Electric vehicle (EV) capabilities have come a long way over just a few years, and EVs are quickly overtaking their gas-driven counterparts. Researchers make clear that investments in EVs have surged since 2020. That’s why the transformation of US roadways, with respect to EV technologies, is no longer a matter of “if”, but “when.”  

The shifting general consumer trends are interesting, but we find ourselves far more curious about the applications of EV technology for large commercial vehicles, as that sector faces much steeper technological barriers to widespread adoptions. 

This article gives an overview of most important challenges and opportunities for medium- to heavy-duty electric vehicle (MHDEV) manufacturers and strategic pointers to drive their business for the coming years. 

The 2020s as a Critical Decade for Medium- to Heavy-Duty Electric Vehicles

A medium- to heavy-duty electric vehicle is defined as Class 4-8 vehicles in the Gross Vehicle Weight Ratings (GVWR) system. These vehicles are “heavier than their light-duty counterparts, pull heavier loads, and have tougher duty cycles.” They include vehicles such as buses and trams, along with delivery vans, semi-trucks, and other vehicles designed to carry heavy-duty equipment. 

The demand for electric vehicles is rising globally. According to a recent report from the International Energy Agency, over 10 million electric vehicles were sold across the world in 2022, and of those sales, 66,000 were electric buses and another 60,000 were medium- and heavy-duty trucks. Experts only predict those numbers to rise in the coming years. 

Medium- to heavy-duty vehicles, the second largest contributor to greenhouse emissions, can also be a promising solution to decarbonizing the transportation sector. As a result, there is stakeholder commitment in helping grow the electrification of the MHDEVs. 

How US Manufacturers Involved with EV Technologies and Transport Should Move Forward

While stakeholder commitments and growing investments in medium- to heavy-duty electric vehicles is a positive sign for EV manufacturers, many unknowns persist, making strategic decisions about investments in MHDEVs fraught with uncertainties.

With so much influx around the future of transportation technologies, those who don’t plan for the future are sure to get left behind. If you’re a manufacturing or engineering firm in the EV sector, here are five things you should be paying attention to: 

•  Current EV Infrastructure & Its Future State 

EV charging station issues are a notorious problem facing wider adoption of EV technologies throughout the United States. This is especially true for MHDEVs that face a special problem due to their long travel durations and/or heavy loads that require much larger batteries. This means they must depend on private charging depots, public charging facilities, and on-route charging, in addition to more efficient charging technologies. 

For manufacturing & transportation companies, the industry is already poised for a robust infrastructural rollout. There has been rapid deployment of publicly-available fast chargers along motorways to enable longer journeys, thanks to the National Electric Vehicle Infrastructure Formula Program (NEVI). According to the National Renewable Energy Laboratory (NREL), commercial charging stations are already being designed to charge large, commercial EVs in less time and money thanks to the development of megawatt-charging systems. 

In the ever-changing landscape of electric vehicle (EV) charging technologies and policies, having enterprise-grade EV experts by your side can be a game-changer for manufacturers. They can help you navigate through complex and rapidly-evolving technologies and policy landscapes. They can even help manufacturers take full advantage of rapidly-growing federal and state incentives.

• Evolving Technologies & Impacts

The range and efficiency of EVs largely comes down to the batteries that power them. Not only are there multiple battery options for EVs, but the battery technologies are expanding rapidly, including the rising capabilities of charge-sustaining electric vehicles, which have an “unlimited range with in-route charge,” as well as new materials, new approaches, and wireless charging options. The goal of the new technologies is to improve energy density, reduce weight, and improve battery performance. 

Given that battery technologies are evolving rapidly, each change has implications for equipment and vehicle configurations. The most efficient product and process solutions will be tailored to the energy cycle demands of the MHDEVs in question. Minimizing the size of the installed battery, while still ensuring a full day’s operation, would be key in designing and manufacturing cost-effective and efficient EVs.

