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Automotive innovations can help diversify Michigan economy

Jan 19, 2015

The Next Idea

The early history of the Michigan economy is a study in diversity: fur trading, lumbering, furniture making, dairy and fruit farming, salt mining, and who can forget cereal making. But starting with the American Century, the Michigan economy has become the most one-dimensional in all of the United States. Our fortunes come and go with the automotive industry. 

Sure there are the occasional blips, like when a miscellaneous company makes it big in pharmaceuticals, chemicals or banking, or like in 2009, when agriculture accounted for more of our gross domestic product than car sales. But to most people, we still appear to be a one-trick pony -- or in our case, a horseless carriage.

Applications for automotive innovations in other industries could help diversify Michigan's economy from the "inside out," says Jeff DeGraff.
Credit Flickr

While many in our state are looking to diversify our industrial base and bring capital investments to new types of companies, we should also consider how the high-tech capabilities developed by the automotive sector can be reapplied to new areas. In other words, we can also diversify Michigan’s economy from the inside-out. So let’s take a moment to quickly look under the hood to see what we can do to turbo-charge our economy.

Reusing Wheels

If you’ve been to Ann Arbor lately, you may have seen one of the thousands of autonomous cars driving itself around town. While this project is being led by Google and the University of Michigan, much of the technology, such as LIDAR (light detection and ranging), is the product of the automotive industry here in Michigan. If you’re like me, you might not be too excited to let your car drive itself, but consider how this technology can be reapplied to adjacent industries like long-haul trucking, where sleep deprivation is a significant contributor to major highway accidents. Or think about how it can be used to alleviate congestion in our skies or to keep our soldiers out of harm’s way.

What you may not know is that many clean tech innovations are emerging from the automotive industry here in Michigan, including eco-design, renewable power generation, composite materials, fuel cells and alternative drive technology.

The global alternative energy, or “clean tech” market offers many opportunities, as well.  According to a recent study, the sector is expected to grow at a rate of almost 90 percent, year-over-year, for the next five years and expand to more than $5 trillion. Some estimates suggest that this boom may create as many as 10 million new jobs. What you may not know is that many clean tech innovations are emerging from the automotive industry here in Michigan, including eco-design, renewable power generation, composite materials, fuel cells and alternative drive technology. When the Great Recession hit a few years ago, many of the automotive suppliers needed to quickly develop new markets to survive, and they discovered new customers for their innovations in segments like aerospace, utilities and industrial machinery. While the markets may be different, the capabilities to create these technological innovations are similar.

So what’s the Next Idea?

Perhaps the most important aspect of innovation currently emerging from the automotive sector in Michigan is one you can’t see: manufacturing and supply-chain innovation. Energy and material efficient production processes have created significant innovations in robotics, nanotechnology and intelligent resource management systems. Think better, cheaper, faster. While we may still be building cars in Michigan, we certainly aren’t building them the same way we did 10 years ago. Innovation is now part of the entire buy, make and ship process.

The automotive industry in Michigan may not have the glamor of the high-tech industries in California or Massachusetts, but it does have the technologies and the capabilities. Now all we have to do is to convince our best and brightest to get behind the wheel and drive them forward into a wide array of new markets and new jobs.

Share Your Ideas:

  •  What else could be done with the technology in your car?  

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Jeff DeGraff is a clinical professor of Management and Organizations at the Ross School of Business at the University of Michigan.