Automotive manufacturing has taken a major hit in Washtenaw County, but the area has been positioning itself to be a major player in the development of what many are calling "iPads on wheels."
The future of the automotive industry lies at the intersection of traditional vehicles and the new technologies driving their development.
“People quite often may say information technology is totally separate from the automotive world.” Governor Rick Snyder said at a recent Michigan Automotive Summit Detroit.
“That’s not a true statement. Look at the information technology in an auto, and the highest type of work being done in IT quite often comes back to an auto. So they’re worlds that are tied together.”
The shift in focus to smarter vehicles has the potential to make Washtenaw County a major player in the development of what many are calling “iPads on wheels.”
Soon those iPads might be able to drive themselves. The University of Michigan announced in November that it plans to put a fleet of connected autonomous vehicles on the streets of Ann Arbor by 2021.
“Clearly Southeast Michigan is the automotive capital of North America and arguably the world,” senior executive administrator at the Toyota Technical Center Bruce Brownlee said.
“This is where the industry is. It just has a synergy of all the talent and activity that make it the most logical and desirable place to be. We could have gone anywhere but it makes a lot of sense to be in here in the Ann Arbor area.”
Detroit has long since staked its claim as Motown, but many in Washtenaw County believe that the region just west of the city has a head start on the new developments Snyder talked about.
“Pursuing the convergence between intelligent technology and transportation is an important place for us to be as a community,” Ann Arbor SPARK CEO and president Paul Krutko said. “We’re already seeing that here in terms of private investment and research efforts at the University of Michigan.”
Connecting cars is the future (until they drive themselves)
The former General Motors Willow Run powertrain plant might be the perfect symbol for the future of the automotive industry in Washtenaw County.
The plant, one of the largest buildings in the world, will be demolished and then purchased by Walbridge Development LLC, which plans to build a test track and research and development hub for connected vehicle technology.
Politicians have been playing their part in paving the road for automotive innovation. The Michigan Senate passed SB 169 on Nov. 14. If the house passes the bill, it would make Michigan the fourth state — along with Florida, California and Nevada — to allow self-driving vehicles on public roads and highways for testing purposes.
“Even if it means picking winners, we need to find one idea and gather behind it to move this industry forward,” Rakolta, who supported the measure, said. “There needs to be the technology and standards that will allow Toyotas to talk to Fiats and so on.”
With the new testing facility, and the involvement of the University of Michigan’s Transportation Research Institute with the Department of Transportation’s connected vehicle project, Ann Arbor has established a cluster of activity around the intersection of information technology and the automotive industry.
The newly established Mobility Transformation Center recently received approval from U-M's regents to begin building its own $6.5 million test track on former Pfizer property in the North Campus Research Complex.
U-M director of corporate relations Michael Drake said that developers of the university’s new interdisciplinary center are already working with partners in the automotive industry on what that “one idea” to gather behind could be.
“What the MTC is oriented toward is the future of transportation and what we are going to do to be a part of that future,” he said.
“It’s really looking at the idea that will come, barring something quite unforeseen, of automated and autonomous transportation. The center is looking at this future and the steps we need to go through explicitly over the next seven years to enable and test it.”
The cluster of activity around the university could lead to further investments and jobs from both public and private sectors.
“Transportation is going to change drastically over the next decade or two,” Krutko said.
“And frankly the technology is further along than the regulatory environment right now, and the ability of the government to do safety valuations. I think that we’re hoping that some of the initiatives we’ve been moving forward with position us well for a facility to do those things to be established here.”
Center for Automotive Research labor industry group director Kristen Dziczek said another federal testing center could have an affect on the region’s economy similar to the Environmental Protection Agency lab established in Ann Arbor in the early 1970s. The emissions testing lab on Plymouth Road led many foreign automakers to set up their research and development centers here, many of which have remained and grown.
“If the government does come out with a site for testing or certification of these new technologies, it would be really important for the region to win that sort of thing to bring in the associated research and development centers,” she said.
