tag:theconversation.com,2011:/global/topics/auto-sector-16261/articlesAuto sector – The Conversation2023-03-26T12:51:07Ztag:theconversation.com,2011:article/2024062023-03-26T12:51:07Z2023-03-26T12:51:07ZDid Canada and Ontario pay too much money for Volkswagen’s battery plant?<figure><img src="https://images.theconversation.com/files/517051/original/file-20230322-28-ykgcz3.JPG?ixlib=rb-1.1.0&rect=0%2C78%2C2614%2C1350&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A driver backs a Volkswagen e-Golf into a parking spot in Peterborough, Ont. Volkswagen has announced plans to build an electric vehicle battery plant in St. Thomas, in southwestern Ontario.</span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Doug Ives</span></span></figcaption></figure><p>Volkswagen recently announced its intention to <a href="https://www.cbc.ca/news/canada/london/a-volkswagen-ev-battery-plant-is-coming-to-st-thomas-ont-but-not-everyone-s-charged-up-1.6777757">build a plant in St. Thomas, Ont.</a> for electric vehicle batteries.</p>
<p>While the <a href="https://lfpress.com/business/local-business/thousands-of-spinoff-jobs-expected-from-vws-st-thomas-electric-battery-plant">news is being described as a major victory</a>, until more information emerges, the deal raises lots of questions about what we actually won, why we won it and whether it was worth the price — which I assume is the range between $1 billion and $10 billion.</p>
<h2>What does it mean?</h2>
<p>Let’s start with the good news.</p>
<p>First, Volkswagen chose a Canadian location over jurisdictions across the United States and Mexico, affirming our residual competitiveness for automotive manufacturing. “Residual” because <a href="https://www.oica.net/category/production-statistics/2022-statistics/">Canadians now make about half as many vehicles as we did just a decade ago</a>.</p>
<p>Second, until now, Volkswagen has not had a manufacturing presence in Canada. Now, in addition to Toyota, Honda, Stellantis, GM and Ford, Canada can add a sixth automaker.</p>
<p>Third, the St. Thomas investment may spur additional investment by current and future suppliers.</p>
<p>Fourth, it’s possible that someday Volkswagen will look at its <a href="https://www.stthomas.ca/">St. Thomas battery plant</a> and the 1,500 acres of industrial land surrounding it and say: “We ought to build a vehicle assembly plant here too.”</p>
<p>Finally, the Volkswagen decision confirms the longstanding impact that active industrial policy measures combined with prolonged, visible support at senior levels of government has on investment attraction. </p>
<p>Indeed, much of the foundation of the Canadian automotive manufacturing industry as it exists today is the result of Ed Lumley’s work as Pierre Trudeau’s industry minister in the 1980s. That’s when companies like Honda, Toyota and others established assembly plants here.</p>
<p>While subsequent international obligations and trade agreements have curtailed the industrial policy tools available to our current federal minister, François-Philippe Champagne, and his Ontario counterpart, Vic Fedeli, those ministers’ performance on the Volkswagen file demonstrates the enduring relevance of the Lumley approach: persistence and visibility.</p>
<h2>Big questions</h2>
<p>The Volkswagen announcement engenders more confounding news too. These include doubts about Champagne’s and Fedeli’s claim that their pitch hinged on <a href="https://news.ontario.ca/en/release/1002817/canada-and-ontario-welcome-historic-investment-from-volkswagen">Canada’s offer of clean energy, critical minerals and a highly skilled workforce</a>. There are even bigger questions about the financial incentives they’ve offered.</p>
<p>While the clean energy narrative fits nicely with the EV low-carbon storyline, automakers’ practice shows that most battery plants in the U.S. are in locations where electricity <a href="https://www.theguardian.com/environment/2016/dec/08/electric-car-emissions-climate-change">is generated from sources that include coal, gas and oil.</a></p>
<p>When it comes to Canada’s much-promoted reserves of critical minerals, the reality is those minerals are still in the ground, and in very remote locations. The transition from “known reserve” to “operating mine” takes at least a decade, and Volkswagen plans to open its St. Thomas battery plant in 2027.</p>
<p>On the matter of skilled labour, automakers have long provided better pay than most other employers, assuring access to employees with above-average skills. Therefore, differences in overall worker education among jurisdictions has a limited effect, an outcome of automakers’ capacity to hire the cream of the available local crop, regardless of location.</p>
<figure class="align-center ">
<img alt="An autoworker with a ponytail, ball cap and face mask carries a box at an auto manufacturing plant." src="https://images.theconversation.com/files/517221/original/file-20230323-24-h3epng.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/517221/original/file-20230323-24-h3epng.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/517221/original/file-20230323-24-h3epng.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/517221/original/file-20230323-24-h3epng.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/517221/original/file-20230323-24-h3epng.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/517221/original/file-20230323-24-h3epng.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/517221/original/file-20230323-24-h3epng.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">An autoworker carries a box on the production line for the Honda CRV at a Honda plant in Alliston, Ont., in March 2022.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Chris Young</span></span>
</figcaption>
</figure>
<h2>Did Canada overpay?</h2>
<p>Finally, let’s examine the financial incentives. Because Canada is neither the <a href="https://www.tecma.com/low-cost-manufacturing-labor-in-mexicos/">low-cost North American location for automotive manufacturing</a> (that’s Mexico) nor the big North American market (the U.S.), it’s quite likely we overpaid.</p>
<p>So far, no one’s saying how rich the Volkswagen package is, citing sensitivity about ongoing negotiations with other potential automotive investors. </p>
<p>We can only assume the range is between $1 billion — that’s what LG-Stellantis got for its <a href="https://www.cnbc.com/2022/03/23/stellantis-lg-to-invest-4point1-billion-in-canadian-ev-battery-plant.html">$5 billion battery plant in Windsor last year</a>, then a record for Canada — and at least $10 billion. That amount is what a U.S.-placed battery plant can now expect via a combination of <a href="https://www.orrick.com/en/Insights/2022/11/Section-45X-of-the-Inflation-Reduction-Act-New-Tax-Credits-Available-to-Battery-Manufacturers">new measures put in place through the Inflation Reduction Act recently passed in the U.S.</a> and <a href="https://www.oklahoman.com/story/news/2023/03/13/volkswagen-electric-vehicle-plant-built-canada-not-oklahoma/69966935007/">individual state-backed support</a>.</p>
<p>Beyond that, the only thing we can be confident of is that the Canada-Ontario package did not mimic the approach of Nuevo Leon, Mexico, the location of a $10 billion Tesla battery factory. When that plant was announced earlier this month, it was confirmed <a href="https://www.reuters.com/technology/mexico-cant-match-us-incentives-proposed-tesla-battery-plant-minister-says-2023-03-04/">no government incentives had been offered</a>.</p>
<p>If the Canada-Ontario package turns out to be near the top of the scale, it was too expensive.</p>
<p>The all-in payroll for a 3,000-person battery plant in Canada over 30 years is about $10 billion, an amount that would effectively eliminate the payroll gap with Mexico. Matching Mexico’s labour costs is not a sustainable approach to industrial policy.</p>
<figure class="align-center ">
<img alt="Two men shake hands while two other men look on. A Canadian flag and a German flag stand in the background." src="https://images.theconversation.com/files/517046/original/file-20230322-984-6q37kh.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/517046/original/file-20230322-984-6q37kh.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/517046/original/file-20230322-984-6q37kh.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/517046/original/file-20230322-984-6q37kh.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/517046/original/file-20230322-984-6q37kh.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/517046/original/file-20230322-984-6q37kh.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/517046/original/file-20230322-984-6q37kh.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Former Volkswagen CEO Herbert Diess and Canadian Minister of Innovation François-Philippe Champagne sign an agreement as Canadian Prime Minister Justin Trudeau and Chancellor of Germany, Olaf Scholz, look on at an event hosted by the Canadian-German Chamber of Industry and Commerce in Toronto in August 2022.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Chris Young</span></span>
</figcaption>
</figure>
<h2>How else could $10 billion have been spent?</h2>
<p>For $10 billion, Canada could have launched its own EV maker. Instead of making batteries in a single plant in Ontario using technology developed in Europe for vehicles designed in Germany and assembled in the U.S. and Mexico, Canadians could have been steering their own creation, directing the most knowledge-intensive, highest-value aspects of the automotive value chain to Canadians.</p>
<p>That’s the approach planned or pursued <a href="https://www.hurriyetdailynews.com/togg-first-turkish-vehicle-sharing-pride-of-85-million-turks-erdogan-178088">by Turkey</a>, <a href="https://europe.autonews.com/automakers/poland-chooses-geely-ev-platform">Poland</a> and <a href="https://www.aljazeera.com/economy/2021/4/29/is-saudi-arabia-going-to-rev-up-a-homegrown-ev-maker">Saudi Arabia</a>.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1625253558227464216"}"></div></p>
<p>That said, the likelihood of a Turkish, Saudi, Polish or Canadian-inspired start-up becoming an enduring industrial policy-driven triumph is highly uncertain.</p>
<p>As it is, within a few years, the contractual production, employment and investment commitments that Volkswagen has agreed to in return for our governments’ largesse will lift, loosening Volkswagen’s ties to Canada. The point: throwing billions of dollars at an automotive enterprise, whether to build a single battery plant or to launch a brand-new automaker, is risky.</p>
<h2>The devil’s in the details</h2>
<p>Until we see details, we can only hope the Volkswagen package lies at the lower end of the scale: closer to the amount extended to LG-Stellantis for its Windsor battery plant last year. </p>
<p>While an offer in the $1 billion range does not say “we’ll build you your plant” or “we’ll use government money to eliminate a labour cost gap with Mexico,” it does telegraph: “We’re serious; we want you here; we want to help you succeed.” And if Volkswagen accepted an amount closer to $1 billion than $10 billion, it would suggest a similar commitment by the automaker.</p>
<p>In the end, the Volkswagen investment represents an important victory for St. Thomas and the southwestern Ontario automotive industry. Right now, it’s also a win for the economic development ministers in Ottawa and Queen’s Park. </p>
<p>What we don’t know yet is if the St. Thomas plant was “facilitated” with an incentive in the $1 billion range, or “bought” with a $10 billion cheque. When we learn that, we’ll know if the Volkswagen plant is truly a victory for Canada, Ontario and the people who paid for it.</p><img src="https://counter.theconversation.com/content/202406/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Greig Mordue receives funding from Social Science and Humanities Research Council (SSHRC)</span></em></p>For the kind of money the federal and Ontario governments probably spent for a Volkswagen EV battery plant in southwestern Ontario, Canada might have been able to launch its own EV maker.Greig Mordue, Associate Professor, ArcelorMittal Dofasco Chair in Advanced Manufacturing Policy, Faculty of Engineering, McMaster UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1725522021-12-02T16:04:51Z2021-12-02T16:04:51ZCanada must once again grab its share of the auto industry, despite U.S. protectionism<figure><img src="https://images.theconversation.com/files/434196/original/file-20211126-23-ft5tcv.jpg?ixlib=rb-1.1.0&rect=0%2C842%2C5464%2C2789&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The shift away from the internal combustion engine to electric vehicles is not a normal retooling of auto plants, but a full-scale recreation of the auto sector that will reshape the modern economy. Will Canada's auto sector be left in the wilderness?</span> <span class="attribution"><span class="source">(Marcin Jozwiak/Pexels) </span></span></figcaption></figure><iframe style="width: 100%; height: 175px; border: none; position: relative; z-index: 1;" allowtransparency="" src="https://narrations.ad-auris.com/widget/the-conversation-canada/canada-must-once-again-grab-its-share-of-the-auto-industry--despite-u-s--protectionism" width="100%" height="400"></iframe>
<p>The news that Tesla <a href="https://www.cnn.com/2021/10/25/investing/tesla-stock-trillion-dollar-market-cap/index.html">recently reached the extraordinary valuation of US$1 trillion</a> shows yet again that the automobile industry remains a huge economic force shaping the planet. </p>
<p>Tesla’s growth also reflects how the transition to electric vehicles (EVs) marks the fifth great wave of automotive investment since 1900. Despite not owning any car companies, Canada has benefited immensely from every previous wave thanks to shrewd policy-makers who used every tool possible to gain a fair share of the auto market.</p>
<p>But as the global industry <a href="https://www.reuters.com/business/autos-transportation/exclusive-global-carmakers-now-target-515-billion-evs-batteries-2021-11-10/">spends hundreds of billions of dollars to completely retool for an EV future</a>, how will Canada ensure it benefits from the current spending spree? </p>
