Microfactories Offer Big Benefits

Traditionally, auto factories require large footprints and lots of fixed production equipment. However, a relatively new concept called a “microfactory” offers a flexible alternative that is appealing to many start-up electric vehicle manufacturers.

In theory, smaller, highly automated factories would enable automakers to be more flexible and more responsive to customers in local markets. Rather than build one factory that specializes in low-mix, high-volume production, a microfactory would concentrate on high-mix, low-volume products.

“Microfactories are intended to be smaller assembly facilities where all the parts and components arrive in a kit,” says Laurie Harbour, president and CEO of Harbour Results Inc., a Detroit-based consulting firm that specializes in manufacturing.

“There would be more modules and fewer assemblers than in a traditional auto plant,” explains Harbour. “Production volumes would also be smaller, with no corner of the factory devoted to die-casting, plastic injection molding, metal stamping or other operations.

“While the microfactory concept makes more sense for start-ups producing low-volume electric vehicles, I don’t hear much about it on a regular basis,” notes Harbour. “However, as more companies seek to leverage their supply base in the future, we may hear more about microfactories.

“To optimize labor and efficiency, more companies may be rethinking the vehicle assembly process,” says Harbour. “The higher the mix and the lower the volume, the more this concept makes sense. It’s definitely something to watch.”

“A microfactory is a small-scale manufacturing facility that can produce a variety of products with limited space and resources,” adds Raimund Klein, CEO of the International Centre for Industrial Transformation. “It typically integrates advanced manufacturing technologies such as 3D printing, robotics and digital design to enable rapid prototyping and production.

“The concept has been explored...within the auto industry, particularly by start-ups and innovative companies looking for alternative production methods,” Klein points out. “However, it hasn't been widely adopted by larger automakers, due to factors such as economies of scale, existing infrastructure and inertia toward traditional manufacturing processes.”

According to Klein, there are several key differences between microfactories and conventional automotive assembly plants. “Microfactories are much smaller in size compared to traditional assembly plants, requiring less space and resources,” he explains.

“They are designed to be highly flexible and adaptable, allowing for rapid reconfiguration and production changes to accommodate different products or designs,” says Klein. “Another advantage is that they can be located closer to consumers, enabling more localized production and reducing transportation costs and carbon emissions.”

Klein believes that microfactories appeal to EV manufacturers for several reasons.

“Electric vehicles often require different manufacturing processes compared to traditional internal combustion engine vehicles, making microfactories well-suited for their low complexity production,” says Klein. “They can facilitate the production of specialized components, such as battery packs and electric drivetrains, which require advanced manufacturing techniques.

“Microfactories also offer the flexibility to quickly adapt to changing demands and technologies,” claims Klein. “They may make more sense for start-ups in the automotive industry due to their flexibility, lower initial investment costs and ability to cater to niche markets.

“Legacy automakers may face challenges in transitioning from traditional mass production methods to microfactory models, given their existing infrastructure and established processes,” warns Klein.

“[Microfactories could] struggle to achieve the same cost efficiencies as large-scale assembly plants, due to lower production volumes,” explains Klein. “Initial investment in advanced manufacturing technologies and the smaller production scale may result in higher-per-unit production costs. There can also be challenges associated with sourcing components and materials at competitive prices.”

Microfactory Pioneers

Despite what some people think, microfactories are not an entirely new concept. In fact, the idea was pioneered by Ford Motor Co. more than 100 years ago.

Back in the early days of the Model T, Ford established a network of domestic auto plants located outside of its main operation in Detroit. The satellite factories were an early attempt to decentralize production and reduce transportation costs.

Due to unprecedented demand, year-over-year production increased by approximately 80 percent during the first few years after the Model T was launched in 1908. It then jumped to 125 percent in 1912 and 140 percent in 1913.

Ford’s first branch assembly plant opened in Kansas City in 1912 to address surging demand. Soon, a network of similar multistory facilities designed by architect John Graham cropped up in cities around the United States.

