Connected and autonomous: a new dawn for automotive in Detroit

Justin Robinson is the Vice President, Business Attraction, at the Detroit Regional Chamber. He is evangelical about the local automotive manufacturing expertise Detroit has to offer the world, as well as the advent of the connected and autonomous vehicle industry, and the collaborative role his region has to play in bringing new technology mobility solutions to the market. Jo Murray speaks to him.

How inspiring to look to Detroit’s future whilst identifying what from Detroit’s past will contribute to its future economic growth. Justin Robinson is emphatic that the design and manufacture of connected and autonomous vehicles will be central to the City of Detroit’s and its surrounding region’s future economic health. While most of the city’s growth will be automotive related, let’s not forget that the aerospace & defense, healthcare, technology and logistics sectors flourish here too.

So why will Detroit stay true to its history and continue to nurture an industry that has been its fortune in its traditional rendition and yet is such an unknown quantity in its future tech-enabled variant?

First, Robinson identifies the talent that Detroit and the State of Michigan generally have grown as a major contributor to the city’s future. There is already plenty of innovation within the traditional Detroit automotive eco-system, points out Robinson, as well as the development of prototypes in terms of advanced powertrains, advanced materials, electronic controls and sensor technology. The state has 20 universities and colleges with nationally ranked undergraduate engineering programs; and more than 650 automotive-focused programs at the post-secondary level. Nearly 115,000 engineers are employed in Michigan, a higher concentration than any other state. Much of this talent is transferrable to the aerospace & defence sector – especially in relation to automation, tooling and fixtures – and always has been. Let’s not forget that Boeing has more than 275 supplier/vendor locations in Michigan alongside the car giants General Motors and Ford.

It is fair to say that the traditional car sector in Detroit, its environs and the State of Michigan generally is vast. Ninety-two of North America’s top 100 automotive suppliers have a presence in Michigan, of which 60 have a headquarters or R&D facility located within the state. A total of 11 assembly plants manufacture 24 cars and trucks in Michigan, producing more vehicles than any other state; in fact, nearly 20% of all US production. Michigan is home to 1,772 motor vehicle and motor vehicle parts manufacturer establishments, 29% of these (509) are foreign-owned.

Since 2010, Michigan announced more than $23 billion in new automotive OEM and supplier investments, more than any other state or province in North America; and more than 46,000 automotive manufacturing jobs have been added since 2009, again, more than any other state. In 2016 alone, 4,686 jobs and $1 billion investments were announced.

An indicator of the future health of an industry is the number of patents granted. Michigan ranks top in the US in terms of patents granted for vehicle, navigation and relative location data processing. It is also one of seven states that have passed laws related to autonomous vehicles, while also leading the nation in connected vehicle projects (49) in 2015. But nothing is being taken for granted.

Robinson concedes that copious work has to be – and is being – done to ensure Detroit and its host state continue to lead the US in terms of connected vehicle projects.

The American Center for Mobility is a testing ground for automated vehicles. The 335-acre site just west of the Willow Run Airport is the site of a former Ford. The facility is intended to offer manufacturers a variety of controlled testing environments for vehicles, a project that could become a hub of research and development.

Then there is the Smart Corridor which is expected to be in place this year. Under the scheme, General Motors Co is joining forces with the Michigan Department of Transportation, the University of Michigan’s Mobility Transformation Center and other automakers to create V2I-enabled corridors on 120 miles of Metro Detroit roadways, the largest deployment of V2I technology in the US. Coupled with this, the state of Michigan is modernizing three miles of I-75 that will be the nation’s first connect work zone that will allow for testing of vehicle-to-infrastructure communication.

A further initiative is The University of Michigan’s Mcity which is pioneering the application of connected and automated vehicles. Mcity’s researchers, collaborators, and partners take a multidisciplinary approach, considering all aspects of the future of transportation and mobility, such as the impact on business, infrastructure, and society.

So how does all this translate into future opportunities for FDI? Robinson points out that the automotive sector is global. “OEMs operate in all markets,” he says. “US OEMs are already selling in SE Asia and that activity serves as a connection back to us. And the supply chain in SE Asia creates prime FDI targets for Detroit.” Japanese companies of this ilk are most represented in Detroit with 400 such companies present. “Toyota has its largest R&D centre outside Japan in Detroit,” points out Robinson. “But the hottest market for us right now is China.”

For example, Johnson Controls, a global automotive supplier with major operations in Detroit, and China’s Yanfeng Automotive Trim Systems Co, have formed a joint venture to manufacture automotive interiors and components. The new company, called Yanfeng Automotive Interiors, is headquartered in Shanghai, China.

The move from traditional manufacturing to connected and autonomous vehicles is a massive FDI opportunity, points out Robinson. The likes of Uber, Lyft, Maven, Siemens and Google are already present and creating a honeypot. “Our focus now is to bring early stage companies to Detroit,” says Robinson, adding that the city’s activities in Israel, the Netherlands, Sweden, Norway, Germany, Canada, Japan and, of course, Silicon Valley will all bear fruit around new technology and the automotive sector.

What about venture capital? To what extent is the venture capital community backing new high-growth sectors? Robinson says they are very much present and involved. Michigan-based venture investors are backing nearly every Michigan venture-funded start-up. There were 141 active venture-backed start-ups in Michigan in 2016, which is a 48% increase in the last five years. A total of 54 start-ups in Michigan received more than $222 million from Michigan venture capital firms in 2016, a 42% increase from the previous five years. Every $1 invested in a Michigan start-up by a Michigan venture capital firm attracts $4.61 of investment from outside of Michigan. There are 33 venture firms headquartered or with an office in Michigan, and the total venture capital under management in Michigan in 2016 was $4 billion. In the last five years, the number of venture capital investment professionals living, working and investing in Michigan has increased by 41%.

Looking forward, Robinson comments that R&D is no longer taking place behind closed doors; it is collaborative. It seeks to solve problems entrenched in communities and it harnesses the skills, thinking and attitudes of the youth as well as the established workforce. There is no longer a “them versus us” approach to new product development and creative thinking emanating from the world’s technology powerhouses, as well as home-grown talent, will be key to the future prosperity of Detroit.