Auto Industry Due for Paradigm Shift

The automotive industry is changing in ways that could benefit Tennessee.

Automotive News editor Keith Crain spoke candidly today to a gathering of some of the state’s industrial and economic development leaders.

He told them the future of automotive manufacturing lies in outsourcing.

I would suggest to you that in the next ten years you’re gonna see companies that are gonna make cars for automobile companies. They’ll be able to do it cheaper, they’ll be able to do it in 5,000 quantities rather than 500,000, and they’ll be able to respond very quickly to the needs of the customers.

Daimler-Chrysler is already using subcontractors to build Jeeps in Ohio and Smart Cars in Europe.

Crain says Tennessee is well situated to take advantage of the paradigm change, because the state has done a particularly good job of attracting smaller companies that support auto manufacturers.

But when asked about the future of the “Big Three” automakers-General Motors, Ford, and Chrysler -Crain predicted they will never regain the ground they lost to Toyota and Honda in the 1970s.

“The reason they’re never gonna get back is they’re closing the plants down, they’re selling them off, they’re getting rid of them. Well, if they get a home run, they’re not gonna have anywhere to build them. They’re not gonna have the capacity anymore to sell 20-percent more cars, trucks if they wanted to.”

Last year G-M announced plans to shut down one of the two production lines at the Saturn plant in Spring Hill, but that move has been postponed due to increased sales of the Ion Sedan.

Crain was in Nashville to announce that the city has been chosen as the site for next year’s Automotive News Manufacturer’s Conference.