Disruptors are demonstrating that legacy car manufacturers don’t necessarily have all the answers and that includes where car factories are concerned. When it comes to how to build a car, the big OEMs are ploughing billions into expanding their existing facilities, but there are alternatives. The microfactory is not a new concept but has become popular recently with start-ups such as Arrival, while Ineos has forged a different path and effectively taken over the old Smart Hambach factory, using the brownfield site to build the new Grenadier.
Erik Torseke, director of operations and supply chain for Ineos Automotive, and Peter Wells, pro-dean of public value at Cardiff Business School, joined us for an in-depth discussion about the future of car manufacturing.
What is a microfactory?
Peter Wells: “Well, a microfactory is actually more than just a place where you manufacture cars. We conceived this as microfactory retailing and something that combines a manufacturing operation and the retailing operation, but on a very small scale. So it's more than just a factory. It's actually a business strategy and a whole new business model which allows smaller, new entrants to penetrate what has traditionally been an industry dominated by economies of scale.”
Did Ineos look at microfactories for the Grenadier?
Erik Torseke: “No, we did not. I mean, what we were looking at was either greenfield or brownfield and we had gone quite far with the greenfield option when the opportunity came to acquire the plant from Mercedes. But with the volume that we're looking at and with the implication of the supply chain, there are significant benefits to produce all of the cars in one place.”
What’s driving this change in some areas of the factory business model?
PW: "Everything comes together here. There's been some really interesting developments in terms of the ability to use digital technologies in the manufacturing space that allow a smaller scale and flexibility. So that's been important in terms of balancing materials, better use of more lightweight materials, different process technologies, and this has really opened up a space where in the past really everything had to be steel. We've moved away from that already. And that opens up many more opportunities for more innovative attitudes. “The market potential can be tapped by smaller operations without having to throw everything in an all-or-lose bid to try and get a bit of market share. I think one of the things we looked at with the microfactories was: what is the expansion route for a business? If you have to go in for a 300,000-unit-per-annum factory, that means you've got to sell a lot of cars very quickly.
Add your comment