In China, Auto Boom Fuels Workers' Aspirations !

Ford engineer Johnny Wang says, 'The things that were totally impossible as a child are now within reach.' Tim Franco for The Wall Street Journal

Ford, GM and Foreign Car Makers Find it Harder to Attract and Retain Skilled Chinese.

NANJING, China� Johnny Wang grew up in a small town in the poor Anhui province in rural, eastern China, where even riding in a car, let alone owning one was a dream. Landing a job in China's booming auto industry changed all that.

Mr. Wang, 32, is a voice recognition engineer at Ford Motor Co. F -1.23% 's research and engineering lab in neighboring Nanjing. His wife, Xiang Jun, 32, works for Automobile Co. some 56 miles away in Wuhu, where the couple owns an apartment. Mr. Wang rents an apartment nearer to his workplace and drives to the couple's home in his Ford Focus at the weekend. Later this year they plan to take Mr. Wang's parents to Southeast Asia on their first overseas trip.

"All the things that were totally impossible as a child are now within reach," said Mr. Wang.

A century ago, when Henry Ford began paying his assembly-line workers $5 a day, the equivalent of $116 a day today and double the manufacturing norms of the time, he triggered a social revolution in America that transformed low-paid workers into middle-class consumers. Much the same has happened in China.

The explosive growth of China's auto industry during the past 20 years has helped to lift tens of thousands of Chinese like Mr. Wang into the middle class. Though below that of other major car-producing nations such as Germany, Japan and South Korea, wages for factory workers and engineers in China's auto sector are typically higher than average here.

Research by consultancy Mercer LLC, for example, shows wages for automotive engineers and factory workers in Shanghai in 2013 were between 15% and 17.6% higher than the average manufacturing wage in the area.

But now auto makers are confronting in China what U.S. auto makers discovered decades ago: Workers' aspirations rise with their pay. China is no longer a low-wage workshop for auto companies. It is increasingly a center for engineering, and research and development initiatives.

Foreign car companies are finding it increasingly difficult to attract and keep engineering talent, as more Chinese car companies offer better pay packages and at times broader professional experience. At the same time, all auto makers face competition for skilled Chinese workers from certain other industries where the pay and professional prospects are better.

Ford declined to reveal salary figures for its research and development engineers, but Chinese engineers with experience at foreign car firms command top pay in China.

Engineers with under 10 years' experience in research and development for foreign auto makers in China earn between 180,000 yuan ($29,200) and 300,000 yuan a year including bonuses, according to recruitment consultancy Robert WaltersRWA.LN -0.87% PLC.

Chinese auto companies usually offer around 30% more in salary to attract top talent from foreign brands, the consultancy said�more when employees are asked to relocate cross-country to newly emerging industry centers such as Wuhan, Changsha and Chongqing.

Vanessa Moriel, managing director of Human Capital Partners, a recruitment firm specializing in the auto industry, said engineers with specialized knowledge or leadership skills could earn as much as 500,000 yuan.

Chinese auto engineers typically want to fast track their careers and seek opportunities that allow them to expand their skills into high-tech, specialist areas, she said. Companies must pay market price salaries, she said, and interpersonal relations are key. "Chinese don't work for a company, they work for a leader," Ms. Moriel said.

Ford's Mr. Wang is content with his career advancement and has no plans to switch to another car company, Chinese or otherwise. "I have a long way to go in my career�and right now, I think I have a lot to learn at Ford," he said.

He also said he plans to stick with the auto industry. "I do desire an overseas experience to expand my horizons," said Mr. Wang. As to where that might be? "My first choice would be America�it's a country on wheels."

Keeping ambitious employees like Mr. Wang satisfied could still require some changes. He and colleague, Shawn Ma, aspire to greater roles in auto industry R&D.

Mr. Ma, a 27-year-old engine component engineer, said his team mostly modifies existing Ford technology to fit Chinese market requirements. But he is hopeful that will change in the next five to 10 years and allow the group to design new parts that will be used globally.

"They are starting to take some leads on global products but we haven't announced anything yet," said Scott Chang, a spokesman for Ford in China.

