What Can be Learned from the Automotive Industry? Perspective from Learning Region in Java DESSY IRAWATI d.irawati@ncl.ac.uk
AIMS: AIMS & METHODOLOGY 1. The Impact of the Global-Local Automotive Network in the Indonesian Automotive Cluster (positive/negative) 2. The Process of Fostering Technological and Knowledge Capability in the automotive cluster in Java 3. The Roles of Actors involved and the process of learning region in Java METHODOLOGY Case Study approach: qualitative research and secondary data for statistic and numerical data Descriptive & Explorative study Semi-structured interview with the automotive actors (car makers and their suppliers), government, industrial estate developer, university/research institution Field work & observation in the car plants for 4 months On-Going Correspondence with the interviewees 4
INTRODUCTION The Automotive is important and complex industry due to the nature of knowledge base, learning process, basic technology, and dynamic complementary: Perspective from MNEs and the Host Country 5
Asia is Pax-Niponica-Mutual Benefit Zone, the most suitable site in the world for Japanese expansion in the automotive industry It is right next to door to Japan & the region is still developing. Importantly for efficient just in time manufacturing system (Dicken 1988, Doner 1991, Dicken 1992, Dicken 2003) 6
The Japanese Auto MNE s Benefits: Providing Capital, Technology-Knowledge Transfer, Managerial know-how (Expatriate Managers/Advisers) Market for the host country (active role for future investment, production, and marketing) Providing strong vertical quasi integration/keiretsu in the global-local auto supply chain 7
The Learning Region : Perspective from Java Increased employment level in the Java Technology and Innovation in the automotive Providing new contact in supply chain to trigger the indigenous growth of the automotive Multiplier effect through inter-industry linkages, either FDI or global-local supply chain 8
The Negative Sides The increased external control into the region Loss of autonomy in subsidiary plants (cont: Indigenous Project Initiatives) Vulnerability to International demand and supply conditions from the global condition (cont: strong export oriented not only to western market but emerging market in Middle East, Latin America, Asia- Pacific, plus strong domestic market) 9
Technology and Knowledge Transfer : KIJANG PROJECT TOYOTA MOTOR JAPAN TOYOTA MOTOR INDONESIA & TOYOTA ASEAN TOYOTA MOTOR INDONESIA LOCAL SUPPLIERS GOVERNMENT ACADEMIA 10
Technology & Knowledge Transfer: Learning Aspect From Knowledge Network In the Automotive Sector (Mito 1990, Nonaka & Takeuchi 1995): Firstly is the technical dimension (capital embodied), which encompasses informal and crafts in the term know-how. Secondly is cognitive dimension (labour embodied) consisting of mental models, beliefs, credo, and perceptions and it is shaped by the surrounding environment (Nonaka & Takeuchi 1995), Japanese support their production management methods and their technical training all the way through OJT (On the Job Training)=LEAN PRODUCTION SYSTEM as Learning Dimension Internal: OJT via TPS,Employees Exchange Programme, OJT via NH Circle, Idea Contest External: Jishuken (Learning activity/cop) through Suppliers for OEM, RP/SP LEAD TO KANBAN-E-KANBAN TO QCDSM 11
THE AUTO INDUSTRY IS A PROBLEM CENTRIC SECTOR Current global recession (bail out, cut down in the plants, redundancy in the auto) Sustainable development (environmental issues, hybrid car, low-cost CO2) Mature Industry VS Emerging Industry Global-local value chain in the Auto: VERTICAL QUASI INTEGRATION VS LONG- TERM CONTRACT 12
Thank You ANY QUESTIONS? d.irawati@ncl.ac.uk