Globalization at a local level

  • 24-Jun-2008 09:08 EDT

"I think it would be very difficult … for the Big 3 here in the U.S. to find any way of getting down to producing a car that was sub-$9000 because there’s just too much overhead in the system," said David Hemmings of Pacific Rim Alliance. Shown is the sub-$3000 Tata Nano.

As might be expected at the “Globalization and the Concept of Corporate Social Responsibility” session at the SAE World Congress, the panelists truly reflected the global nature of the topic. Executives from Germany, India, Russia, a German company in Brazil, and a Japanese company in the U.S. shared their expertise on globalization and where it’s headed.

While the geographic locations of the speakers varied widely, many of their viewpoints were quite similar. One of those was summed up by Sanford Ring, General Manager of External and Legal Affairs for Hino Motors Mfg. USA, Inc., in a phrase he may have coined while preparing his presentation: “global locally.”

“We talked about imports and exports, and that certainly is one type of globalization, but I think the more progressive [type] really is the localization of globalization. It’s not simply selling cars or trucks or buses from one place in another market,” Ring said.

Srinivas C. Kanthadi, Vice President of Larsen and Toubro Infotech, believes that in India and other emerging markets there is “a huge opportunity” for automotive companies to leverage the local capabilities. “For instance, if you take a low-cost car—the tool design, the manufacturing part of it, the packaging—all of those things can be locally sourced,” he said.

Kanthadi also suggests adopting a business strategy that focuses on serving “global communities of similar needs.” For example, “a low-cost car that was developed in India may be suitable for a market in Africa, then maybe in Russia, then Brazil. That is where you are going to get the volume,” he said.

Discussion migrated to the development of ultra-low-cost vehicles in and for emerging markets, a la the highly publicized Nano developed by Tata Motors. Panelists agreed that automakers cannot just de-content an existing, sophisticated car to make it inexpensive; it needs to be designed up front as a low-cost car.

“I think it would be very difficult [for existing companies], particularly for the Big 3 here in the U.S., to find any way of getting down to producing a car that was sub-$9000 because there’s just too much overhead in the system,” said David Hemmings, President and CEO of Pacific Rim Alliance. “I believe that it’s quite possible for an existing company to create this new type of vehicle, but I think it has to be done in isolation from the main organization, with a new group of people and a new mentality.”

Lars Thomsen, Chief Futurist and CEO of Future Matters, referred to the next phase of globalization as “Globalization 2.0,” which is achieved “through really connecting the brains—the human resources—of the global community … because there’s a lot of problems that have to be addressed and solved in the next decade that can only be solved on a global level.”

“I don’t think that innovation is all about taking an existing technology and stripping it down so that it can fit other markets,” Thomsen continued. “There is a possibility that we will see very new concepts of mobility coming into new markets …. It is very important for every company working in the market right now not only to incrementally innovate their products, but to set aside some time to think of radical innovations.”

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