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Detroit and the Auto Industry

Nissan’s Carla Bailo takes a look at the auto assets in Southeast Michigan

Pages 14-16

Carla Bailo is the senior vice president of research and development for Nissan Americas. With their headquarters based in Farmington Hills, Nissan has a strong presence and role in Michigan’s economy. Bailo discusses the domestic and global role Detroit plays in the automotive industry, as well as its future.

What do you think Detroit’s role is in the domestic and global automotive industries?

Detroit is clearly still the hub of the North American auto industry, and the global hub for certain areas of the business. The level of innovation being driven by research centers in Southeast Michigan is diverse and quite impressive. You can find some of the world’s most advanced work in fuel cells, batteries, lightweight materials, alternatives to precious metals and more coming from both auto manufacturers and hundreds of suppliers located here in Michigan.

What factors continue to draw companies that want to make an impact in the global automotive industry to Michigan?

As Nissan’s top executive in Southeast Michigan, I’ve repeatedly seen how fruitful it is to have our research and development (R&D) operations here. Since it is the hub of the North American auto industry, we can directly interact with many of our top supplier partners here. There are also dozens of other universities and research facilities in and around the area that are valuable innovation partners as we develop next-generation vehicle technology. In short, any engineering work in our industry can be accomplished here with fewer resources and manpower, just due to the critical mass of infrastructure.

Why is Michigan such a hotbed for automotive R&D?

The roots of the automotive industry and automotive innovation are in Michigan. In the past, access to major waterways and trade routes or access to steel supplies drove automotive companies to Detroit. Now, Michigan is the strategic location for our R&D operations due to the engineering talent generated by the colleges, universities and research institutions in the region. We need to tap into this top talent to drive innovation into each of Nissan’s vehicles.

How do you see the rapidly evolving technology of the automotive industry impacting talent and the workforce?

Technology and innovation are making our industry more exciting and fast-paced than ever before. The proliferation of more electronics, computers and on-board entertainment in our vehicles has forced us to adapt and move faster than the typical automotive development cycle. This also means we must attract software and electrical engineers at a high level, which pits us against Silicon Valley companies like Google or Yahoo, rather than just other car companies.

The movement from internal combustion engines to more alternative powertrains such as those in electric cars, hybrids, plug-in hybrids and fuel cell vehicles, is also creating the need for engineers and Ph.D.s from chemical or environmental backgrounds.

Biomedical engineers are entering our workforce to enhance occupant safety and to help our customers avoid serious injuries.  They are working in conjunction with medical schools to further the advances necessary.

Nissan isn’t the only company realizing this shift, which means the landscape for recruiting and retaining engineering talent is hyper-competitive and not likely to cool off in the near future.

What talent issues are facing the industry and what are companies like Nissan doing to address these issues?

There is clearly a shortage of engineers in the automotive industry. During the economic crisis, Michigan and the industry lost some of its engineering talent. Now, many new graduates have the perception that other industries offer more career opportunities or stability.

To help address this shortage, we meet regularly with universities all over the Americas region to build Nissan’s R&D brand and to generate excitement for engineering work in the auto industry. We also have ongoing partnerships with several universities on special projects so that students can begin getting hands-on experience with us early in their education. This should increase the likelihood that they will want to work for us after graduation.

Finally, we work with government and economic development organizations to help communicate what Michigan has to offer to prospective companies or those individuals looking to build a career in engineering.

Today, emerging technologies like autonomous vehicles and infotainment systems continue to create a buzz around the industry. Where do you feel the future of the industry lies?

You’ve nailed it, but there are a multitude of technologies beyond autonomous cars or the next smartphone integration. Further work in alternative powertrains and lightweight materials will be vital to meet upcoming fuel economy regulations. Solar energy and new charging systems will help fuel adoption of the next generation of electric cars. The future success of an automaker will rely on the implementation of technologies with an economic equation that creates solutions viable for the mass-market consumer. That is the key.

Joining Nissan in 1989 from General Motors, how have you seen the global automotive industry change over the past two decades? What has been the most surprising development or change?

I think the most surprising development is the shift as new companies have entered the market and rapidly increased their market share.  Along with this has been the growth of auto manufacturing in the South, such as Nissan’s plants in Tennessee and Mississippi. As much as we’ve seen globalization, we’re also seeing a dramatic push for localization, both at a vehicle and a part level. By 2015, we expect that 85 percent of Nissan’s products for the U.S. market will be built in North America, and the vast majority of components in those vehicles will be sourced here as well.

The other major surprise when you look back is the speed of change. Although we could predict it at some level as the Internet gained momentum, the speed at which customers demand technology – and the expectation that we deliver it perfectly – has revolutionized our business.  When you compare a 2002 model year minivan my family still owns to a new 2013 Nissan Quest, for example, the number of features and ease of use is amazingly improved. The rapidity that we can introduce new innovations to the market will be the hallmark of our sustainability.

What have you learned from your experience thus far as head of research and development for Nissan’s American operations?

I strive to learn something new every day, be it within the engineering discipline such as fuel cell and battery technology for future vehicles, or in areas such as employee development and coaching. This is the first time I’ve overseen operations in several different countries, and of a staff size of over 1,500 and still growing. I’ve learned to delegate more than ever and to learn quickly who I can trust to manage tasks versus things I need to manage directly. I try to use my guidance and influence to generate new ideas and challenge the “usual” way we do things to keep the organization moving in the right direction. However, the challenges and variety of the job are what make it wonderful and drive me to keep learning.

What key lessons did you take away from the 2009 financial crisis and what were the keys to guiding Nissan through it?

I was in Japan when the crisis hit, and was assigned to the Nissan’s global recovery committee. Our task was to take immediate action to maximize our revenue, reduce our operating costs and eliminate unnecessary expenses. Given that Nissan was already a very frugal company, it was challenging in some cases to find opportunities. However, that mindset meant that we were good at identifying opportunities to grow our business and eliminate costs. We found things that we didn’t need to do, and we have not returned to “business as usual” as business has improved. We often found that small steps added up to large improvements. This has allowed us to continue to recover and grow as a leaner and more efficient organization.

You serve as a member of the MICHauto Steering Committee. Why did you join and why do you think an effort like MICHauto is important to our state?

Being born and raised in metro Detroit, the auto business is core to my personality.  I remember waiting anxiously to the see the new cars each year at the auto show. In the past, each automotive company worked in a silo with little collaboration – we are competitors after all. However, there are some things that we can improve if we collaborate. One of these is MICHauto, to foster the growth of the business in our state. All automotive companies should be concerned about the lack of engineering talent and the changing landscape of the business due to changing demographics, regulations and other factors. We can have a much larger impact and get the job done better if we expand our bandwidth and cooperate.

Where do you see MICHauto going from here?

First and foremost, we have key strategic pillars that we are focused on delivering and/or improving: awareness, advocacy, economic development, and talent attraction and retention. These four pillars are very challenging, and I don’t see us solving them in the near-term. These will require consistent effort for several years, since we are now competing with high-tech firms, in addition to other auto companies. I believe MICHauto will continue to focus on topics that all automakers can band together to improve our industry – we’ll prioritize and do the right things as a team.

Is there anything else you’d like to discuss?

I truly think that Detroit and Michigan are back. Businesses who have survived here are strong and lean, and it’s a great time to live in this state. We have many challenges, but with the Detroit comeback spirit, we’ll succeed and excel. I don’t think I’ve ever been more proud to be from Michigan.