs in Adelaide by 2018.

Both studies, however, seem overly optimistic, given they assume that a high proportion of component manufacturers will move into exports and/or the after-sales parts market, which are already crowded and highly competitive. The PC also assumes that two thirds of the expected 40,000 retrenched auto workers will find another job – an assumption that seems fanciful given the lack of other manufacturing industries in Australia, the sheer size of the employment shock (which of course will occur alongside the sharp decline of mining investment), and the overall weak labour market.

Irrespective, the impact of the car industry’s closure is likely to be huge and represent a king hit to the economy, particularly in South Australia and Victoria. Again, the timing is particularly poor, since these job losses are set to coincide with the unwinding of the biggest mining investment boom in Australia’s history and the loss of tens-of-thousands of mining-related jobs.

These are the two employment cliffs facing the Australian economy, and are key reasons why I remain so concerned about Australia’s labour market.

With commodity prices sinking fast, and the Australian dollar likely to follow suit in due course, Australia may also face the unfortunate prospect of importing Holdens from South Korea at higher prices than could have been built locally given more favourable exchange rates.

Such is Australia’s gross mis-management of the mining boom.

[email protected]

 

Article source: http://www.macrobusiness.com.au/2014/11/senate-to-block-cuts-to-auto-industry-assistance/

Govt car industry cuts set to stall

Labor the Greens will block a government move to cut almost $1 billion from car industry support.

The federal government’s plan to cut $900 million in car industry assistance looks set to stall in the Senate as a new inquiry is launched into the industry’s future.

Labor, the Greens, the Palmer United Party and crossbenchers Nick Xenophon, Bob Day, Ricky Muir and John Madigan have rejected the plan to cut funding for car makers and suppliers by ending the Automotive Transformation Scheme.

The government says it is appropriate to trim funding back to $700 million between now and 2018, as Holden and Toyota will stop building cars in Australia by the end of 2017.

A bill to enable the cuts passed the lower house on October 2 and is due to be debated in the Senate after a committee reports on it on Monday night.

Labor industry spokesman Kim Carr, who on Tuesday will seek the Senate’s approval of a new broad-ranging inquiry into the car sector, said every country in the world with an automotive sector had some form of government support.

“Australian people expect us to be able to be more than just a farm or a quarry – they expect us to be able to make things in a highly sophisticated way,” Senator Carr said.

“The automotive industry is one of those key sectors that’s able to provide us with the skills and the capabilities we need to secure future investment in manufacturing more broadly.”

Independent Nick Xenophon, who represents the car-making state of South Australia, said there would be a “tsunami of job losses” if the funding scheme was axed.

Fellow South Australian, Family First senator Bob Day, said that in principle he did not believe propping up industries was a good use of taxpayers’ money.

But he will oppose the axing of the scheme because of the potential for thousands of job losses in his state.

“It’s a conflicting one for me,” he said.

The Australian Motor Industry Federation (AMIF) said a broad inquiry into the industry would be better than ad hoc policy-making.

“It represents a once-in-a-generation opportunity to map out a policy framework including future government investment, support and/or intervention, industry action and policy cohesion,” AMIF chief Richard Dudley said.

More than 370,000 Australians are directly employed by the automotive industry, which represents 2.6 per cent of Australia’s GDP.

An estimated 50,000 jobs are expected to be directly impacted by the closure of car making.


AAP

Article source: https://au.news.yahoo.com/a/25599816/govt-car-industry-cuts-set-to-stall/

Senate to veto automotive industry cuts

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Article source: http://www.theaustralian.com.au/national-affairs/treasury/senate-to-veto-automotive-industry-cuts/story-fn59nsif-1227132449524

Millions of cars need airbag fix as Senate grills auto industry



 

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  • Takata airbag plant in Mexico with troubled past at center of probe
  • Honda admits failures in Takata airbag fiasco
  • Ford, GM business seen buoying Takata as U.S. probes airbags
  • Airbag angst preceded U.S. demand for nationwide Takata recall
  • BMW says its Takata inflator work moving from Mexico to Germany
  • Toyota’s Lentz says more replacement inflators coming next month
  • AutoNews Now: Automakers tied to Takata

TOKYO (Bloomberg) – The world’s biggest automakers have fixed a fraction of almost 8 million cars recalled for Takata airbags, providing fuel for a Senate committee the grilled industry executives today for their handling of the crisis.

