“Automakers continue to expand their footprint while weighing risks, from regulatory factors to fluctuating currencies, and are pressured to find a balance between global operations, product innovation and securing top talent to compete.” –Rick Hanna, global automotive leader at global consulting firm PricewaterhouseCoopers
There’s a lot for automotive executives to worry about these days, despite the brisk rise in sales numbers many are posting. Attracting and retaining talent, cutting costs, investing in innovation, managing risk, and economic uncertainty are just some of the top things automotive CEOs say keep them up at night, according to data gleaned from PricewaterhouseCoopers’ (PwC) 15th Annual Global CEO Survey automotive summary.
More than two thirds (69%) of automotive CEOs polled by the global consulting firm said they plan to cut costs in the next 12 months to try and balance the need to attract talent while freeing up funds to invest in innovation.
Of the 104 automotive CEOs from 31 countries participating in the annual survey, 72% intend to focus more heavily on innovating to improve existing processes and product development. More than three fourths (78%) of them noted they plan to change their R&D and innovation capacity in 2012, allowing them to bring new products to market that meet stricter regulatory standards and changing consumer preferences, as well as to realize future growth.
Yet they are also well aware that economic uncertainty looms, and so automotive CEOs are keeping their eye on the economic environment. More than half (57%) say their companies have been directly affected by the sovereign debt crisis and nearly half (47%) concerned about government protectionism, in the form of tariffs and high taxes, that may end up crimping growth plans.
Automotive CEOs also specified that China and Brazil remain key markets for future growth, with particular interest in China, as 38% of them consider it a top future market, followed by Brazil at 24% percent and the U.S. at 22%, according to PwC's poll. The firm added that its automotive team is forecasting that China will produce 28 million units worth of demand a year by 2018, compared with just 11.1 million units in the U.S. and 6.4 million in Germany.
The automotive industry has also needed to adjust to changing consumer preferences and regulatory requirements in various markets. For example, more than half (59%) of automotive CEOs have modified products and services to accommodate the Chinese market.
Another interesting tidbit PwC unearthed in its survey is that nearly half (46%) of the automotive CEOs polled said finding the right talent is a challenge due to a lack of skilled workers. In addition, 56% fear that the lack of key skills could drag down growth – a particular concern in growth markets such as China.
The majority (89%) of automotive CEOs polled by PwC believe that the private sector needs to invest and develop a skilled workforce to achieve future growth.
That’s creating a shift in how – and who – automotive OEMs are recruiting into their ranks. Take Continental Tires, for example: out of the eleven engineering and science graduates from six different countries within the company’s Explore Tires Research & Development trainee program, six are women and five are men.
For years now,noted Geert Roik, head of R&D for commercial vehicle tires at Continental in Germany, there have been a rising number of women among the firm’s new recruits in research and development.
"Research and development, particularly in the motor industry, is often an exclusively man's world. But In reality, things are very different,” he noted. “Over the business year just ended, more than one third of the new appointments in tire development were women and we have also noticed a growing number of women joining our international training program in tire research and development.”
It’s just one more sign that the companies building cars and trucks – along with their myriads of suppliers – are leaving no stone unturned or talent pool unchecked as they prepare themselves to face the uncertainties of the future.