Why Silicon Valley Won't Be the Green Car Detroit 329
thecarchik writes "NPR boldly pronounced, 'The new automobile of the 21st century is likely to benefit from the culture of Silicon Valley, where people are used to taking a chip, a cell or an idea and working on it until it becomes something big.' We've thought about it for a year, and discussed it with many people. And we don't believe it. Silicon Valley is the wrong place to build an auto industry, for three main reasons."
California Taxes (Score:5, Interesting)
That's reason number one. That's the last place I'd want to build an industry, not just because of me but also my workers would have to deal with the heavy tax burden.
Better someplace that has few taxes & doesn't steal (much) money from the workers' paychecks. Like one of the Carolinas.
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>>>Feedback on this comment system?
Yeah it sucks. And it's slow (CPU intensive). And I can't get back to the classic (plain text) index even though I've un-checked and checked it multiple times.
They could say exactly the same thing about energy (Score:4, Interesting)
Re:Only one real reason (Score:5, Interesting)
Customisation (Score:2, Interesting)
Re:Outsorucing (Score:2, Interesting)
2. If your part isn't at the assembly plant when it is needed and GM has to shut down the line, your company gets charged about $2000 per minute (might be more, now). With "Just in Time" inventory practices, no supplier would be willing to risk a long transport time.
3. Logistics (related to 2) When I worked for an auto supplier, orders were finalized no more than 3 weeks out. When I worked for the paper products company, product from China was shipped 3-6 months out.
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JimFive
Imported engineers (Score:5, Interesting)
TFA is saying that one of the reasons the valley won't manufacture cars is because they'll have to import engineers from elsewhere since the ones already in the place are only qualified in microelectronics and aren't qualified in the heavy duty engineering needed for manufacturing.
Silicon Valley's already full of imported engineers who were brought in to work as coders. I'm one of them. I don't see why they couldn't import the necessary skills. The valley is a very attractive proposition to someone living in India, or in England as was the case for me.
The NUMMI plant (Score:5, Interesting)
Tesla has the advantage of taking over the NUMMI plant in Fremont, CA, a big, successful auto plant shut down for the 2008 recession, when Toyota, for the first time, had to close plants. They're only using a fraction of the plant, but they own all the buildings (although not all the land; they didn't buy all the parking lots). There are plenty of laid-off auto workers living nearby, so a workforce is available.
The cost differential with China has narrowed. It turns out that once wages in China reach a quarter of the US level, China manufacturing stops being competitive. The transport costs, the delays, and the quality problems make outsourcing manufacturing less attractive. With wages rising in the coastal provinces in China, (and wages dropping in the US) that wage level has been reached in some industries.
Also, with all the foreclosures, bay area house prices have dropped. Maybe by a factor of 2.
Operating in Detroit has its own problems. The weather is harsh. Crime is high. Most of the people with competence and ambition moved out when the jobs did.
Don't worry about the rare earth supply problem. Mountain Pass, California [molycorp.com] is already coming back on line.
Not so easy. (Score:3, Interesting)
One of the big advantages Silicon Valley has enjoyed is it's proximity to Asia. And likely it's one of the reasons why Silicon Valley is where it is. They enjoy easier access to the high technology coming out of Japan, South Korea and Taiwan and the manufacturing resources of China.
The automotive industry is an entirely different beast. The technology isn't nearly as concentrated as it might be with computers or consumer electronics. A company could draw on manufacturing, expertise and technology from Europe, Asia and within the United States. So why even bother putting up with the high taxes and regulations present in California? The company could be based anywhere.
And building a car, especially a green car, is a far more complex undertaking than a lot of people seem to realize. I expect we're going to see a lot of investors burned in ventures that end up not working out. Even Tesla, which has gotten far further than most is struggled. Too many start ups have impractical pie-in-the-sky ambitions. Unrealistically lightweight vehicles with amazing fuel economy that manage, by magic, to meet all crash-worthiness requirements. And they simply don't have the resources to build aerodynamic bodies cheaply and efficiently. I expect that in the end it's going to be the major automakers who will bring practical green cars to the market.
The big limiting factor is the battery. If someone manages to produce batteries that store far more energy and can be charged quickly it would revolutionize the automotive industry. We wouldn't need hundreds of pounds worth of batteries or hybrid drivetrains and we'd still get a practical 300+ mile range out of these cars.
Only one of the reasons makes sense (Score:4, Interesting)
The "It takes $1 billion and 5 years to launch a new vehicle" is simply bullshit. It make take that long if you do it the way Detroit does it, but history has shown that Detroit is doing it wrong! Modern businesses are no longer the huge vertically integrated monopolies of the early industrial age; it is now possible to buy everything from out of house. "Wrong kind of engineers" is also bullshit -- create a demand for automotive engineers and Stanford and Berkly will train them! Granted, there is a 4-year lag, but the reason there is a Silicon Valley in the first place is because the world-class universities in the area created a pool of world-class engineers. Again, having engineers that are trained to do things "the GM way" is a disadvantage, not an advantage.
