An initiative lead by: Anand S. Kunnathur and Mark Vonderembse with James A. Pope Ram Rachamadugu and The IOTM Dept., College of Business Administration and Peter A. Gold of The Gold Group, LLC 1 •  The primary sources of employment in Northwest Ohio and Southeast Michigan are the automotive and its ancillary industries •  The auto industry greatly impacts state and local revenues •  The automotive industry is in severe retrenchment and in need of reorientation •  The manufacturers and suppliers in the automotive industry are part of a supply chain that is at risk of not surviving because of the lack of robustness and diversification. 2 •  The automotive supply chain is made of vehicle manufacturers, also called Original Equipment Manufacturers (OEMs) and tier 1, 2 and 3 suppliers •  Firms that sell finished components (for example, starter or generator) directly to the vehicle manufacturers are called Tier 1 suppliers •  Firms supplying directly to tier 1 (for example, copper wire or carbon brushes) are classified as Tier 2 •  Firms supplying raw materials to either of the two are classified as Tier 3. 3 •  The current economic downturn has bankrupted two of the big three automakers, also affecting the automotive supply chain •  Employment in the Midwest, especially in Southern Michigan and Northwest Ohio is largely driven by jobs related to the automotive supply chain. Between 2003 and 2005, $3.3 billion was invested in Ohio by companies operating in the automotive industry •  Saving the employment base of the region is an urgent imperative to avoid serious negative repercussions for the region and the nation 4 •  It has been shown from input-output models that automotive supply chain expenditures account for a considerable percentage of production of many materials-producing industries, such as metals industries •  In 2001, about 32 percent of all aluminum, and 14 percent of all U.S. steel purchases was attributed to the automotive industry •  The automotive supply chain generates close to 59,000 jobs in the electronics industry 5 •  The automotive industry has the largest employment multipliers in the economy •  The auto suppliers industry constitutes the largest manufacturing sector in the United States, directly employing 686,000 people and indirectly contributes to 3.29 million jobs, which is a multiplier of 4.8 •  The average wage in the tier 2 and 3 automotive suppliers is close to the average wage in the service industry, hence making it easier to compete in other sectors such as aerospace and alternative energy •  Auto suppliers have the technology and capability to manufacture high quality products, helping transition into high precision medical instruments industry, and DoD contracting 6 •  Manufacturers and suppliers in the automotive industry are in need of help with: •  Organizational Restructuring •  Product development •  Business planning •  Building of the supply chain infrastructure •  Retooling •  Workforce Retraining •  Knowledge building and organizational learning 7 •  The College of Business Administration, University of Toledo has the expertise to help the automotive industry and its supply chain return to viability and profitability. We can offer: –  Consultative services –  Retraining programs –  Business planning and product development assistance –  Reorienting and diversifying the supply chain –  Help in developing and reshaping the supply chain infrastructure 8 •  The Institute, with inputs from other thought leaders, will –  Develop new business models and best practices –  Become a national resource in testing and advancing such new models –  Work to diversify the supply chain to service Dept. of Defense and Govt. Contracting, the medical device industry and emerging industries such as alternative energy 9 •  The Institute will also assemble academic, business, industry and government thought leaders for: –  Identifying new ways of doing business through modeling, simulation methodologies and other means. –  Determining the validity, efficacy and/or effects of various types of federal intervention, federal and state regulations, and other proposed actions. 10