"If we want to build a base for innovation, where's that going to take place? We could be the place where manufacturers and suppliers get together in a way that hasn't happened in the South before."
Today, North America's undisputed center for automotive research is southeast Michigan. Automotive factories may have closed in the region, but r&d thrives there.
The critical mass of the Detroit 3, their suppliers and schools such as the University of Michigan and the College for Creative Studies, draws automotive companies from abroad. Toyota Motor Corp., Nissan Motor Co., Denso Corp. and Robert Bosch GmbH are just a few of the foreign companies that have built r&d centers in southeast Michigan.
Southern alternativeThe research center -- also known as CU-ICAR (pronounced "C-U-I-Car") -- offers an alternative r&d center for those companies. And while Michigan boosters may not want to see a rival region competing for high-paying research jobs, I think CU-ICAR is a good idea for America's automotive industry.
CU-ICAR offers a master's as well as America's first Ph.D. program in automotive engineering. But it hasn't even graduated its third class, so it's too soon to judge the rigor of the program.
CU-ICAR's glistening new campus showcases an intentional collaboration with industry and local government. About $200 million is invested in facilities and equipment at a site outside Greenville and away from Clemson's main campus, to signal that CU-ICAR aims to engage with industry.
There are research facilities and professors' chairs funded by Michelin, BMW, Timken, Okuma and others. The state of South Carolina matched the endowment dollars from private industry, so the school now has four engineering chairs endowed at $36 million.
But collaborations exist among automotive companies, academia and government at Ohio State and Purdue University, among other schools. CU-ICAR is not unique in that.
What sets it apart is the same thing that sets southeast Michigan apart: critical mass.
More than 1,000 automotive assemblers and suppliers are within a 500-mile radius of the so-called Upstate region that includes Greenville and BMW's Spartanburg, S.C., factory. The 10 counties that make up Upstate are home to 238 foreign-owned companies from 24 countries that have invested more than $9 billion in the region since 1990. Of those, 24 are automotive suppliers and related companies.
In short, CU-ICAR has the potential to become the research hub of the southern tier of the U.S. auto industry. I believe the industry needs that.
GeographyI have a theory about geography and industrial competition.
When an industry is concentrated in a single city, the companies in that industry think they compete vigorously, but they don't. The top executives play golf together, go to the same concerts and support the same charities. They all do things pretty much the same way. And they are convinced that because their competitors do it the same way, they must have it right.
So when game-changing innovation comes, it has to come from far outside, often from overseas.
We've seen that in the auto industry, when lean production from overseas displaced mass production. It was true for the steel industry and the beverage industry, where outsiders, not Coca-Cola, led the rise in noncarbonated beverages and bottled water.
Or take my field: media. New York City is the center of America's media industry, but the innovations of the past 50 years did not come from the Big Apple. They came from CNN (Atlanta), USA Today (Washington) and a host of Web-based publications.
In contrast, industries that are geographically diverse are more competitive and, therefore, more creative. Consider aerospace (Seattle, St. Louis and Southern California), high-tech (Silicon Valley, Boston's Route 128 and Austin, Texas) or pharmaceuticals (a bunch of cities).
Silicon Valley?Some may claim the U.S. auto industry already is gaining another r&d center in Silicon Valley, with the rise of electric cars. Well, sort of. The folks out there may understand electrons, but when they need a suspension or help with making a workable transmission, they scurry to established automotive suppliers for help. Tesla did.
We could keep southeast Michigan as the r&d center for the North American auto industry. It would continue to compete with innovators in South Korea, Japan, Germany and, increasingly, India and China. Or we could encourage the development of a second r&d center, outside of Greenville, S.C.
I like the idea of America's auto industry having its innovation eggs in more than one basket.
You can reach James B. Treece at email@example.com