About 6 percent of affected vehicles recalled by 10 carmakers have been replaced, according to Bloomberg News calculations based on figures provided to the National Highway Traffic Safety Administration. Other estimates have put the total number of Takata-related recalls since 2008 at more than 10 million in the U.S. and more than 16 million globally.

Honda Motor Co. and Toyota Motor Corp., which have called back the most cars, each disclosed lower remedy rates in letters on NHTSA’s website on Wednesday.

The slow progress underscores the challenge still ahead for the industry and its regulator to protect motorists whose cars are equipped with air bags linked to five deaths. NHTSA demanded automakers broaden their campaigns nationwide two days before the hearing, after months of allowing limited, regional recalls.

Takata said the expanded callback could risk lives by aggravating a shortage of replacement parts.

“This looks unacceptably low, especially because a large majority of the cars were recalled some time ago,” Ashvin Chotai, managing director of researcher Intelligence Automotive Asia, said by phone. “I don’t expect them to have an easy time.”

Takata airbag inflators have injured or killed motorists by deploying with too much force, breaking apart metal parts within the airbag module and shooting them at passengers. Many of the vehicles affected are a dozen or more years old, complicating efforts to track down owners and determine how many of the cars are still in use.

Representatives from Honda, Takata, Chrysler Group LLC and NHTSA are scheduled to testify before a U.S. Senate Committee on Commerce, Science and Transportation hearing today.

Honda meetings 

Honda, leading all automakers with almost 5.1 million vehicles affected, meets with Takata daily to share inflator demand information and discuss supply, the carmaker told NHTSA in its letter dated Nov. 5.

The automaker made available or reimbursed owners for more than 3,000 loaner and rental vehicles in October and the first few days of November. Honda said it’s had no significant shortage of parts to repair vehicles.

Both Honda and Toyota said they’re exploring ways to obtain additional airbag inflators, including by reaching out to suppliers other than Takata. Autoliv Inc., TRW Automotive Holdings Corp. and Daicel Corp. compete with Takata.

Developing and producing a replacement inflator by an alternative supplier could take “a minimum of one year” and possibly longer if the parts need to be fine-tuned to specific vehicle characteristics, Toyota said in its letter.

‘Not feasible’ 

Nissan Motor Co., the automaker with the third-most vehicles affected, said obtaining replacement inflators from other suppliers is “not feasible,” as the parts would require re-engineering and validation to ensure quality and safety.

General Motors Co. Ford Motor Co., BMW, Chrysler, Mazda Motor Corp. and Mitsubishi Motors Corp. also have conducted recalls or service campaigns since April 2013. Ford told NHTSA the number of its vehicles was not available, while Chrysler requested confidential treatment of its information.

Fuji Heavy Industries Ltd., the maker of Subaru cars, has fixed 2,148 vehicles out of the 17,521 recalled as of Nov. 5, Mariko Ougi, a Tokyo-based spokeswoman for the company, said by e-mail. A filing describing the status of airbag repairs by Fuji Heavy wasn’t available on NHTSA’s website.

Contact Automotive News

Article source: http://www.autonews.com/article/20141120/OEM11/141129995/millions-of-cars-need-airbag-fix-as-senate-grills-auto-industry

RI auto industry can rival Thai’s: Minister

© 2014
PT. Niskala Media Tenggara

Article source: http://www.thejakartapost.com/news/2014/11/22/ri-auto-industry-can-rival-thai-s-minister.html

Canada’s Auto Industry Thrived and Died in Windsor


Windsor, Ontario has recently been dealt another blow; Ford Motor Company has just announced that it will not be bringing the new small engine production line to the Rose City. Instead, it will be built in Mexico, and the 600 potential jobs that would have brought every laid off Ford employee back to work has become nothing more than a cruel twist of fate.

Since 2002, Ontario’s manufacturing sector has shrunk by nearly 30 per cent — or more than 300,000 jobs. No other part of the province has been hit as hard as Windsor, consistently ranking among the highest in unemployment year after year. To give you an example of how hard times have been, one only has to look at the candidate platforms from the most recent provincial and municipal elections. Despite the highest unemployment rate in the country no candidate ran on a platform of job stimulus, and no one demanded it of them either. The outgoing mayor served for 11 years and his departure was met with great fanfare, even though the unemployment rates during his tenure were among some of the worst this city has ever endured.