John Lawler, chief executive of Ford Motor China, recently described the expansion of the center in Nanjing as one of Ford's "top global product-development priorities." The company has invested more than $200 million there and plans to invest another $100 million. Ford would increase the number of employees at the Nanjing complex to around 2,000 people by 2018 from roughly 1,300 today. When the company moved into the current facility in 2007, the center had around 300 employees.

To maintain and grow their engineering workforces in China, foreign auto companies are finding themselves battling for talent with Chinese auto makers.

"Five years ago, a lot of Chinese wanted to work for multinationals, now that pendulum has swung," said Mary Thornton, formerly human resources director China for General Motors Co. GM -1.87% until the end of April. The attrition rate at GM in China is around 12% a year, she said. Some other companies in the industry have rates of around 20%, according to Human Capital Partners.

If Chinese car makers evolve into national or even international champions, more Chinese engineers working for foreign companies may switch allegiance to homegrown companies.

"The auto industry is almost 100 years old, but I think for China we're just at the start," says Mr. Ma. "At this time we're working for a foreign company. But in the future, more and more Chinese people are going to work in the industry and contribute to our own China automobile" industry.

Ms. Moriel said that trend could become more pronounced as ambitious Chinese employees realize that top jobs at foreign auto makers still go to foreigners. At Chinese companies, Chinese engineers have more chances to perform management roles beyond R&D and, she said, stand a greater chance of becoming chief executives one day.

Still, the auto industry remains a popular choice among engineering graduates. In a recent survey employer branding consultancy Universum Group AB said the car industry overtook heavy industry as the "most ideal" sector to work upon graduation for Chinese engineering students, something the consultancy said could be due to students' perception of the industry as creative and dynamic.

But when Universum looked at specific companies, auto makers in China trailed leading technology companies such as Huawei Technologies Co. and Google Inc.GOOGL -0.82% Only one, BMW AG BMW.XE -1.27% , appeared on the top 10, and GM's Shanghai GM joint venture ranked 20th.

ref: online.wsj.com

Car Sales passed 9.6 Million in the First Half of 2014 !

Car makers in China delivered 1,560,311 units in June and 9,629,246 in the first half of 2014, according to CPCA (China Passenger Car Association). Compared with the same period a year ago, deliveries rose 11.8% and 11.4% respectively. Excluding exports, sales increased 14% to 1,465,735 in June and 11.4% to 9,094,452 in H1. The numbers cover only domestically produced sedans (two- or three-box), MPVs, microvans, and SUVs. Imports and commercial vehicles are not included.

In the past, significantly more consumers chose to buy a new vehicle in the second half of the year than in the first. If the pattern holds, the 2014 passenger market is to exceed 20 million, a record level in history. ref: chinaautoweb.com

Sector	Wholesales in June	Growth on year	Wholesales in H1 2014	Growth on year
Sedan (two- or three-box)	1,005,651	7.0%	6,210,741	6.7%
SUV	319,055	32.3%	1,810,074	35.9%
MPV	123,099	39.3%	862,460	47.3%
Microvan	112,506	-10.4%	745,971	-17.4%
Total	1,560,311	11.8%	9,629,246	11.4%

The growth of Chinese Automobile industry, creates new bridge to the US for EV market.

Chinese automotive companies have long aspired to build vehicles for the U.S. electric vehicle (EV) market, without much progress. However, recent developments indicate that Made in China could be stamped on cars stateside before long.

Chinese automakers, have all made investments in establishing or partnering with U.S. entities with the goal of opening China�s formidable manufacturing resources to America. Geely, which has been the slowest among the three to approach the U.S. market, purchased Emerald Technologies in February. The company, a startup developing electric vans and taxis, has offices in the United Kingdom and Missouri. It will receive up to $200 million during the next 5 years to grow its business.

