Can the Aftermarket Launch the Hydrogen Economy?

NEWS ANALYSIS Can the Aftermarket Launch the Hydrogen Economy? PLYMOUTH, MI - During recent testimony on the hydrogen economy before a hearing of the U.S. Senate Committee on Energy and Natural Resources, Metaldyne Corp. CEO Tim Leuliette said the automotive aftermarket needs to be included in federal discussions and programs aimed at reaching a hydrogen economy. "Globalization has thrown the auto industry into a transformation on a scale greater than we have ever witnessed," Leuliette told the audience. The need to get to hydrogen is clear to all, he said. The problem is there is no urgency in the pace. He urged Congress to create a National Energy Policy that mandates collaboration with every part of the U.S. auto industry, including the aftermarket, to develop new technologies that facilitate the use of hydrogen: "As a nation and an industry, we cannot afford to allow politics and competitive concerns freeze out companies, [or allow] people or regions to stand in the way."  The committee was meeting to discuss the Hydrogen Title, a federal initiative designed to: * Enable and promote comprehensive development, demonstration and commercialization of hydrogen and fuel cell technology in partnership with industry. * Build a mature hydrogen economy that creates fuel diversity in the massive transportation sector of the United States. * Sharply decrease the dependency of the United States on imported oil, eliminate most emissions from the transportation sector, and greatly enhance the nation's energy security. Accelerating Toward Hydrogen * Establish a well-funded and powerful industry consortium made up of all the major stakeholders, including the automotive aftermarket.

* Appoint a collaborative hydrogen-powered-vehicle design team to set industry practice and design rules.

* Set a national target that 80 percent of the vehicles sold in the United States and 100 percent of the imported vehicles are hydrogen-powered by 2025.

* Provide federal customer incentives, research dollars and funding for infrastructure issues by imposing a gas tax and/or by alternative means that include investment by public and private equity.

* Educate the public to understand that hydrogen is the long-term solution, whereas hybrids and ethanol are the intermediary steps.

(Source: Tim Leuliette / Metaldyne)

"As GM's head of research, Larry Burns has said that the biggest risk of all is to sit on the sidelines and not try to create this future," said Leuliette, adding that Burns has cited a number of projects where a society-wide effort to build new infrastructure yielded wild success and made great impacts: the Panama Canal, the Alaska Pipeline, the Manhattan Project and the moon missions of the 1960s. He said the same could be accomplished with the Hydrogen Title.

The aftermarket: ready, willing and able  While automakers are included in the federal debate, Leuliette said the aftermarket - despite its weight in terms of employment, facilities and capital investment - is not. But it should be. He noted that the aftermarket has been denied a formal or direct ability to participate in the federal government's hydrogen program, FreedomCAR. Its constituents can only bid for grants and projects under the U.S. Department of Energy's Energy Efficiency and Renewable Energy (EERE) Vehicle Technologies program, which focuses more on hybrid components and short-term gains in fuel efficiency.  "This is not only an oversight - it is a huge mistake that will extend the timeline to achieving the hydrogen economy by decades," Leuliette said. He informed the committee of the size and scope of the aftermarket, which collectively represent two-thirds of the entire automobile industry: * According to the most recent statistics released by Motor Equipment Manufactures Association (MEMA) in June 2006, the aftermarket is a $384 billion industry - of which $199.2 billion consists of OE manufacturers and suppliers and $184.7 billion consists of aftermarket service and repair organizations.  * The U.S. automotive aftermarket employs more than 1.2 million people at more than 11,500 domestic plant locations across the country. This translates to 2.9 jobs in the auto supply chain for every one automaker job.  * Aftermarket OE products account for more than two-thirds of the content on each new vehicle. * There is a misconception that suppliers simply build systems, components and parts to automaker specifications. A recent National Science Foundation report showed that, in reality, the aftermarket plays a key role in automotive research and development (R&D) and innovation. According to the NSF report, the auto industry spent $16.9 billion on R&D in the United States in 2003. Supplier R&D accounted for about 40 percent of that, or about $6.9 billion. "We have the resources in  this nation to make the 
hydrogen economy 
a reality." 
- Tim Leuliette

Leuliette told the committee that the aftermarket is ready, willing and more than able to play a leading role in the march to the hydrogen economy: "It simply needs an avenue to march down and an invitation to the parade. The Hydrogen Technical and Fuel Cell Advisory Committee that the Secretary of Energy is establishing to advise the government on hydrogen programs is just that avenue."

