Manufacturing Matters: Building a CASE for Automobile Production in a World of VUCA

Type de publication:

Conference Paper


Gerpisa colloquium, virtual (2020)


Preliminary note:
The paper proposed is not part of a larger research project but rather derived from the author’s professional work experience in the automotive industry over the past 20+ years. It is therefore not (yet) refined in its methodology but meant to be a discussion starter rather than a presentation of findings.

It did not need the corona virus and the worldwide pandemic it has caused to prove that the world has become less stable and less easy to navigate. Increasingly, businesses are finding themselves competing in a “VUCA” environment – characterized by volatility, uncertainty, complexity, and ambiguity. Generally, the origin of the VUCA concept is attributed to American military trying to establish a framework for dealing with a multilateral world after the end of the cold war.

There would be ample example for each of the four challenges in today’s automotive industry, with ever more volatile markets and demands, with uncertainty about future regulations by states or municipalities, with the complexity in building vehicles employing different drivetrains, and highly ambiguous announcements of some industry players, real or imminent.

Still, in the automotive industry is has been a different set of (mostly four letter) acronyms which seems to have dominated the recent discussion, both within industry and in public. Whether it is CASE (Daimler), ACES (BMW), or MADE (Roland Berger), eacsy (PricewaterhouseCoopers) or whatever variation thereof - the industry’s key drivers and challenges identified are, for the most part, the same: Future automobiles are expected to be more “connected”, “autonomous”, “shared”, and “electric” (or electrified). Occasionally, an M for “mobility”, a “D” for digital, or a “Y” for yearly updated are added in an attempt to add a new twist. The terms themselves first popped up in public sometime in 2016/2017. For the purpose of the paper, I shall use the term CASE in going forward.

The notion of CASE has centered the discussion almost exclusively on the industry’s core product, the automobile itself. To repeat: Future automobiles are expected to be more “connected”, “autonomous”, “shared”, and “electric” (or electrified).
Listening to the apostles of CASE, one could get the picture that the product is all that matters, and the question of how to make this product is of minor importance.

In their 1987 book “Manufacturing Matters” (from which I borrowed the first part of the title for this paper), Stephen Cohen and John Zysman debunked the “myth of the post-industrial economy”. One of their core arguments was that “that firms could not easily control markets in which they were not masters of the production process”, as Zysman (2002) put it in a more recent paper.

A fine example for this would be Tesla. With its attention tuned to the vehicles that indeed were novel and innovative (way beyond their battery electric powertrain), the company severely underestimated the complexity and challenges of bringing these vehicles into serial production. In trying to ramp up production of its higher volume Model 3, Tesla found itself in “production hell”, as Elon Musk so pictorially put it. As of today, Tesla’s having mastered the escape from said “production hell” and making it into the plains of stable and profitable serial production has remained the exception rather than the rule among the ambitious automobile start-ups vowing to change the rules of the game.

Manufacturing, then, the argument goes, still matters – and will continue to do so. The relative simplicity of an electric powertrain, for example – relative, that is, in comparison to vehicles with an internal combustion engine, has led many to believe that in future, the actual production of vehicles could easily be outsourced given a readily available capacity of contract manufacturers. A similar argument, interestingly, was once made in Nicolas Carr’s (in)famous claim that “IT Doesn’t Matter” …

Yet not all established OEMs are ready to have their core competencies downplayed. This is epitomized at BMW Group with the rise to power of new CEO Oliver Zipse, a no-frills production manager. The move symbolizes the company’s renewed focus on making and selling automobiles – rather than on aiming to transform an automaker into a future “mobility provider”. Fittingly, it was Zipse who – as BMW’s VP of Production - chaired VDA’s production committee which continues to define itself as “responsible for the automotive industry’s core field, the value-added creation of a product”. The same point was strongly made in a 2019 white paper by the Fraunhofer Automobile Production Alliance, correspondingly entitled “Producing Future Mobility: Manufacturing Matters”.

To repeat the argument: No matter how connected to the outside world (car2X), how autonomous they will be, if and how they are shared in use, and how electrified their powertrain: Before they can actually be used as means of transportation, these vehicles have to be built, produced, manufactured first: in a stable process, cost- and resource-efficient, and flexible manner.

It is here where the paper shall try to incorporate the basic idea from Abernathy’s work on innovation and productivity. In his seminal study (1978) of the American automobile industry, he found that “radical innovation has given way to standardization and to the efficiency of highly complex mass-production methods”. With CASE technologies now representing a set of radical innovations on the product side: What will this mean to highly engineered and efficient serial production of vehicles?

The first ideas for a paper on this theme were explored before the corona virus fully hit worldwide. Obviously, the corona crisis has already impacted the automotive industry severely after the first few weeks of plant and dealership shutdowns. A “return to normal” is increasingly in doubt – especially, as was outlined above, there has been no “normal” given the transformation the industry already found itself in before or without Corona.

Manufacturing matters: The question of production (who, how, and where) has re-entered the spotlight of industrial policy. Outsourcing and relocating production of certain goods (medical equipment, pharmaceuticals, …) assuming that manufacturing is not that relevant has shown to backfire, as the ongoing Corona crisis has tellingly demonstrated.

Interestingly, public pressure to produce badly-needed medical devices quickly centered on automakers and their suppliers. While this has triggered a debate in itself (on how quickly production facilities could switch to making medical equipment) and therefore would fit nicely within a framework of flexibility and productivity, this cannot and will not be covered in the paper.


Abernathy, William J. (1978): The Productivity Dilemma: Roadblock to Innovation in the Automobile Industry. Baltimore: The Johns Hopkins University Press, 1978

Carr, Nicholas G. (2003): IT Doesn’t Matter, in Harvard Business Review, May 2003, reprint R0305B

Cohen, Stephen and John Zysman (1987): Manufacturing Matters: The Myth of the Post-Industrial Economy. New York: Basic Books, 1987

Zysman, John (2002): Production in a Digital Era: Commodity or Strategic Weapon, BRIE Working Paper 147, September 2002

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