IpL/HBS European Conference „Relaunching the Innovation Rates …“ Ulrich Jürgens Wissenschaftszentrum Berlin für Sozialforschung Social Science Center Berlin for Social Research Strategies with Regard to Market, Product Innovation, Technology and Organization Topics: Globalization revisited Product innovation Industry organization IpL/HBS European Conference „Relaunching the Innovation Rates …“

IpL/HBS European Conference „Relaunching the Innovation Rates …“ 52 Car Makers in the World IpL/HBS European Conference „Relaunching the Innovation Rates …“

IpL/HBS European Conference „Relaunching the Innovation Rates …“ Automobile Production by World Regions (Passenger and Commercial Vehicles, 1997 and 2003, in 1000 Units) Quelle: oica.com IpL/HBS European Conference „Relaunching the Innovation Rates …“

IpL/HBS European Conference „Relaunching the Innovation Rates …“ Forecast on Value Added Development in the Automotive Industry Worldwide* 2002 – 2015 (FAST 2015) 2002 2015 % Change Vehicle production (million units) 57 76 33,3 Value added OEM (€ billion) 228 203 11,0 Value added suppliers (€ billion) 417 700 67,0 Value added total (€ billion) 645 903 40,0 * Automobile development/production, light vehicles Source: Mercer Management Consulting, Fraunhofer-Gesellschaft (2003) IpL/HBS European Conference „Relaunching the Innovation Rates …“

IpL/HBS European Conference „Relaunching the Innovation Rates …“ Share of World Regions in Automotive Industry Value Added 2002 and 2015 Change: 67,3% Change: 328,0% Change: 259,5% Change: 19,3% Change: 10,6% Change: -51,2% Change: 17,4% Change: 65,6% Source: Mercer Management Consulting, Fraunhofer Gesellschaft (2003) IpL/HBS European Conference „Relaunching the Innovation Rates …“

Shares of Production, Domestic vs. Abroad, of Major Car Makers (2003) 51,5% 39,0% 54,9% 76,0% 72,3% 41,9% 13,4% 45,4% 59,6% 45,2% Source: Automotive News Data Center (autonews.com), VDA (2004): International Auto Statistics, own calculations. IpL/HBS European Conference „Relaunching the Innovation Rates …“

Globalization Structure of Selected Car Makers (in Percent) Source: Own calculations on the basis of IMF Auto Report 2004, p. 71 IpL/HBS European Conference „Relaunching the Innovation Rates …“

Globalization Structure of Selected Car Makers (in Percent) NAFTA W. Europe East Europe Japan Asia/ Pacific South America Africa & New East 100 200 300 400 500 600 700 Fiat Renault Toyota VW Group GM Daimler- Chrysler IpL/HBS European Conference „Relaunching the Innovation Rates …“

Motivation for Relocation of Production Abroad Source: Lay/Kinkel/Maloca (2003): Stand und Entwicklung der Auslandsproduktion bei Automobilzulieferern – ein Branchenvergleich. Düsseldorf: HBS, p. 18 IpL/HBS European Conference „Relaunching the Innovation Rates …“

IpL/HBS European Conference „Relaunching the Innovation Rates …“ Indexed (Germany = 100) Yearly Wages/Salaries and Labour Costs per Person Employed in the European Automotive Industries 2003 Wages and Salaries Total Labour Costs Germany 100.0 UK 75.9 69.9 France 70.2 78.3 Sweden 66.4 77.7 Spain 55.6 59.5 Italy 49.5 57.4 Hungary 20.3 22.0 Poland 18.1 17.8 Czech Republic 16.4 17.9 Slovenia 11.8 - Slovakia 12.9 13.9 Romania 5.6 6.2 Russia 4.0 – Source: VDA: International Auto Statistics, edition 2004, p. 350f.; 361f., own calculations. The average per-capita figure for wages and salaries in Germany was € 45700; for total labour costs € 57200. IpL/HBS European Conference „Relaunching the Innovation Rates …“

IpL/HBS European Conference „Relaunching the Innovation Rates …“ Use of Modern Organization Concepts by German Auto Suppliers Relocating Production Abroad Source: Fraunhofer ISI, Mitteilungen aus der Produktionsinnovationserhebung, No. 32, March 2004, p. 10 IpL/HBS European Conference „Relaunching the Innovation Rates …“

