China's production of motor vehicles

Back in 1982 the Chinese Premier declared 'it is great to be wealthy' and that the growth of China would take place on the back of development of the motor vehicle. In 2007 there were 22 million privately owned motor vehicles in China. That is roughly 2% of the population owns a motor vehicle. Imagine if 20% of the population were to gain ownership of a motor vehicle. That would represent more privately owned motor vehicles than for the entire population of the USA.

Of course this is not a game of 'mine is bigger than yours'- well maybe it is, however, the implications are significant. Over the next two decades China's demand for oil, if it continues to power motor vehicles, will outstrip the demand of the USA and several slightly smaller nations. This means for every dollar a non oil producing nation offers to purchase oil; China will be able to offer two dollars.

It also means China has a huge, in-house testing lab for the development of motor vehicles. Leaving issues of quality aside, as the Japanese, Koreans and Taiwanese have shown us, poor quality is only a temporary issue, China has the potential to become the world's leading producer of motor vehicles. It's own population becomes its R & D laboratory. Imagine the impact on world motoring were China to take the lead in the development of a motor vehicle that did not rely upon fossil fuel. All of that research for motor vehicles would then spill into their manufacturing sector.

Around 600,000 people in the USA are employed directly in the manufacture of American motor vehicles, at GM, Ford and Chrysler. Many of them represent the last generation of American auto makers. The majority of the next generation of workers will be employed by Asian manufacturers. Will they be able to compete on cost with the Chinese? Will the American manufacturers be able to maintain their outpost plants in places such as Australia? I believe the bells are tolling. China doesnt need to export cars to America, it can manufacture them there, alongside other Asian manufacturers or it can choose to export everywhere else except the USA. Either way it represents a stranglehold on the American-made car industry. Even though USA manufacturers are present in China, in joint partnerships, their time there is limited and eventually competition for other Chinese manufacturers, not dependent upon foreign investment, will force them out - or the wealth of the Chinese manufacturers will enable to eventually purchase ownership of the likes of GM, Ford and Chrysler. Twenty years ago, in 1988, Lee Iacocca stated that China's road to motor vehicle domination would be a very 'long haul'. In hindsight he must be thinking that two decades is a very 'short haul'.

The USA has not only dominated the vehicle market for most of the past 100 years it has also benefited from the spillover of technology into the consumer market in areas as diverse as robotics, computerisation, gps, electronics and lighting. A loss, by the USA, of motor vehicle R & D will impact directly upon R & D in many other fields. While some of this R & D has already been taken up by the Japanese and Korean vehicle manufacturers, it is likely the Chinese will garner that which remains with USA manufacturers.

Chery, the Chinese car manufacturer has been in business for only one decade. In 2007 it produced 250,000 cars for the Chinese domestic market and exported a further 125,000 cars. In 2008, domestic production rose to 350,000 units while exports slipped slightly to 100,000. China is predicted to produce 11 million light cars in the next twelve months, compared to 10million in the USA and less than 1 million in Australia.

What might be the impact upon Australia? The demise of American manufacturers GM and Ford will impact upon both imports and exports. The dominance of Chinese auto parts manufacture will place price pressure on current suppliers. Chinese manufacturers may be able to produce a vehicle and deliver it already assembled into the Australian market for less than it would cost to manufacture it in Australia.

Australia provides much of the iron ore needed by China and will into the foreseeable future. The more Australia charges for iron ore the more it costs to produce a motor vehicle. Without competition from domestic manufacturers, Australia could find it spends more money purchasing motor vehicles than China spends purchasing iron ore. On the other hand China could purchase Australian iron ore and then ration the export of motor vehicles to Australia.

It is possible, and likely, Australian motor vehicle manufacturers will increase their exports into China. All three major manufacturers have demostrated an ability to export high quality vehicle, even into Japan and America. The new rich of China's middle class will provide excellent opportunties for such exports. Of course this means that the potential to export to other countries is always present, including India and Latin American nations.

Approximately 30,000 people are employed in motor vehicle manufacture in Australia, the majority at GM Holden and Ford Motor Company. Many of those jobs will be under threat over the next two decades as the level of domestic manufacture declines. Fortunately projected labour shortages will likely provide alternative employment. It is likely manufacturers will recruit less and less people allowing natural attrition to keep labour costs down. While less people may be employed in the sector, overall the potential for the sector to engage in exporting remains positive. While the impact of China as a vehicle manufacturer will affect every motor vehicle manufacturer, it will still be some years before Chinese domestic manufacturers will be able to satisfy demand by the Chinese domestic market - how many year? A lot less than Lee Iacocca might have envisaged.

