The Heller Group has its own way of doing things. This doesn’t mean the German machine tool company is a maverick. Rather, it gathers the facts of a situation and draws up a business plan that may or may not resemble what its competitors are doing. An example: the company’s early—and now dominant—position in cylinder bore coating for aluminum engine blocks. So it should come as no surprise that Heller has once again taken a look at where machining in the automotive industry is headed.
The family-owned concern revealed some of its thoughts on the matter when Heller Group COO Manfred Maier delivered a keynote address to journalists at Heller’s Tech Days event at the company’s US operations in Troy, MI, in July. Entitled “Mobility and Machine Tools ¾Quo Vadis” (Latin for “Where are you going?”), the presentation painted a picture of growing light vehicle production (expecting 120 million units to be built in 2030 versus 90 million in 2017) but a decrease in the production of combustion engines that will lead to a decrease in machine tool consumption.
The drop in the purchase and use of machine tools, Maier contends, is because electric powered vehicles, which eventually may replace a fair percentage of ICEs, do not require machining of engine blocks, heads, crankshafts and cam shafts. Nor do the transmissions used in EVs require as much machining because they tend to be less complex.
What might be the magnitude of the change?
Currently, the Heller executive said, world consumption of machine tools runs in parallel with the production volume of light-duty vehicles, with one in every six machine tools being sold into the motor vehicle industry. “Electric powertrains,” Maier said, “require less than 20% of the metal cutting of internal combustion powertrains.”
Looking at things another way, if EVs make up just 5%—or 4.5 million—of the 90 million vehicles built in 2017 then 85.5 million of those vehicles have ICEs and require more machining. If, as Maier thinks may be possible, 45 million of the 120 million vehicles built in 2030 are EVs, then just 75 million vehicles will be ICEs. The EVs will require machining equivalent to just 9 million ICE vehicles. The net result: it will take less machining capacity (enough to build an additional 2.4 million ICEs) to produce a total of 120 million vehicles in 2030 than it does to build a total of 90 million vehicles in 2017.
And as time goes on and the EV fleet grows in comparison to the ICE fleet, the picture won’t improve for machine tool makers—especially Heller, which devotes 55% of its efforts to the light-duty vehicle industry.
What to do?
Maier said more global machining capacity will be devoted to agricultural and energy equipment production. Transportation production may grow, but it will be devoted to aircraft, rail and heavy duty vehicles, such as construction equipment and semi trucks.
In sum, machine tool consumption should increase, just not at its present rate. That good news will be balanced—at least for Western machine tool builders—because much of that growth will happen in China and the rest of Asia and there will be even more consolidation in the global machine tool industry.
For its part, Heller will address these challenges by adapting and anticipating, something it’s done over its 123-year history. It is letting vehicle makers (and other customers) know of its expertise as an integrator. It also is putting a fresh emphasis on refurbishing and repurposing existing machines. It will continue to push its cylinder block coating advantage, which improves the efficiency and lowers the emissions of ICEs. And it will continue to develop and grow its Wenzler subsidiary, which specializes in producing machine tools for making complex lightweight structures for light-duty vehicles—whether they are powered by electricity or petroleum.