Industrial Research and Development Collaborations Increasing Environmental Knowledge for Competitive Advantage

PAUL C.KILLGOAR, JR.

Most private-sector collaborations are driven by the motive to gain information and knowledge that can be integrated into a company’s operations and used to competitive advantage. In many ways collaborations may seem to be paradoxical, because collaborations also require sharing information. It is that paradox that makes collaborations such a challenge. The history of research and development (R&D) collaborative efforts in the automotive industry illustrates how some of the challenges inherent in collaborations were met, where the potential for the use of information technology in collaborative effort lies, and how these efforts have contributed to improving environmental performance.

HISTORY OF COLLABORATION IN THE AUTOMOTIVE SECTOR

During the 1960s, when Chrysler, Ford, and General Motors (GM) dominated the world market in trucks and cars, collaboration among the Big Three was unimaginable. Competition among the Big Three was strong, there were no external threats to U.S. automakers, and there was no reason or incentive to collaborate. Even if there had been a reason, antitrust law would have prevented collaborations because they were seen as undermining competitiveness. In fact, employees were regularly reminded of their obligations and responsibilities under the antitrust laws, and lawyers often were present during trade-group meetings to answer questions and provide advice on matters related to antitrust concerns.

In the 1970s the situation changed. The Big Three started to lose their world leadership. Japanese automakers began to expand their export markets and establish their automobiles as quality products. In addition, regulation began to affect



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Information Systems and the Environment Industrial Research and Development Collaborations Increasing Environmental Knowledge for Competitive Advantage PAUL C.KILLGOAR, JR. Most private-sector collaborations are driven by the motive to gain information and knowledge that can be integrated into a company’s operations and used to competitive advantage. In many ways collaborations may seem to be paradoxical, because collaborations also require sharing information. It is that paradox that makes collaborations such a challenge. The history of research and development (R&D) collaborative efforts in the automotive industry illustrates how some of the challenges inherent in collaborations were met, where the potential for the use of information technology in collaborative effort lies, and how these efforts have contributed to improving environmental performance. HISTORY OF COLLABORATION IN THE AUTOMOTIVE SECTOR During the 1960s, when Chrysler, Ford, and General Motors (GM) dominated the world market in trucks and cars, collaboration among the Big Three was unimaginable. Competition among the Big Three was strong, there were no external threats to U.S. automakers, and there was no reason or incentive to collaborate. Even if there had been a reason, antitrust law would have prevented collaborations because they were seen as undermining competitiveness. In fact, employees were regularly reminded of their obligations and responsibilities under the antitrust laws, and lawyers often were present during trade-group meetings to answer questions and provide advice on matters related to antitrust concerns. In the 1970s the situation changed. The Big Three started to lose their world leadership. Japanese automakers began to expand their export markets and establish their automobiles as quality products. In addition, regulation began to affect

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Information Systems and the Environment U.S. industry, particularly requirements imposed by the Clean Air Act and the Corporate Average Fuel Economy program. Chrysler, Ford, and GM were all challenged to develop exhaust treatment technologies and increase the fuel efficiency of their fleets. The costs required to develop these technologies were significant and independent of company size; thus, larger manufacturers, such as GM, were able to spread these costs over large sales volumes, and therefore had some competitive advantage. However, even though foreign competitors were required to meet the same U.S. regulations, they could legally collaborate in their home countries and often were encouraged to do so by their governments. This ability to collaborate gave foreign companies (often smaller in size) a significant competitive advantage, not only in the automotive industry but in other U.S. industries as well. To address these competitive concerns, the U.S. government passed the Cooperative Research and Development Act in 1984. This act allowed U.S. industries to undertake collaborative research in noncompetitive or precompetitive areas. Under this act, Big Three management got together and set the stage for various collaborations. Engineers in all three companies worked out the details, identifying the key noncompetitive areas for collaboration. From this effort, two areas emerged with potential for collaborations: The first area related to technologies where there was no customer differentiation, and the second area related to R&D directed at societal good, such as environmental improvements and occupant protection. The cigarette lighter is illustrative of the first area of collaboration. At one point, the Big Three had about 20 different cigarette lighter designs in use, although the sale of a car probably never hinged on the basis of a cigarette lighter. It made sense, then, for the Big Three to come to an agreement on what the functional and design characteristics of a cigarette lighter should be. From this work it became possible to reach agreement on two or three common designs for cigarette lighters. Decisions such as this helped to provide an economy of scale and improved quality for certain automotive components. The second area of collaboration, and environmental concerns, in particular, have driven the majority of the automotive industry’s joint efforts. One early example of this type of collaboration was the formation of the Auto/Oil Air Quality Improvement Research Program to study the effects of fuel composition on vehicle emissions. This work was used by the automobile and oil industries as a basis for discussion with the federal and California state governments in setting standards relating to fuel. Figure 1 shows the history of collaborations in the automobile industry beginning with the enactment of the 1984 Cooperative Research and Development Act. The 1986 Technology Transfer Act expanded collaboration between industry sectors and led to the creation of the Auto Steel Partnership and the Automotive Composites Consortium. These early efforts laid the groundwork for the many R&D collaborations to follow. Opportunities to expand the collaborations

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Information Systems and the Environment FIGURE 1 Chronology of auto industry collaborative research. SOURCE: USCAR, 1997.