China is no stranger to EVs, having launched a successful EV carsharing joint venture with Kandi Technologies Group. The Emerald acquisition gives the company access to new technology outside of the consumer passenger vehicle market, which is a common strategy for Chinese companies that do not want to take on Detroit, Japan, and South Korea head on in the United States � yet. If Chinese-built taxis, vans, and trucks can pass all of the required safety tests and prove their reliability in the coming years, then American consumers might become more comfortable in considering them. Chinese Automaker purchased Volvo in 2010 and has been expanding globally during the past few years, including setting up shop in several countries in Eastern Europe and Latin America.

BYD was the first Chinese automaker to target the U.S. market and had announced its intention to sell EVs when it established a presence in California back in 2010, but the company has yet to deliver passenger vehicles. The latest target date for EVs in the United States from Warren Buffett-backed BYD is late 2015. Until then, the company is focused on selling electric buses using its battery packs in China, California, Canada, and Spain.

Wanxiang has been the biggest spender from China on U.S. EV assets: the company picked up the bankrupt pieces of battery maker A123 Systems and of Fisker Automotive for pennies on the dollar. Wanxiang recently said it would resume production of the aborted Fisker Karma (perhaps both as a gas car and plug-in electric vehicle) by the end of 2015, as well as complete the development of the Atlantic, the second EV promised by defunct Fisker. It would not be surprising to see more acquisitions of EV-related technology firms from Wanxiang in the United States in the future.

The U.S. EV market has taken 3 years to grow to just under 100,000 vehicles, but according to Navigant Research�s Electric Vehicle Market Forecast report, over the next 3 years it will more than double � reaching volumes that merit Chinese firms establishing North American assembly and manufacturing plants. Chinese companies will continue to learn more about optimizing EV production at home once a domestic market begins to mature in China, and this will lead to greater efforts to tighten the bond between the two countries� EV industries. ref: www.forbes.com

The World's Automakers and Brasil challenges !

Here�s what the world looks like to a car guy in Detroit right now: In the U.S. new regulations are cranking up costs while cautious car buyers creep back into showrooms. China�s once-hot sales are cooling�fast. Europe is a total basket case, with too much production capacity and an allout price war. Carmakers from General Motors and Ford Motor to Volkswagen and Daimler warn of difficult times ahead. Market conditions, says VW Chief Executive Martin Winterkorn, have become �noticeably harder and tougher.�

But bring up Brazil and you get a smile. No, they�re not looking forward to a Rio vacation or a cheap retirement. What carmakers see when they look at Brazil is South America�s largest consumer market, a still-bustling economy�and a lot of potential customers. Forget that in the world�s fifth-largest country only 14% of the roads are paved. Incomes are rising, lifting almost 40 million more Brazilians into the middle class since 2003�and putting a vehicle purchase within their reach for the first time. �Brazil is at a critical point right now,� said Guido Vildozo, a Latin America specialist at market research firm IHS Automotive, noting that the country�s GDP has topped $10,000 per capita. �That�s a milestone. If you look back at the U.S., Europe, even Korea, you�ll see that this is when markets move to a growth stage. This is why we�re suddenly seeing all the carmakers focusing on Brazil. They want to try to capture a slice of that pie.�

Anfavea, Brazil�s auto industry trade group, forecasts sales will increase 68% from 3.4 million units in 2011 to 5.7 million by 2016, despite a massive tax burden and high borrowing costs that drive up car prices. (In the U.S. sales are forecast to rise 30%.) As early as 2015 Brazil could overtake Japan to become the world�s third-largest car market after China and the U.S., according to Roland Berger Strategy Consultants.

Volkswagen, Fiat, GM and Ford have dominated Brazil for years, with 84% of the market in 2007. But that number is dropping as new players rush in. By 2015 it�s expected to fall to 70%, according to market researcher J.D. Power and Associates. Pressure is coming from global rivals like Kia, Hyundai, Honda, Nissan and BMW, as well as new players like China�s Chery, Geely, JAC and Hafei, and India�s Tata and Mahindra.

Competition is only one problem for Detroit�s Brazilian operations. The government is another. Spooked by the flood of foreign-built cars, President Dilma Rousseff, a onetime Marxist and late convert to capitalism, grabbed for a comfortable crutch earlier this year: tariffs. She raised the tax on imported cars from 25% to 55%. Brazilian shoppers eyeing popular models like a Toyota Corolla, which sells for $16,230 in the U.S., were shocked by sticker prices of $29,000.

