Motoring Africa Examines Business Opportunities in an Emerging Auto Manufacturing Industry
For years, consolidations in the auto industry have made the market seem as if opportunities for new entrants were limited. But the changing economics in global markets have made this obstacle “appear” less formidable. I say “appear” because building cars can seem simple, but building a manufacturing operation to scale is more complex. Anyone following Elon Musk’s automotive venture can see those complexities easily.
Still the sky may be the limit for the right sustainable manufacturing ideas in Africa, according to Edward Hightower, an automotive exec who has written a terrific book, Motoring Africa: Sustainable Automotive Industrialization – Building Entrepreneurs, Creating Jobs, and Driving the World’s Next Economic Miracle. The reader will walk away with global views of the industry and real-world ideas about how to best enter the market.
Hightower has a very accomplished background in the automotive industry. He is a managing director of Motoring Ventures LLC, a private capital investment, operations and growth advisory firm. Hightower lead a crossover business unit for General Motors and has worked for BMW and Ford as well. I heard about the book through the author’s brother, a developer friend who established a Ruby-on-Rails conference in Chicago. I attended a book launch at the BlueLacuna incubator in Chicago, Hightower’s hometown, and purchased a copy for this review.
What Is Motoring Africa About?
Motoring Africa is a thorough look at the automotive industry on the African continent, but it also has a value as a primer for understanding the global automotive industry and sustainable manufacturing concepts. For example, in the book Hightower deftly notes how the automotive sector is more strategic for job creation:
“While the combined market capitalizations of the tech companies are nearly eight times those of the automakers, the automakers create double the jobs of tech companies.”
Early on, Hightower makes a reasonable case for economic trends in Africa. Check out this stat as an example:
“The McKinsey Global Institute forecasts that by the year 2034, Africa will have a working age population of 1.1 billion, which will be larger than the workforce populations of either China or India.”
He then takes those stats and emphasizes how an economy, and subsequently, a community, benefits.
“Supply chains are developed to support the manufacturing company, its suppliers, and its competitors….Developing the skills to manufacture one type of product can give a person, community, region, the potential to apply those skills to the creation of other related or unrelated products.”
The book is divided into three main segments. The first explains what sustainable industrialization is, with a splendid 10 point framework for what is involved. There’s an outline on page 33 about what the concept is meant to achieve.
“Sustainable industrialization means growing the business to operate at an ideal scale and performance level to optimize the cost structure and margins, thereby enabling the business to sustain and succeed over time….This means optimizing the use of renewable energy sources and responsibly limiting the use of non-renewable fossil fuels. It also means incorporating product use sharing and end of life cycle reuse opportunities into the design, manufacturing, and distribution processes.”
The book’s first segment also examines the economics and market structure creating opportunities not only for manufacturing vehicle sub-assemblies, but also for building vehicles from Semi-Knockdown Kits and Complete-Knockdown Kits.
The second segment examines the global economy, noting examples of emerging markets and the progress made by suppliers, manufacturers, and investors in these markets. Hightower highlights international partnerships with companies like Renault-Nissan, Geely and Great Wall Motors of China. He also mentions high tech startups like Divergent 3D which launched a 3D supercar (A little easter egg for you: My article on the O’Reilly Solid conference features a picture of the Divergent supercar.).
In thee third section of the book, Hightower offers strategic suggestions for the savvy entrepreneur interested in taking advantage of this emerging opportunity. The book also examines relevant public policy including suggestions regarding financing and addressing risks.
What I liked about Motoring Africa
Well, as a car guy, I enjoy any book on the automotive industry. But what impressed me is how Hightower created a textbook-quality read for business owners who really need to keep economic and competitor factors in mind. The book also appeals to folks who appreciate a bit of business history. The first chapter notes historical examples in which entrepreneurs transformed Chicago meatpacking and North Carolina furniture manufacturing into industries with major regional impact.
I really like how the later chapters outline key considerations for establishing a sustainable operation. In Chapter 9, Hightower covers criteria for selecting a region to manufacture, and then ranks several countries as an example.
Hightower is always direct in his observations. Take this statement about assembly of the aforementioned knockdown vehicles:
“Don’t even think about only launching a semi-knockdown or complete knockdown operation. Assembly is not manufacturing….The new African entrants should set their sights on operation at all levels of the industry value chain form the start.”
Even though it may seem Hightower is saying “Here, do X and Y,” the reader gets a view of why these recommendations exist. They give the reader a clear view of marketplace reality.
The insights also help the reader appreciate how public policy shapes marketplace opportunities. Hightower’s inclusions of marketplace comparisons to Brazil and China not only spotlight his extensive experience but also emphasize the importance of researching government programs for each market
Those interested in sustainability will see a lot of discussion about how to create sustainable manufacturing strategies, such as this significant comment in Chapter 11.
“Auto manufacturers in developed markets make 200k plus vehicles per plant, per year. Typical auto assembly plants in emerging markets need to produce at least 50K units to break even and justify their existence. I recommend scaling the operations of the new African manufacturers to break even at an initial production capacity of 10K per year…This capacity will reduce property and equipment costs, initially require less direct labor, and better match production with demand at the outset.”
Each chapter ends a summary of easy-to-gasp takeaways. Despite a textbook approach — even my mom got that impression when I showed her the book — Hightower picks conclusions that are actionable. And throughout the book, he stresses the magnitude of investment going on in Africa, but also the potential rewards:
“Yes, almost like the mission to Mars, building autos in Africa is a big project. But Africa is a big continent…that is only getting bigger.”
Hightowers’ experience as an investor and advisor also come through here. The book can feel quite overwhelming at times, but the automotive industry is inherently complex. Still, Hightower finds ways to simplify he information for entrepreneurs enabling them to choose the right opportunity.
Entrepreneurs and investors should find Motoring Africa a great marketplace primer. Very few books outline an industry opportunity with such thorough analysis on a market — including an analysis of the risks involved. In fact, Chapter 14 is literally called Risks and Migitigation.
Buy Motoring Africa to learn more about the opportunities available in Africa’s emerging car manufacturing industry and whether you might want to get involved.
This article, “Motoring Africa Examines Business Opportunities in an Emerging Auto Manufacturing Industry” was first published on Small Business Trends