<p>With the threat of <a href="https://www.autonews.com/regulation-safety/biden-spending-proposal-backs-union-made-ev-credit">protectionist measures in the United States aimed at keeping American EV investment at home</a>, a look back at the ways Canadians have adapted economically to secure auto investment shows how a peripheral economy gained a major auto sector — and how it might hold onto it in the electrified future.</p>
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Read more:
<a href="https://theconversation.com/canada-should-look-inward-to-address-american-protectionism-172274">Canada should look inward to address American protectionism</a>
</strong>
</em>
</p>
<hr>
<h2>In the beginning, there was Ford</h2>
<p><a href="https://www.ushistory.org/us/46a.asp">The first great auto investment wave, from 1900 to 1930</a>, created <a href="https://www.britannica.com/topic/Fordism">what’s known as Fordist (after Henry Ford, founder of Ford Motor Co.) mass production and consumption</a> and reshaped the world. </p>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/434198/original/file-20211126-1794-82bn4g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A man in a pale suit and dark tie sits on an antique car." src="https://images.theconversation.com/files/434198/original/file-20211126-1794-82bn4g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/434198/original/file-20211126-1794-82bn4g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=475&fit=crop&dpr=1 600w, https://images.theconversation.com/files/434198/original/file-20211126-1794-82bn4g.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=475&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/434198/original/file-20211126-1794-82bn4g.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=475&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/434198/original/file-20211126-1794-82bn4g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=597&fit=crop&dpr=1 754w, https://images.theconversation.com/files/434198/original/file-20211126-1794-82bn4g.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=597&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/434198/original/file-20211126-1794-82bn4g.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=597&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">In this 1942 photo, Henry Ford visits the shop where he built his first automobile in Detroit.</span>
<span class="attribution"><span class="source">(AP Photo)</span></span>
</figcaption>
</figure>
<p>Canada was in close proximity to Detroit — home of the Big Three automakers, Ford Motor Co., General Motors and Chrysler — and imposed a 35 per cent tariff on American imports, prompting Ford and other American automakers to establish branch plants in Canada to avoid them. </p>
<p>British preferential rules that encouraged the U.S. manufacturers to export to Commonwealth countries also helped to cement the emergence of an <a href="https://www.thecanadianencyclopedia.ca/en/article/foreign-investment">American-owned branch-plant sector</a>. By the 1920s, all of Canada’s domestic producers had perished because of technological and capital requirements that were beyond them.</p>
<p>Ontario’s close proximity to Detroit, along with these policies, made <a href="https://www.thecanadianencyclopedia.ca/en/article/automotive-industry">Canada the world’s second-largest producer of cars by the 1920s</a>.</p>
<h2>The golden age</h2>
<p>Following the Great Depression and the Second World War, the <a href="https://www.motortrend.com/vehicle-genres/american-car-industry-brands-1950s-history/">second great wave of auto investment lasted from the 1950s into the 1960s</a>. Spurred by post-war North America’s auto-brokered labour peace and its baby boom, Detroit’s Golden Age marked the apex of American global economic power and international investment. </p>
<p>Canadians dramatically reoriented <a href="https://www.cbc.ca/archives/entry/canadas-car-industry-before-the-auto-pact">their auto economy</a> to gain a share of this boom <a href="https://www.nber.org/papers/w1953">via the 1965 Canada-U.S. auto pact</a>. The deal sealed Canada’s American economic fate, but hard bargaining also resulted in smart interventionist Canadian measures that required U.S. assemblers to continue producing in Canada in exchange for cross-border, tariff-free trade.</p>
<figure class="align-center ">
<img alt="A large cream-coloured car with a brown roof with its trunk and hood open." src="https://images.theconversation.com/files/434199/original/file-20211126-23-13z42t1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/434199/original/file-20211126-23-13z42t1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/434199/original/file-20211126-23-13z42t1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/434199/original/file-20211126-23-13z42t1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/434199/original/file-20211126-23-13z42t1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/434199/original/file-20211126-23-13z42t1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/434199/original/file-20211126-23-13z42t1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A 1965 Pontiac Acadian is shown at the Motorama 2018 custom car show in Mississauga, Ont.</span>
<span class="attribution"><span class="source">(Joe DeSousa)</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Canadian production was mostly exported south, leading to another investment boom, <a href="https://www.autotrader.ca/newsfeatures/20160901/a-brief-history-of-auto-manufacturing-in-canada/">including new plants in Ontario and Québec</a>.</p>
<h2>OPEC complications</h2>
<p>The third wave was caused by <a href="https://www.jstor.org/stable/1830396">1970s regulatory automotive regime changes</a> in the fuel economy (the <a href="https://history.state.gov/milestones/1969-1976/oil-embargo">1973 OPEC embargo</a>), emissions control (the environmental movement) and safety (<a href="https://www.nytimes.com/2015/11/27/automobiles/50-years-ago-unsafe-at-any-speed-shook-the-auto-world.html">championed by consumer activist Ralph Nader</a>).</p>
<p>Forced to retool their factories to build smaller, lighter vehicles as nimbler foreign competitors devoured North American market share, the Big Three struggled to survive. By the mid-1970s, it looked like they might leave their Canadian branch plants out of the investment wave as they looked to retool their American factories, a dynamic similar to today. </p>
<p>But Canadian policy-makers hit upon a new tool: direct subsidies to manufacturers as investment incentives. In 1978, Canadian governments <a href="https://www.nytimes.com/1978/08/04/archives/ford-to-build-new-plant-in-canada-despite-strong-opposition-by-us.html">gave Ford $78 million for an engine plant in Ontario</a>, snatching it away from Ohio and fuelling American anger. </p>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/434201/original/file-20211126-17-nvfl45.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Auto workers assemble a Chrysler minivan." src="https://images.theconversation.com/files/434201/original/file-20211126-17-nvfl45.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/434201/original/file-20211126-17-nvfl45.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=798&fit=crop&dpr=1 600w, https://images.theconversation.com/files/434201/original/file-20211126-17-nvfl45.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=798&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/434201/original/file-20211126-17-nvfl45.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=798&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/434201/original/file-20211126-17-nvfl45.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1003&fit=crop&dpr=1 754w, https://images.theconversation.com/files/434201/original/file-20211126-17-nvfl45.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1003&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/434201/original/file-20211126-17-nvfl45.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1003&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Employees work on the newest minivan version on the assembly line in 2008 as Chrysler celebrated the 25th anniversary of the minivan at the assembly line in Windsor, Ont.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/ Dave Chidley</span></span>
</figcaption>
</figure>
<p>The Ford incentive resulted in near-permanent government financial support for the industry, including the 1980s Chrysler bailout, when Canadians demanded new product mandates (including the wildly successful Windsor-built minivan) in exchange for government support. Beneficial health-care policies and exchange rates also helped, and Canada came out of the 1980s disproportionately building nearly two cars for each one it consumed.</p>
<h2>Asian imports</h2>
<p>The fourth wave came in the 1980s, buffeted by a flood of inexpensive and reliable imports. Americans forced Japanese car companies to build plants in the U.S. by <a href="https://www.aeaweb.org/articles?id=10.1257/aer.89.3.400">imposing export restraints</a>. Ottawa, terrified the Japanese would simply source the Canadian market from their new U.S. factories, used both sticks and carrots to convince the Japanese to build complementary plants in Canada.</p>
<p><a href="https://books.google.ca/books?id=vio1NicC-QYC&pg=RA6-PT81&lpg=RA6-PT81&dq=canada+port+blockades+japan+autos&source=bl&ots=wGSKFv2gfH&sig=ACfU3U0Lpf5DSxJRsjwTWgeaFfdRAu4dbA&hl=en&sa=X&ved=2ahUKEwifjsH5p7H0AhVTjIkEHXCtA48Q6AF6BAgXEAM#v=onepage&q=canada%20port%20blockades%20japan%20autos&f=false">Port blockades, aggressive lobbying and threats of punitive content regulations</a> by Canadian policy-makers were paired with financial and infrastructure support as Toyota and Honda ultimately agreed to build facilities in Canada. Billions were invested and thousands of jobs were created.</p>
<h2>Profound recreation of the industry</h2>
<p>The fifth great global auto investment wave is now upon us, but it differs from the previous four in profound ways. </p>
<p>First, the shift away from the internal combustion engine is not a normal retooling of plants, <a href="https://www.forbes.com/wheels/features/electric-cars-overview/">but a full-scale re-creation of the industry</a> that will <a href="https://www.bloomberg.com/news/newsletters/2021-11-12/there-will-be-jobs-in-the-electric-vehicle-economy-kvwea84s">reshape the modern economy</a>. </p>
<p>EVs are among <a href="https://blog.wallbox.com/9-leading-ev-influencers-discuss-the-innovations-that-will-shape-the-future-of-electric-cars/">the greatest technological upgrades in human history</a> and will affect every aspect of the global political economy, from transportation networks to work, labour and international relations. </p>
<p>Second, EVs represent a huge step towards a decarbonized future and can help humanity avoid the worst effects of climate change. They’ll ideally lead to a system-wide cascade towards decarbonization, a scenario instigated by Tesla, which has proven that EV production is viable, scaleable and profitable. </p>
<figure class="align-center ">
<img alt="Cars charge up at an EV charging station with a solar panel above them and large cedar trees in the background." src="https://images.theconversation.com/files/434195/original/file-20211126-27-1wz8mi0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/434195/original/file-20211126-27-1wz8mi0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/434195/original/file-20211126-27-1wz8mi0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/434195/original/file-20211126-27-1wz8mi0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/434195/original/file-20211126-27-1wz8mi0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=565&fit=crop&dpr=1 754w, https://images.theconversation.com/files/434195/original/file-20211126-27-1wz8mi0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=565&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/434195/original/file-20211126-27-1wz8mi0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=565&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">An EV charging station under a solar panel.</span>
<span class="attribution"><span class="source">(Pexels)</span></span>
</figcaption>
</figure>
<p>Third, if sustained EV spending isn’t secured by Canadians, it may mean the end of assembly production for an already challenged domestic industry. Without ownership of any major car manufacturers and <a href="https://canada.autonews.com/article/20180110/CANADA/180119992/canada-s-auto-production-faces-decreasing-u-s-demand-report-warns">facing a steady two-decade decline in North American production share</a>, Canada has little say in EV investment decisions.</p>
<p>Added to this challenge is U.S. President Joe Biden’s Build Back Better legislation granting American consumers tax incentives for EVs built only with U.S. union labour. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/congress-is-waiting-on-the-cbo-for-its-build-back-better-report-but-how-did-fiscal-scorekeepers-come-to-be-so-powerful-in-politics-171642">Congress is waiting on the CBO for its Build Back Better report – but how did fiscal scorekeepers come to be so powerful in politics?</a>
</strong>
</em>
</p>
<hr>
<h2>Automakers pledge Canadian EV investments</h2>
<p>The Buy American measure threatens to divert future EV production from Canada, despite recent <a href="https://www.bloomberg.com/news/articles/2021-01-29/canada-s-ev-agenda-is-getting-supercharged-by-biden-ford-and-gm">Big Three promises to make EV investments at its Canadian plants</a>.</p>
<p>Unless Canada secures a share of the EV investment boom, expected to be in the hundreds of billions of dollars, it may lose its auto sector and thousands of direct and spin-off jobs. </p>
