VIEWPOINT: Indiana ripe for new breed of auto industry

Landing the Honda plant is a great coup for Indiana. Gov. Mitch Daniels deserves congratulations. Not only will Honda employ an estimated 2,000 Hoosiers, it appears the governor secured the facility at a bargain price for Indiana’s taxpayers.

While the plant
brings much-needed employment, future wealth created from Honda’s production accrues to its primarily Japanese shareholders. This is only fair, as Japanese automakers have innovated, invested and expanded over the past 30 years. They have earned their success and deserve our admiration.

The question is whether Hoosiers can be innovators and entrepreneurs as well. Can they start auto-related companies, employ other Hoosiers, and create and retain wealth in Indiana? Or are Hoosiers destined to be just the employees of large, efficient Asian manufacturers?

I believe there is more opportunity in the auto industry today than at any time in the last 50 years. Rising tension in the Middle East, a permanent increase in the price of gas, and a plethora of new technologies is creating a dynamic new market for energy-efficient vehicles (EEVs).

Indiana needs to capitalize on this opportunity. The state has more ingredients to be
the center of innovation and new-venture creation in the EEV industry than any other region in the country. Indiana has a work force skilled in all aspects of auto-related manufacturing-although many are now underemployed or out of work.

Indiana has the infrastructure, education facilities, work ethic, current political will and geography ideal for leading the EEV industry.

Beyond all the natural attributes and assets, Hoosiers have a historic love of motor vehicles-from Indy-car racing in Speedway, to the RV and van-conversion industries in northeast Indiana, to the Winged Warrior Performance Challenge in Anderson, to car shows across the state. Hoosiers have always loved cars-building, modifying, racing and showing them off.

Unfortunately, the innovation and entrepreneurship in the nascent EEV industry is taking place in California. Teams of engineers are modifying hybrid cars with new technologies to build even more efficient vehicles- making “tricked out” electric rides. California entrepreneurs are forming companies to commercialize these ideas and seasoned Silicon Valley venture capitalists are investing in EEV businesses.

These entrepreneurs have wisely segmented the market, serving affluent consumers who will pay to break their Mideast oil addiction. This high-end niche has strong customer interest, low price sensitivity and no competition from the major auto companies. Success within this market segment mirrors the success pat
tern of Indiana’s van-conversion industry.

Indiana can compete in the EEV market, but it will require a major investment analogous to what BioCrossroads provided to Indiana’s life sciences industry. Where BioCrossroads capitalized on “the intersection of existing assets and growth potential in Indiana” in life sciences, an EEV initiative would capitalize on the intersection of assets and growth potential in energy-efficient vehicles.

From its Indianapolis headquarters, BioCrossroads spurred the formation of venture capital, organized resources, and sparked new venture creation in life sciences. An EEV initiative has similar potential and should be located appropriately.

I would propose Anderson as home of an EEV initiative. No Hoosier city has borne more of the brunt of the auto-industry downsizing. Thousands of unemployed Anderson residents have generations of auto experience. The city has large, empty facilities ideal for housing hybrid-vehicle-conversion shops. Anderson is well-suited to be the center of the state’s EEV investment.

Today, the locus of EEV innovation is Silicon Valley. With leadership, investment and vision similar to that demonstrated with BioCrossroads, Indiana can seize the opportunity in this growing industry and Anderson can become once more a vibrant, growing center of auto manufacturing.