Foreign Direct Investment in Latin America and the Caribbean 2017

116 Chapter II Economic Commission for Latin America and the Caribbean (ECLAC)
The automotive
industry is facing its
greatest technological
change in more than
a century.
New plants will make it possible to produce better-quality vehicles with fewer
faults, a larger variety of models, with a shorter time to market and, above all, lower
costs. These physical objectives are being integrated into the digital world to combine
smart machines, production systems and processes to form cyber-physical production
systems, which are the centre of the fourth industrial revolution (ECLAC, 2016b).
Productivity gains will be made not only within the factory (during production), but all
along the value chain, starting with engineering and product development (for example
through prototyping and virtual testing, or 3D printing), together with supplier logistics
and management.
For this to happen, three groups of industry participants must work in coordination.
First, infrastructure providers such as telecom operators (America Movil, AT&T, Telefonica)
and platform managers (Cisco, Amazon), need to offer support structures and services,
ranging from cloud computing to storage and big data analysis. Second, technology
firms (General Electric, Siemens, Asea Brown Boveri (ABB) Group) need to provide
collaborative robots or remote maintenance systems. Lastly, vehicle manufacturers
can become one of the key drivers of the deployment of new technologies (Roland
Berger, 2016a). The automotive industry is facing its greatest technological change
in more than a century. In this world, strategic alliances between manufacturers and
suppliers, and also within the supply chain, will become increasingly important and
offer significant growth potential.
The new production models of the largest manufacturers increase automation
and digitization very significantly, with the widespread incorporation of robots, artificial
intelligence and the creation of digital networks with the suppliers. Exploiting digital
technologies, they will be able to improve manufacturing techniques by virtue of the
principle of commercial efficiency, or just in time, improving the logistics and cost
efficiency of an industry involving a large number of suppliers distributed around the
world. Continuous real-time data exchange affords a much higher level of intelligence
and individualized automation. At present, BMW has to deliver about 30 million parts
at the right time and place every day, so that around 9,000 vehicles can be produced at
the group’s 31 production plants around the world (IHS Markit, 2016). In the future, the
firm plans to have a fully networked supply chain, operate with autonomous transport
robots and use existing vehicle information for the delivery process, to make the
logistics more flexible and efficient (BMW Group, 2016a).
Audi, for its part, has stated that fixed assembly line times are becoming less
efficient (Audi, 2016). The more the number of derivatives and model variations grow, the
harder it is to control that complexity and integrate new routines into a rigid sequential
process. The firm’s response is modular assembly, which has already started to be
used in the test phase at the Audi plant in Györ (Hungary). With this method, smaller,
independent work centres can achieve work routines that are highly flexible in terms
of time and space. Driverless transport systems bring vehicles under construction and
the parts required from one work centre to another, while a central computer controls
driverless transport and recognizes the needs of each centre, ensuring a regular flow
(Audi, 2017).
These advances are not confined to vehicle manufacturers. Some of the main
suppliers are also at the cutting edge of technology. The largest supplier company in the
world, Robert Bosch GmbH, is the only one that actively embraces the three levels of
the Internet of Things: devices, gateways and centralized computing. 13 The firm offers
13
The intelligence of the Internet of Things is developed on three levels. The first is the furthest from centralized equipment and
is determined by the capacity of devices to process information. The second consists of the gateways, which group traffic from
different devices; and the third is the infrastructure of the firms or the centralized platforms to which devices and gateways
send information. The first two are the edge and the third is the cloud. A cloud-only system is a centralized intelligence system,
while one that has processes on the Edge is of distributed intelligence.