<p>Nonetheless, Canada’s potential as a source for EV battery components (<a href="https://www.cbc.ca/news/canada/toronto/ontario-electric-vehicle-mining-ring-of-fire-1.6238261">cobalt and lithium from Ontario’s Ring of Fire, for example</a>), <a href="https://www.ic.gc.ca/eic/site/auto-auto.nsf/eng/h_am02387.html">its excellent production record</a>, the willingness of policy-makers to provide incentives and union leaders to bargain production mandates may be enough to gain a share of the EV future. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/will-debt-liability-and-indigenous-action-see-the-sun-set-on-the-ring-of-fire-169311">Will debt, liability and Indigenous action see the sun set on the Ring of Fire?</a>
</strong>
</em>
</p>
<hr>
<p>So far, Canadians have secured some important investment promises, including <a href="https://www.cp24.com/news/union-reaches-deal-with-ford-with-nearly-2-billion-in-electric-vehicle-contracts-1.5114774">Ford’s $2 billion announcement to build up to five EVs at its Oakville assembly plant starting in 2024</a> (with $500 million of Canadian government funding), and <a href="https://windsorstar.com/news/windsor-part-of-44-5b-stellantis-plan-to-electrify-offerings-by-2025">a promise by Stellantis (formerly Chrysler) to build electric vehicles in Windsor by 2025</a>. </p>
<p>But the Canadian sector still faces an existential threat. It will take <a href="https://www.cbc.ca/news/business/electric-car-retaliation-column-don-pittis-1.6255204">some aggressive diplomacy and innovative policy-making</a> by governments and stakeholders to ensure that Canada doesn’t miss out on the most important wave yet of automotive investment.</p><img src="https://counter.theconversation.com/content/172552/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dimitry Anastakis has received funding from SSHRC in the past to study the auto industry in Canada.</span></em></p>A look back at how Canada secured auto investment in the past shows how a peripheral economy gained a major auto sector — and how it might hold onto it even in the face of U.S. protectionism on EVs.Dimitry Anastakis, Professor and LR Wilson/RJ Currie Chair in Canadian Business History, University of TorontoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1042122018-10-02T10:03:44Z2018-10-02T10:03:44ZHow is new NAFTA different? A trade expert explains<p>Leaders of the U.S., Mexico and Canada <a href="https://www.marketwatch.com/story/trump-today-president-predicts-easy-approval-for-newly-signed-trade-pact-with-canada-mexico-2018-11-30">have formally signed</a> a trade deal intended to replace NAFTA, but the new accord has a <a href="https://www.politico.com/interactives/2018/naftatimeline/">long road ahead</a> as lawmakers in all three countries must still pass it before it goes into effect. It took over a year of negotiations to reach this point.</p>
<p>So what’s changed from the 25-year-old North American Free Trade Agreement and why should you care? </p>
<p>The <a href="https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/united-states-mexico">text of the United States-Mexico-Canada Agreement</a> is <a href="https://www.thenewamerican.com/world-news/north-america/item/30208-new-nafta-text-of-u-s-mexico-canada-agreement-usmca-revealed">1,809 pages long</a> – about 100 more than the North American Free Trade Agreement – and includes numerous tweaks from its predecessor, both big and small. <a href="https://scholar.google.com/citations?user=rToS2UYAAAAJ&hl=en&oi=ao">I believe</a> three are especially noteworthy. </p>
<h2>Please pass the butter</h2>
<p>Since 1994, the U.S. and Canada <a href="https://ageconsearch.umn.edu/bitstream/16835/1/ag01fr01.pdf">have dropped tariffs</a> and other trade restrictions on most agricultural products, but there were a few exceptions, most notably dairy. </p>
<p>Dairy was a particularly problematic sticking point in the recent negotiations as the <a href="https://accounts.wsj.com/auth/sso/login?code=Zt6os4RvG0AtL2ui&state=http%3A%2F%2Fwww.wsj.com%2Farticles%2Fwhy-milk-matters-in-u-s-canada-trade-feud-1535803200&savelogin=on">U.S.</a> and <a href="https://slate.com/business/2018/06/trumps-beef-with-canadas-dairy-industry-explained.html">Canada</a> both have long histories of protectionist policies such as subsidies to dairy farmers, import quotas on milk and Canadian tariffs that range from 200 percent to 300 percent for exporting too much of a given product. </p>
<p>The new NAFTA <a href="https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2018/october/united-states%E2%80%93mexico%E2%80%93canada-trade-fa-2">begins to change that</a>, representing a big win for both countries, especially the U.S. </p>
<p>Under the new accord, Canada pledged to curb some of the ways it protects its dairy industry. As a result, <a href="https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2018/october/united-states%E2%80%93mexico%E2%80%93canada-trade-fact">more American milk, butter, cheese and other dairy products</a> will flow into Canada duty-free, with reciprocal treatment for Canadian dairy exports to the U.S. </p>
<h2>Made in North America</h2>
<p>The new agreement made big changes for auto manufacturers in hopes of ensuring more of those products are made in North America. </p>
<p>Starting in 2020, to qualify for zero tariffs when crossing borders, a car or truck must have <a href="https://www.washingtonpost.com/business/economy/us-and-canada-closing-in-on-a-new-nafta-deal-as-deadline-looms/2018/09/30/2ef72018-c50b-11e8-b1ed-1d2d65b86d0c_story.html">75 percent</a> of its components manufactured in Canada, the U.S. or Mexico, up from 62.5 percent currently.</p>
<p>Even more noteworthy, negotiators agreed to a new requirement that 40 percent to 45 percent of a vehicle’s components be made by workers earning at least US$16 per hour, which is about <a href="https://www.washingtonpost.com/business/2018/10/01/us-canada-mexico-just-reached-sweeping-new-nafta-deal-heres-whats-it/">three times more</a> than the average wage currently earned by Mexican autoworkers. </p>
<p>This change is huge, particularly for low-paid workers in Mexico.</p>
<h2>Keeping up with the times</h2>
<p>Almost a quarter century has passed since NAFTA was implemented in 1994. </p>
<p>And much has changed. The internet was still in its infancy, while smartphones and self-driving cars were barely imaginable.</p>
<p>That’s why <a href="https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2018/october/united-states%E2%80%93mexico%E2%80%93canada-trade-fa-1">modernization</a> – updating rules and standards to keep up with the times – is a critical and positive update to the trade deal tying the North American continent together. </p>
<p>While NAFTA was the <a href="http://www.buildingipvalue.com/05_XB/052_055.htm">first trade treaty</a> to include intellectual property protections, the high pace of innovation has made modernization of its provisions imperative.</p>
<p>The new agreement <a href="https://www.washingtonpost.com/business/2018/10/01/us-canada-mexico-just-reached-sweeping-new-nafta-deal-heres-whats-it/?utm_term=.7be0c4624366">includes</a> stronger protections for patents and trademarks in areas such as biotech, financial services and domain names – all of which have advanced considerably over the past quarter century. It also contains new provisions governing the expansion of digital trade and investment in innovative products and services. </p>
<p>Separately, negotiators agreed to update labor and environmental standards, which were not central to the 1994 accord and are now typical in modern trade agreements. Examples include enforcing a minimum wage for autoworkers, stricter environmental standards for Mexican trucks and lots of new rules on fishing to protect marine life. </p>
<p>Apart from the changes, there is one important thing about the original NAFTA that will stay, thanks to the <a href="https://www.washingtonpost.com/business/2018/10/01/us-canada-mexico-just-reached-sweeping-new-nafta-deal-heres-whats-it/?utm_term=.15f9401acfa4">insistence</a> of Canada. Chapter 19 is the dispute settlement mechanism that allows countries to seek remedies for breaking the rules. It’s like “trade court” and makes it much easier to challenge another country’s policies.</p>
<p>All in all, the new NAFTA is definitely a modern and updated version of its important predecessor, which the U.S. Department of Agriculture <a href="https://www.fas.usda.gov/sites/development/files/nafta1.14.2008_0.pdf">characterized</a> as one of the most successful trade agreements in history. But the question remains, will Congress and the other two parliaments pass it?</p><img src="https://counter.theconversation.com/content/104212/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Amanda M. Countryman receives funding from the United States Department of Agriculture and the National Science Foundation. </span></em></p>Canada, the US and Mexico have signed a deal to rip up the 25-year-old NAFTA and replace it with something new. But what’s actually changed?Amanda M. Countryman, Associate Professor of Agricultural Economics, Colorado State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1042152018-10-01T22:51:24Z2018-10-01T22:51:24ZThe winners and losers in the new NAFTA<figure><img src="https://images.theconversation.com/files/238795/original/file-20181001-195275-q4bs87.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Prime Minister Justin Trudeau and Minister of Foreign Affairs Chrystia Freeland arrive to hold a news conference on the United States Mexico Canada Agreement (USMCA) in Ottawa on Oct. 1, 2018.</span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Sean Kilpatrick</span></span></figcaption></figure><p>NAFTA is out but the <a href="https://www.cbc.ca/news/politics/usmca-nafta-trade-deal-1.4845219">United States-Mexico-Canada-Agreement (USMCA) is in.</a> </p>
<p>But how different is USMCA from NAFTA? Who loses and who wins? </p>
<p>Canadian negotiators and government officials are singing the praises of the new deal, still subject to approval by U.S. Congress. U.S. Trade Representative Robert Lighthizer and Foreign
Affairs Minister Chrystia Freeland said the agreement <a href="https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/september/joint-statement-united-states">“will result in freer markets, fairer trade and robust economic growth in our region.”</a> </p>
<p>They added: “It will strengthen the middle class, and
create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home.” </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/238793/original/file-20181001-195272-itl4r2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/238793/original/file-20181001-195272-itl4r2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=393&fit=crop&dpr=1 600w, https://images.theconversation.com/files/238793/original/file-20181001-195272-itl4r2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=393&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/238793/original/file-20181001-195272-itl4r2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=393&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/238793/original/file-20181001-195272-itl4r2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=494&fit=crop&dpr=1 754w, https://images.theconversation.com/files/238793/original/file-20181001-195272-itl4r2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=494&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/238793/original/file-20181001-195272-itl4r2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=494&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">In this January 2018 photo, Foreign Affairs Minister Chrystia Freeland, centre, talks with United States Trade Representative Robert Lighthizer, right, and Mexico’s Secretary of Economy Ildefonso Guajardo Villarreal during NAFTA renegotiations.</span>
<span class="attribution"><span class="source">(Graham Hughes/The Canadian Press)</span></span>
</figcaption>
</figure>
<p>It’s understandable that the chief negotiators would try to sell the deal as a win-win-win agreement, but, like any deal resulting from long and at times acrimonious negotiations, it’s not quite that simple.</p>
<h2>Challenging trade practices</h2>
<p>The most significant achievement by Canadian negotiators is their success in <a href="https://globalnews.ca/news/4422423/nafta-chapter-19-explainer/">preserving Chapter 19</a> from the original NAFTA. These provisions allow Canada, Mexico and the United States to challenge one another’s anti-dumping and countervailing duties in front of a panel of representatives from each country. </p>
<p>This is generally a much easier, less costly and more predictable process than trying to challenge a trade practice in a U.S. court. Canada has successfully used Chapter 19 to <a href="https://www.theglobeandmail.com/report-on-business/canada-calls-for-stop-to-us-softwood-lumber-duties/article37516085/">challenge the United States on its softwood lumber restrictions.</a></p>
<h2>Auto sector</h2>
<p>Canada has also staved off the tariffs Trump threatened to impose <a href="http://news.morningstar.com/all/canada-news-wire/20181001C6515/usmca-framework-achieves-auto-gains-unifor.aspx">on autos and auto parts</a> that could have devastated the Canadian auto industry, which contributes over $50 billion in income and sustains more than 500,000 direct and indirect well-paying jobs in Canada. </p>
<p>The agreement would shield the first 2.6 million Canadian car exports to the U.S. from any tariffs. This is significantly higher than the current 1.8 million cars that Canada on average exports to the U.S. annually. </p>
<p>Under the terms of the agreement starting in 2020, a car will qualify for tariff-free treatment only if 75 per cent of its contents are made in North America, up from 62.5 per cent in the current NAFTA. </p>
<p>In addition, at least initially, 30 per cent of the content must be produced by workers earning at least US$16 an hour. This will ramp up to 40 per cent in 2023. The wage is more than three times what the average Mexican autoworker earns now. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/238794/original/file-20181001-195256-vhq83l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/238794/original/file-20181001-195256-vhq83l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/238794/original/file-20181001-195256-vhq83l.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/238794/original/file-20181001-195256-vhq83l.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/238794/original/file-20181001-195256-vhq83l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/238794/original/file-20181001-195256-vhq83l.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/238794/original/file-20181001-195256-vhq83l.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A worker on the production line at Chrysler’s assembly plant in Windsor, Ont., works on a minivan in January 2011.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Geoff Robins</span></span>
