Frank

Day 1: Monday – May 9th

The morning started with a cruise in Grosse Pointe along Lake St Clair as each car took in the upper-class neighborhoods in Metro Detroit. Like any city, well-maintained and polished houses quickly turned into less maintained real estate as we visited professor Smitka’s childhood home and then Indian Village. We stopped at the Heidelberg project and took in the urban art that brings the unique neighborhood together. Hopefully we will get to revisit with an explanation from a local artist during the remainder of the week. After taking a pit stop we headed out to Plymouth to visit Federal Mogul. Federal Mogul’s Plymouth location is under construction as over 140 employees are moving from separate locations to put all application engineers under one roof. The overall goal of Federal Mogul is to reduce friction and weight in their products, providing better fuel economy for their customers. Federal Mogul works with every major automotive and engine company, and has a 100 year plus reputation that produces billions in sales annually. With a $30 million research and development budget, the Plymouth location is an in-house industry leader in engine parts and especially steel pistons. Steel pistons are superior to aluminum in larger engines and diesel; they can handle both higher heat and higher pressure. This location is also heading Federal Mogul’s corona spark plug development, which is expected to reduce emissions by up to double-digit percents with correctly adapted engines. We toured throughout the facility, from application engineers speaking to customers and designing special parts, to metrology, to engine testing rooms and so on. Each department specializes in different product design stages and explained the methodology used in great detail. The cyclical nature of auto manufacturers to develop products in-house and then out-source is always turning, however currently auto companies are outsourcing for innovation. Federal Mogul goes to companies with ideas long before they have any idea how to make it happen. Remembering that engine innovation can be as much as a 5 year process, current technologies in development will not be on the road for years. Federal Mogul is an industry leader, yet embraces competition as it brings new innovation to the forefront of customers minds. The tour ended with a Q&A and we then headed out for a tour of the University of Michigan and then dinner.

Day 2: Tuesday – May 10th

We started our morning heading to the Ford Rouge plant, which currently produces the Ford F150 and f250. The plant originally produced the Mustang, but was retrofitted with a change in production. The plant manufactures 1 truck a minute, resulting in 1200 a day. Each truck that comes off the assembly line has already been sold to a dealer and ordered. Teams work Mon-Fri in two 10-hour shifts with 4 hours off for maintenance. On the weekend there is one 10-hour shift on both sat and sun and more serious maintenance is done during the down time. Each worker does the same job each day on their spot in the line. Much of the process is automated by robots and the cars move through the factory and are assembled impressively fast. Bill Ford, the current Chairman of Ford and great grandson of Henry Ford, retrofitted the plant to be more eco-friendly. The roof of the main assembly line building is covered in sedum, a grass that takes in water to use within the factory. There are also sunlight boxes on the building that provide natural light during the day to cut down on electricity. Some of the original buildings from Henry Ford’s days remain, such as the blast furnace and offices. The steel plant, however, has been sold to another company and ford buys their steel from another source when used. The new F150 is different from the last version as it is fully aluminum and not steel. The change in material results in lower weight and much higher fuel economy.

After the plant we moved to the Henry Ford museum where we saw American engineering feats along with other historical artifacts. A highlight was the GM EV1 which was the most serious attempt since the 1920’s to build an electric car. 1117 cars were built from 1996 to 1999, but in 2003 GM decided there was not a market for electric cars and halted production. This only makes me wonder what would have happened if they continued pursuing the project when looking at the massive media attention around Tesla. The biggest highlight for me in the museum was not a car, but instead the airplane that Admiral Byrd flew on his first expedition to Antartica. I have a personal connection to this plane as my great uncle was part of the exploration team led by Byrd. There were countless other exhibitions from the history of agricultural machinery to the Dymaxion house to explore for the remainder of the morning.