In addition, innovative design practices, such as utilizing lightweight materials and implementing regenerative braking systems for energy recapture, will play a crucial role in improving energy efficiency of vehicles, while extending their driving range.

• Higher Costs of Production

The higher the power demands on the EV, the bigger the battery. The bigger the battery, the more expensive the vehicle. For instance, Tesla Semi has a battery pack that alone weighs over 11,000 pounds! That means medium- to heavy-duty electric vehicles can come with a steep price tag. 

Bigger and heavier batteries are not the only reason for high costs of MHDEVs production. Start-up costs associated with setting up of MHDEVs production plants are also steep. This is due to higher capital investments needed for the development of advanced and reliable battery technology that feed into supplier costs, investment in new manufacturing processes that are different from processes suited to gas-powered vehicle production, and a skilled workforce designed for more efficient assembly requirements. 

By collaborating with industry experts, taking advantage of government subsidies to reduce upfront costs, and scaling of operations, manufacturers can create enhanced efficiencies and ultimately push down the price tags associated with EV production.

• Complex Supply Chains

The EV battery supply chain is complex and dispersed throughout the world. It is also unpredictable due to unavoidable geo-political and economic complexities.

Upstream challenges include issues of capacity. Lithium and cobalt requirements to meet the ever-increasing battery average capacity are expected to surpass the amount of reserves. The EV supply chain is also wrought with component shortages, shipping delays, and inefficient production processes.

Merkur, as a leading engineering solutions firm specializing in transportation & manufacturing solutions, recommends flexible design standards, reliance on a diversified supplier network, opting for local resources, and partnering with strategic engineering solutions experts early in your strategic process, so they can help you stay ahead of supply chain complexities, optimize your costs, and save you time.

• Energy Availability and Grid Capacity. 

One of the driving benefits of electric vehicles is their ability to reduce reliance on fossil fuels. Unfortunately, while fossil fuels serve as on-demand energy sources, renewable sources of energy are less reliable. The electrification of vehicles is only going to increase the load on the electric grid. According to the EV Hub, the ongoing electrification of MHDEVs is expected to increase U.S. daily energy consumption by 140,000 megawatt-hours per day by 2030!

For that reason, our electric grids need a major tune-up. Currently, energy storage capabilities are lacking, meaning that for the time being, we will require use of fossil fuels to supply energy to the grid as needed.   

Policy shifts and technological improvements to support improved load management, effective vehicle-to-grid integrations and a move to a more dispersed grid are all steps in the right direction that can meet local demands and provide a boost to the EV markets. Manufacturers must stay abreast of these policy shifts that may impact their manufacturing choices in the years to come.

Merkur as Your Partner in Strategic Positioning into the Future 

At Merkur, our teams of innovators and experts are ready to support you with deep industry insights, industry-leading technical knowledge, and more. See how Merkur, as an end-to-end design & build partner, helped design and build a 1 million sq. ft. production plant for zero-emission vehicles. 

For US-based manufacturers aiming to make strides in the EV space, partnering with the right stakeholders will make all the difference. We’re ready to work with you. Give us a call or schedule a consultation through our website today. 

Over the past several decades, gross sales and GDP of US manufacturing has fallen precipitously (as a share of global manufacturing). As a result, some have been led to believe that US manufacturers simply can’t compete with the lower costs of manufacturing abroad. However, it’s important to remember that US-located manufacturing has many competitive advantages when it comes to more sophisticated manufacturing processes.

These competitive advantages all involve harnessing the power of modernized tools and processes—something data shows to be lagging significantly in the industrial sector. As experts in industrial modernization, Merkur excels at supporting partners as they refine their processes and technologies. Here are our top 5 key tips. 

The Importance of Keeping Pace with Modernization 

Since 1997, the number of US-based manufacturers is down roughly 25 percent, but they still account for 60 percent of US exports, 35 percent of US productivity growth, and 70 percent of US R&D spending. In short, the US industrial sector packs a punch when it comes to supporting the US economy. 