</figcaption>
</figure>
<p>Despite these successes, there are a few negatives to contend with that would affect this key industry. The wage hikes required in Mexico will undoubtedly raise the cost of production of North American cars and render a good part of them non-competitive on world markets, particularly in Asia. </p>
<p>While higher Mexican wages may discourage auto makers in Canada and the U.S. to relocate to Mexico, the new rules could create strong incentives for American and Canadian auto makers to move to Asia.</p>
<h2>The dairy industry</h2>
<p>The U.S. has repeatedly complained about the unfairness of Canada’s protection of its dairy industry as if the Americans don’t protect their own farmers. The Canadian supply management system is a far more efficient way to protect farmers’ incomes than the farm price support system in place in the United States. </p>
<p>Nonetheless, the U.S. got its way, forcing Canada to yield a larger market share for American dairy farmers. While Canada, under the new terms of the Trans-Pacific Trade Agreement, was willing to grant a 3.2 per cent market share to trade partners, under the USMCA, it yields 3.6 per cent. </p>
<p>Perhaps more significant is Canada’s willingness to eliminate the
pricing scheme for what is known as Class 7 dairy products allowing U.S. producers to out-compete Canadian farmers.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-the-dairy-lobbys-cash-grab-put-canada-in-trumps-crosshairs-102974">How the dairy lobby's cash grab put Canada in Trump’s crosshairs</a>
</strong>
</em>
</p>
<hr>
<p>The government <a href="https://ipolitics.ca/2018/10/01/supply-management-saved-say-trudeau-and-freeland/">has already suggested</a> it will introduce
subsidies and farm income protection schemes that Canadian taxpayers will have to pay for. </p>
<h2>Drug patents</h2>
<p>A serious change is Canada’s acceptance of lengthening the patents of pharmaceutical companies to 10 years. This pretty much means that U.S. drug companies will now be able to sell pharmaceuticals in Canada for 10 years before facing generic competition. That’s up from the eight years of “market protection” that’s currently in place.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/nafta-negotiations-may-threaten-pharmacare-102851">NAFTA negotiations may threaten pharmacare</a>
</strong>
</em>
</p>
<hr>
<p>This means individuals, insurance companies and governments will pay more for pharmaceuticals.</p>
<h2>Intellectual property rights</h2>
<p>New and more stringent intellectual property rights rules and time limitations for the protection of patents and trademarks, including those for biotech, financial services and even domain names,
are included in USMCA. </p>
<p>While many believed that these updates were necessary given
that the original agreement was negotiated 25 years ago, Canada will benefit less from these protections than the U.S. given the differences in size of these sectors in both countries.</p>
<h2>Labour, environment</h2>
<p>The USMCA makes a number of significant upgrades to environmental and labour regulations, especially those in force in Mexico. The agreement stipulates that Mexican trucks that cross the
border into the United States must meet higher safety regulations, and that Mexican workers must have more ability to organize and form unions.</p>
<p>The real issue with these provisions, now as before, is this: Will these new standards be implemented in Mexico? <a href="https://www.theguardian.com/us-news/2018/aug/25/nafta-trump-drops-sunset-clause-demand-mexico">U.S. negotiators tried hard to introduce an automatic sunset clause on the deal but
failed to get their way.</a> </p>
<p>As things stand now, the USMCA stipulates that the three nations will automatically review the agreement after six years. If all parties agree it’s still working, then the deal will continue for the full 16-year period, with the ability to renew after that for another 16 years. </p>
<p>Trump did not get his wish for the sunset clause, but there will be an automatic review, although it won’t happen until long after Trump has vacated the Oval Office.</p>
<h2>Better than chaos</h2>
<p>So it’s incorrect to claim that all North Americans will be better off under the new deal. There will be losers, and there will be winners. </p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/238798/original/file-20181001-195260-t56ad4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/238798/original/file-20181001-195260-t56ad4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/238798/original/file-20181001-195260-t56ad4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/238798/original/file-20181001-195260-t56ad4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/238798/original/file-20181001-195260-t56ad4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/238798/original/file-20181001-195260-t56ad4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/238798/original/file-20181001-195260-t56ad4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">President Donald Trump announces a revamped North American free-trade deal in the Rose Garden of the White House in Washington, D.C.</span>
<span class="attribution"><span class="source">(AP Photo/Pablo Martinez Monsivais)</span></span>
</figcaption>
</figure>
<p>The new deal, on the whole, is not any better than the
old deal, but it’s surely better than the uncertainty created by renegotiating NAFTA and the chaotic atmosphere created by Trump during the negotiations. </p>
<p>Judging by the performance of the stock markets <a href="https://money.cnn.com/2018/10/01/investing/stock-market-today-usmca-ge-tesla-dow/index.html">in both the U.S.</a> and <a href="https://www.cbc.ca/news/business/markets-usmca-1.4845414">Canada since the deal was announced</a>, Canadians are less convinced than Americans about the net benefits. The TSX rose by a modest 31 points while the Dow Jones climbed 193 points. The Canadian dollar strengthened, but that’s a mixed blessing.</p>
<p>If there’s any lesson to be learned after months of tense negotiations, it’s this: Canada should never again allow itself to be overly dependent upon one trading partner. Canada must diversify its products and services that liberate Canadians from the stranglehold of geography.</p><img src="https://counter.theconversation.com/content/104215/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Atif Kubursi does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Who are the winners and losers in the new USMCA? It’s complicated, but one thing’s for certain: Canada should never again allow itself to be overly dependent upon one trading partner.Atif Kubursi, Professor Emeritus of Economics, McMaster UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/741002017-03-06T17:45:12Z2017-03-06T17:45:12ZPeugeot group’s past takeovers cast a shadow over Opel and Vauxhall<p>Pity the car maker trying to get coverage this week for a shiny new model or revised range at the <a href="http://www.gims.swiss/en/">Geneva International Motor Show</a>. The biggest topic of conversation there will not be anyone’s latest offering. Instead it will be the news that French group PSA – the maker of the Peugeot and Citroen brands – has <a href="http://www.bbc.co.uk/news/business-39175740">agreed to take over</a> General Motors’ Opel/Vauxhall group and its European finance operations for a combined €2.2 billion. </p>
<p>It is a deal that will fundamentally redraw the car-making map of Europe – again. You see, this isn’t the first time PSA has bought the loss-making European arm of a US auto maker, and if this acquisition plays out in the same way as the last one it could be grave news for plants in the UK.</p>
<p>In Coventry, in the West Midlands, locals still bitterly remember <a href="http://www.autocar.co.uk/car-news/industry/analysis-why-ryton-closing">PSA’s closure of its Ryton assembly plant in 2006</a> despite the effort put in by management and workforce to improve productivity and cut costs. </p>
<h2>Job cuts</h2>
<p>Ryton was one of the last remnants of the Rootes Group, a British car making giant in the middle of the 20th century which was <a href="http://www.rootes-chrysler.co.uk/">absorbed by the US Chrysler company in 1964</a>. For a while, the new arrangement worked well. But as Chrysler struggled to compete with Ford and General Motors in the 1970s US market, it starved its European arm of R&D cash. </p>
<p>Chrysler Europe’s myriad brands were rationalised and replaced by the Chrysler nameplate. Ultimately, the parent company divested itself of the European group for a nominal US$1 in 1978. The buyer was PSA Peugeot Citroën.</p>
<p>PSA rebadged European Chrysler cars under the Talbot brand, but did little to invest in new product. Instead it sold its Whitley engineering centre to Jaguar in 1986, and phased out Talbot models in favour of Peugeots. Ryton soldiered on until 2004 when PSA decided to build its 207 supermini elsewhere. <a href="http://www.telegraph.co.uk/finance/2937027/Midlands-fury-at-Ryton-closure.html">Ryton closed</a>, with a loss of 2,300 jobs. Some of those workers, and their families and friends, refuse to buy Peugeot cars to this day.</p>
<p>The closure of Ryton casts a long shadow over the new announcement. PSA will be looking to cut costs across its newly-expanded group and the two Vauxhall assembly plants in the UK, at Ellesmere Port on Merseyside and at Luton in Bedfordshire, will be under a renewed threat.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/159614/original/image-20170306-20767-utbpn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/159614/original/image-20170306-20767-utbpn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/159614/original/image-20170306-20767-utbpn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/159614/original/image-20170306-20767-utbpn.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/159614/original/image-20170306-20767-utbpn.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/159614/original/image-20170306-20767-utbpn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/159614/original/image-20170306-20767-utbpn.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/159614/original/image-20170306-20767-utbpn.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Playing for pride? There is a marketing risk in closures.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/dullhunk/7215097914/in/photolist-c2NuXJ-bZzgeU-Eag33d-EaAukz-F5EuFw-Eag3aY-Eag3jL-qwoWpB-8DBQb5-74Kw2G-74FCcg-74KvvQ-yghMcd-yvz6df-yxTGSH-yghyuu-yghNZG-LZjrbz-SqiDb">Duncan Hull/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>Top-sellers</h2>
<p>Then as now, UK plants are at risk not because they suffer from poor quality or high costs. Instead the problem is that <a href="https://www.ft.com/content/1c2b7178-cfc8-11da-80fb-0000779e2340">the UK’s more flexible labour laws</a> make it easier and cheaper to close a plant here than in France (where PSA’s biggest plants are located) or Germany (where most Opel production is based).</p>
<p>PSA may now find itself in the invidious position of being forced to close an efficient plant in the UK because the costs of closure – political, social and financial – are higher elsewhere.</p>
<p>But PSA cannot afford to ignore the UK completely. Britain is still the second biggest new car market in the EU, and Vauxhall is the second biggest brand in the UK. Its Corsa and Astra models were both top-ten best sellers in <a href="https://www.smmt.co.uk/2017/01/uk-new-car-market-achieves-record-2-69-million-registrations-in-2016-with-fifth-year-of-growth/">the UK car market in 2016</a>, and Vauxhall sold more than 250,000 cars for a 9.3% share of the market. By comparison PSA’s three brands sold just 161,000 cars between them in the UK last year.</p>
<p>And all may not be lost for the Opel/Vauxhall UK assembly plants in the UK. PSA aims to grow and <a href="https://theconversation.com/peugeot-bulked-up-with-gm-europe-could-leave-vw-looking-nervously-in-the-rear-view-mirror-73288">challenge Volkswagen</a> as the largest car maker in Europe and join <a href="http://www.telegraph.co.uk/business/2017/01/30/vw-overtakes-toyota-worlds-best-selling-car-maker/">the battle with Toyota</a> to be the largest in the world. To do that it will ultimately require greater capacity.</p>
<h2>Going in on a gamble</h2>
<p>PSA boss Carlos Tavares may be banking on the long-awaited recovery of the European car market. While the UK market is enjoying its best sales figures for years, Europe is yet to recover fully from the collapse in sales which accompanied the financial crisis in 2007. Tavares could be gambling that PSA will need to increase production as the European market recovers, which would dovetail with the extra capacity delivered by the Opel/Vauxhall acquisition.</p>
<p>Tavares will also see the UK plants as a hedge for PSA’s bets against the uncertainties of Brexit. Currency fluctuations and different trade tariffs between the eurozone and post-Brexit Britain could make a production facility outside the EU an advantage for PSA – if the UK plants can boost their proportion of local content from the current 25% or so. The recent news of a £10m investment by the Liberty House automotive group in a <a href="http://www.libertyhousegroup.com/news/liberty-unveils-10-million-automotive-centre-of-excellence/">new automotive centre of excellence in the Midlands</a> will give those plans a boost by encouraging growth in the UK supply chain.</p>
<p>Meanwhile, the disposal of Opel/Vauxhall may solve one immediate problem for GM but it also generates a series of new ones. For example, the D2XX platform that underpins Opel/Vauxhall’s Astra and other models is also the basis for US market models like the Buick Envision and Chevrolet Cruze, plus the Chinese market Buick Verano.</p>