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Information Systems and the Environment to include national laboratories were facilitated by the 1989 National Competitiveness Technology Transfer Act. Several automotive consortia and partnerships were formed after the 1989 act, all of which related to environmental concerns. For example, the Environmental Research Consortium focuses on measuring emissions from vehicles and assessing soil remediation technologies. The U.S. Automotive Materials Partnership is looking at material alternatives that lighten the weight of vehicles. The Low Emission Paint Consortium is working on developing solvent-free clear-coat technology, and the Vehicle Recycling Partnership is establishing procedures to increase the recycling of end-of-life vehicles. PRACTICAL CHALLENGES IN COLLABORATIONS The process of establishing each of these collaborations was difficult. All posed administrative, definitional, and legal challenges. The administrative challenges ranged from scheduling meetings and getting contracts signed to handling intellectual property concerns. To address these issues and to provide focus for the precompetitive research of the Big Three, the United States Council for Automotive Research (USCAR) was established in 1992. With this umbrella organization in place to deal with administrative issues, the researchers were freed up to focus on their work. As it turns out, the administrative challenges were among the more transparent ones, and a number of them were identified in early collaborations as factors that could stall progress. The first issue was the difficulty of establishing trust. There is a common belief in collaborations that each participant is trying to extract as much information as possible from the other collaborators while sharing the minimum of their own knowledge. Building trust takes time and lots of face-to-face meetings. The second issue was the difficulty of defining the bounds of the research. Because the collaborative projects involved precompetitive technologies, the participants had to understand issues such as what portion of the research was precompetitive, where the research crossed into competitive areas, and how relevant background information could be identified and shared. The third issue was related to intellectual property ownership and how such property could be used by non-U.S. subsidiaries. There were major legal issues to hammer out, particularly in the earlier consortia, but they are less contentious today because of the long history of collaborative activities in the automotive industry. The final issue was the complex nature of technical project management. Collaborators had to define the scope of work to be undertaken, set schedules for milestone completion, and assign responsibilities for the project tasks. Much of this work involved sharing background information, where, as pointed out above, trust was needed for progress to occur.

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Information Systems and the Environment Some of the issues discussed above became even more difficult when the collaborations extended beyond the Big Three. For example, USCAR is a partnership of the Big Three, and although suppliers are not part of the organization, they can participate on individual projects as technical teams deem necessary. The most significant complication of extending the circle of participants was in obtaining suitable legal agreements covering the ownership of intellectual property. In comparison, the involvement of governmental entities and universities is easier to finesse, and occurs more frequently. For example, when one of the consortium projects wanted to acquire data on real-world vehicle emissions and automobile ownership, it brought the Michigan State Police and Department of Motor Vehicles into the consortia. These organizations were interested in the data; and in exchange for the results, they provided logistical and data support for the project. Under the Clinton administration the health of technology was raised as a critical national priority, and in 1993 the automobile industry saw the creation of the Partnership for a New Generation of Vehicles (PNGV). The PNGV is an ambitious collaboration involving the U.S. government and its laboratories, USCAR, suppliers, and universities in an effort to develop next-generation cars that are fuel efficient and environmentally friendly. The long-term research goal of the PNGV is to develop vehicles that meet consumer needs for safety, quality, performance, utility, and affordability and that achieve up to three times the fuel efficiency of today’s comparable vehicles (identified as the Ford Taurus, Chrysler Concorde, and Chevrolet Lumina). The more immediate goals of the PNGV are related to manufacturing and the implementation of near-term advances. In manufacturing, the goal is to pursue advances that can reduce production costs and development lead times for new cars and trucks. The near-term goal is to pursue technological advances that can lead to improvements in the fuel efficiency and emissions of conventional vehicles. Both of these goals are aimed at cars being built today, and in essence, they call for implementing new technologies as they are developed. The implementation challenge of the PNGV is the responsibility of each party involved. The question for each is how to get the information from the collaboration back to their organization where it can be implemented and used to gain competitive advantage. The concept sounds simple, but the execution can be difficult. At issue is the communication between the groups assigned to the task of developing the technology (the research community) and those responsible for implementing the concepts (the design and manufacturing engineers). For the implementation to work, the researchers need to engage their company’s design and manufacturing personnel early on in the process so that a viable implementation plan can be developed. When one considers the vast networks of suppliers who need to be involved in this process, the size and scale of such an implementation can be daunting. However, the process can be aided by the appropriate use of information technology.