This year, my family’s electrical business was sold after 64 years in business and it broke my heart to see the sign come down, but an electrical business that specialized in assembly line motors can’t stay in business with no assembly lines. I come from generations of autoworkers. In the height of the automotive boom in Windsor my great grandfather was the head electrician for Chrysler until his position required a degree from a University in Electrical Engineering. Another great uncle of mine used to boast that he collected a pension from Ford longer than he worked for them; to be fair, he worked for them (after serving six years in the Navy during WWII) for 30 years and was retired 33 years when he passed away at 91. Those were the glory years. Now a cousin of mine has almost two decades in Essex Engine (the same Ford plant that just lost the contract) and he is 100 from the bottom of the seniority list. This would have been unfathomable just a decade earlier.

The Canadian auto industry was literally created in Windsor, known as Canada’s auto capital. The city used to be able to convert its factories from automobile production to rolling tanks and planes off the line in mere days. Now there is a block-long empty GM transmission plant in the heart of the city that has a paint ball facility in it.

With this latest setback, the local Conservative representative Jeff Watson has taken a classic Conservative tactic. He has decided to condemn Ford in a demonizing manner. To get a better understanding of the parliamentary secretary to the Minister of Transport watch him answer questions about the Transportation Safety Board findings. This has become the norm as he is merely following the example set by his party leader Prime Minister Stephan Harper, whose right wing rhetoric has not had the world rolling its eyes this much since Hugo Chavez.

The out of touch ramblings of a politician past his shelf life aside, according to the 2013 CAPC report and the 2014 ARPC report the facts of the Canadian auto industry are as follows:
• Motor vehicles are the # 1 contributor to Canada’s manufacturing GDP
• Every assembly line job creates nine additional jobs
• And, there are currently about 115,000 jobs equated to a direct contribution of over $16 billion to the GDP in 2013.
• Overall, auto manufacturing makes up almost 10 per cent of Canada’s manufacturing GDP and almost 8 per cent of the manufacturing employment.

Joseph McCabe of Automotive Compass predicted at the APMA conference on October 2, 2013 that if the Canadian Auto industry continues to decline at the rate it is going, the 2012 volume of the world’s automobile production of 2,454,069 vehicles that were produced in Canada will be reduced to 1,761,672 by 2019, or a volume growth of -28.2 per cent. Of the 20 countries on the list, the only other country that saw a negative prediction was Japan at -8.9 per cent, nowhere near what Canada’s is predicted to drop. Every other country on the list saw a predicted increase.

This brings me back to the failed attempt to bring a new engine line to Windsor. There needs to be specific strategies in place, with the goal of securing new product mandates. If one already exists, it’s time for a revision. For example , the United States government is “coordinating federal aid to support communities’ strong development plans and synchronizing grant programs across multiple departments and agencies to strengthen American manufacturing.”

Canada’s businesses enjoy some of the best tax rates in the world; that is likely why Burger King merged with Tim Hortons and moved its headquarters to Canada. This needs to be used to our advantage, and we must recognize that bullying will not get us anywhere and posturing will only further alienate corporations and cost Canadians potential jobs.

The last 10 years have been horrible to Essex County, and our community has endured enough. When the bad news broke two weeks ago, a pair of Ford employees decided to take matters into their own hands. They launched an online petition, urging the federal and Ontario governments to reconsider their decision and re-open talks with Ford.

I hope their efforts are not for naught, and yet that is all Windsorites can cling to for hope. The failures at both the provincial and federal levels to develop any sort of strategy has all but ruined us. As George Eliot wrote, “More helpful than all wisdom is one draught of simple human pity that will not forsake us.” This cannot be truer than the plight of the automotive industry in Windsor, Ontario.

Article source: http://www.huffingtonpost.ca/bruce-moncur/ford-plant-windsor_b_6192208.html

Industry minister optimistic that automotive industry can rival Thailand’s

© 2014
PT. Niskala Media Tenggara

Article source: http://www.thejakartapost.com/news/2014/11/21/industry-minister-optimistic-automotive-industry-can-rival-thailands.html