While globalization has pushed a significant amount of manufacturing abroad, it’s clear that the manufacturing which has stayed on US soil is most competitive when it harnesses modern technologies and keeps pace with innovations. 

Here are a few key improvements in manufacturing over the last several years that manufacturers should be thinking about: 

– Digital supply chain solutions to improve efficiency and resilience

– Lean manufacturing to reduce waste and improve productivity

– Predictive maintenance to minimize downtime and sustain equipment 

– Updated health and safety measures to protect workers and reduce costs 

– Custom tooling design to boost productivity, protect equipment and more

In order to enjoy these benefits, manufacturers must first decide that it is time to modernize their processes. Unfortunately, it’s not always an easy decision. 

5 Tips for Strategic Modernization of Your Manufacturing Facilities

While manufacturers may recognize that need for changes are imminent, they may still feel reluctant about the investment cost. This is not unusual and demonstrates well-warranted caution. 

Some perceptions and preconceived ideas about updating manufacturing processes can be a hindrance in doing what’s best for your facility. The key is to think about modernization in a strategic manner. Here are 5 tips to help you with strategic modernization: 

• Challenge Your Assumptions About “Modern” 

Areas of industrial modernization include digital transformation, automation, sustainable manufacturing, worker reskilling, energy efficiency, supply chain management, predictive maintenance, lean manufacturing, custom tooling design and workplace safety.

If you’re not in the information technology space, trying to understand these new and upcoming technologies can quickly become overwhelming. However, these terms can be de-mystified.

Words like “digitization”, “artificial intelligence”, and “automation” can immediately make you think of science-fiction films, but  in practice, these technologies are far more straightforward than you might think. Automation, for example, is just a fancy word for using computer software to handle repetitive tasks like paperwork or packaging—activities so routine, straightforward, and ubiquitous that human intervention might do more harm than good (think human error when inputting numbers into a data sheet). 

In short, modernization is an umbrella term that includes many different new technologies & processes, many of which can be broken down into simple and clear business value. 

• Modernization Isn’t All-Or-Nothing 

Modernization is a blanket term for so many technologies, including the “Internet of Things” (IoT), AI and digitized workflows. Although conversations about improved efficiency, productivity, quality, etc. commonly couch the discussion as modernized vs. status quo, the reality is that modernization is a process. You don’t need to adopt every innovation available at once; in fact, it’s often much better to transition methodically and gradually. 

This is for several reasons: 

• Employees need time to adjust
• Steady changes help minimize or eliminate downtime
• Oversights are not unusual when integrating new technologies
• Innovation can happen at the facility level and may require buffer time

• Keep Your Employees in the Loop When Considering Automation 

When considering modernization, communication is key. Keep all stakeholders in the loop and, if there’s resistance, work to get all stakeholders onboard. Reassure everyone that their jobs are secure (if that’s true). Let them know they are not expected to adjust to these changes overnight. 

It’s also important to communicate the long-term benefits to workers alongside the short-term discomfort of learning new skills. For example, automation can significantly reduce time pressures or safety risks to machine operators. 

There should also be ongoing conversations throughout your organization with time set aside to refine your ideas and approach to communicating these changes. Making sure that communication flows both ways also allows your employees to feel like important contributors to the final decision. 

• Always Consider Sustainability in Modernization 

These days, “sustainability” is a major buzzword, and that isn’t likely to change anytime soon. The number of US government regulations, digital security and environmental protection protocols will continue to increase. 

By keeping pace with them and planning for the future, you can make energy-efficient and strategic decisions to reduce costs and environmental impact both immediately and long-term. 

• Remember that Worker Skills are a Critical Component of Industrial Modernization 

A recent Deloitte study concluded that the existing skills gap in US manufacturing is likely to widen in the coming years, possibly resulting in over two million vacant manufacturing jobs by 2030. Without skilled workers, the US cannot have a strong manufacturing sector, period. Strategic modernization requires attention to workers and laborers. 

