Competition can come from places where you least expect it. Consider, for example, the fact that companies including Microsoft are keenly interested in getting products into automobiles. Intel, of course, has been a supplier of smart components for cars for some time now, and Hewlett Packard produces all manner of things that are used in vehicles. Many of the Japanese electronics giants are also strongly evident.
As the importance of silicon in cars grows, these companies will emerge as more important players, perhaps even dwarfing the materials and conventional systems suppliers that have long held sway. It is within the realm of possibility that even the OEMs will have their positions modified—no matter what country of origin these OEMs have. This is, perhaps, somewhat unthinkable, given the extent to which there is such a huge manufacturing infrastructure established by the OEMs. The likelihood of a new entrant matching that—or even coming close—is close to nil. But it is also possible that the new entrants may not even require that type of infrastructure.
General Motors has the EV1, its electric car, out on the road and in the driveways of customers right now. GM has billions of dollars invested in internal combustion engine-making capabilities, none of those capabilities are being used for the EV1. To be sure, the number of electric cars produced by GM, Honda, Ford, etc. is infinitesimal compared to the number of internal combustion cars, but the direction seems to be away from the IC engines that we are familiar with—both from a producing and consuming standpoint—and to, probably, a hybrid. Chrysler's announcement of the development and pursuit of the gasoline-powered fuel cell is an important example of this vector of pursuit.
The EV1 has a plastic body. GM has 13 stamping sites in North America; once again, this represents billions of dollars of investment. None of them make the skin for the EV1. Although the work done by the American Iron and Steel Institute on ultralight cars and trucks indicate that steel can give alternative materials a run for their money and probably win, once again it is important to consider that there was due consideration given to the selection of body materials for the EV1, so perhaps it is a harbinger of things to come. At the very least, things will continue to change away from the dominant.
The ramifications of things like more electronics, different types of power plants, and the use of alternative materials will be tremendous on makers of all manner of products, from machining centers and stamping presses to wiring harnesses and steering wheels.
Yes, I know that it is hard to imagine that the auto industry as we know it could be changed. But developments that change things profoundly do happen. This became extremely clear to me while reading a fascinating and thought-provoking book, Of Bicycles, Bakelites, and Bulbs: Toward a Theory of Sociotechnical Change by Wiebe E. Bijker (The MIT Press; 380 pp.; $16.00 [paperback]). The author aims to explain how technical changes happen, both from the standpoints of the development of artifacts and of their acceptance in and modification by society. Because he wanted to provide some technical depth in his examination, he selected what he calls "elementary innovations," so "this led me to the bicycle rather than the automobile, Bakelite rather than synthetic materials in general, and to the fluorescent lamp rather than electric lighting."
In the discussion of bicycles, he examines the companies that had generally produced things other than vehicles of any type. For example, writing of the second half of the 19th century he notes that in Great Britain, where the word "bicycle" was actually first used in an 1869 patent, "...the Franco-German War had a destabilizing effect on British industry. As export opportunities grew scarce, several machine manufacturers started looking for other trades. Weapons makers, sewing machine manufacturers, and agricultural machine producers were only too happy to shift their production to bicycles."
Think about it: Sewing machine and rifle makers going into the bicycle business. And with success, it must be noted. History may not exactly repeat itself, but there certainly seem to be a whole lot of patterns.
The point is this: Complacency is something that no one can afford. Someone, somewhere, is always facing changed conditions and is thinking about how they can, consequently, change directions. That direction might lead them to where you are at and then still further. And you could be left behind. AD&P