News of Detroit's death greatly exaggerated (Score:5, Interesting)
Are they kidding? Silicon Valley already doesn't do a lot of it's hardcore manufacturing. Neither does Detroit anymore.
Detroit doesn't do manufacturing? That would be news to those of us who live in Detroit. Despite all its problems, Detroit still is the beating heart of manufacturing in the US. EVERY automobile company has a presence in Detroit. Every major auto supplier has a presence in Detroit, many headquartered here. There is still heaping gobs of manufacturing jobs throughout Michigan even despite the recent problems. Major defense contractors like General Dynamics as well as lots of biomedical engineering goes on in Detroit. It's also one of the top 5 finance hubs in the US.
Silicon Valley won't be the Detroit of green cars because Detroit will be almost certainly be the Detroit of green cars. Little known fact: Detroit metro has the FOURTH highest [altiusdirectory.com] amount of high tech employment in the US. Detroit already has huge expertise in building cars, existing infrastructure, tons of engineering talent, idle manufacturing capacity and a work force in need of employment. Michigan is investing huge into battery manufacturing. Silicon Valley will get involved to be sure - especially in the electronics that are going to be an ever more important part of the vehicles. Not to say things are roses in Michigan; they aren't but anyone who thinks Michigan is out of the manufacturing business doesn't understand manufacturing.
There's no good reason that the Valley can't be the R&D center for even conventional cars.
Sure there is. The engineering talent and the companies that need it already live elsewhere. Moving to Silicon Valley would require uprooting a lot of existing investments, people to relocate to a place with no particular advantages in technologies specific to automobiles besides electronics and software. There is auto R&D that occurs in California already but Silicon Valley isn't remotely the only place with engineering talent in the US. Could it happen? Sure. Likely? Very very doubtful.
An electric car would be no different from an iPod in this respect.
Right, because building iPods makes Apple/HP/etc perfectly suited to get into the auto manufacturing business. No difference whatsoever... [/sarcasm]
Re:Only one real reason (Score:5, Interesting)
Manufacturing in Michigan (Score:4, Interesting)
Operating in Detroit has its own problems. The weather is harsh. Crime is high. Most of the people with competence and ambition moved out when the jobs did.
Bullshit. The weather is fine unless you are a huge sissy and in case you didn't know, manufacturing occurs indoors. The workforce and engineering talent ALREADY lives here. Crime is not particularly high in most of Michigan. Since you are obviously ignorant about how things work in Detroit, most of the manufacturing does not take place in high crime areas. Very few companies actually make anything in Detroit proper - everyone moved out to the suburbs LONG ago. Oakland County (the one immediately to the north of Detroit proper) is one of the wealthiest counties in the entire country and one of only 10 or so with a AAA credit rating.
The dumbest comment though is the last one you made. No one with any competence in Detroit? Spoken like an ignorant jackass who doesn't actually know anything about Detroit or what goes on there. Michigan has the 4th highest amount of high tech employment of any major metro area in the US. The place is absolutely crawling with engineering talent. Might not be as glamorous as microchips and software but make no mistake that there are a LOT of very smart people in Michigan.
Nice article, not mirrored in reality (Score:5, Interesting)
Nice polemic, and echoed widely. On the other hand, California leads the entire US by "value added by manufacturing" and on its own dwarfs the entirety of the Southern states the authors hold up as an example. For example, according to the US Census Bureau, California created $254bln in added manufacturing value with 1.3 million workers in 2008, South Carolina: $37bln with 230000 workers. If you crunch the numbers, you'll also see that California produces more value per worker than most other states. And until the meltdown last year, one of the primary car factories in the US was Nuumi in Fremont, CA, actually the Toyota plant Tesla bought.
Yes, once prices come down and everyone can do it, it'll probably electric car manufacturing will probably move to other states and California will get started on the next thing. But to get this off the ground initially, Silicon Valley is a great spot, because all the expertise you need to debug the process is within a two hour drive.
And by the way, Porsche, Mercedes, Audi, and BMW main factories are in Germany's most expensive areas, very few are in the more depressed parts (although Wolfsburg is really depressing).
Trapped by narrow ideology and thinking. (Score:3, Interesting)
Obama did save the US auto-industry, despite republican efforts to kill it, whether he gets any credit for it or not. However, Americans and in particular the auto makers in Detroit will need to make the most of their last chance to survive. This has less to do with politics than with a a willingness and wisdom to adopt a progressive mindset that isn't afraid to change with the times. This piece was all fluff, with no real substantiation or analysis of any of the claims that "the more things change the more they stay the same" (see the closing line [in French]). Seems as if its become popular to believe that competition only requires adopting conservative philosophies and borrowing money from foreigners is all that is needed to stay competitive, with no need to put in the effort to make the changes or investments in education and infrastructure to stay in the game.