As mentioned above, possibly the greatest competitive advantage onshore US manufacturing has over outsourcing is the improved access to a high level of institutional knowledge and skilled tradesmanship. Failing to integrate advanced training and continuing education to workers results in missing out on a core component of modernization.

Merkur as Your Partner in Modernized Manufacturing 

At Merkur, we’re seasoned experts not only in engineering custom manufacturing solutions and tackling the most challenging aspects of your manufacturing processes, but we’re also partners in all areas of modernized manufacturing services. 

We’re ready to work shoulder-to-shoulder with you as you take an important step towards the future of your business. Learn more by visiting our website or giving us a call today at 877-571-0222.

Resources: 

Rouse, Margaret. “Automation.” Technopedia. https://www.techopedia.com/definition/32099/automation. 

“2.1 Million Manufacturing Jobs Could Go Unfilled by 2030.” NAM.com. https://www.nam.org/2-1-million-manufacturing-jobs-could-go-unfilled-by-2030-13743/. 

“Critical Infrastructure Sectors.” CISA.gov. https://www.cisa.gov/topics/critical-infrastructure-security-and-resilience/critical-infrastructure-sectors. 

“Delivering the U.S. Manufacturing Renaissance.” McKinsey. https://www.mckinsey.com/capabilities/operations/our-insights/delivering-the-us-manufacturing-renaissance. 

“Deloitte and The Manufacturing Institute: Big Gains in Perceptions of US Manufacturing as Innovative, Critical and High Tech.” Deloitte. https://www2.deloitte.com/us/en/pages/about-deloitte/articles/press-releases/deloitte-and-the-manufacturing-institute-big-gains-in-perceptions-of-us-manufacturing-as-innovative-critical-high-tech.html. 

“NAICS Sectors 31-33: Manufacturing.” EPA.gov. https://www.epa.gov/regulatory-information-sector/naics-sectors-31-33-manufacturing. 

In today’s business landscape, custom manufacturers with sophisticated product offerings are realizing that turn-key equipment frequently puts them at a stark disadvantage. It’s not only supply chain disruptions and quality issues that can impact production, but poorly suited tools and equipment can also reduce productivity and increase costs.

That’s why manufacturers have increasingly turned to custom tooling design to boost their competitive edge. However, custom tooling requires higher upfront costs to gain their long-term financial benefits. Therefore it is necessary to compare absolute value of turn-key tooling versus custom tooling. This article offers a simple, 5-step breakdown on how to approach this decision process.

Understanding Cost-Benefit Analysis

Investing in a custom manufacturing tool can enhance efficiency, reduce waste, and improve overall productivity, which are at the core of achieving a competitive advantage. It’s no surprise that the global custom manufacturing market, in which custom tools and solutions are designed by specialized engineers and scientists, was valued at almost $900 billion in 2021 and is expected to reach over $1.3 billion by 2031.

But, custom tooling design involves upfront design costs, which can be steep. That’s why it’s important to determine if custom tooling design is worth pursuing from a business perspective. That requires a thorough and comprehensive cost-benefit analysis comparing the return on investment (ROI) for custom tooling vs.the ROI for your status quo. This comparison is what transforms tooling considerations from a business cost to a crux of your business strategy.  

A 5-Step Approach to Cost-Benefit Analysis for Custom Tooling Design

Conducting a thorough cost-benefit analysis is a challenging endeavor, but it pays back by giving you an understanding of your market position going forward.

Here’s a five-step breakdown to help get you started:

Step 1: Think Through Challenges and Benefits of the Current Tooling Status-Quo

Determining areas for improvement involves thinking about costs over time. Those costs can be in the form of financial costs to replace tools and equipment, manual labor costs to service and maintain tools and equipment and the costs of downtime or inefficiency of the status-quo manufacturing process.

Also, think about challenges associated with your current tooling solutions, like supply chain issues, that directly increase cost of production. 

Lastly, consider the benefits of the current status quo, such as consistent, predictable costs, familiarity among your workforce and conservation of company funds and resources (as opposed to investing in a new tooling solution).

