Focus: The electric vehicle boom is pay-dirt for factory machinery makers
20/08/2021 11:00
By Ben Klayman
DETROIT, Aug 20 (Reuters) - The investment surge by both new
and established automakers in the electric vehicle market is a
bonanza for factory equipment manufacturers that supply the
highly automated picks and shovels for the prospectors in the EV
gold rush.
The good times for the makers of robots and other factory
equipment reflect the broader recovery in U.S. manufacturing.
After falling post-COVID to $361.8 million in April 2020, new
orders surged to almost $506 million in June, according to the
U.S. Census Bureau.
Here's a graphic on U.S. manufacturing new orders: https://tmsnrt.rs/3lVyhlM
New electric vehicle factories, funded by investors who have
snapped up newly public shares in companies such as EV start-up
Lucid Group Inc LCID.O are boosting demand.
"I'm not sure it's reached its climax yet. There's still
more to go," Andrew Lloyd, electromobility segment leader at
Stellantis-owned STLA.MI supplier Comau, said in an interview.
"Over the next 18 to 24 months, there's going to be a
significant demand coming our way."
Growth in the EV sector, propelled by the success of Tesla
Inc TSLA.O , comes on top of the normal work manufacturing
equipment makers do to support production of gasoline-powered
vehicles.
Automakers will invest over $37 billion in North American
plants from 2019 to 2025, with 15 of 17 new plants in the United
States, according to LMC Automotive. Over 77% of that spending
will be directed at SUV or EV projects.
Equipment providers are in no rush to add to their nearly
full capacity.
"There's a natural point where we will say 'No'" to new
business, said Comau's Lloyd.
For just one area of a factory, like a paint shop or a body
shop, an automaker can easily spend $200 million to $300
million, industry officials said.
'WILD, WILD WEST'
"This industry is the Wild, Wild West right now," John
Kacsur, vice president of the automotive and tire segment for
Rockwell Automation ROK.N , told Reuters. "There is a mad race
to get these new EV variants to market."
Automakers have signed agreements for suppliers to build
equipment for 37 EVs between this year and 2023 in North
America, according to industry consultant Laurie Harbour. That
excludes all the work being done for gasoline-powered vehicles.
"There's still a pipeline with projects from new EV
manufacturers," said Mathias Christen, a spokesman for Durr AG
DUEG.DE , which specializes in paint shop equipment and saw its
EV business surge about 65% last year. "This is why we don't see
the peak yet."
Orders received by Kuka AG, a manufacturing automation
company owned by China's Midea Group 000333.SZ , rose 52% in
the first half of 2021 to just under 1.9 billion euros ($2.23
billion) - the second-highest level for a 6-month period in the
company's history, due to strong demand in North America and
Asia.
"We ran out of capacity for any additional work about a year
and a half ago," said Mike LaRose, CEO of Kuka's KU2G.DE auto
group in the Americas. "Everyone's so busy, there's no floor
space."
Kuka is building electric vans for General Motors Co GM.N
at its plant in Michigan to help meet early demand before the
No. 1 U.S. automaker replaces equipment in its Ingersoll,
Ontario, plant next year to handle the regular work.
urn:newsml:reuters.com:*:nL1N2OO1H9
Automakers and battery firms need to order many of the
robots and other equipment they need 18 months in advance,
although Neil Dueweke, vice president of automotive at Fanuc
Corp's 6954.T American operations, said customers want their
equipment sooner. He calls that the "Amazon effect" in the
industry.
"We built a facility and have like 5,000 robots on shelves
stacked 200 feet high, almost as far as the eye can see," said
Dueweke, who noted Fanuc America set sales and market share
records last year.
COVID has also caused issues and delays for some automakers
trying to tool up.
R.J. Scaringe, CEO of EV startup Rivian, said in a letter to
customers last month that "everything from facility
construction, to equipment installation, to vehicle component
supply (especially semiconductors) has been impacted by the
pandemic."
However, established, long-time customers like GM and parts
supplier and contract manufacturer Magna International MG.TO
said they have not experienced delays in receiving equipment.
Another limiting factor for capacity has been the continuing
shortage of labor, industry officials said. urn:newsml:reuters.com:*:nL1N2GW1DV
To avoid the stress, startups like Fisker Inc FSR.N have
turned to contract manufacturers like Magna and
Foxconn 2354.TW , whose buying power enables them to avoid
shortages more easily, CEO Henrik Fisker said.
Growing demand, however, does not mean these equipment
makers are rushing to expand capacity.
Having lived through downturns in which they were forced to
make cuts, equipment suppliers want to make do with what they
have, or in Comau's case, just add short-term capacity,
according to Lloyd.
"Everybody's afraid they're going to get hammered," said
Mike Tracy, a principal at consulting firm the Agile Group.
"They just don't have the reserve capacity they used to have."
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US Manufacturers' New Orders https://tmsnrt.rs/3xJvsXc
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(Reporting by Ben Klayman in Detroit; additional reporting by
Joseph White; Editing by Dan Grebler)
((benjamin.klayman@thomsonreuters.com; 313-600-2277; Reuters
Messaging: benjamin.klayman.thomsonreuters.com@reuters.net))