Protecting the Auto Supply Chain, Part One
Written by Sean Martin of imsmartin consulting
According to a survey conducted by Purdue University and the Center for Education and Research in Information Assurance and Security (CERIAS) in association with McAfee, as much as $1 trillion of intellectual property is stolen by cybercriminals each year. Is this figure not enough to suggest that an ‘out of sight, out of mind’ placement of security in favor of cost-cutting could actually prove to be more costly for the automotive industry in the long run?
The automotive industry relies heavily on its secure and reliable communications for key business operations such as supply chain management via Electronic Data Interchange (EDI), Computer Aided Design (CAD), Computer Aided Engineering (CAE) and Product Data Management (PDM). One could say that the systems and data that enable these communications are the lifeblood of the automotive supply chain, potentially even the automotive industry. Make a poor decision that affects the ability for the supply chain to move, and the results could be globally catastrophic. However, as the industry struggles to operate more efficiently with fewer expenses, these collaboration and document exchange services become a very large and natural target for cutting costs.
In an attempt to formally find ways to cut costs associated with the enablement of these services, the Automotive Industry Action Group (AIAG) established a committee in the latter part of 2010 designed to bring together a number of global industry representatives with the goal of identifying cost-effective alternatives to dedicated private collaboration networks. This committee recently met with other global industry representatives during the recent “Collaborative Supply Chain Data Network Connectivity” event held in Southfield, MI.
It should come as no surprise that the topic of cost-cutting ran hot through most of the sessions and conversations during the event. Unfortunately, it appeared that the main discussion point of cost-cutting and the associated discussions surrounding the adoption of new technologies as a way to reduce costs have pushed the topics of security and reliability to the side. With a suggested move to leverage the public Internet, the industry could indeed save some money through lower technology and service acquisition costs. However, this decision could come at the expense of trade secrets being stolen, supply chain productivity decreasing and even increased operational overhead.
As described by McAfee in their 2011 report entitled “Underground Economies: Intellectual Capital and Sensitive Corporate Data Now the Latest Cybercrime Currency,” the globalization and commoditization of information technology have driven businesses to store increasing amounts of precious corporate data in the cloud. As this shift has taken place, cybercriminals have discovered new ways to target this precious data, both from inside and outside the organization. More pointedly, in 2010 alone, the US Secret Service handled cybercrime violations totaling over $500 million in actual fraud loss (source: Verizon Business 2011 Breach Report).
One such case of theft can be viewed where Hyundai Capital admitted to nearly 25 percent of its 1.8 million customers’ personal information was stolen; roughly 420,000 people were affected through the unauthorized access to Hyundai’s customer database via a successful hacking attack.
Come back tomorrow for Part Two of our series on Protecting the Auto Supply Chain,
Edited by Kevin Scarpati
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”