Step 2: Calculate the Lifecycle Costs and Profitability of Status-Quo Tooling

Life cycle costs (LCC) and life cycle assessments (LCA) enable you to determine the total cost of acquiring, maintaining, and disposing of an asset. This involves calculating all costs in acquiring, installing, operating, maintaining, financing and disposal of the tool, as well as its rate of depreciation.

Also, calculate the revenue that the tool generates for your business throughout its lifecycle.

Step 3: Estimating Costs and Estimated Revenue Associated with Custom Tooling Design

Now, conduct a life cycle assessment (LCA) for the custom tooling solution by estimating the project costs for having a custom tool designed. Again, you will need to know all costs involved in acquiring, installing, operating, maintaining, financing, disposal and tool depreciation over time. 

Also, calculate the estimated revenue generation due to this custom tool.

Step 4: Calculating ROI

With all costs and benefits quantified, it’s time to calculate the return on investment (ROI) for both the status-quo and custom solutions.

1.     Get the net benefit of each by subtracting total costs from total benefits
2.     Divide the net benefit by the total costs
3.     Multiply that number by 100 to get the ROI as a percentage

If you get a negative percentage, it means that the investment isn’t profitable. A positive ROI indicates profitability. A higher percentage means a higher ROI and the best solution has the highest ROI.

Double-check your results by returning to the challenges of your status-quo tooling solution and reverse engineer the relative financial value of a custom tooling solution:

 

• Increased Production Capacity: Calculate the total production value of the increased output of using a custom designed tooling solution.
• Improved Product Quality: Consider the value of enhanced customer satisfaction, predicted reductions in return volume, and maybe even the additional revenue of a higher quality, higher-priced final product.
• Reduced Waste/Maintenance Costs: Take the cost of waste for your current solution and determine the cost-savings your custom tooling solution will deliver in terms of reduced waste.
• Decreased Labor Costs: Custom tooling can reduce the relative cost of manual labor and even automate some processes that were previously done by hand. Calculate the cost savings by multiplying the reduced total hours of manual labor by the hourly cost of that labor. 

If the sum value here is more than the cost of acquiring and installing your custom tool, then it’s an overall financial improvement.

Step 5: Consideration of Intangible Benefits

In addition to direct financial benefits, also consider the more qualitative benefits of custom tooling design. Custom tools provide intangible benefits like improved employee morale, increased process flexibility and enhanced industry reputation. While these benefits are difficult to measure in dollars, they still create value for your business.  

Merkur as Your Partner in Custom Tooling Design

Thorough cost-benefit analysis is critical when considering any investment for your manufacturing company, and especially important when considering the modernization of current manufacturing operations. Cost-benefit analyses are powerful tools in and of themselves, but they can be challenging to calculate, particularly for more traditional US manufacturing and industrial companies. When in doubt, seek the advice of professionals to guide you through the process. Learn more at merkurinnovation.com

 

Resources:

Fernando, Jason. “Return on Investment (ROI): How to Calculate It and What It Means.” Investopedia. https://www.investopedia.com/terms/r/returnoninvestment.asp.

Lerea, Nisan. “The Alternative to Outsourcing: How New Subtractive Tools are Enabling Manufacturers to Keep Processes In-House.” Manufacturing.net. https://www.manufacturing.net/operations/article/22820700/the-alternative-to-outsourcing-how-new-subtractive-tools-are-enabling-manufacturers-to-keep-processes-inhouse.

Srivastav, Ashish Kumar. “Life Cycle Cost Analysis.” WallStreetMojo. https://www.wallstreetmojo.com/life-cycle-cost-analysis/.

 “The Worldwide Custom Manufacturing Industry is Projected to Reach $1.3 Billion by 2031 – researchandmarkets.com.” Businesswire. https://www.businesswire.com/news/home/20221207005565/en/The-Worldwide-Custom-Manufacturing-Industry-is-Projected-to-Reach-1.3-Billion-by-2031—ResearchAndMarkets.com.