The 'Multiplier Effect' is a phrase generally much loved by economists, and today much hyped by politicians relative to the expected positive results from recent massive stimulus spend. But of course its root lays in the laws of physics (from particulate to quantum). And as of today, that important difference is critically highlighted by the announcement of the Bladeless Fan from (James) Dyson. A physical examplar and useful allegory.
Why?
Because in essence it demonstrates the philosophical and policy-led 'about turn' required to regenerate the global economy. To re-direct it through 180 degrees from the now exhausted and disqualified 'credit-pull' variety of economic growth to one of 'productivity push'. In short, for the horse to be put back in-front of the cart by means of meaningful inventive progress that generates meaningful B2B and B2C demand. True progressive conceptual innovation over false static repackaging.
Just as there needs to be a new 'fundamentalism' in the manner that objective investors view the capital markets – rationality over emotionality - so society and its consumption en mass is returning to a new age of reason. The Copenhagen talks approach the Kyoto Protocol ideals will be tested, the outcome seen to either kick-start a new eco-participatory era or very possibly flail under the political reality of EM region economy-building demands. If this is the case, it will ironically be the politicians looking at both industry and the populace to make the difference.
Given the fragility of the politics, the onus is increasingly looking to be upon the consumer expectations which in turn must be met by industry. And importantly that puts an upstream onus on every corporate participant within every sector of industry. That by default puts the onus onto the R&D departments of all industrial players which by virtue (and investment reality) demands that the very commercial nature of R&D and the resultant IPR can be applied as broadly as possible as improved solutions for new age challenges.
That calls for inter-disciplinary interaction, whether via an investment group's holding-company portfolio, a conglomerate structure, joint-ventures, corporate spin-offs into new arenas or M&A to acquire and broadly-deploy new solutions.
In short the eco-demands of today and tomorrow create greater commercial pressures, yet greater concomitant rewards.
Whilst investment-auto-motives intentionally has both broad and deep investment related remits spanning the macro and the micro, it understandably tends to spotlight directly related auto-industry issues and current affairs topics. Thus, at the micro-level steers toward the corporate components of the industry's value chain – from raw materials procurement and processing to Tier 3, 2 & 1 suppliers (single sector or multi-sector), to VMs themselves, to the dealer-base (corporate, affiliated or independent), to consumer credit furnishers, to auto-insurance providers and lastly the general aftermarket suppliers and distributors.
Given the maturity of the industry and typical barriers to entry ( ie high CapEx, brand lineage & credibility, historical distribution agreements etc etc) the company names mentioned are all to well known ranging from say Basic Element Group to say Arcelor-Mittal to say GKN to say FIAT Auto to say Pendragon or CarMax to GMAC to GEIKO to say MoPar to say Halfords. For the most part the names are indelibly linked and recognised.
And whilst the industry itself, in its conventional form, runs through yet another typical phase of regional consolidation and re-shaping to align itself with the global economic and business cycles, the shifting sands at the edge of the sector created by PESTEL trends highlights the potentiality of non-typical companies and solutions.
By this investment-auto-motives does not necessarily infer the theoretical industry disruptive effect of pure EVs – there are still sizable barriers of regulatory, technical and commercial natures to overcome related to these vehicles. Instead the more feasible and commercially tractable routeway to 'improved autos' is the re-engineering of the conventional systems and methods we have in place today and which make-up the the reality of our economy. This instead of the largely hot-air rhetoric of introducing a 'tomorrow's world' ideology that practically appears light years away.
The reality is that western governments do not have the funds to transpose us into a new world, and the east which is far more liquid has already invested in conventional technology to date. Thus whilst it is right to applaud efforts to increase renewable energy technology and the EV ideology and set proportionate funds aside to develop such technologies (along with concise project monitoring to ensure “bang for buck”, the industrial reality of the auto-sector must dictate a logic of evolution over revolution.
In this regard Sir James Dyson's bladeless fan is a useful tool – both as possibly a directly applicable engineering solution to vehicle engineering and as an inspirational case-study.