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Information Systems and the Environment INFORMATION REQUIREMENTS IN COLLABORATIONS Each collaborative program has unique requirements for managing and transferring information, based on the program’s goals and participants. Existing consortia provide some insights into differing needs for collecting and sharing information in collaborations. In the Low Emissions Technologies R&D Partnership, the mission is to coordinate R&D efforts on emission control technologies through the exchange of technical information. The overall goal is to identify and develop enabling emissions technologies, drawing from the existing knowledge base and R&D work of the Big Three. In this collaboration the participants communicate via face-to-face meetings, paper documents, and e-mail. E-mail is particularly valuable in some situations because it enables all participants to receive the same information at essentially the same time. Most of the information comes from the results of collaborative research being conducted by the Big Three, and each participant is responsible for archiving the data. In the Low Emission Paint Consortium, the focus is on paint-related technologies that can reduce or eliminate solvent emissions. The group has an explicit goal of building a common industry database for the information gathered. The consortium’s first collaborative project explores the materials and process issues related to using powder clear-coat paint systems in automobile manufacture. Powder paint systems are solvent free and thus reduce plant emissions, and the consortium has built a highly instrumented pilot facility to test their use. To ensure that all of the necessary expertise is available, the consortium includes manufacturers of paint and paint spray equipment. All participants are involved in developing the materials, processes, and monitoring systems needed to show the environmental impact of specific paints. The ultimate goal is to place proven materials and processes into automotive assembly plants so that plant emissions can be reduced. The Casting Emissions Reduction Program offers another example of how information is shared in collaborations. The Big Three are dependent on some of the 3,100 foundries in the United States that supply the castings for engines, transmissions, and other parts. The foundry industry is essential not only to the automakers, but to other groups as well, including the Department of Defense (DOD). Emissions from foundries are cause for concern, but no individual foundry is in a position to conduct the magnitude of research needed to examine the potential problems. To address these issues and help protect the national supply base, a collaboration was developed between USCAR and the DOD that included the U.S. Environmental Protection Agency (EPA), the California EPA Air Resources Board, and the American Foundrymen’s Society. The consortium has built a state-of-the-art facility at McClellan Air Force Base to look at new environmentally friendly and efficient casting processes designed to meet new regulations expected in the year 2000. The program’s goals are to collect and analyze data on casting quality, foundry processing, and foundry emissions and

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Information Systems and the Environment to find processes and technologies that will allow the foundries to stay in business. The information technology challenge in this program is to acquire and organize the data and disseminate the findings to the foundries. The consortium hopes that the involvement of the American Foundrymen’s Society will help to speed that process, as it provides a central source for industry information through its publications and meetings. USE OF INFORMATION TECHNOLOGIES IN COLLABORATIONS Various information technologies are being used to manage the data derived from the various automotive R&D collaborations. These technologies include those that are used routinely in corporations to communicate, store, and relate information, such as e-mail, CD-ROMs, intranets, databases, and others (see Carberry, this volume). Although information tools are useful in many situations, they may be less so in the early stages of a collaborative project, when it is important to establish a sense of rapport and trust between the participants. Although teleconferences and videoconferences may approach the immediacy of direct meetings, there are nuances in the communication process that are missed when using these devices. Once rapport and trust are established, information technologies may become more valuable in facilitating a collaboration, but in the early stages participants need to meet face to face to make the collaboration work. A peek into the near future suggests that information-sharing technologies such as groupware show promise for use in collaborations, but until these technologies become more commonly used (not just available) in individual organizations for collaborative purposes, their utility is limited. In addition, such efforts are likely to confront issues related to the diversity of available software packages. So, at the moment, the key to a successful collaboration remains the people involved. When it comes to archiving and disseminating information, the Internet and intranets are evolving as effective tools. This may be the place where information technology will have its greatest impact—that is, in preserving knowledge in an easily accessible form. However, at the present time, most data, particularly R&D and more technical information, are still exchanged on diskettes, in written documents, and through oral presentations. The challenge in using any method continues to be the need for more knowledge to move out of the research departments and into the larger corporations. Even this, so far, has best been accomplished in face-to-face meetings. SUMMARY The majority of the Big Three collaborations have been directed at solving environmental problems. Early collaborative efforts included the manufacturers and government research entities. Today, collaborative efforts include a range of

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Information Systems and the Environment other players—particularly suppliers. Historically, information exchange in these collaborations has been accomplished via face-to face meetings, traditional paper documents, and familiar computer media such as diskettes and databases. More recently, technologies such as the Internet and intranets have shown promise as vehicles for information exchange. However, the promise of these and other new tools for cross-company collaborations will be realized only as personnel in the companies become more familiar and comfortable with them. REFERENCE Killgoar, P. 1997. Chronology of Auto Industry Collaborative Research. Paper presented at the National Academy of Engineering Industrial Ecology Workshop, Woods Hole, Mass., July 20–22.