Because Mexico was exempt under a regional trade agreement, carmakers figured they could just ship more vehicles from their Mexican factories. That didn�t set right with Rousseff, who slapped a quota on Mexican imports. Carmakers can pay less tax on imports if they do more engineering work in Brazil and use mostly Brazil-made auto parts in their local factories. �Brazilian consumption has been appropriated by imports,� Finance Minister Guido Mantega said in announcing the tax. �We are the fifth-largest automobile market in the world and the seventh-largest producer, but we risk losing our position if we don�t take measures.�

Luckily, all the policy wrangling to bolster Brazil�s industry was trumped by headwinds from the worldwide economic crisis. In May Rousseff�s government enacted tax cuts and lower interest rates to spur consumer spending. The economy bounced back, as did car sales. The stimulus measures have been extended through October, prompting predictions of a second-half boom.

Manufacturers have learned their lesson, though. GM, Ford, VW, Fiat, Toyota, Hyundai, Nissan, Honda, Renault, Peugeot and Chery are among the companies adding or expanding factories at breakneck speed, with plans to invest some $25 billion in Brazil by 2016, adding 1.5 million units a year of production capacity. That doesn�t include investments by auto parts suppliers.

For GM and Ford the ramp-up is especially tough. They tolerated high labor costs and low manufacturing productivity for years in South America, while they focused on growth markets like Asia, which had more immediate potential. While auto industry wages in Brazil have risen 125% in ten years, productivity has increased only 22% due to a lack of automation, poor training and high energy and steel costs.

Both GM and Ford reported lower operating results in the region thus far in 2012. While currency and global economic issues are partly to blame, they�ve also been hurt by outdated product lineups. Both companies are revamping their cars to keep consumers interested�and margins profitable.

GM, for example, is launching seven new products this year in Brazil, including the Chevrolet Spin sport-utility and Colorado pickup. Ford, meanwhile, is rolling out a new small SUV, the EcoSport, along with a redesigned Ranger pickup and the next-generation Ford Fusion. �By 2015 we will have all global platforms in Brazil,� said Rogelio Golfarb, a vice president at Ford South America. �We are caught right in the middle of the transition.� With so much competition, mostly in smaller vehicles, he said, �it forces you to be real efficient. That�s the challenge of Brazil.�

But not the only one. The government�s shifting policies have also made it hard for automakers to make long-term decisions.

�The government has thrown a few curveballs over the last six months or so,� says Robert Shanks, Ford�s chief financial officer, who says the company set up its manufacturing footprint in Mexico and Argentina to take advantage of free trade agreements between Brazil and those countries. Now it has to start over. �That�s not something we can respond to overnight.� Given the global auto market these days, they�ll have no choice but to try.
ref: www.forbes.com

How is Mexico passing Brazil, as the top Latin American Car producer ?

Mexico is poised to overtake Brazil as the top Latin American automobile producer for the first time in more than a decade as surging exports to the U.S. spur factory openings and record output.

After nosing ahead of Brazil in the first six months of the year, Mexico is projected to hold its advantage through 2014, for the first full-year lead since 2002, according to consultant IHS Automotive.

Mexico�s ascent is being fueled in part by auto sales running at the fastest pace in almost eight years in the U.S., the country�s largest market. The boom coincides with a slump in Brazilian production through June as domestic demand cools, setting up a shift in leadership of the Latin American industry faster than analysts predicted.

�The wind is in our sails� in Mexico, said Luis Lozano, lead automotive partner at PricewaterhouseCoopers LLP, in a telephone interview from Mexico City. �People talk about the energy and telecom industries in Mexico, but the auto industry is going to continue as the icon of this country.�

Eclipsing Brazil, where output has fallen 17 percent this year, would vault Mexico to No. 7 among the world�s largest auto producers. China and the U.S. lead the global pack.

Brazil reported today that light-vehicle output fell 32 percent in June from a year earlier to 205,207 with exports plunging 52 percent. Mexico reported today auto production rose 7.9 percent in June from a year earlier to 287,344. Exports rose 2.1 percent.