<p>When the time comes to engineer replacements for those cars GM will no longer be able to use its European volume to spread the costs. Disposing of its European problem child could well make its US products more expensive. Ironically the solution to that might be for GM to do a platform-sharing deal – with PSA.</p><img src="https://counter.theconversation.com/content/74100/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andrew Noakes is chairman of The Guild of Motoring Writers.</span></em></p>The takeover of GM’s European brands has historic parallels – and implications for both Europe and the US.Andrew Noakes, Senior Lecturer in Automotive Journalism, Coventry UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/659082016-09-27T11:38:14Z2016-09-27T11:38:14ZA deal with McLaren would see Apple shift up a gear on car ambitions<figure><img src="https://images.theconversation.com/files/139225/original/image-20160926-31875-wy074e.jpg?ixlib=rb-1.1.0&rect=1%2C0%2C998%2C500&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/desvarenne_d/16616765108/in/photolist-rjngm9-2Roh6J-fJs5yZ-6K7S9t-iGrFx7-qGecet-hqTAGA-9fBw9D-jeGvEn-JH1Rg-5zUoz5-8bEw3J-nVGTgd-5gkwBP-rsxzV-CGTMdz-jeF3o2-bEZFAH-snxXSM-hqTd8j-eYKZxo-jeHa1q-rB2XWx-orLYgv-jeKi35-bdFyjZ-hqTASf-qoqRV3-79vYML-hqTa4J-6AVpKo-hqT1tr-hqTdgA-dnJVRL-hqTa9J-qBAtVU-ryzZsc-gNn1nZ-7Kkc5E-oM6Jq1-m7Uosj-rh2ARq-aoR6c3-oNRxHR-bER8vg-gNmNv2-aopP93-oP6FeA-rwiFuo-GVAwH">Damien/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span></figcaption></figure><p>British supercar maker McLaren <a href="http://www.bbc.co.uk/news/business-37435865">may be denying</a> that it is in <a href="https://www.ft.com/content/523422ba-7ffd-11e6-8e50-8ec15fb462f4">talks with Apple</a> about a potential tie-up, but the firm can’t deny that the idea actually makes some sense. </p>
<p>Apple has long been rumoured to be working on its own electric and autonomous car, under its <a href="http://www.businessinsider.com/everything-we-know-about-apples-project-titan-electric-car-2016-8?IR=T">secretive “Project Titan”</a>, and a tie up with an auto firm or supplier was anyway something analysts had been speculating about for some time. </p>
<p>But on first inspection, McLaren’s products don’t seem such an obvious strategic fit for Apple’s car plans.</p>
<p>The company may be based in <a href="http://www.visitsurrey.com/explore/woking-p219311">modest and unremarkable Woking</a>, in south-east England, however its products are anything but. Even the most “basic” of McLaren’s cars – <a href="http://www.topgear.com/car-reviews/mclaren/v8-2dr-ssg-auto/first-drive">the 540C</a> – starts at an eye-watering £125,000, even before being loaded with extras. It features a host of exotic technologies which you wouldn’t think would feature on an “iCar” designed for the mass market which Apple has <a href="http://www.forbes.com/sites/chuckjones/2016/02/21/apples-iphone-market-share-vs-profits/#61b1f3e046f8">targeted so successfully</a> with it computers, iPods and iPhones. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/139226/original/image-20160926-31849-15tkuz8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/139226/original/image-20160926-31849-15tkuz8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/139226/original/image-20160926-31849-15tkuz8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/139226/original/image-20160926-31849-15tkuz8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/139226/original/image-20160926-31849-15tkuz8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/139226/original/image-20160926-31849-15tkuz8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/139226/original/image-20160926-31849-15tkuz8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/139226/original/image-20160926-31849-15tkuz8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/kongjak1/17244533516/in/photolist-rvMXp7-sgQK2o">H.B. Kang/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<h2>A hybrid deal?</h2>
<p>Nevertheless, linking up with McLaren could be a smart move for Apple, and indeed McLaren. The latter has great expertise in a range of areas such as design, engineering, electronic control systems and lightweight materials. </p>
<p>As <a href="https://www.theguardian.com/technology/2016/sep/21/apple-mclaren-acquisition-formula-1-self-driving-car">media reports note</a>, McLaren already has experience in electric vehicles. It is thought to be working on making electric drive trains lighter to make electric vehicles (EVs) more efficient; a technology Apple might find useful in its own EV development.</p>
<p>McLaren has a <a href="http://www.mclaren.com/formula1/heritage/cars/">long and successful history</a> in the Formula 1 motor racing championship. Its luxury vehicle business emerged out of more than 50 years of race experience. This background in the pursuit of speed and raw horsepower might appear not to chime with Apple’s aspirations, but it’s worth noting that modern F1 cars – <a href="http://www.mclaren.com/formula1/car/">including McLaren’s</a> – are essentially hybrids with energy recovery systems.</p>
<p>More broadly, the cost and challenge of developing driverless or autonomous cars is driving partnerships and <a href="http://www.popsci.com/audi-bmw-daimler-enter-autonomous-car-race">takeovers</a> across the industry, including in the supply chain.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/139235/original/image-20160926-31862-1mmq7jc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/139235/original/image-20160926-31862-1mmq7jc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/139235/original/image-20160926-31862-1mmq7jc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=402&fit=crop&dpr=1 600w, https://images.theconversation.com/files/139235/original/image-20160926-31862-1mmq7jc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=402&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/139235/original/image-20160926-31862-1mmq7jc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=402&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/139235/original/image-20160926-31862-1mmq7jc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=505&fit=crop&dpr=1 754w, https://images.theconversation.com/files/139235/original/image-20160926-31862-1mmq7jc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=505&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/139235/original/image-20160926-31862-1mmq7jc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=505&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Early prototype?</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-123983275/stock-photo-funny-snack-for-a-child-in-a-shape-of-a-car.html?src=EHttheQXB0GSbhf3taCTsw-1-1">photka/Shutterstock</a></span>
</figcaption>
</figure>
<p>Project Titan itself is rumoured to have <a href="http://www.nytimes.com/2016/09/10/technology/apple-is-said-to-be-rethinking-strategy-on-self-driving-cars.html?_r=0">changed tack of late</a>, with Apple thought to be focusing more on developing autonomous technologies rather than a whole car. At some point Apple may choose to link up with an automotive player – whether a supplier or an established high-volume manufacturer such as Ford or Volkswagen. </p>
<h2>F1 example</h2>
<p>Meanwhile, the huge cost of developing autonomous technologies is a challenge for McLaren. Last year McLaren Automotive had revenues of £475m and made a pre-tax profit of £5.4m on some 1,600 cars delivered. It spent £124m on R&D. By stark contrast, Apple had revenues of US$231 billion last year and a pre-tax profit of US$72 billion (£55.6 billion).</p>
<p>Although buying McLaren for £1-1.5 billion would be barely noticeable for Apple given its cash pile of over £50 billion, a more selective partnership might make more sense as it could be other technologies that Apple is really after.</p>
<p>Perhaps of most interest for Apple is <a href="http://www.mclaren.com/appliedtechnologies/">McLaren Applied Technologies (MAT)</a> which has experience in applying the firm’s technology to other areas, through its development of smart products, smart data systems, virtual test and development environments, and control systems.</p>
<p>When success and failure in F1 can come down to hundredths of seconds in a pit stop to change tyres, collecting and using real time data becomes critical for teams. McLaren – like other F1 firms – uses sensors in its race cars to collect data on things like tyre pressure, brake temperature, the impact of force and so and uses this mass of data to continually improve car performance and inform team strategy through its “predictive analytics” expertise.</p>
<p>Via MAT, the firm’s technology has been applied to a wider range of <a href="http://www.mclaren.com/appliedtechnologies/innovation">other sectors</a>. It has developed <a href="http://www.mclaren.com/appliedtechnologies/case-study/stowhealth-obesity-trial">health</a> monitoring systems, speeded up drug trials run by <a href="http://www.mclaren.com/appliedtechnologies/case-study/gsk">pharma firms</a>, and cut the time <a href="http://www.mclaren.com/appliedtechnologies/case-study/ekofisk">oil and gas drillers</a> spend on exploration.</p>
<p>The firm’s “Decision Insight” platform was also used by the National Air Traffic Control Service (NATS) and Heathrow Airport <a href="https://www.jamesallenonf1.com/2014/03/mclaren-to-use-f1-technology-in-improving-heathrow-airport/">to build a system</a> that enables controllers to optimise the flow of air and ground traffic. That can bring all sorts of benefits, such as through reducing delays, reducing emissions, and improving efficiency.</p>
<p>MAT is also developing <a href="http://www.mclaren.com/appliedtechnologies/case-study/future-wearable-technology">wearable technology</a> to collect personal data that makes it easier for people to record and analyse their lives whether exercising, undergoing treatment for an illness or participating in a clinical trial.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/139238/original/image-20160926-31862-1dxx2bi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/139238/original/image-20160926-31862-1dxx2bi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/139238/original/image-20160926-31862-1dxx2bi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/139238/original/image-20160926-31862-1dxx2bi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/139238/original/image-20160926-31862-1dxx2bi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/139238/original/image-20160926-31862-1dxx2bi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/139238/original/image-20160926-31862-1dxx2bi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/139238/original/image-20160926-31862-1dxx2bi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">McLaren has clear aesthetic links with Apple. Inside the the Woking production centre.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/bisgovuk/6465408953/in/photolist-egNhGC-A4KY2-A4KCr-A4KBn-aRjK54-aRjUQa-aFtG1D-7xUvKs-f3kBWJ-5fThr7-fw7tsk-f3kCeU-aRjE9v-aRjScX-7xQDzi-aFtGfR-5fNWeR-f3kydu-f3kC7m-f36k1Z-f36jWX-f36k6v-f3kyk5-f3kCdQ-f36jZv-7xQGrp-7xQCcT-fwmHS1-uRtnZ-azb5MD-f3kC2S-apU49X-4NdmEn-9cAPgL-f36oQP-f36oLr-f36oWZ-f3kBUd-fw7sbk-fwmDNN-apU4Gx-uRtqu-fwmHCU-4zf2pr-fw7sAg-bL5jmV-bxaBxs-69dC5T-xi2DXs-xbadwC">Department for Business, Innovation and Skills</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<h2>High ambitions</h2>
<p>All of this could be of interest to Apple, both in terms of developing its own cars, but more likely in applying McLaren technologies in different ways.</p>
<p>McLaren itself has some ambitious plans. Its <a href="http://cars.mclaren.com/featured-articles/track22.html">“Track 22” expansion plan</a> involves spending £1 billion over the next six years with the aim of developing a range of new models and tripling sales. It hopes to sell 4,500 cars a year by 2022. </p>
<p>A strategic investment from Apple could push that along while enabling Apple to access McLaren’s technologies which are likely to become even more relevant in an area of <a href="https://www.weforum.org/agenda/2016/06/how-the-fourth-industrial-revolution-is-powering-the-rise-of-smart-manufacturing">smart manufacturing</a> and <a href="https://www.theguardian.com/technology/2015/may/06/what-is-the-internet-of-things-google">the internet of things</a>.</p>
<p>The likelihood of Apple buying the whole of McLaren and getting into F1 racing is pretty remote, as intriguing as it might be. Apple is more likely to want access to MAT’s remarkable technologies, which McLaren itself needs to underpin its own competitiveness in F1 racing.</p>
<p>So while a takeover is unlikely, a strategic investment by Apple in McLaren might be of interest to both firms.</p><img src="https://counter.theconversation.com/content/65908/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Bailey receives funding from the EU Horizon 2020 project MAKERS, which is a Research and Innovation Staff Exchange under the Marie Sklodowska-Curie Actions, grant agreement number 691192.</span></em></p>A Woking-Cupertino tie-up seems implausible at first glance, but there is plenty up for grabs which could suit both companies.David Bailey, Professor of Industry, Aston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/634672016-09-07T12:44:01Z2016-09-07T12:44:01ZTo drive Bond-style classic cars into the future, Britain needs a new generation of Qs<figure><img src="https://images.theconversation.com/files/136878/original/image-20160907-25244-1l58mpj.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C1024%2C682&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/jimmonk/9904636403/in/photolist-g6eRka-g6e36c-poQdWK-g6eaxe-g6dGe7-g6difw-g6ekc7-p7k3cg-5oVUgY-7aZLkW-p3Fimt-7aFssq-FG64EZ-79YSEc-BYeohB-719g9Q-7bQUoB-7aZGSL-719dRj-qQfmWw-8DJbaN-719epu-8DENYT-C3sULz-b6DKRe-7aZJju-pdmcMv-7aBFst-pN1BLz-pvQBQ4-p7kYvf-pzUiuL-5oRUm8-pnx2EC-oZ1ybz-7aVSBB-719ftS-8DJ5J5-CizyjK-hesbCj-8DF6r4-pethV2-8DF6j2-8DJ4Bf-apfyCw-iMoXzk-apfCFN-bdhmig-g9eztH-78pthF">Jim Monk/Flickr</a></span></figcaption></figure><p>Britain excels at heritage-as-spectacle affairs, and they rarely get better than the <a href="https://www.goodwood.com/flagship-events/goodwood-revival/">Goodwood Revival</a>. The latest instalment of this classic motoring festival kicks off on Friday September 9, at a historic racing track in the heart of the Sussex countryside. Since its launch in 1998, it has become phenomenally successful. More than 100,000 visitors come through the gates over three days, the majority in meticulously curated <a href="https://www.goodwood.com/flagship-events/goodwood-revival/explore-revival/best-dressed/">vintage outfits</a>. But the real magic is the dedication, skills and labour which underpin the nostalgia by getting the cars to the track in the first place. </p>