In the afternoon we set out for Ford headquarters where we had the luxury of meeting with Hau Thai Tang. Ford’s head of global purchasing. With a budget of $100 billion and over 4000 employees under his control, Mr. Tang was incredibly generous in taking the time to meet with us. We learned of the obstacles he overcomes as his department purchases everything from toilet paper to transmissions for Ford. Anything that is needed to run the company he is responsible for purchasing. Mr. Tang provided a quick background on himself and his involvement in Ford, including the Mustang team he led, and then opened the floor for questions. One point that I especially took note of was his pen analogy to the sourcing of parts. Mr. Tang highlighted that to create the hypothetic best pen, he could bring the design to multiple companies and get quotes. At around $2.50 per unit, for example, he could have it produced. The price is surrounded by material costs, acquisition of new equipment, insurance on the order and a multitude of other aspects. Mr. Tang noted that if he had instead looked at what the manufacturer already had in equipment, he could design the pen around that and save significant amounts of money. He went further into challenges of running such a large scale corporation and gave incredible examples to answer all questions.

Day 3: Wednesday – May 11th

In the morning we visited the Federal Reserve Bank of Chicago – Detroit Branch, which has a team that focuses on the auto industry. We started out by taking a tour of the money processing facilities where we were able to watch money be counted and deposited in the vault. The Fed has an extremely secure security system with security protocol that protects hundreds of billions of dollars. The safe, when full, can hold over $200 billion in cash. When banks exceed their cash reserve limits or need change, they send money to the Fed in armored cars for processing. Bills are not printed at this location and are instead received in unmarked box trucks from the government. The facility scans each bill and shreds all bills that are deemed unfit for circulation. The average $5 bill is in circulation for 18 months. We discussed research into plastic bill, a strategy used in Australia, which would extend bill currencies lifetime to around 30 years. Any counterfeit money found is sent to the government to be tracked back to its source. It is interesting to note that the individual bank teller that accepted the counterfeit bill can be held responsible for the note and have to pay for it. We then joined two Fed executives for presentations on both the countries current economic situation and on Detroit.

We first interacted with Dr. Paul Traub, a senior business economist,  as he presented on the recession, it’s impact on the auto industry, and the current state of the US economy. Before joining the Fed. Dr. Traub was a senior economist for Americas Commercial Transportation Research Company LLC and was a corporate economist with 25 years of service at Chrysler LLC. We interacted with a variety of graphs as we discussed both micro and macro economic trends of the market over the last 40 years. The most interesting part of this presentation, to me, was the unemployment analysis. Dr. Traub highlighted that our unemployment statistics are not quite accurate. The government does not include the 3% less able bodied workers who want to work now than they did in years past. People are less incentivized to work now, and over 3 million people have dropped out of the work force. While we report unemployment as going down, the gap in people who want to work is significantly hurting the economy. We then heard from Dr. Martin Lavelle, a senior associate economist, who talked about the current state of Detroit. Dr. Lavella is not from Detroit and provided an outside analysis that wasn’t affected by a bias that a lifetime resident may hold. The presentation highlighted many key faults that led to Detroit filing for bankruptcy. The main factor was corrupt government officials and the 2008 auto collapse that took away thousands of jobs. The mayor at the time gambled with billions of Detroit’s money in a high-risk investment and lost it as the housing market crashed. As the auto industry went under, thousands of  employees were laid off and could not find work in the few other industries in the city. Detroit is too large and emergency services are too slow and too poorly equipped. The government runs on a 30 year old operating system and has not selected a proper city plan to execute. Fortunately, this is changing as meetings are taking place to balance the budget and start to get things in order. Squatters are currently living in the plethora of abandoned houses and the city is starting to get property values and knock down vacant houses. There is aa push for other industries to move in; for example, BlueCrossBlueShield now has a large Detroit location. A big focus is on taking advantage Wayne State University and making it a more desirable and prestigious college. At the same time, students from The University of Michigan need to be incentivized to come into down town Detroit. There is current construction on a rail system to greatly improve the pretty much nonexistent public trans system. While Detroit has many feats to over come, and some say they can’t do it, positive steps are being taken and there is a chance to revive the city.

