The PACE of supplier innovation

GM just announced that it will begin selling a dual gasoline/CNG (compressed natural gas) version of its Impala – the first Chevy in years (decades!?) to get a top rating from Consumer Reports. Now such vehicles are standard in Brazil, allowing the country to take advantage of the widespread availability of natural gas. [In Brazil, such vehicles can also use any gasohol mix, from 100% gasoline to 100% ethanol – you put whatever's cheapest into your tank.] With natural gas running as low as $1.50 per gallon equivalent in the US, that's of considerable interest to fleet operators, and perhaps someday to regular consumers. And while the article makes no mention of the specifics of who supplies GM's system, the dual fuel technology comes from a supplier, Magneti Marelli. One item of note is that it is an example of the globalization of the supply base, as this is an Italian firm but the R&D was done in Brazil. The other is that this innovation – TETRAFUEL – was a 2008 PACE winner.

The PACE supplier innovation competition is now entering its 20th year; finalists for the 2014 awards were announced Saturday morning at the Society of Automotive Engineers "Global Leadership Conference" at the Greenbrier in West Virginia.^{Note 1} I've commenced a project analyzing PACE winners. I hope that will provide a window on what I believe is a gradual shift in the nature of automotive innovation (I gave a presentation on "technology roadmaps" at the Industry Studies Association in May 2013.) Another component is to see whether we PACE judges [yes, I'm one] have done a reasonably good job in evaluating which innovations matter. Of course we can't give awards to firms that don't apply, so we don't have a complete set of innovations to work from. But my sense is that we do pretty well.

Flexible fuel systems are an example of that. What Magneti Marelli did was really clever, starting from problem solving in the Brazilian context, where ethanol is cheap [unlike in the US]. Now other suppliers have to make sure that their hoses aren't soluble in ethanol, that their fittings are robust, as it's chemically different from gasoline. MM's focus was engine controls. How does the air-fuel mixture need to adapt, or ignition timing, or ... in the presence of different mixtures? And how do you measure the fuel mix? They discovered that the information they needed was already being gathered by sensors present in the burn and emissions systems; they didn't need additional sensors in the fuel line to figure out ethanol content. TETRAFUEL took it one step further: how did engine controls need to respond to natural gas? Solvable. (Again other suppliers did the work on lines and fittings; CNG storage and handling is a mature technology.) How to switch fuels? Some clever engineering utlimately led to a low-cost system that could be fitted to existing engines.^{Note 2}

You can peruse past PACE winners on the competition's web site, along with the list of 2014 finalists that this year ranges from Korea and Japan to Sweden and Germany, with a global customer base. I'll make site visits to a few as part of the judging process. Until the announcement of the winners at a black-tie event in Detroit in April 2014, though, I won't be able to say much more.

Note 1: SAE is recovering from a near-death experience, the two-plus-century-old Greenbrier resort is also recovering nicely under the ownership of a local WV businessman.

Note 2: All the detail that I provide on PACE innovations is from public sources. We judges are very careful to adhere to non-disclosure rules, which not only includes engineering, customer and financial data from suppliers relating to their innovation, but the input of customers and other outside references on an innovation relative to alternative approaches and systems from rival suppliers.

mike smitka