Tesla is partnering with Toyota and everyone knows that Toyota does know something about electric vehicles and does have deep pockets, if for no other reason that US taxpayers give them an indirect advantage by being so deeply in debt that their appreciating currency is worth more and more. Hence, they can buy more cheaply (from their perspective) to invest in joint ventures with Tesla and others. For geographic reasons alone, California would be an excellent location for Toyota to expand in the US, since they already have manufacturing plants in the southeastern US. Say what you will about California's progressive politics, but they have a far better educated workforce (assuming Meg Whtiman isn't successful in her promise to dismantle the University System) that is much better able to adapt and utilize to the new technologies that are the future of the auto industry, lots of electronics and experimentation with light-weight composite materials. Like anything else in life, you get what you pay for and for that better quality work force and higher standard of living for workers, one pays a bit more, yes. However, the piece makes the error in thinking that means it won't be cost effective. So long as they can use these advantages California offers to innovate faster than their competition and increase their productivity relative to their competitors, which these days is all about industrial robotics production, rather than reemploying armies of less-than high tech factory workers to do the same job, they will do just fine. Off-shoring jobs with minimal assembly and manufacturing in the US has been and continues be to the preferred republican approach to drive corporate profits, but this is rapidly reaching a point of limited returns, since ultimately it robs American consumers of buying power, the primary reason we now see so few jobs. Likewise, the notion that you will need big steel plants close by is yesterday's thinking, which is what is expressed in this PR piece, and why, if Detroit doesn't get its act together soon, it won't be much of a player in the automotive business going forward.
There will be a big shift from a petroleum based automotive industry to an electricity based automotive industry. The only real question is who will be the one to make the money.
Asia is way out ahead of the US in these technologies and it is unclear if America will ever again be a dominant player in the automotive industry, especially in a US auto industry that is unwilling or unable to keep up with technological progress and unable to break the lock and interconnecting web of entanglements with the oil industry. Consequently, California is well positioned with both its high tech base and forward looking industries, compared to Detroit. Likewise, it has lots of nearly free sunshine and wind and its citizenry is busy making use of it to get off their addiction to foreign oil.
Frankly, this piece displays a rather ignorant smugness of conservative status-quo thinking that Detroit and America can't afford to have, if they want to stay competitive. Sure, the politics of big oil and PR will keep Detroit in the game for some time to com
Re:Only one real reason (Score:4, Interesting)
The conservatives who decided it should be all but impossible to raise taxes ever, that was also pretty short sighted.
So you're saying the highest taxes in the nation just aren't high enough? What are you smoking? I lived in Texas, and it had roads and schools and hospitals and no income tax. I lived in Florida, and it had roads and schools ans hospitals and no income tax. Now I'm in California, and its roads, schools, and hospitals are just the same, but it somehow a 9% income tax isn't enough, and the state is bankrupt? What a buch of losers, whatever their political stripe.
Re:Only one real reason (Score:3, Interesting)
Sure, and it has nothing to do with the $1.8 million dollars that Soros just gave to them. No way there'd be strings attached. Nothing to do with the million he just gave Media Matters, whose mission it is to destroy Fox by taking quotes painfully out of context. Juan has been appearing on The Factor for a long time now. If NPR didn't like it, they wouldn't have sat on it for so long. His dialog on the show hasn't changed so far as I can tell. He's honest, he speaks from the heart. I don't agree with much of anything liberal, but I enjoy his presence on O'Reilly's show.
The irony here is that NPR's action adds credence to FNC's claim of being "fair and balanced". I don't see O'Reilly getting fired for appearing on The View. I don't see Juan being excluded from FNC for having been on NPR.
"You must not advocate for political or other polarizing issues online."
He wasn't advocating for anything. He was talking about his feelings. The only reason he'd bring it up is because he recognizes that such an emotional response is wrong, but being honest, he admits to feeling that way. He's not saying O'Reilly's audience should be afraid. He's not saying that anyone should be excluded from air travel. All he did was state his own emotional state. NPR, a network that even has show called "All Things Considered" refuses to tolerate a man's irrational fear, even as he's using it to promote dialog on a touchy subject? It's absurd. We'll never get past issues like this if we refuse to discuss them.
I have to wonder, if it's so clear to you.. why did you post as an anonymous coward?
Utah, period. (Score:2, Interesting)
Plenty of space, plenty of people, plenty of talent, strong work ethic principles from both the Mormons and the Mexicans, plenty of rail access and roads for transport....
It's called The Beehive State for a very good reason. Build outside of the liquefaction zones and you're golden.
Re:Designed in California. Made in [not California (Score:3, Interesting)
The article mentions England/UK twice:
"Executives confirmed that the company recruits literally all over the world for engineers with the right mix of experience, including from England’s ample supply of Formula 1 race-car engineers."
"The company developed its groundbreaking Roadster smartly, by adapting and reusing large portions of an existing car—the Lotus Elise sports car—and outsourcing much of that work to Lotus itself, along with the manufacturing (in the U.K.)."
Perhaps the "green car Detroit" won't even be in the USA.
Re:Only one real reason (Score:3, Interesting)
You don't know basic physics. Note that my post got meeded up by several people, while you did not. Do what I said the first time, and LOOK UP EER, SEER, or COP. If you do so, instead of remaining willfully ignorant, you'll see I'm 100% correct.