Many of the brick, steel-frame factories shared similar design elements, such as large windows that enabled natural light to penetrate the interior. Branch plants were quickly built in many large cities, including Atlanta, Boston (Cambridge), Chicago, Cincinnati, Cleveland, Dallas, Denver, Indianapolis, Los Angeles, Milwaukee, Minneapolis, New York (Long Island City), Philadelphia, Pittsburgh, San Francisco, Seattle and St. Louis.

There were also branch factories in smaller cities such as Buffalo, NY; Columbus, OH; Des Moines, IA; Fargo, ND; and Memphis, TN. In Canada, assembly facilities were built in Montreal, Toronto, Vancouver and Winnipeg.

At first, many cars were assembled from knockdown kits shipped by rail from Ford’s flagship factory in Highland Park., MI. Parts were delivered to the upper floors of the branch factories. Using a top-down assembly process, finished vehicles rolled out a door on the ground floor, either for sale in the branch plant’s showroom or for distribution to regional dealerships.

According to an article in the June 1915 issue of Ford Times, the branch plants “have a production capacity of from 50 to 250 cars a day and in these buildings are assembled about one half of the Ford cars produced.”

Additional details were included in a 1915 booklet entitled Ford Factory Facts: “The production of 308,213 finished Ford cars between August 1, 1914, and August 1, 1915, marks a record, and in point of numbers is more than the output of all other companies combined, for the same period. This great output would be impossible, were it not for the Ford Assembling Plants and Branch Houses, 28 in number, located in the principal cities of the United States.

“To these assembling plants are shipped parts for Ford cars in carload lots, and the cars are assembled at the different plants and supplied direct to dealers in the surrounding territory. While the factory at Detroit is able to average 1,200 cars per day of eight hours, the assistance of the assembling plants makes possible the attainment of a daily average of approximately 2,000 cars.

“Where the Ford assembling plants and branches are located, they are a distinct addition to the red blood of the industrial life of the community, for they employ from 200 to 700 workmen each, at the best wages…It is estimated that the value of buildings alone, for branches and assembling plants is in excess of $13,000,000.

“All this intricate organization and investment of funds is designed to accomplish two objects. First, the system makes it possible to ship parts from the main factory to definite points for assembly, obtaining a more rapid and more economic distribution.

“Second, the location of the assembling plants aids in giving prompt, reliable and economical service to Ford owners, besides very greatly reducing the freight costs for delivery of cars. The strategic location of the assembling plants makes for a handy distribution of parts and supplies, and there are no vexatious delays for the owner of a Ford car while a part is forwarded from the home factory.”

Ford Motor Co. also operated a network of small factories in rural settings scattered throughout Southeast Michigan that produced car parts. The so-called Village Industries initiative was the antithesis of the vertically integrated Rouge complex. It was intended to allow factory workers to be part-time farmers.

All of the facilities were located on the banks of rivers, and many were on the sites of abandoned gristmills or sawmills, which had formerly used water power to turn their waterwheels. Each plant employed about 100 workers.

The plants produced a wide variety of auto parts, including carburetors (Milford, MI); door locks (Cherry Hill, MI); oil, fuel and temperature gauges (Manchester, MI); starters and generators (Ypsilanti, MI); valves (Northville, MI); and vehicle lamps (Flat Rock, MI).

The heyday of the Village Industries was from the 1920s to the 1950s. However, the first of the 19 facilities remained in operation until 1989.

Aborted Assembly Attempts

Microfactories have been touted as a panacea to production problems of the past by several EV start-ups. Despite generating initial buzz and boosting investor confidence, these firms have since failed to ramp up their assembly lines.

One company that pioneered the concept was Local Motors. Its grand plan was to locate several microfactories throughout the United States and “print” cars on demand using additive manufacturing technology. The company had microfactories in Knoxville, TN, and Phoenix, with plans to create more. However, it went out of business in 2022.