<p>Goodwood might be <a href="https://www.hagerty.com/articles-videos/Articles/2007/09/27/The-Best-Event-in-the-World">the best event of its type in the world</a>. Only vehicles that would have been eligible to race on the original circuit from 1948 to 1966 are allowed to do so now, and all other vehicles on the grounds have to be of the same period. Rare and beautiful beasts and gems arrive in “concours condition” while thousands more are found in the visitors’ parking. </p>
<p>Beyond Goodwood, there are more than <a href="http://www.fbhvc.co.uk/research/">850,000 “classic cars”</a> being kept from the scrap heap in the UK. That is thanks in part to the financial commitment and dogged devotion of owners, but in reality, the show can only go on thanks to the largely invisible labour of mechanical specialists, panel beaters, painters, welders, coachwork specialists, trimmers and other craftspeople who nurture and heal the classics’ many aching joints. </p>
<p>Behind every <a href="http://subscribe.octane-magazine.com/news/what-next-for-the-barn-finds/">barn-find-to-auction star </a> and <a href="http://www.westernmorningnews.co.uk/alan-family-heirloom-drive-classic-car-title/story-17361782-detail/story.html">heirloom car</a> is the story of those who repair, restore and maintain these machines laden with tales and memories. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/136880/original/image-20160907-25272-1a2kyy6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/136880/original/image-20160907-25272-1a2kyy6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/136880/original/image-20160907-25272-1a2kyy6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/136880/original/image-20160907-25272-1a2kyy6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/136880/original/image-20160907-25272-1a2kyy6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/136880/original/image-20160907-25272-1a2kyy6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=504&fit=crop&dpr=1 754w, https://images.theconversation.com/files/136880/original/image-20160907-25272-1a2kyy6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=504&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/136880/original/image-20160907-25272-1a2kyy6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=504&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Seen better days.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/waynerd/6277122067/in/photolist-ayFTGx-84NUjB-84S2Zf-84S24Y-owWQhG-84S291-4kih9Y-cmPMbN-6czS6Q-84S2z7-dutQZb-85XAaj-84S2xY-6WJPSH-bxaep1-9z7LLf-a7snLR-dQPMVf-6WNMcm-84NTQg-4o2AGW-5gco6S-93pSKx-6Xk3Gs-aFnNv6-aoLEy4-6L7p5R-8K5XBR-6Xk1fm-84anun-8JcVie-84a5GD-6WJQzD-9YJVdj-biatGc-aoEENf-84d9Yd-dutQgC-a7veRN-7wXNK8-84a5ZB-84ao8Z-a7veYC-6M1kgy-6LBQN6-anBrMX-dAC9fw-an5GYA-diAiXP-aoBVkt">Wayne Stadler/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<h2>Generation gap</h2>
<p>You can meet some of the specialist engineers behind the celebrated racing cars in the Goodwood Revival paddocks (special passes are required for this inner sanctum). However, the vast majority of classic car workers are toiling away across the country in small workshops and garages, often self-employed. Many are getting on a bit, becoming that grey-haired craftsman who knows how to fix things they don’t make anymore. </p>
<p>And so the <a href="http://www.fbhvc.co.uk/trade-and-skills/">Federation of Historic Vehicle Clubs</a> says we have a “ticking time bomb”: an imminent shortage of specialist skills for the classic cars we seem to love more and more. <a href="http://www.practicalclassics.co.uk/">Practical Classics</a>, a leading sector magazine with a firm hold on the grassroots’ pulse, found in a recent survey that craftsmen with traditional skills are retiring faster than they can be replaced. Attempts to bring more young people into suitable training having “only limited, localized success”. </p>
<p>This is not just bad news for classic car obsessives, but offers another angle on the well-known British demand-and-supply skills mismatch. The <a href="http://www.fbhvc.co.uk/research/">Historic Vehicle Research Institute estimated in 2011</a> that classic motoring as a sector generates over £4 billion and more than 28,000 people earn all or some of their living from it. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/136882/original/image-20160907-25244-1jtz98l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/136882/original/image-20160907-25244-1jtz98l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/136882/original/image-20160907-25244-1jtz98l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=376&fit=crop&dpr=1 600w, https://images.theconversation.com/files/136882/original/image-20160907-25244-1jtz98l.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=376&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/136882/original/image-20160907-25244-1jtz98l.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=376&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/136882/original/image-20160907-25244-1jtz98l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=472&fit=crop&dpr=1 754w, https://images.theconversation.com/files/136882/original/image-20160907-25244-1jtz98l.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=472&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/136882/original/image-20160907-25244-1jtz98l.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=472&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Spanner in the works?</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/jez_b/9883099574/in/photolist-fpi1Eq-oX5hoA-zjzqR3-ymjKDH-xozX6Q-g4ktbw-oX64CJ-asabB4-daRGhS-daRHES-apaqLS-gA5Nww-daRFra-qEQE5k-dd75ub-apaqFb-75DfVo-qJLc8P-dbhE52-qUoemr-8CbaaX-ao1nM2-dg6jpD-ap7ExH-ao1omT-8BVqTh-gA2JQh-ChF1xr-ap7DYr-ao3QuL-6Hjh9w-9ERLGU-5pjxBk-5poMzb-psACAJ-6Hj5CJ-5poNsu-5s75R4-qXi7TP-apb6WM-5sbqfA-6ZNpF2-CiM4zX-dg6jFV-gA3cWo-gA5Ghs-yAGNgj-ARJQyV-yka4YH-w7ujXh">Jez/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>Given the rise of a broader “vintage economy”, even the more humble classic family car can be worth something if some time and money is put into it. Check any local paper and there will likely be a classic car event near you, not to mention a full calendar of massive national events like the annual shows at <a href="http://www.necclassicmotorshow.com/">Birmingham’s NEC</a>. Sector media is rich, varied and globally acclaimed, auction houses and dealerships have done well out of the boom. <a href="https://www.classicdriver.com/en/article/cars/where-collector-car-market-going-say-experts">Despite a recent “cooling off”, the sector has grown rapidly in recent years</a>. The trouble is that the skills base is contracting. </p>
<h2>Diversion</h2>
<p>Classic car hobbyists have traditionally been amateur restorers or at least repairers. For many, much of the fun in classic car ownership is in the “tinkering” with a project car. As modern cars have become more dependent on electronics, first-hand experience of getting hands dirty fixing things has <a href="http://www.dailymail.co.uk/news/article-1337595/Modern-cars-baffling-DIY-mechanic.html">steeply declined</a>. As a new generation becomes interested in classic cars, they are also less able than ever to do the work themselves. That should further increase the demand for a skilled workforce. </p>
<p>So far, most of the lobbying and publicity has focused on apprenticeships, with the <a href="http://www.activatelearning.ac.uk/news/classic-vehicle-apprenticeship-fill-skills-gap">oft-repeated assertion </a> that 1,000 are needed to replenish the sector. Several colleges including Banbury and Bicester, City of Oxford, Reading and central Nottingham – near concentrations of car and classic car specialists – have launched schemes in recent years. Trainees are typically at a college 1-2 days a week and spend 3-4 days at the workplace, leading to Level three qualifications in around 36 months. </p>
<p>This sounds great on paper, but numbers are nowhere near what is desired despite good retention rates and decent buy-in from employers. One issue might be age: current funding schemes basically demand that over-25s pay their own way. This curtails their recruitment into a field most become aware of and drawn to slightly later in life. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/136884/original/image-20160907-25260-1ii2euk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/136884/original/image-20160907-25260-1ii2euk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/136884/original/image-20160907-25260-1ii2euk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=434&fit=crop&dpr=1 600w, https://images.theconversation.com/files/136884/original/image-20160907-25260-1ii2euk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=434&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/136884/original/image-20160907-25260-1ii2euk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=434&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/136884/original/image-20160907-25260-1ii2euk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=545&fit=crop&dpr=1 754w, https://images.theconversation.com/files/136884/original/image-20160907-25260-1ii2euk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=545&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/136884/original/image-20160907-25260-1ii2euk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=545&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Biker at Goodwood 2014.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/steelerobert/15230903351/in/photolist-pcUmVV-p7kRSN-8MmcsP-7y3Vwk-aq1FU2-5oY4vT-djiEGr-djiCxD-8BSgUp-dguzkp-3wcSoG-aq1HwK-fvgtrS-pXWc8j-djS5po-djiyjV-8MmJpX-djRXKY-djj6aU-7y3YDt-djiz6i-djiCfj-dguB59-fY2qEY-7y7K3E-p7mRNp-djRXV5-aq4icA-gr7H71-djiysi-djS2UX-poP841-djiAvf-djS9gP-djiwPu-djS8Sa-poQirr-dguKda-5p3ozS-peJzAV-diYW35-dguD2o-7y7MHd-5p3quw-fSQ8cG-dguEAo-db5yr1-7y7NyL-dguyMZ-aq1xhg">Robert/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<p>This aligns with what is witnessed at the renowned full-time classic car restoration college course at <a href="http://www.leedscitycollege.ac.uk/courses-apprenticeships/departments/motor-vehicle-studies/motor-vehicle-classic-car-restoration-imial-diploma-level-2/">Leeds City College</a>, one of a handful in the country. Cohorts of 10 to 15 routinely comprise of trainees with highly varied career experiences behind them, many in their late 20s and early 30s. It is a big financial sacrifice and the decision to pursue something they love often follows from substantial soul-searching. If the accessibility to a broader age-range of trainees could be married with the practical experience provided by the apprenticeships schemes, it would be very good news for the future of historic motoring in the UK. </p>
<p>The Goodwood Revival roars on with all the self-assuredness of <a href="https://www.astonmartin.com/en/heritage/james-bond">James Bond’s Aston Martin</a> on a winding country road on a fine day. But it was always Q who kept Bond moving, and to make sure the ride is smooth and long into the future, Britain would be wise to make sure there are plenty more Qs in the making.</p><img src="https://counter.theconversation.com/content/63467/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ödül Bozkurt is a member of the SAAB Owners Club and a volunteer paddock steward at the Goodwood Revival. </span></em></p>The Goodwood Revival is a celebration of classic cars and the art of keeping them on the road and race track. Sadly, it is a dying art.Ödül Bozkurt, Senior Lecturer in Work and Employment, University of Sussex Business School, University of SussexLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/479922015-09-23T23:22:18Z2015-09-23T23:22:18ZDespite Volkswagen cheat, clean diesel is good technology today and for the future<figure><img src="https://images.theconversation.com/files/95949/original/image-20150923-2634-b5ezmc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Still a lot of good under the hood. </span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/please/125128303/in/photolist-7KvAaE-7FVyUw-a5Httv-a5Htwk-a5Htvz-a5LkuC-a5LkA7-a5Lky3-5VfqMa-bneSXt-bneSPa-9x41iQ-bydDRB-oqAzUS-e3xrfC-SYvvq-57NYWv-4oCQNL-4oyMaZ-2aoziu-4DwP1N-5i3bMk-c4jVF-c4mrw-5uMtde-c4jhx-c4kBa-dVkwQj-dVeVyZ-ascCtu-asf2dy-asa3QK-ascqR4-aseUdQ-7R1bEe-hbuHL-6ARVzu-ascaKt-asi3YK-askJT7-as9WxK-as9T6c-asfPgZ-3Vjrm-gSEfGx-3Vjrk">please/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>The discovery that Volkswagen circumvented <a href="http://www3.epa.gov/otaq/cert/documents/vw-nov-caa-09-18-15.pdf">EPA emissions tests</a> in diesel-powered vehicles has led to a massive recall, the resignation of the company’s CEO and many disillusioned customers. </p>
<p>As VW seeks to repair its damaged image, many now question whether clean diesel technology is as clean as it’s been marketed.</p>
<p>As a diesel technician turned instructor, I see the clean diesel solution as a viable option for sustainable transportation in the long term, even despite the current debacle. It’s still unclear why VW decided to evade emissions tests. But the technology to meet the EPA air pollution standards and still achieve relatively high fuel efficiency exists today, whether it’s from Volkswagen or other carmakers.</p>
<h2>VW’s hack</h2>
<p>The current VW scandal, which I’ve seen labeled “dieselgate” now on many social media groups, involves <a href="http://www3.epa.gov/airquality/nitrogenoxides/health.html">nitrogen oxides</a> (NOx), gases that are formed in an engine by the nitrogen and oxygen from the air. The company wrote software that was able to recognize the conditions typical of an emissions test. During testing, the controls that limit the production of these pollutants were turned on. When on the road, the controls were turned off. </p>