[NB. Of course with the Dyson brand so closely related to advanced electrical consumer goods there is an argument regards its applicability as an EV manufacturer in its own right].
Like Dyson's previous ball-barrow, cyclone vacuum cleaner and ball-upright vacuum cleaner, the fundamentals of a conventional design have been re-assessed and improved upon. Of course advancement means improved functionality and so differentiation and thus pricing power, and that has been the Dyson matra to date. But just as the cyclone vacuum was a self-confessed technology transfer from industrial filtration systems to a domestic application, we must ask ourselves whether the principles of the bladeless fan can be adapted to other fields – such as automotive design?
Conventional ICE powertrains are water/liquid-cooled, but the present-day trend for them to shrink in relative cubic capacity and in cases the actual number of cylinders so associated heat build-up and dissipation declines, prompting the possibility of utilising an air-cooled system. This provides the benefit of a) simplified engine block design and manufacture b) sizable weight reduction from a waterless system c) avoidance of conventional radiator weight, cost and engine-bay packaging complexity (assisting front-end crash performance) d) avoidance of weight, cost and parasitic energy depletion from mechanically or electrically driven ancillaries – such as the radiator fan itself.
“Water cooled versus air-cooled” is a question that arises when any new small vehicle project given 'clean-sheet' status by the Board; it is one of the fundamentals of the early stage decision tree. But historically given the level 'sunk-cost' (financially and culturally) in multi-platform common systems and the normative order-capacity agreements put in place to secure discounts with suppliers, much of the engineering component packaging is effectively 'a given' when a new project is embarked upon. Hence the self-fulfilling systemic circle.
However, there have of course been evolutional advancements at a systems level generation after generation and through technical trickle-down – typically orientated toward powertrain and chassis systems as the additional cost of a new solution is first absorbed by high-margin/low volume products and latterly reached low-margin/high-volume products. 'e-systems' solutions ranging from e-steering to the e-accelerator to now e-regenerative brakes are reflective of the influence and integration of of e-systems. Thus new solutions are introduced.
So whilst chassis and powertrain have ostensibly seen the main focus, what of the engine cooling and and the physically linked HVAC ? Ostensibly little has altered, except the typical attuning of radiator & fan size and materials along with CAD enabled dynamic thermal management. As for HVAC, there have been efforts regards miniaturization and simplicity.
But taking things back to first principles – such an an air-cooled ICE engine – allows for new thinking and solutions. Thus with technology transfer in mind, it is almost natural that the Dyson bladeless fan solution be conceptually incorporated into both CAD-based and physical powertrain prototypes relative to next generation lightweight small vehicle packages
As an integrated element of the HVAC system – inter-feeding feeding air instead of conventional liquid – the fan-ring could sit in frontt of, or directly over, a normal small engine block or possiblyseparatedd and physically 'finned' cylinders – as with old-style exposed motorcycle boxer (eg BMW) or V-twin (eg Harley-Davidson) engines.
And latterly as the commercialisation and consumer demand of pure EV cars grow, such simple integrated solutions can critically act as 'technical transition enablers' allowing the creation of dual powertain (ICE or EV) platforms - and so act as stepping stones toward the EV dream.
This Dyson inspired example is of course derived simply from the recent press release, as opposed to the fully exhaustive research and assessment required – a task investment-auto-motives believes lays at the feet of national and international government.
And beyond the responsibility of government it is surely in the investment community's interest to bolster such activity. By far of the majority of 'Green Funds' created have looked at – and largely been cautious of – radical renewable-energy technologies – with accordant (self-interested) scientific over-hype and usually complex deployment scenarios.
So it is no surprise that the investment sector has learned from recent lessons, made all the more prosaic from still cautious credit and capital markets, and are increasingly looking to the the eco-directed R&D from within the bowels of each sector (materials processing to building construction) and also the opportunities for technology transfer.
In this regard Dyson's bladeless fan appears to cut both ways, and all funds from VC's to last-phase to indeed the institutionals should be assessing and creating that commercial 'white-space'.