This year�s diverging fortunes of Mexican and Brazilian auto production reflect the state of their biggest markets. Brazil-made cars and trucks are too expensive, given high labor costs and taxes, to send abroad and go mostly to local buyers. Mexican factories export eight of every 10 cars they produce -- with more than half going to the U.S.

Economic Divergence
The auto industry epitomizes the underlying economic fundamentals in the two countries. Mexico is starting to see signs of rebounding after growth missed forecasts in seven of the past eight quarters, while Brazil cut gross domestic product estimates for this year and next and boosted inflation forecasts. Economists project that the Mexican economy will grow 2.8 percent this year compared with 1.3 percent in Brazil.

Light vehicle output in Mexico rose 7.4 percent through June to 1.6 million vehicles, bolstered by new plants for Nissan Motor Co. (7201), Honda Motor Co. (7267) and Mazda Motor Corp. (7261), according to the Mexican Automobile Industry Association, known as AMIA. Brazil�s total was 1.47 million, according to Anfavea, Brazil�s automaker association.

Mexico�s proximity to the U.S. also gives it an advantage, as do labor costs for automakers that are about 20 percent of U.S. levels, according to Pricewaterhouse Coopers.

�The broader significance is the appeal of Mexico as the production source for North America,� Bill Rinna, senior manager of North American forecasts at LMC Automotive, said in a telephone interview from Troy, Michigan. LMC forecasts Mexico to overtake Brazil in 2016.

Surprise Win
While Mexico�s exports to the U.S. rose 16 percent through June, Brazil�s shipments to its top trading partner, Argentina, declined 28 percent through May according to Anfavea. Within Brazil, consumers have slowed purchases because of tighter credit and a weakening economy.

Mexico�s surge caught some industry watchers by surprise.

�At the beginning of this year, we basically did not have Mexico overtaking Brazil at any point in time,� Guido Vildozo, Latin America analyst at IHS Automotive, said in a telephone interview from Lexington, Massachusetts.

Even as exports are buoying Mexico�s auto industry, the low level of domestic sales is a weak spot, according to AMIA President Eduardo Solis. New car sales in Mexico totaled 1.06 million last year. Mexico should restrict used-car imports from the U.S. more stringently, he said.

�We have record production and exports and a domestic market that just isn�t turning the corner,� Solis told reporters June 10 in Mexico City.

Diplomatic Confrontation
Mexico is likely to produce 3.1 million autos this year, according to Solis, who said he was unsure whether the nation would build more than Brazil. IHS is forecasting Mexican output of almost 3.2 million, ahead of Brazil�s 3.17 million.

Mexico�s auto-production gains combined with Brazil�s losses may lead to a diplomatic confrontation this year between Latin America�s two biggest economies, according to Augusto Amorim, IHS Automotive�s analyst for South America.

In 2012, Mexico agreed to limit car exports to Brazil for three years after a surge in Mexican shipments to Latin America�s largest economy. That led to a 23 percent drop in Mexican-made vehicles exported to Brazil last year, according to AMIA.

While the pact is set to expire in March 2015, Brazil may look for ways to extend it, Amorim said. AMIA will probably meet with Anfavea and a similar trade group from Argentina this summer, Solis said.

Production Chain
�We are still in negotiations for both countries to have successful results,� Brazil�s ministry of development, industry and external commerce said in an e-mailed response.

�The commitment is to get back in 2015 to a free market,� Mexico Economy Minister Ildefonso Guajardo told reporters July 3 in Mexico City.

Automakers� investments show the importance of both countries in the global production chain.
After the recent Mexico plant openings by the Nissan-Honda-Mazda trio from Japan, a combined investment valued at $4 billion, Germany�s Audi AG is building a $1.3 billion plant to assemble the luxury Q5 sport-utility vehicle.

Bayerische Motoren Werke AG announced plans last week to invest about $1 billion in a new factory in Mexico, that will produce about 150,000 cars a year. And in June, Daimler AG and Nissan said they would jointly produce luxury vehicles, including Infiniti compact cars, at a new $1.4 billion factory in Mexico, the biggest project to date in their four-year-old partnership.