Innovation Roadmap Compact Class Europe Segments Interior Smart Airbags Pedestrian protection sensors LED head lights Electro- nics in all seg- ments LED tall lights CO2 air conditioning Pre-crash sensor system Fully variable interiors External network Head-up display Night vision Active lighting Object recognition Electronic bus systems Adaptive cruise control 42 V electric grid Smart power distribution Infotainment (e.g. smart navigation system) Fuel cell as auxiliary power unit Flat ribbon cable Optical bus systems High-pressure supercharged diesel Power train Elektrical radiator and ventilation/cooling control Electrohybrid propulsion Fuel cell Particle filter Thermal manage- ment Shift-by-wire Electromechanical valve timing gear CVT Piezo injectors Gasoline direct injection Electric double clutch Starter generator Chassis New materials (high-tensile steels, aluminium) Electromech. brake (brake-by-wire) Electromech. steering (steer-by-wire) Electronic power- assisted steering Air suspension Electric parking brake Electrohydraulic brake Friction coeffic. recogn. Electrical overlay steering Product differentiation of identical compo- nents by software Tire pressure monitoring Active suspension Body Hydroforming Steel space frame Aluminium Metal foam Adhesives technology Plastic add-on parts Sandwich structure Composite materials Colors with Lotus effect Laser welding Color matching 2002 2005 2010 2015 Source: HAWK Study by McKinsey & Company/PTW (2003: 20) IpL/HBS European Conference „Relaunching the Innovation Rates …“

R&D Costs per Car of Selected Car Makers 2003 US-Dollar Source: Goldman Sachs (2004): Germany: Automobiles - DaimlerChrysler (DCXGN.DE) IpL/HBS European Conference „Relaunching the Innovation Rates …“

IpL/HBS European Conference „Relaunching the Innovation Rates …“ Employment Potential Through X-by-wire Systems Germany (1997 to 2002 to 2015) System integration/ assistant systems ABS ESP+ Steer-by-wire 37.500 17.500 5.500 2002 2005 2010 2015 Additional employment Electr. hydr. assisted steering Electromech. steering +3.500 +9.500 +24.500 +13.000 +8.000 +2.000 Sensorics, batteries, bord net, electronics Brake-by-wire Initial level 1997 EHB ESP Source: Jürgens, U.; Meißner, H.-R. (2005): Arbeiten am Auto der Zukunft. Berlin, p. 122 IpL/HBS European Conference „Relaunching the Innovation Rates …“

Emplyoment Perspectives in the Area of Powertrains in Germany 2002 2005 2010 2015 Additional employment Diesel injection technology +52.000 +7.000 +6.000 +4.000 European Diesel boom (40% market share) Diesel boom USA? +1.000 +3.000 Fuel cell/hydrogenic propulsion Hybrid propulsion +12.000 (+1.600) +40.000 Initial level 1997 Innovation competition Diesel/Hybrid Innovation competition Otto/Diesel Gasoline direct injection technology Source: Jürgens, U.; Meißner, H.-R. (2005): Arbeiten am Auto der Zukunft. Berlin, p. 168 IpL/HBS European Conference „Relaunching the Innovation Rates …“

IpL/HBS European Conference „Relaunching the Innovation Rates …“ Impact of a Change from Conventional Engines to Fuel Cell Systems on the Supplier Industry Source: Wengel, J.; Schirrmeister, E. (Hg.) (2000): Innovationsprozess vom Verbrennungsmotor zur Brennstoffzelle. Karlsruhe, p. 181 IpL/HBS European Conference „Relaunching the Innovation Rates …“

IpL/HBS European Conference „Relaunching the Innovation Rates …“ Some Findings of the Project “Innovation and Employment in the Automotive Industry” Project Results (I) The intensification of innovation has positive effects on employment and competitivity Diesel technology as European success story x-by-wire as specialty of European suppliers Competing technologies in various propulsion systems, light-weight materials etc. lead to a multiplication of R&D activities We observe a technological revolution in basic technologies which, nevertheless, is implemented in an incremental way (delay/canceling of introduction dates; long periods of phase-in and phase-out) In the mid and long term the innovation dynamics lead to drastic structural effects regards types of suppliers and division of labor OEM - suppliers. IpL/HBS European Conference „Relaunching the Innovation Rates …“

IpL/HBS European Conference „Relaunching the Innovation Rates …“ Project Results (II) We found only weak links between innovation strategies and personnel development strategies, between technology road-maps and consequences for employees. Cross-functional approaches (R&D and production) to discuss consequences of innovation on employment and qualification requirements were also weakly developed. IpL/HBS European Conference „Relaunching the Innovation Rates …“

IpL/HBS European Conference „Relaunching the Innovation Rates …“ Die zehn größten Automobilhersteller weltweit nach Produktionszahlen 2003 und Veränderungen gegenüber 1997 IpL/HBS European Conference „Relaunching the Innovation Rates …“

IpL/HBS European Conference „Relaunching the Innovation Rates …“ Company Value by Market Qualification The Top Ten Auto Companies of 2004 Toyota‘s cash and other liquid assets at the end of business year 2004: 32,7 bln. US-Dollar Source: Börsenzeitung of 12.2.2004; Toyota Motor Corporation, Annual Report, March 31, 2004, SEC Forum 20 IpL/HBS European Conference „Relaunching the Innovation Rates …“