<p>Today’s clean diesel-powered passenger car represents an average 20% improvement in fuel economy over similar gasoline powered models. I personally own two TDI Jettas and previously a gasoline-powered model. I averaged 27 mpg in the gasoline car, while the TDI that I primarily drive averages 49.1 mpg – same driver, same model year, same routes. </p>
<p>The better fuel economy does come with a trade-off with emissions, however. Though the total amount of emissions of the average clean diesel are similar to or lower than an equivalent gasoline engine, the compounds are different. The two primary exhaust elements of a modern diesel are Particulate Matter (PM or soot), which is essentially unburned fuel, as well as nitrogen oxides (NOx) – including nitric oxide and nitrogen dioxide.</p>
<p>In a combustion engine, fuel mixes with air in a cylinder and combusts to drive the pistons. NOx is produced in diesel vehicles because the engines run with 25% to 500% more air relative to fuel than most gasoline engines. NOx is a byproduct of air being heated beyond 2,900 degrees Farenheit. A lean-burning diesel engine has plenty of air left in an engine cylinder after combustion. That creates the conditions for NOx to be produced from nitrogen and oxygen in the hot air remaining in the cylinder after combustion.</p>
<p>Particulate Matter (PM) would historically be seen as black smoke, though the majority of remaining PM emissions today are largely undetectable. PM emissions traditionally have been the biggest knock on diesels, though NOx typically carries the more severe consequences. </p>
<p>NOx emissions, among other things, have been identified as a cause of acid rain, photochemical smog (the smog you can see above high-traffic areas) and as contributors to emphysema and bronchitis. </p>
<h2>Clamping down on NOx</h2>
<p>Clean diesel engines today utilize two primary devices to control NOx formation: Exhaust Gas Recirculation (EGR) and Selective Catalytic Reduction (SCR). </p>
<p>EGR functions on the principle that previously consumed gases from within the engine are passed back into the engine. These gases take up room in engine cylinders where nitrogen and oxygen-rich air could otherwise exist and combine to form NOx. The presence of this inert gas from the engine exhaust lowers the temperature inside the engine below the 2900 degree threshold, thus minimizing NOx production.</p>
<p>SCR serves to cleanup any remaining NOx that EGR was unable to eliminate. SCR works by spraying a fluid known as Diesel Exhaust Fluid (DEF) into the exhaust stream to create a chemical reaction. Diesel exhaust fluid, essentially water and <a href="http://pubchem.ncbi.nlm.nih.gov/compound/urea#section=Top">urea</a>, reacts with the exhaust inside a catalyst to convert any remaining NOx into harmless nitrogen and water. SCR did not exist on Jetta and Golf models until 2015, though it was on Passat models starting in 2013. </p>
<p>The emissions control technology today, though quirky at times (it’s still in its relative infancy), is effective. </p>
<p>The unknown at this point in time is why Volkswagen Group chose to circumvent their own very effective emissions solution. One possible reason is to keep potentially dirty exhaust gas out of the engine to prevent a need for premature maintenance, as diesel exhaust can clog air intake eventually when it’s recirculated. The other reason that keeps rolling around in my mind is whether it was an attempt to reduce the consumption of diesel exhaust fuel in order to lower costs for consumers. </p>
<p>Preventing the exhaust gas recirculating function from working can improve the car’s performance, both in terms of fuel efficiency and acceleration. But current technology is more than capable of meeting both EPA emissions limits and delivering the high fuel efficiency Volkswagen touted before dieselgate. </p>
<h2>Come a long way</h2>
<p>In the 1980s, a diesel-powered car or light truck in the United States conjured thoughts of smoke, noise and poor reliability, leaving most of the around <a href="http://goo.gl/erXkhY">400,000</a> diesel buyers disheartened. Fast forward to the late 1990s when Volkswagen brought the economical diesel back to the US – with a vengeance. From 1994 to 2006 alone, Volkswagen’s diesel sales in the US increased <a href="http://goo.gl/9NhKsn">1,500%</a>. </p>
<p>The clean diesel solution has a nearly cult following. TDI owners pile miles on their vehicles, including cross-country road trips and, because of the diesel engine’s ample torque, can use the Jetta and Golf passenger cars as many use trucks. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/95951/original/image-20150923-2611-9aqcrs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/95951/original/image-20150923-2611-9aqcrs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/95951/original/image-20150923-2611-9aqcrs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=488&fit=crop&dpr=1 600w, https://images.theconversation.com/files/95951/original/image-20150923-2611-9aqcrs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=488&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/95951/original/image-20150923-2611-9aqcrs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=488&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/95951/original/image-20150923-2611-9aqcrs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=613&fit=crop&dpr=1 754w, https://images.theconversation.com/files/95951/original/image-20150923-2611-9aqcrs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=613&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/95951/original/image-20150923-2611-9aqcrs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=613&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The author’s Jetta – on the move and proud of good mileage.</span>
<span class="attribution"><span class="source">Will Burns</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>In addition to Volkswagen and its Audi TDI models, General Motors offers a Cruze diesel, and BMW and Mercedes also sell clean diesels. All represent a compelling juxtaposition – a vehicle that’s fun to drive and economical while at the same time very utilitarian, even capable of towing a small trailer. The utility is something that many hybrids cannot compete with. </p>
<p>Even with the impressive fuel economy offered by clean diesel-powered vehicles, the US still has only a roughly <a href="http://goo.gl/cxm2lH">3% total diesel</a> market share in the light-duty segment. In contrast, <a href="http://www.mnn.com/green-tech/transportation/blogs/clean-diesel-what-you-need-to-know">European countries overall see a 55% market</a> share going to the diesel. The stigma of the 1980s US diesel is tough to break.</p>
<p>But the current scandal does not represent doom and gloom for the clean-diesel world. We are on the forefront of some absolutely amazing technology in terms of biofuels and lab-produced diesel alternatives. </p>
<p>The most revolutionary alternative right now is actually a solution supported by Volkswagen Group’s own Audi brand. </p>
<p>Audi has partnered with a company that has developed a sustainable bio-diesel produced by microbes fed only sunlight and nutrients, which Audi calls <a href="http://goo.gl/Mw1LRy">“e-diesel.”</a></p>
<p>If a fuel based on water and air, which can be run as a drop-in replacement for petro-diesel isn’t a sustainable viable option, I don’t know what is.</p><img src="https://counter.theconversation.com/content/47992/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>William Burns does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Current clean diesel technology is more than capable of meeting tough air quality rules while still delivering excellent fuel performance. Biofuels could make it even cleaner.William Burns, Instructor, Diesel Equipment Technology, Penn StateLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/443992015-08-03T05:28:10Z2015-08-03T05:28:10ZHere’s how we can save the car – and the planet at the same time<p>Passenger cars are still the <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/264679/tsgb-2013.pdf">most popular transportation</a> mode. In 2014 nearly <a href="http://www.oica.net/category/production-statistics/">68m</a> were produced globally. They’re not only a vital part of our economy and our personal lives but also an important social and cultural tool, used to present a certain image and status – real or imagined. </p>
<p>Our entrenched reliance on – and attachment to – this method of travel means that, even if we shift away from such widespread car ownership, we need to change our perception of what cars are if we want to mitigate their high environmental costs.</p>
<p>This doesn’t just mean moving to electric vehicles. Just at the resource extraction level, roughly <a href="http://www.volkswagenag.com/content/vwcorp/info_center/en/publications/2007/01/Golf_A4__Life_Cycle_Inventory.bin.html/binarystorageitem/file/golfa4_english.pdf">five tons of materials</a> are needed to produce a 1.2 ton car, creating ten tons of effluents and 2.5 tons of emissions. Processing these materials into components, assembling and distributing the cars around the world – and then using, servicing and disposing of them generates even more emissions. In total, a typical mid-size car is responsible for around <a href="http://www.theguardian.com/environment/green-living-blog/2010/sep/23/carbon-footprint-new-car">17 tons of CO₂</a>.</p>
<p>The total embodied emissions for alternatively fuelled vehicles such as hybrids, electric and fuel-cell vehicles may even be higher than normal internal combustion engines – even when they produce no tail-pipe emissions (based on the as-yet unpublished <a href="https://greet.es.anl.gov/greet/index.htm">Greet2 study</a>). This is perhaps because such technologies are more energy intensive to produce due to the materials that compose them.</p>
<h2>New ideas needed</h2>
<p>So what is the alternative to the current system? If car travel is going to remain common, perhaps we need to be smarter about how we build and use them. Our cars currently spend <a href="https://books.google.co.uk/books?id=47Ps28Y4CaUC&pg=PA114&dq=cars+spend+most+of+their+time+parked&hl=en&sa=X&ved=0CCEQ6AEwAGoVChMIhJ2_uaX-xgIVI4zbCh2G6w-s#v=onepage&q=cars%20spend%20most%20of%20their%20time%20parked&f=false">92% of their time</a> parked – and, when driving, most of their weight is used only to carry one person most of the time.</p>
<p>Cars could be produced in fewer numbers, to be smaller, <a href="https://www.academia.edu/14527049/Driving_In_The_Wrong_Lane_towards_a_longer_lifespan_for_cars">longer-lasting</a> and shared by more people. And instead of focusing on turning out as many new cars with relatively short lifespans as possible, manufacturers could provide more services to keep vehicles on the road for longer and deal with their disposal.</p>
<p>The role of car designers could also change. First by designing simpler basic cars, without “gimmicks” such as mood lights or massaging seats. Timeless lines rather than subject to the fads of the day. Instead of working on one project after another, the designer could be involved in an upgrading process that would see each model evolve through re-manufacturing in a more direct interaction with consumers.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/90435/original/image-20150731-17151-v5vy27.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/90435/original/image-20150731-17151-v5vy27.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/90435/original/image-20150731-17151-v5vy27.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/90435/original/image-20150731-17151-v5vy27.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/90435/original/image-20150731-17151-v5vy27.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/90435/original/image-20150731-17151-v5vy27.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/90435/original/image-20150731-17151-v5vy27.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Gimmick-free design?</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Gordon_Murray_Design_T.27_RAC_Future_Car_Challenge_1.jpg">Dominic Alves</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Other changes in the features of the cars themselves could also produce more sustainable models. For example, safety standards today are driven by electronic systems such as collision-avoidance and pedestrian-detection systems. These could be upgraded during service life more easily than physical features. Based on my own (as yet unpublished) research, I believe that if these systems prove to be highly reliable, there will be no need for low-speed impact structures, reducing the use of materials.</p>
<p>This model might be easier to move to than it first sounds. So-called millennials are less interested in cars than previous generations, <a href="http://www.sciencedirect.com/science/article/pii/S0967070X1200008X">applying for driver’s licences</a> later in life and <a href="http://www.centreforcities.org/press/young-people-leading-21st-century-resurgence-in-city-centre-living/">more likely to live</a> in highly congested cities where access to public transport is easier. They are also used to sharing or renting services, for example with taxi-hailing or liftsharing apps such as Uber. Owning a car, on the other hand, is seen as an <a href="http://www.theguardian.com/money/blog/2014/sep/16/cost-driving-young-people-off-road">expensive liability</a>.</p>
<h2>Industry turning point</h2>
<p>The car manufacturing industry is also at a cross-roads. Powertrain options are multiplying, driverless technology is poised to make big changes and non-automotive companies <a href="http://uk.businessinsider.com/the-google-car-is-a-huge-threat-to-the-auto-industry-2015-1">including Google</a> want a share of the market. As materials <a href="http://pubs.acs.org/doi/abs/10.1021/es902909k">become more expensive</a>, relying on cars with relatively shorter lifespans to flood the market is not in anyone’s interest. Not even the car makers, who at best can only make 5% annual profit.</p>
