2017 Syllabus

Overview of Topics

The auto industry directly employs about 2% of the population, not including car financing, advertising and ancillary downstream industries, and steel, aluminum and semiconductors on the upstream end. While almost every part of the US has distribution and service employment, R&D and manufacturing jobs are highly concentrated in the US. The health of the industry is socially and economically important.

Almost all American families own at least one motor vehicle. Getting to and from a job, or shopping, or a wide array of other activities are dependent on moving around by car. What you drive is also tied to your personal identity; cars are status symbols. Product differentiation and the profit margins that accrue to the ability to choose your ability to choose your personal wheels are central to the industry. Both aspects mean that cars are also deeply embedded in our culture; it was an article about customizing cars, “The kandy-kolored tangerine-flake streamline baby,” that brought W&L’s own Tom Wolfe to prominence.

Today’s vehicles are hi-tech products, with multiple computers providing safety, emission control, efficiency, and infotainment, using exotic materials and sophisticated manufacturing processes to provide light-weight, safe and durable products that are high in quality. Cars today use hundreds of pounds of materials that were first created in labs a scant decade ago. Manufacturing tolerates defects of at most single-digit parts per million, for components that must survive 15 years of abuse without causing an issue. And there are 20,000 or more parts in a single vehicle. Engineering and manufacturing products of this complexity raises many interesting economic and management issues.

It is a global industry. NAFTA and the EU are large markets, with 20 million new vehicles sold each year. China’s rapid growth, though, means that it is 25% bigger than either of those markets. It has been a multinational industry almost from its inception; in 1900 the majority of vehicles in the US were made in France, while Henry Ford had a Canadian manufacturing operation in 1905. Today it is a global industry, with common products designed for sale in multiple markets. Trade is huge within Europe or North America, yet most vehicles are made where they are sold. One evidence of that is a supply chain structured to provide identical components, locally made, in the EU, NAFTA, China and in most cases multiple smaller markets.

Technology is evolving. Headlines trumpet Tesla and its battery electric vehicles, Google’s autonomous cars and “sharing economy” firms such as Uber that dream of mobilizing assets that sit idle in garages and parking spots 90% of the time. Will these prove disruptive? Or will the three global leaders, VW, Toyota and GM, still be the dominant firms in 2050?

Approach: Output and Grading
The course takes advantage of the intensive nature of Spring. We bring at least one speaker a week to campus. That entails prepping for each in advance with readings and class presentations; meeting for two sessions with each speaker; and joining them for lunch and dinner. Only on occasion do we meet for just one class period in a day. Our time in Detroit is even more intense. Typically we are on our way to our first activity of the day befor 9 am, and often don’t return until 10 pm or later.

The flip side of this intensive nature is that we do not have time for exams or papers. You will be asked to blog, and to lead discussion. But in the end participation accounts for the majority of your grade. Showing up well-prepared is crucial. We presume 100% attendance at all class-related functions.

You will each have access to this web as an Editor, able to post messages, edit and reply to comments, and set up an individual page for a class journal. I will read and comment on those.

Texts will vary depending upon our visiting speakers. One that we will use is Smitka and Warrian (2016), A Profile of the Global Auto Industry: Technology and Dynamics, that in fact was published January 1st 2017 so is current. We will also read a small number of academic papers and journalistic accounts.

Separate Fee Required

There is a $700 fee for this course. That covers transportation expenses, lodging, admissions fees to museums, and speaker fees. If we have even numbers so that all motel rooms are double-occupancy, and gas prices stay low, then I will be able to cover the cost of most if not all of our meals on the road. (The exception would be meals while going to and from Detroit, as we typically travel in three separate rental vehicles.)

You need to commit to taking this course early Winter, so that I can make detailed arrangements. You will be charged for the course after the final drop date (in March?) even if you decide to take another course.

In Detroit we will stay at the Greenfield Best Western at I-94 and Oakwood. I have already reserved a block of rooms.