Big Volumes
�Whatever is made there can be exported,� to any of the more than 40 countries, including the U.S., that have free trade agreements with Mexico, IHS Automotive�s Amorim said. �When you have Mexico adding a new factory to source the entire world, then you�re talking about big volumes.�

In Brazil, Nissan opened a $1.5 billion complex in Resende in April, and Chery Automobile Co. has a $530 million factory in Sao Paulo state debuting this year, marking the Chinese automaker�s first major investment outside its home country.

New factories being considered for both countries in the coming years may mean neck-and-neck racing for the lead in Latin American production, according to IHS Automotive and LMC Automotive.

Rinna, the LMC Automotive analyst, predicts that Mexico will hold the top spot from 2016 until 2021, when Brazil wrests it back. By then, the combined auto output of the two nations would be 8.83 million vehicles, 38 percent higher than in 2013.

ref: www.bloomberg.com

While Electric Car Owners, are asleep - Tesla

Frankfurt Auto Show
http://www.teslamotors.com/ 

Electric vehicles are entering the mainstream, with the sporty Tesla having sold 30,000 vehicles so far, and recent moves designed to greatly expand the use of innovative battery technology.

However, as more of these cars hit the road, they place unique strains on the electric grid.

Households with electric vehicles guzzle juice from the grid at night in order to get charged up for the next day, according to a new analysis by Opower, a company that provides cloud-based software to the utility industry. And that could be a problem in the long run.

As electric vehicles go mainstream, utilities may need to continue nudging consumers away from plugging in during peak periods of energy demand, the analysis suggests.

The numbers also show that electric vehicle owners are far more likely to have rooftop solar panels than non-electric vehicle owners, which helps offset some of their electrical consumption from coal and natural gas-fired power sources.

Image : Opower

At night, the average power consumption of many electric car households is four times higher than typical levels, Opower reports. The company maintains a database of energy use in more than 50 million households, and is in part a consulting firm to electric utilities, working to help them become more energy efficient.

The company's analysis compared data from about 2,000 electric vehicle owners in the western U.S. who charge their cars at night, to data from nearly 100,000 typical households in the West. The data includes electric vehicles other than Teslas, such as the Nissan Leaf and other plug-ins.

Opower plotted the average hourly grid electricity use of electric vehicle owners compared to typical households with gasoline-powered vehicles. Between midnight and 7 a.m., electric car households used three times as much energy than non-electric vehicle owners did. Researchers found a major spike in energy use from electric vehicle households starting at about 10 p.m., peaking around midnight, and then declining toward 6 a.m.

It's no coincidence that the electric vehicle owners in this study tended to charge their cars at night, since their owners signed up with their utilities to secure discounted electric rates late at night, with higher prices during the day. Opower says its data clearly shows that when consumers sign up for such electricity rate frameworks, they take advantage of them, and this data could encourage utilities to roll out more programs like this.

Such arrangements are advantageous for utilities because they help reduce the electricity demand during the day, when overall demand is highest and the risk of overloading the grid is elevated.

                                                                                                  Image : Opower

Several states have implemented off-peak charging incentives to encourage electric vehicle owners to charge their cars at night, including Texas and Georgia, in addition to the more environmentally conscious California.

Interestingly, Opower found that electric car owners still use more power than their peers during the day. The company explained this by noting that compared to the average household, owners of electric cars tend to be more affluent, with larger houses and more swimming pools than households without such cars. Also, some owners may be plugging their cars in early in the morning or earlier in the evening, missing the low-cost window.

On the other hand, electric vehicle households are also far more likely than typical households to own rooftop solar panels, which cuts their midday energy use and sends power to the grid. In the West, one out of 13 electric vehicle households have rooftop solar installations, compared to just one out of 86 typical households.

If you are an electric vehicle owner without rooftop solar energy, however, it's still likely that you're using more grid electricity than a typical household.
ref: http://mashable.com by Andrew Freedman