Brownlee said Toyota first came to the area by purchasing a small garage near the EPA Lab in 1972. That presence has grown to include technical centers in Ann Arbor and York Township that combine for just more than 1,000 full-time employees and a large number of contract engineers.
Despite Ann Arbor’s talent pool and experience with new automotive technologies, attracting a new government testing center is far from a sure thing.
“While we think we’re very smart, there are smart people around the country who see the same opportunity we do,” Krutko said.
He pointed to Clemson, S.C.; Blacksburg, Va.; and Silicon Valley as other places that have made significant investments in research on the future of the automotive industries.
“The fact is, this region has been the global center for automotive development,” Krutko said. “The question is for the next big thing, will we be able to keep the jobs and the major investments here?”
From the assembly line to the technical center
According to data from economic forecasts compiled by University of Michigan economists George Fulton and Don Grimes, Washtenaw County went from 7,819 transportation equipment manufacturing jobs in 2007 to just 4,656 in 2012. Fabricated metal products manufacturing — which includes some automotive suppliers — also fell by 200 jobs.
During the same time period, private sector engineering jobs held steady and jobs in testing laboratories and specialized design both showed slight increases.
“When you look at your car and the technology that’s involved there it really speaks volumes about the requirements of the workforce that it takes to actually build a car now,” said Pamela Hurt, manager of workforce development at SME — formerly the Society of Manufacturing Engineers.
“With the changing technologies it is absolutely requiring that people interested in working in the automotive industry be highly skilled.”
SME looks at the manufacturing process as a spectrum that begins with design and ends with the delivery of the product. The Ann Arbor area has always been a player in the earlier stages of the timeline and could become even more so in the coming months and years.
Toyota recently announced a $28 million expansion to its center in York Township to increase powertrain engineering capabilities.
Brownlee said the center's location is crucial to being able to work with engineers at automotive suppliers in the region. He said that collaboration between the bigger car companies and the local suppliers is key to increasing innovation and new ideas in the industry.
Hyundai and Honda also announced expansions to their local research operations in the past year and a half, and automotive computing and design companies like NVIDIA — which is looking to collaborate with the major manufacturers — have been searching for office space in the area.
The new engineering and design jobs that have come to the region pay better than the jobs that left. According to U.S. Bureau of Labor data, the average mechanical engineer in Ann Arbor makes $81,300 per year, while the average “team assembler” makes $24,790 and “machinists” make an average of $52,310 per year. Despite their higher salaries, the engineering and design jobs are not being created at a pace to replace the jobs lost at the assembly line.
“Our growth is very step by step. We don’t just hire people all at once and train them all at once,” Brownlee said.
“We hire in increments of 50 to 100 and then we develop those engineers and nurture them so they can become the next team that hires and trains the next set.”
The slow-but-steady pace of hiring is a trend for most foreign car companies that have set up shop in Washtenaw County. Toyota has 13 job openings listed between its Ann Arbor Township and York Township locations, Hyundai has nine posted jobs for its technical center in Superior Township and Honda has announced as part of its expansion in the area that it will grow from six employees to 10.
“Hiring is steady for us right now,” Miles Johnson, a Hyundai spokesman, said. “We currently have about 190 people at our locations here in Michigan and we’re continuing to add to that.”
Ten years after it first opened in Superior Township, the Korean auto company is approximately on track to meet its initial goal of 400 jobs at the location by 2024. The company announced the potential creation of 600 additional jobs when it received a 20-year tax credit in 2005.
One semi-bright spot for the county in the manufacturing sector was the sale of the former ACH plant in Saline to French automotive supplier Faurecia. Employment is down at the plant from 2,300 to about 1,600, but the company says it plans to explore using the facility to make new carbon fiber parts for all “Big Three” Detroit automakers.
In the end, the success of the Ann Arbor region in remaining a critical cog in the North American automotive industry will likely be judged not by how many parts are made, but how smart those parts are.
Ben Freed is a business and general assignments reporter for The Ann Arbor News. Email him at benfreed@mlive.com and follow him on twitter at @BFreedinA2