TPT May 2016

G LOBA L MARKE T P L AC E

Cybersecurity is seen as a major concern for operators of autonomous cars “Perhaps the most harrowing problem in this zoomy future of autonomous, software-packed vehicles may be protecting them from hackers. “A fast-growing density of software guides these vehicles and collects data on everything from where we drive to what we eat.” As reported by Greg Gardner of the Detroit Free Press, the takeaway from the Connected Car Symposium held on 18 February in downtown Detroit was clear and worrisome: self- driving and connected vehicles face a future rife with threats from hackers. (“Road to Autonomous, Connected Cars Is Filled With Risks,” 18 February) The event, sponsored by the law firm Butzel Long, gathered lawyers, cybersecurity experts and software engineers to explore the implications of the 100 million lines of software contained in the average new car. While this is 200 times what is needed to operate NASA’s Space Shuttle, regulators such as the US National Highway Traffic Safety Administration provide almost no guidance on preventing misappropriation of the software. Hackers have tended to focus on the information technology (IT) world – “because that’s where the money is”, according to a security consultant at the Detroit symposium. But that is expected to change as more services are delivered to and through vehicles by software apps used by drivers to access entertainment and travel information. As cars become savvier they will be collecting financial and other personal data of keen interest to hackers, warned Jennifer Dukarski, a Butzel Long attorney. And according to McConnell Trapp of Speed Trapp Consulting (Troy, Michigan), the growth of car-sharing and ride-sharing networks will only compound the cybersecurity challenge. In a rental car, for instance, wrote Mr Gardner, “The moment a customer connects his or her smartphone to the vehicle, that data could be exposed to any bugs or malware that have infected phones of previous users.” › Another threat looms in the increasing use of over-the- air software upgrades and repairs, enabling hackers imitating legitimate manufacturers or service providers to send “updates” that could disable the vehicle. Brian Dougherty, chief technology officer with the Motor & Equipment Manufacturers Association, told the Free Press , “The vehicle doesn’t know whether the over-the-air software patch is coming from a white-hat or a black-hat source.”

turbochargers and transmissions, completed the $951mn acquisition of Remy International Inc (Pendleton, Indiana). Before that, in July, Magna International Inc (Ontario, Canada) purchased the German transmission manufacturer Getrag for $1.9bn. According to an Automotive News survey cited by Mr Wiegand, Magna was already the second-largest automotive supplier in the world. The largest acquisition of 2015 had come came earlier still, with the $12.4bn purchase by ZF Friedrichshafen AG, also German, of TRW Automotive Holdings Corp (Livonia, Michigan). As a result of these so-called megadeals, smaller downstream automotive suppliers should be prepared for some increased price competition, Dave Andrea, executive vice-president of research at the Ann Arbor-based Center for Automotive Research told Mibiz.com . But it would seem that the suppliers have more immediate worries. In January, the Original Equipment Supplier Association (OESA) reported that more suppliers all the time are concerned about their ability to adjust to the newly erratic production scheduling of their reconstituted big clients. Julie Fream, the president and CEO of OESA, observed that week-to-week changes can be hard to manage; and their greater frequency has been souring some producer/supplier relationships. Ms Fream sees the challenges around production schedules stemming, in part, from a rise in capacity utilisation rates at a time when many suppliers are already operating close to full tilt. OESA in January identified a median capacity utilisation rate among automotive suppliers of 85 per cent, with those in the topmost quartile reporting 90 per cent capacity utilisation. (“Auto Suppliers Contend With Scheduling Constraints, Impact of Megadeals,” 21 February) “I think when you’re operating so close to your capacity limits, it’s much more challenging to manage than when you have a little flexibility in your schedule,” said Ms Fream, who pointed out the follow-on effect of difficulties from one tier to the next in the supply chain. › In addition to production scheduling issues, the Center for Automotive Research expects last year’s megadeals among large suppliers to impact West Michigan suppliers as those companies start to integrate their operations. Most of the megadeals of 2015 closed by the end of the year. In 2016, Mr Andrea told Mibiz.com in February, “Suppliers are dealing with restructuring and what that means for the competitive landscape now that these companies are starting to work together as single entities.” › The Original Equipment Supplier Association also took note of a persistent complaint amongAmerican automotive suppliers: too few qualified workers. OESA identified the talent shortage as “the primary internal supplier challenge”, with 64 per cent of respondents to its January survey reporting a lack of qualified engineering talent; 60 per cent, a scarcity of skilled labour.

Dorothy Fabian, Features Editor (USA)

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M AY 2016