British EV manufacturer Arrival Automotive UK Ltd. also tried the same concept and failed. It set up its first microfactory in Bicester, England, then announced ambitious plans to produce buses and delivery vans in Rock Hill, SC.

In 2020, the start-up proclaimed that its U.S. facility “will utilize a new cell-based assembly method to produce vehicles rather than a traditional automotive production line, allowing the production of any vehicle from Arrival’s portfolio. With this model, Arrival occupies a smaller footprint, hence the name ‘Microfactory.’

Arrival claimed “local production eliminates the need for complex and expensive transportation. That enables us to reduce costs by 30 percent, thereby maximizing the margins on every vehicle we produce.

“Arrival is pioneering a decentralized method of making electric vehicles. Our local, low-footprint microfactories use cell-based robotic assembly instead of a traditional automotive production line.

"Microfactories are set up in areas of demand using existing commercial spaces or warehouses and require lower capital expenditure to establish. Operational six months from a site’s readiness, they can be profitable from much lower volumes with superior unit economics and enhanced flexibility in operations.”

Earlier this year, Arrival declared bankruptcy and received a delisting notice from NASDAQ. Canoo Inc. recently acquired “a substantial portion of the advanced manufacturing assets” formerly owned by the company.

According to Canoo, it has acquired “equipment supporting cabin production processes such as robots, dispensing systems, advanced control equipment, PLC controllers and equipment supporting general assembly capacity expansion, such as advanced safety equipment, manipulators, high-tech dynamic vehicle testing equipment and other spare equipment parts.”

Several years ago, Canoo planned to open several “mega microfactories” throughout the United States. Since then, the struggling company has been concentrating its efforts on a facility in Oklahoma City that is supposed to assemble battery-powered delivery vans for customers such as the U.S. Postal Service and Walmart.

Another start-up called HummingbirdEV hopes to succeed where others have failed. Earlier this year, the company announced plans to build a microfactory in the United Arab Emirates to produce small- and mid-sized commercial vehicles.

The company says it will initially focus on catering to the region’s growing demand for mid-mile and last-mile vehicle applications, including refrigerated trucks. An ambiguous press release claims that the company’s “commitment to microfactories underscores how it’s substantially reducing the time to market and making vehicle production profitable and environmentally sound.” However, no other details about the new UAE facility have been revealed.

Microfactories in Action

Hyundai recently became the first major automaker to use a microfactory to produce electric vehicles. The Hyundai Motor Group Innovation Center Singapore (HMGICS) is located in the heart of one of the densest cities in the world.

The seven-story facility includes a highly automated flexible production system capable of assembling 30,000 EVs a year. It operates with a much smaller footprint than traditional auto factories.

Vehicles are built in a cell rather than on a long, linear assembly line. Each automated cell attaches different components to a vehicle before it moves to the next cell via an automated guided vehicle.

“By combining our manufacturing expertise and the latest cutting-edge technologies, the result is…a new paradigm of manufacturing,” claims Euisun Chung, executive chairman of Hyundai Motor Group. “HMGICS is an open and connected urban innovation hub that encourages and embraces creativity and collaboration. It seeks to completely redefine the very concept of manufacturing.”

Electric vehicles such as the IONIQ 5 and IONIQ 6 are assembled in “a cell-based production system that leaves behind the traditional conveyor-belt manufacturing approach to achieve unsurpassed standards of flexibility and automation,” says Chung. “Approximately 50 percent of all tasks are carried out by 200 robots, with humans, robotics and AI systems achieving unprecedented levels of collaboration thanks to integration made possible by the digital twin platform.”

“Robots perform assembly, inspection and production facility organization, and take care of more than 60 percent of component process management, ordering and transportation,” adds Alpesh Patel, vice president of HMGICS. “This frees humans from repetitive and laborious tasks to focus on more creative and productive duties.

“With the help of robotics, AI and the Internet of Things, we’ve built a human-centric manufacturing innovation system that can respond to changes in mobility, processes and products with agility and flexibility,” notes Patel. “These innovations are setting new benchmarks for efficiency and customization.”