An Inevitable Network of Relationships

Imagine this. You arrive at work, not necessarily in an office. Following you is the usual emails, a list of recent blog posts you follow, a stream of twitter tweets, requests from colleagues to be added to your social network page and a notice of a recommendation about you on LinkedIn.

Using your internet enabled telephone you are video conferencing with colleagues and customers - maybe even involved in a remote performance review with your immediate manager, while you respond to a variety of online messages and send your own. Your social networks enable you to share information, request help for a problem, catch up with friends, collaborate on a project with colleagues in different places, make a donation to your favourite charity.

This is not a blog entry about the virtues of technology. I am creating an analogy of the emerging network of relationships. Technology is simply the means to enable you to develop a broad relationship network. Technology is not a substitute for good, face-to-face, conversation it is a means of enabling communication in a world of remote and often virtual teams. Technology enables you to develop a web of networked contacts, each able to help you in a number of different ways. These contacts are valuable. In the past a good relationship builder may have had access to a network of ten to twenty people. Now a good relationship builder may have access to literally hundreds, maybe even thousands of contacts.

I would like you to consider the impact and consequences of a a networked society or a networked workplace. Where does leadership come from in these circumstances? How is trust developed and maintained? Where are the repositories of knowledge? Who becomes the influencers? What impact might the networked community have on flow of information? The balance of power? The decision making processes? Your ability to understand the systemic nature of your organisation, off your networks?


John Coxon

Emerging From The Ashes

The title should more correctly state 'emerging from the laboratory' which is where so much of our future technology originates from. Someplace, somewhere in the world people are working on the future. They may not know what the future will be but they know they are working on changing the present and bringing in the new.

At various times in our history nations have risen to the pinnacle of their strength based upon their ability to exploit the emerging environment. In the past 300 hundred years we have seen the United Kingdom gain strength on the back of the industrial age, the United States become a dominant force on the back of firstly the railroads, then the motor vehicle and more recently military technology, the Asian tigers on the back of the microchip and even smaller nations such as Australia and New Zealand on the back of agriculture and natural resources. Waiting in the wings, for when they are ready, are a host of nations in Africa, South America and the Arab states, not to mention China and India, the two most populous nations, who, in time, will also reach their potential on the back of emerging technologies.

Growth of nations comes from embracing the future while learning from the past. In the past vast growth was achieved on the back of the motor vehicle. The desire and need for motorised transportation will not decline. Already the transportation sector is changing. The focus is on sustainability. How to move goods and people in a cost efficient manner, in safety, while reducing the impact upon our planet? From motor cars to airliners to seagoing freighters the future will provide work for many. The issue is not about the decline in oil supplies, it is about how to create cost efficient, clean, transportation.

Six billion people and growing. Developed nations struggle to provide cost effective medical assistance to their populations. People are living longer due to improved living standards and our scientific understanding of the factors that contribute to a functioning body. The systems and process that are failing the developed nations will also fail those nations yet to achieve prosperity. Some of these nations have large, diverse populations, often driven by centuries of tradition. Science and technology will continue to drive our food production, our medicines and our ability to repair ourselves when damaged. The marriage of business and science will continue to drive new innovative technologies and create work for people.

Nations at war do not progress, they stagnate. Eventually all nations will come to understand this. Just as they will understand that warfare is not the only way to gain global prominance. The Chinese have demonstrated that there are variations on the theme of democracy. Emerging nations will develop the means to blend their faith with effective governance. At the heart of a tolerant and peaceful world is an accepting community, one where diversity is welcomed, accepted and embraced. It is a community based upon collaboration rather than domination. Civilisations rise and fall, it is not possible to prevent the rise of any one civilisation. It is best to learn how to live and work together for mutual benefit rather than work towards extermination.

The desire for information is insatiable amongst the worlds population. Once a person has a taste for knowledge they simply want to know more. We gave up living in caves a long time ago. Information and education go hand in hand. There will always be a place for educators, for teachers and for those that enable the spreading of information. They have an important role to play; even though the mode of transfering information may change. Informed citizens are intolerant of injustice and of inequity. This is why various dictatorial governments will try to control the flow of information. They will ultimately fail. For every attempt to control the flow of information there are more people trying to develop the means to circumvent the controls. Attempting to control the flow of information in today's world is like trying to push water upstream with your hands. A pointless waste of energy.

This world we live in is ultimately a positive place, a place of promise and a place of potential. We cannot plan for the future; we live the future, now and today. By the time you have read this blog entry you are in the future. Go forward, enjoy and prosper.

John Coxon