Meritor CEO delivers keynote at ACT Expo 2018

 ( Photo: FreightWaves )

(Photo: FreightWaves)

The 2018 Advanced Clean Technology Expo, presented by FleetOwner, Daimler, and Penske, officially kicked off Tuesday morning in Long Beach, California. The event is a gathering of environmentally-minded technologists, manufacturers, shippers and carriers that combines a traditional expo’s display booths with conference-style panels and breakout sessions. 

Erik Neandross, CEO of Gladstein, Neandross, and Associates, served as welcoming MC, and introduced the opening remarks, keynote presentation, and first panel.

Dr. Joseph Lyou, the president and CEO of the Coalition for Clean Air, and the California governor’s appointee for the South Coast Air Quality Management District Governing Board, gave some opening remarks that explained why, from the policy-making side, events like the ACT Expo were so important. 

“Welcome to ACT EXPO 2018, and welcome to one of the most polluted air basins in the country,” began Dr. Lyou. Lyou explained that he represented the governor in a local regulatory body that sought to bring Los Angeles into compliance with state and federal air quality guidelines. 

“We’re all about adopting and enforcing regulations and supporting clean air science and technology. We came up with a plan on how to get to clean air, and thanks to technological development, we can do that, but it’s gonna cost money—about $1B a year for 14 years, just for L.A. to comply with state and federal regulations. We have to reduce NOx [i.e., nitrogen oxides] by 45% by 2023 and 55% by 2031 to reach compliance with federal air quality standards; if we don’t do that, we face a bunch of really ugly sanctions. Most of this NOx comes from the heavy duty freight transportation industry—the ships, offroad equipment, railyards, trucks. That’s why this conference is so important to us.”

Lyou emphasized that the transportation sector is still in a state of transition and that there is significant uncertainty as to which clean technologies (including hybrid-electric, various hydrogen systems, liquefied or compressed natural gas, etc) will ultimately become commercially viable. “We don’t know that there’s a clear path forward. We don’t know where we’re gonna be. The main message is that for medium duty and heavy duty freight, things are changing quickly and for the better,” said Lyou.

Jay Craig, the CEO and president of Meritor, gave the keynote presentation about how Meritor, a century-old industrial manufacturer of automotive components, is investing in and adapting to clean technologies. “Rather than pushing off new clean air standards, we’ve decided to embrace it and move aggressively into the market,” Craig said.

Craig noted that many industries have seen a significant amount of technological change, and they struggled to adapt, with incumbents becoming irrelevant faster than they could have imagined (Craig gave the examples of Sears, Blockbuster, Borders, Nokia, and Kodak). He justified Meritor’s aggressive investments of capital, executive time, and human talent in emerging technologies with a quotation from Jack Welch: “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”

“We’re at one of the most dynamic forks in the road our industry has ever seen,” claimed Craig. “The push for electrification and clean fuels is one of the biggest changes, and is requiring the biggest investment we’ve seen in the history of the industry. And it’s hard to see into the future and pick outcomes. There are major uncertainties with things like battery cost, battery payload, legislative attempts to work with industry, and one of the biggest challenges, infrastructure: where will all the power source comes from that will fuel these vehicles in the future? Do we stay the course or go headlong into the future, or do we take a more measured approach?”

“The pace of change we’re having to deal with is becoming more and more rapid and makes planning decisions much more difficult,” said Craig, highlighting what would become the theme of his talk: navigating an uncertain, dynamic technological landscape from the perspective of the C-suite. Craig cited another quote from a famous executive, Bill Gates: “We always overestimate the change that will occur in the next 2 years, and we underestimate the change that will occur in the next 10 years.”

During the rest of his presentation, Jay Craig walked the audience through five key areas that Meritor executives evaluate when they see significant changes in a field in which they’re a player. Meritor looks at its resource allocation, product portfolio, core competencies, partnerships, and customer integration. Craig explained that in times of rapid change, it’s easy to get out-of-step with your customers, the fastest route to irrelevance. 

“We try to stay very closely aligned with our customers’ executive teams and, more importantly, their future product program teams. Blackberry didn’t stay in step… they had dominant market share in mobile data devices but lost it to Apple because they were too internally focused. We try to make sure that we’re constantly out in front of our customers, testing our strategies, figuring out where the market is headed, and going with them. For example we made a strategic decision to make our electrification systems an open architecture… we want to provide whatever our customers need, and it’s been successful because we aren’t perceived as a threat, but as a genuine partner,” said Craig.

The overall emphasis of Craig’s presentation was to show how Meritor seeks to preserve its options as far into the future as it can, when the company expects more certainty and a clearer path forward. 

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