General Motors recently began assembling the Cadillac Celestiq at a microfactory located within its Global Technical Center in Warren, MI. Each of the high-end luxury EVs is hand-built, with annual production volume limited to 100 to 150 vehicles.

The automaker invested $81 million to create a facility where no more than six vehicles will be assembled at one time to ensure high levels of quality by a team of operators that GM refers to as “artisans.”

Borrowing a page from other brands such as Bentley and Rolls-Royce, Cadillac is offering high levels of customization on the Celestiq, with a wide variety of interior and exterior features available, including different color, finish and material options.

To produce the low-volume, high-mix vehicle, GM engineers are harnessing state-of-the-art technology in the microfactory, such as additive manufacturing and gigacasting.

Each vehicle will feature more than 300 fabricated pieces throughout the body structure, chassis, interior and electrical components. “This ‘flex fabrication’ process utilizes metal sheets that can be folded and manipulated into the unique shapes required for the Celestiq design, a process more akin to metallic origami than traditional stamping,” says Tony Roma, chief engineer of the project.

“The underbody includes six large precision sand-cast aluminum components,” explains Roma. “Each casting reduces part count by 30 to 40 components, compared to typical stamped construction. The benefits being more efficient use of space, simplicity and improved structural rigidity. The precision sand-casted content and processes are ideal for low-volume, hand-crafted, bespoke vehicles.”

The Celestiq also features 115 printed parts, which represents GM’s broadest use of additive manufacturing.

“The use of additive manufacturing is cutting-edge technology that produces several important design elements, such as the steering wheel decor, which would be impossible to create with typical metal castings and CNC milling,” claims Roma.

“The steering wheel center is the largest metal part [we have] printed in production, combining the show surface and the structural B-side of the part, while the seat belt adjustable guide loop is [our] first safety-related printed part,” Roma points out. “Other 3D-printed parts include window switches, grab handles, console decor and structural pieces under the vehicle’s surface.”

Another company deploying the microfactory concept is Ample Inc., a start-up that specializes in EV battery swapping technology. It is using a modular automation system provided by EID Robotics Inc. to ramp up production at its facility in Brisbane, CA.

Unlike traditional custom-made manufacturing lines, EID’s ANT Plant is built from standardized robotic assembly cells. It can be configured to assemble and test a variety of electromechanical devices, such as batteries, medical devices or lighting fixtures. ANT Plant's modularity and predesigned cells enable faster design and deployment, and lower cost, than traditional automation options.

“This is a great example of how [microfactories] can help manufacturers build efficient operations at the local level instead of outsourcing production overseas,” says Andy Korhonen, senior vice president of U.S. operations at EID Robotics. “Modularity is an important part of the microfactory concept, because it enables various production cells to click together like Lego blocks. It enables start-ups to scale up production quickly and reduce costs by around 30 percent.”

In addition to electric vehicle manufacturers, companies in other sectors are intrigued by the benefit of microfactories.

“[They] are used in industries such as consumer goods, electronics and white goods, and also as reactor technology for chemical plants or better scalability,” says the International Centre for Industrial Transformation’s Klein. “These industries often benefit from the agility, customization capabilities and reduced overhead costs offered by microfactory production models.”

At FirstBuild in Louisville, KY, GE Appliances is using a microfactory to create new types of cooking products. From these small-batch appliances, the company can scale up to larger-volume production in its traditional factories.

“This new model reduces the cost and risk of product development and enables fast market validation, so products make it to market faster,” says Kevin Nolan, president and CEO of GE Appliances.

The company has recently expanded its microfactory footprint, opening sites in other cities. Last fall, for instance, it opened CoCREATE Stamford to assemble small appliances such as the Monogram Hearth Oven and the GE Profile Smart Mixer. Through partnerships with the University of Connecticut and Connecticut State Colleges & Universities, students work paid, part-time shifts in the factory after classes alongside CoCREATE engineers.