In the afternoon we moved to UMTRI to talk about their research and a focus on autonomous vehicles. UMTRI does research across the board on cars, from safety to head light beam angles. A special focus of this visit was autonomous vehicles and the massive challenges they still have to face. It is interesting to note that Google’s autonomous car has over 2 million miles on it and a much lower crash rating. What becomes interesting is the fact that the car gets rear-ended significantly more than a car being driven by a person. Google has had no fatalities and just minor damages to the car and sensors throughout it’s road testing. While this is all good, there are still countless other problems. I have a hard time foreseeing how in the immediate future problems such as police offices pointing cars in one direction can be solved. There seems like to many barriers to be solved shortly and that it will take years. We then got to walk over to MCity, where many vehicles are being tested on street-like conditions, and peep through the fence to see the fake city and street ways.

Day 4: Thursday – May 12th

In the morning we visited Fox Auto Parts just outside the city. We took a tour and were able to see all aspects of the recycling industry. The technology and tools used in modern times have spiked up the percent profit on each car to much higher rates. Computers are used to bid, log parts and take orders, things that were all down manually before. A car is bought at auction due to either current demand for a part or projected demand through computer analysis. The car is then inventoried for all it’s parts and anything sold is taken off and tagged. The car then goes and sits in the yard until another part is needed, where it will be fully stripped with all parts tagged. Fox also offered self-service where customers pay $2 to come and harvest their own parts. It seems like this part has a much higher ROI as there is very little labor provided by the company. It is amazing to see how automated the whole process is on the management side, but also how much physical labor goes into harnessing all recyclable parts of a car. A truck comes at 5 AM and 5 PM every day to drop off and pick up parts that are going to local consumers. The recycling operation is linked with hundreds across the company who can swap and sell parts to each other to meet customer needs. With 8-10 million in assets sitting on the lot, I can only wonder how autonomous cars and fewer accidents are going to affect this industry. From Fox we went to the Detroit Institute of Art and saw various collections unique to the area. The museum almost had to sell its art during the financial crisis, but was saved by private donations. Next we revisited the Heidelberg project where Tyree, the artist, spoke of his motives and engaged us in tricky conversation about life. The project has been a distinct part of Detroit for the last 30 years and is continuing to change and adapt to new ideas. We then spent the rest of the afternoon walking along the river taking in the scenes of Canada on the other side.

For dinner we met with three automotive journalists, some linked to the PACE award, and sat to pick their brains. I sat next to Steve Finley from Wards Automotive at Vinsetta Garage, the oldest repair shop east of the Mississippi that is now a restaurant. Mr. Finley currently writes on the dealership side of the auto world but has extensive experience in all aspects. A native of Detroit, he grew up and now lives just a few miles in each direction from where we were sitting. It was intriguing to talk to him about the future and past of Detroit as he has been deeply tied to the auto world. He put the auto journaling world in perspective when he talked about his colleagues in New Zealand who are the only ones in the world covering the area. All information out of the region comes from them, and he has to be tied to them to make sure his work that overlaps is correct. Mr. Finley just announced the PACE awards for interiors and highlighted how complex the award is. The coolest part of his job from my perspective, but probably not from his, was the notion that he drives almost every car to judge. He gets behind the wheel of hundreds of new cars to judge various factors of performance. The interior is judged not only based on material, but also on factors such as stitching patterns and connectivity to the user. This dinner opened my eyes to how detailed the PACE awards are, as well as their prestige in the industry.

Day 4: Friday – May 13th

We departed the Pink Palace at 8 am and headed towards the Transportation Research Center in East Liberty, OH. Jeff Sprague and Amanda Rockhold gave us a quick overview of the whole center and then a tour over their countless car-testing features. TRC is the leading testing center in the nation as any car brand a consumer can think of has been tested on the track. The center does dynamic/durability testing, impact testing, emissions testing, contract engineering and several other services that pertain to the auto world. The facility is owned by Honda but multiple companies have places to hold cars on the property. The facility has hundreds of millions of dollars of infrastructure and is receiving $300 million more within the next 5 years. All major auto testing done by the government is done through TRC who provides data for their analysis. The 4,500 acres features a 7.5 mile track loop with countless features in the middle such as pavement types and various water/brake testing pads. A key highlight was seeing the Acura NSX on the track which is coming out in 2016. Many of the cars being tested were camouflaged as they are prototypes and not released yet. The shear security of the facility was incredible as every company is testing cars right in front of their direct competitors.