<p>The current business model may not survive in the longer term. It may naturally make more sense for manufacturers to build and service cars as long-lasting rental products. Some electric vehicle manufacturers have already introduced rental schemes for their batteries, which are likely to need replacing far quicker than the rest of the car.</p>
<p>Extending the lifespan and the product life cycle will impact on production. Fewer cars means that the return on investment <a href="http://gala.gre.ac.uk/11886/">may take longer</a>. But it could also mean less need to update costly manufacturing tools – and factories could be made more modular and flexible to produce different types of cars in one assembly line. Plants could be more localised to meet the different needs of the different megacities of the future. And redundant assembly workers <a href="https://books.google.co.uk/books?hl=en&lr=&id=c-khWRnJcmsC&oi=fnd&pg=PR1&dq=Wells+The+automotive+in+an+era&ots=D0TDiFp7WV&sig=wqhKrLLDfjTwRrFiua6AyeJxC_Y#v=onepage&q=Wells%20The%20automotive%20in%20an%20era&f=false">could be retrained</a> into servicing and maintenance or other car-related services.</p>
<p>This model would require us to think differently about cars, redefining terms such as “old” and “used” and educating consumers, especially those from older generations who are unfamiliar with sharing systems. Not all cars will survive into the future, but if we are better stewards of what we have now and learn to cherish products in a more subjective way than the market does, cars can definitely last for longer.</p><img src="https://counter.theconversation.com/content/44399/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alexandre Rodrigues does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Changing habits and pollution concerns are calling time on our love affair with cars. But this doesn’t have to be the end.Alexandre Rodrigues, PhD candidate, , Nottingham Trent UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/403962015-04-22T05:25:23Z2015-04-22T05:25:23ZVorsprung durch realpolitik – what VW power games say about German CEO culture<figure><img src="https://images.theconversation.com/files/78724/original/image-20150421-9032-nwyhrq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Leading from the front. VW management do battle.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/54945394@N00/7580948446/in/photolist-cxUkRG-7WP4by-PZ5XN-ftr2Hz-ftFo81-ftr2Uc-ftFof1-6n994M-fxAibT-fxQC5b-fxAyXg-7EwWGV-3imxA6-3pCgvL-c1PtyY-jMRF32-Hf2ot-8vb7P9-8EApHP-upwj1-u4H1X-6GhG4W-ejVWcU-bDqKcF-YVg9d-fxoSy-3CLSKs-fxoSx-cLiDKL-pSFzv-gmwSo-fxQQXL-9Vomzh-69sReC-sg9CS-6z5zd6-2qkpx-dDdrs-6eHXTM-cgqDr-dTSk1z-AFxXP-dC6QA7-4Zs4Jq-4HaVFT-gzXy6R-aLVppK-fNJz6H-7Knz3Z-5N8KvF">dachalan</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><blockquote>
<p>I am distancing myself from Winterkorn.</p>
</blockquote>
<p>With this short sentence, the powerful chairman of Volkswagen’s supervisory board, Ferdinand Piëch, expressed his misgivings about CEO Martin Winterkorn, who has led Europe’s largest car manufacturer to unprecedented heights since 2007. </p>
<p>Lobbed into the German media landscape out of the blue ten days ago, Piëch’s verdict exploded like a hand grenade. Frenzied coverage in national papers and TV bulletins soon came to the conclusion that, irrespective of his corporate achievements, Winterkorn would have to resign. </p>
<p>Equally soon, events proved them wrong. A week after Piëch had launched his attack, an emergency meeting of the supervisory board backed Winterkorn, <a href="http://www.ft.com/cms/s/0/081045e4-e4e8-11e4-8b61-00144feab7de.html">promising to extend the CEO’s contract</a>. </p>
<p>While this episode may appear as little more than a corporate power struggle, it sheds light on far broader issues. Indeed, the motives behind Piëch’s attempt to remove a successful CEO, the manner in which Winterkorn secured backing and the intense media interest highlight important aspects of Germany’s business culture.</p>
<h2>Family ties</h2>
<p>To some extent, the media focused on the conflict at VW because of the personalities involved. The expectation that Winterkorn would have to go reflected Piëch’s reputation as a ruthless power broker. In particular, the German public remembered how Piëch had fought off a hostile take-over bid from luxury car manufacturer Porsche in 2008. Initially standing with his back to the wall, <a href="http://www.theguardian.com/business/2012/jul/05/volkswagen-buys-porsche">he launched a determined counter attack</a> that resulted in a gleeful public humiliation of Porsche’s management. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/78733/original/image-20150421-9043-1s9fupm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/78733/original/image-20150421-9043-1s9fupm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/78733/original/image-20150421-9043-1s9fupm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=375&fit=crop&dpr=1 600w, https://images.theconversation.com/files/78733/original/image-20150421-9043-1s9fupm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=375&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/78733/original/image-20150421-9043-1s9fupm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=375&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/78733/original/image-20150421-9043-1s9fupm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=471&fit=crop&dpr=1 754w, https://images.theconversation.com/files/78733/original/image-20150421-9043-1s9fupm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=471&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/78733/original/image-20150421-9043-1s9fupm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=471&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Inside a 1950s Beetle.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/geralds_1311/6802139532/in/photolist-5CCU1c-nByDyx-pDgXng-pScYsM-2bUeXG-qMH7ef-dTwcQQ-9TrULy-79zuph-qxKv85-a2THG8-azT2x8-7xuRdM-iRvVJm-dkHjJw-iRtJkF-a2TL6Z-dirq6w-7Hnoy9-7HitDH-a2TMFZ-iRt7uo-8Mjbpv-5vXnjT-a3dnt4-8KGpUA-93gwkY-7xyDfm-6PHXde-7X3rjW-a5E67X-978jRa-ct46A5-7WZe2e-iRsuwR-7xuQSM-a5E6tv-a82WJU-5oCha7-nNTgGg-8QBqoK-dRnYQu-a1VNbo-bn5K6N-6PHWSD-a3Qhmj-6R2qWf-8QBq8K-9QDCUw-g7reW5">Georg Sander</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span>
</figcaption>
</figure>
<p>Many German observers were also aware that Piëch has an exceptionally personal and intriguing stake in VW. With other family members, Piëch owns a holding company that, in turn, controls the majority of VW’s shares. He owes this good fortune not only to an illustrious career that included success as a CEO at Audi and Volkswagen; he is also a member of one of Europe’s premier auto dynasties. Ferdinand Piëch’s grandfather was <a href="http://www.biography.com/people/ferdinand-porsche-9542414">no other than Ferdinand Porsche</a>, who designed the legendary Volkswagen Beetle in the 1930s and thus laid the foundation for today’s corporate giant. <a href="http://www.biography.com/people/ferdinand-anton-ernst-porsche-20848203">His uncle was Ferry Porsche</a>, who established the eponymous sports car firm.</p>
<p>Its infighting has entertained the German public for years, not least during the aforementioned take-over bid of 2008, which – among other things – was a family spat writ large. While most global enterprises are clad in a largely anonymous aura, VW attracts unusual public attention because important company developments can be told as a family drama – in which Piëch plays the towering corporate patriarch.</p>
<h2>Weather vane</h2>
<p>At the same time, many Germans regard VW as far more than an over-sized family firm. It is <a href="http://247wallst.com/investing/2012/10/18/the-seven-companies-that-power-germanys-amazing-economy/">Germany’s largest company by a considerable margin</a>. In 2014, VW employed almost 600,000 people who <a href="http://www.volkswagenag.com/content/vwcorp/content/en/the_group.html">worked in 118 factories in 31 countries</a>. Moreover, the German public has long viewed Volkswagen as an enterprise whose fortunes are symbolic of wider national economic trends. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/78741/original/image-20150421-9021-rfvv5i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/78741/original/image-20150421-9021-rfvv5i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/78741/original/image-20150421-9021-rfvv5i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=398&fit=crop&dpr=1 600w, https://images.theconversation.com/files/78741/original/image-20150421-9021-rfvv5i.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=398&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/78741/original/image-20150421-9021-rfvv5i.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=398&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/78741/original/image-20150421-9021-rfvv5i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/78741/original/image-20150421-9021-rfvv5i.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/78741/original/image-20150421-9021-rfvv5i.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">VW’s factory in Wolfsburg.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/mortwatkins/6877754384/in/photolist-nhKe8e-b1zzgp-6mXeyv-b9BrY-6ZqBWd-6otcYt-pnAQq-4WmvVk-8F9Boh-at69me-btLhL9-53yHUm-53utAv-53yG6S-5H54je-5TjRdD-29HEZ-5BPmRB-5BTBeo">Morten Watkins</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span>
</figcaption>
</figure>
<p>The company gained this cultural resonance during the <a href="http://www.econlib.org/library/Enc/GermanEconomicMiracle.html">so-called “economic miracle”</a> of the 1950s and 1960s, when average incomes quadrupled. Then, VW embodied a country under dynamic reconstruction. Its best-known product – the Beetle – stood for an affordable consumer boom. VW’s workers received West Germany’s highest wages and most generous benefits, in part due to cooperative industrial relations between management and trade unions. While the economic miracle is a thing of the distant past, Volkswagen’s status as a national weather-vane of “Made in Germany” remains intact. </p>
<p>That is why the German public tried so hard to decipher what Piëch might have meant when he “distanced himself” from his CEO. In March, <a href="http://www.cnbc.com/id/102499138">VW had presented impressive annual figures</a>. Profits stood at €11 billion; most employees, including assembly line workers in Germany, received substantial bonuses. With its 10m cars sold that year, the firm was on track to become the world’s biggest auto maker. Just like the country itself, Volkswagen seemed to be in rude economic health. </p>
<h2>Expansion pact</h2>
<p>Given that, Piëch’s attack was widely read as impatience with longstanding problems that Winterkorn had failed to solve. In particular, the CEO had not expanded <a href="http://www.autonews.com/article/20150126/RETAIL01/301269949/how-vw-veered--off-target">Volkswagen’s market share in the US</a>, where the VW brand remains stuck in a tiny niche. Although the company posted impressive results in Asia, Winterkorn had not arrested falling sales in Brazil, which auto circles see as a crucial emerging market. </p>
<p>It is also probable that Piëch saw the need for a new approach to a key structural problem. You see, the group consists of brands ranging from high-end Lamborghinis to budget Skodas. Within this range, the Volkswagen brand (Golf, Passat, Polo etc.) is stuck between highly profitable luxury marques and the high-volume economy range. This awkward mid-market position has left the Volkswagen brand struggling to reach the profitability levels of other parts of the VW concern.</p>
<p>Piëch, commentators reasoned, wants to install a new CEO who makes VW’s core brand more profitable. That he did so at a time of good results showed him drawing on decades of experience to anticipate crises. Indeed, when Piëch was VW’s CEO in the mid-1990s, one of his main tasks had been boosting the core brand’s results.</p>
<h2>Blessed union</h2>
<p>The emphasis that German coverage placed on VW’s potential problems indicates that observers there are attuned to the tenuous nature of economic success, but still, the public had little sympathy for Piëch’s initiative. Indeed, the CEO emerged from the power struggle with the promise of an extended contract because the powerful trade union representatives, who make up half the members of VW’s supervisors boards, unanimously backed Winterkorn. </p>
<p>The message was clear: whoever wants change at a substantial German company needs to consult the trade unions first. Germany’s prosperous economic results (including substantial <a href="http://uk.reuters.com/article/2015/02/24/uk-germany-economy-gdp-wagedeal-idUKKBN0LS0T520150224">pay awards for large sections of the workforce</a>) highlight that the country’s pervasive approach to industrial relations, which requires employers and trade unions to work together to resolve problems, may have a lot to recommend it. On this occasion, it shored up a CEO who is Germany’s highest-paid manager on about €15m.</p>
<p>To highlight their alliance, Winterkorn and the head of VW’s trade union sat next to each other during the Europa League match of VfL Wolfsburg, the club sponsored by VW. Neither of them looked too happy; Wolfsburg lost that first leg of the tie to SSC Napoli 1-4. Winterkorn may have had more than football on his mind. Immediately after the board meeting that saved his neck, commentators were predicting that Piëch was setting himself up for a second leg of his own.</p><img src="https://counter.theconversation.com/content/40396/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bernhard Rieger does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>When Ferdinand Piech took on Martin Winterkorn, the VW Boardroom looked once again like the scene of a family drama… and it was left to the kids on the factory floor to settle things.Bernhard Rieger, Professor of History, UCLLicensed as Creative Commons – attribution, no derivatives.