Electric vehicle boom is dirt for factory machine makers

DETROIT, Aug.20 (Reuters) – The surge in investment by new and established automakers in the electric vehicle market is a boon for factory equipment makers who supply the highly automated picks and shovels to prospectors in the electric vehicle gold rush.

The good times for manufacturers of robots and other factory equipment reflect the broader recovery of the US manufacturing sector. After dropping after COVID to $ 361.8 million in April 2020, new orders jumped to nearly $ 506 million in June, according to the US Census Bureau.

Here is a graph of new manufacturing orders in the United States: https://tmsnrt.rs/3lVyhlM

New electric vehicle factories, funded by investors who have acquired new public shares in companies such as start-up EV Lucid Group Inc (LCID.O) are driving demand. “I’m not sure it’s reached its peak yet. There is still a lot to do,” said Andrew Lloyd, leader of the electromobility segment at supplier Comau owned by Stellantis (STLA.MI), in a statement. interview. “Over the next 18 to 24 months, there is going to be significant demand coming.”

The growth of the electric vehicle industry, propelled by the success of Tesla Inc (TSLA.O), is in addition to the normal work of manufacturing equipment manufacturers to support the production of gasoline vehicles.

Automakers will invest more than $ 37 billion in North American factories from 2019 to 2025, with 15 of the 17 new factories in the United States, according to LMC Automotive. More than 77% of this expenditure will be devoted to SUV or EV projects.

Equipment suppliers are in no rush to increase their capacity to near full capacity.

“There is a natural point where we will say ‘No'” to new business, “said Lloyd de Comau. For a single area of ​​a factory, such as a paint shop or 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 rush to bring these new variants of electric vehicles to the market.” Automakers have signed agreements for suppliers to build equipment for 37 electric vehicles between this year and 2023 in North America, according to industry consultant Laurie Harbor. This excludes all work done for gasoline vehicles.

“There is always a pipeline with projects from new electric vehicle manufacturers,” said Mathias Christen, spokesperson for Durr AG (DUEG.DE), which specializes in paint shop equipment and has seen its activity of electric vehicles increase by about 65% last year. “That’s why we don’t see the peak yet.”

Orders received by Kuka AG, a manufacturing automation company owned by the Chinese group Midea (000333.SZ), rose 52% in the first half of 2021 to just under € 1.9 billion ( $ 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 Automotive Group (KU2G.DE) in the Americas. “Everyone is so busy there is no floor space.”

Kuka builds electric vans for General Motors Co (GM.N) at its plant in Michigan to meet initial demand before the No.1 U.S. automaker replaced equipment at its plant in Ingersoll, Ontario, next year to do regular work. Read more Automakers and battery makers should order most robots and other equipment they need 18 months in advance, although Neil Dueweke, vice president of automotive U.S. operations for Fanuc Corp (6954.T ), said customers wanted their gear sooner. He calls this the “Amazon effect” in the industry.

“We have built a facility and have about 5,000 robots on shelves stacked 200 feet high, almost as far as the eye can see,” said Dueweke, who noted that Fanuc America had set records for both sales and market share. Last year.

COVID has also caused problems and delays for some automakers trying to equip themselves.

RJ Scaringe, CEO of startup EV Rivian, said in a letter to clients last month that “everything from building facilities and installing equipment to supplying vehicle components (especially semiconductors) has been affected by the pandemic ”.

However, long-established customers like GM and parts supplier and subcontractor Magna International (MG.TO) said they had not experienced any delays in receiving the equipment.

Another limiting factor for capacity has been the continued labor shortage, industry officials said. To avoid stress, startups like Fisker Inc (FSR.N) have turned to subcontractors like Magna and Foxconn (2354.TW), whose purchasing power makes it easier for them to avoid shortages, has said CEO Henrik Fisker. Growing demand, however, does not mean that these equipment manufacturers are rushing to increase capacity. After going through downturns in which they’ve been forced to make cuts, equipment vendors want to make do with what they have, or in Comau’s case, just add capacity in the short term, according to Lloyd. “Everyone is afraid of getting hammered,” said Mike Tracy, director of consulting firm Agile Group. “They just don’t have the spare capacity they used to have.”

Report by Ben Klayman in Detroit; additional reporting by Joseph White; Editing by Dan Grebler

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