DETROIT - Since Delphi employs people in 37 countries around the globe, I travel quite a bit, and in the course of my travels I talk to government leaders, company chiefs and representatives of various interest groups.
I have detected an increasing, and I believe misplaced, discouragement about the auto industry. People seem overly concerned. I constantly hear concerns about overcapacity, environmental pressures and congestion, but someone once said that if everyone's problems were piled into one big heap and each of us had to take an equal share, most people would be content to take their own problems and go home.
Without a doubt, I would take the auto industry's problems over the problems facing the world banking industry. I'd rather be in the auto business than in copper or any number of other commodity businesses. The auto industry has challenges, but I for one am quite optimistic about our industry's future. I confidently believe that in the years ahead the automobile will continue to be a major contributor to global economic growth.
Fundamentally, the auto industry's future is solid because of a basic human desire - the desire for personal mobility. Our research has long shown that the automobile's basic appeal is the freedom of movement it provides. The inherent human desire for the freedom to go where you want, when you want, is a very sound and positive foundation on which to base an industry.
People desire motor vehicles
We have abundant evidence that people want private transportation. As families become more prosperous, one of the first things they want is a car. In Mexico, the number of private vehicles has risen 30 percent since 1991. The number of cars on the streets of Seoul, South Korea, more than doubled between 1990 and 1996. I might add that in such developing countries as Brazil and China, every 1 percent increase in income means a 3 percent increase in the demand for motor vehicles.
A Leeds University study in England found the continuing trend toward car travel so strong that just to keep traffic in British cities at current levels would require gasoline prices to be tripled to roughly $12 a gallon. In Norway in 1991, Oslo began charging for a car to enter the city center. It expected traffic to be deterred. Instead, the volume has increased every year since.
We hear a lot about congestion, and yet the reason we have congestion is that people find cars superior to any other alternative. High prices, tolls and restrictions have not changed that. Congestion cannot be ignored and must be addressed in creative ways, but it is a sign of our industry's strength, not its weakness. In few industries do people have such a deeply felt predisposition for their products.
Huge economic benefit
Beyond fulfilling the human desire for freedom, the automobile industry also provides substantial economic benefit. It has a powerful, positive influence on economic development and high-wage employment.
In the United States, every auto assembly job creates 12 other jobs throughout the country's economy. This includes jobs in upstream industries, such as parts and raw materials, and it includes jobs downstream in the distribution, servicing and repair of motor vehicles.
In Brazil, the numbers are even higher. There are 15.5 jobs related to every auto assembly job.
Our internal research conservatively estimates that as China develops, the auto sector could generate as many as 30 million jobs. Nearly half of urban Chinese residents are considering the purchase of a car or truck. China's auto industry is ready for take-off, a job-creating machine that will give an energetic boost to the economy. The automobile industry is also a major source of technological progress, and technology is a wellspring of economic growth.
The automobile industry is increasingly a high-tech industry. The value of electronics in a new car is greater than its steel and plastic content. The amount of software in a vehicle is increasing by 20 percent to 30 percent a year. In addition to new technologies inside the car, the industry will also be expanding into technologies outside the car, such as intelligent highway systems, as we seek to alleviate congestion.
Industry creates knowledge
What I am leading up to is this: If a country is developing an auto industry, it is developing knowledge in electronics, materials handling, computer processing and other necessary industries of the future.
If I am so upbeat about the economic benefits of the auto industry, shouldn't every government start one? The answer is no. The private market should decide that. An auto industry faces tremendous obstacles if it is government-directed. Neither does it need to be domestically owned or domestically sourced to provide the desired economic benefits. The benefits flow regardless of ownership or where the parts are sourced.
Today there is overcapacity in the auto industry, mainly because government subsidized that which the private market should have been left to do on its own. Yet there is plenty of growth for the auto industry in the years ahead. This growth will be mainly in the developing world. Yes, it will benefit the world auto companies, but it will also greatly benefit the developing countries themselves.
If we stood still technologically, the environment would be a tremendous problem. But we are not standing still. Look at the progress already made. Today the five-gallon plastic can that holds the gasoline for your lawn mower emits more hydrocarbons than a person driving a new car around town on an average day.
That is how far we have come with the internal combustion engine. But we are not going to stay with the internal combustion engine. We are moving on - to cars that run on electricity and fuel cells and hybrid combinations.
If you look over the history of technology, you will find the optimists generally have been the realists. That premise is about to be proved correct for the automobile's environmental challenges.