Published on July 21st, 2014 | by Daniel Sherman Fernandez0
Are Car Companies Hiring More Technology Professionals?
An auto industry analyst thinks the world’s nearly 30 major automakers will see dramatic consolidation — and about a half dozen will remain. Morgan Stanley auto analyst Adam Jonas said in a research note recently that the U.S. auto industry needs a dramatic change in thinking, spurred on by electric vehicle maker Tesla Motors Inc.
The radically changing landscape of autos requires a commensurate change of thinking in Detroit if the domestic OEMs, as we have traditionally known them, are to remain relevant 15 or 20 years from now. The world has too many car companies: We cover nearly 30 auto assemblers globally across eight countries. In our opinion, the balance of economic, competitive and technological forces will ultimately consolidate this figure to five or six players.
Forecasts a decade ago of auto industry consolidation haven’t come true. During the financial crisis, governments helped prop up struggling automakers. Consolidation has taken place among suppliers, but not to the extent some had predicted. Vision will be necessary for automakers to survive. As recently as 1950, Detroit was home to nearly a dozen major automakers.
There are several auto firms with the vision to make it to that final select group. Others are more distracted by the issues of the day, working diligently towards the next engineering cycle. The newest battle line is integration of technology being developed outside the auto industry. General Motors Co. said last year it had set up a committee to review Tesla’s operations and see if it could learn anything.
Tesla could either end up being Detroit’s worst enemy or its salvation. In our opinion, the disruption from Tesla comes early enough to allow an incumbent sufficient time to adapt its culture, capital allocation and recruiting strategy to the changing forces. With proper execution, Detroit may thank Tesla Motors for being that stiff board in the back of the head right when they needed it.
Are U.S. automakers are prepared as the industry moves to self-driving cars. Do GM and Ford have the right talent and organizational structures in place to achieve industrial leadership in these areas? It will require careful collaboration with suppliers. An unusually high concentration of new players in the worldwide tech industry are based in Silicon Valley, presenting a unique opportunity for domestic auto companies. BMW AG has about twice as many tech professionals staffed at its Mountain View technology center than all of Detroit’s automakers.