The industry and the hydrogen movement need the engineers in aftermarket organizations to address the tactical issues of hydrogen vehicles, he said. The aftermarket is often the inventor of technology, and hydrogen is no different, Leuliette told the committee. Powertrains, chassis components and other systems need to be developed, and the aftermarket must be involved to take a leadership role in ensuring the most positive long-term solutions are adopted. 

Fueling global competitiveness Leuliette stressed that a collaborative environment must be created in the United States: "We have the resources in this nation to makes the hydrogen economy a reality."  Whether it's dependency on oil, lost competitiveness and related job losses, national security or the bite on household income, he told the Committee, "The only way we are going to regain our competitive advantage is if we solve the energy issue before other countries do, and that demands a National Energy Policy and a larger commitment to hydrogen." To date, Washington has only committed $1.2 billion to its Hydrogen Fuel Initiative, with the goal of producing commercially viable fuel cell vehicles by 2020 and a major dent in domestic oil usage by 2040. "As you know," Leuliette said, "that is simply too little." He commended the committee for its strong stand to authorize substantial monies to the initiate the hydrogen initiative, but argued more funding was needed, sooner than later. "The United States can't be a superpower if it's out of power," Leuliette asserted. He informed the committee that the current plan outlines a timetable 10 times longer than the Manhattan Project and four times longer than putting a man on the moon. Without the unified sense of urgency on a national level that permeated those and other major projects, reaching a meaningful hydrogen economy in time is at risk. Breaking the status quo Leuliette testified that the imminent squeeze of an increasing driver population in the face of declining oil reserves is leading to a precipice that could be economically catastrophic if the pace toward hydrogen economy isn't quickened. As China, India and other developing countries embrace free markets and foreign investment, they're producing hundreds of millions of new middle-class car buyers - in addition to the growing of drivers in America.  "The United States can't be a superpower if 
it's out of power." 
- Tim Leuliette

"Between now and 2020, the number of vehicles worldwide likely will rise from 750 million to more than a billion. We can't keep up with the oil consumption needed to run those vehicles," said Leuliette. Adding 300 million more vehicles to the mix over the next 15 years could result in a super spike in oil prices. 

With leadership in more fuel-efficient hybrid and diesel vehicles resting in Asia and Europe respectively, the pressures on the domestic automobile industry and other sectors of the economy will be enormous. The need to accelerate toward hydrogen is clear, Leuliette urged the committee. 

"If the U.S. truly wants to be [a] player in 2020, there must be a strong, doable national plan for hydrogen," he said. That plan, he said, needs to be collaborative in nature, embrace all major stakeholders and agents of change like the aftermarket, employ regulatory targets and offer federal incentives.

The auto industry, which has long been the bedrock of the U.S. economy, is at a crossroads and must adopt a new business model that will weave its collective expertise into a single fabric, with its focus on hydrogen, said Leuliette. "This transformation is good and necessary ... for the industry and the United States." 

Leuliette said that the technological challenges facing the industry and the nation today are more than any single company can achieve without extraordinarily large financial expenditures within a reasonable timeframe. An urgent national effort is needed beginning today, he said, one that pools the resources of the federal government, all sectors of the economy and public/private investors to move the U.S. to a hydrogen economy more quickly and efficiently. "There is simply no future in the status quo, and there can be no status quo in our future."

(Source: Metaldyne Corp.)