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A step towards a greater uptake of contract manufacturing

Every automotive design engineer knows that the electric vehicles rolling off their production lines have fewer moving parts than their Internal Combustion Engine predecessors.

This, however, must mean significantly less will be invested in in-house machining equipment. Is this an opportunity to incorporate specialist external CNC Machining centres into your supply chain? Or, when the focus is to keep your supply chain as short and flexible as possible, will outsourcing CNC machining compromise what you are trying to achieve?

CNC requirements and EV manufacture

It is widely reported that as electric vehicle production takes off, there will be an increase in demand for machined components such as blade carriers, gear wheels, planet carriers, shafts, transmission components, a variety of battery cells and modules, and compressors. CNC investment for OEMs and the larger Tier 1 suppliers, particularly those that have invested in local battery manufacture, will therefore concentrate on stacking and winding technologies.

Demand for comp brake shoes, electrical housing, heat sinks, panels, and electrical components such as radar sensors, optical instruments, switches and sockets is not going to dwindle significantly. However, the superior surface quality and a need for identical parts may see many of the smaller components being produced through additive manufacturing.

Over the same period (a decade, we presume, given the 2030 deadline), we are likely to see a downturn in demand, but for the time being not a total eradication, of high-pressure fuel pumps, particulate filters, and pistons to name a few. With this expected downturn, investment in new milling, drilling, honing and grinding equipment will show a steady decline. If OEMs and Tier 1 suppliers are not investing here, it remains for some of the smaller Tier 1s and Tier 2s to provide the services. So, no supply contraction just yet.

The EV supply chain and built-in flexibility

The ‘demand’ or ‘upstream’ component of most automotive supply chains tends to be protracted, often extending to three tiers or more between raw materials supplier and OEM. The component part manufacturer is uniquely positioned, though, to act as an overseer of these transactional steps, taking away the responsibility from the OEM or Tier 1. This is a process of contract manufacturing, where the supplier takes responsibility for quality, traceability, materials sourcing, and delivery and becomes a single point of contact for the OEM. The added benefit is that the onus for ongoing investment into the milling, drilling, honing and grinding falls to the component manufacturer.

In a UK focused on re-shoring with government support, contract manufacturing of component parts is a way for OEMs and Tier 1s to de-risk the supply chain and even shorten the supply chain. Investment at this level can focus on new requirements, allowing depreciating assets of milling, drilling, honing and grinding equipment to fall away.

Capitalising on opportunity

Smaller components are ideal outsource opportunity. There are plenty of CNC component manufacturers out there offering turnkey solutions. Those offering contract manufacturing solutions offer distinct advantages from extensive industry experience to guaranteed quality and traceability with batches delivered to your specific timescale. These are fewer in number. If this is the chosen route, your selection should not just focus on reputation but clearly outlined, no-nonsense value-added services.

A CNC contract manufacturer should be able to tailor their solutions to meet your specific needs, whether they provide the main bulk of your component part supply, or they are there to provide on-demand back up for contingency parts. Let’s face it, in a production utilising 10,000 parts per month, you will need to plan for up to 6% in loss, damage and not-fit-for purpose. You need a strategy in place that can ensure these replacement components are available on demand.

As the production of EVs ramps up and evolves, your outsource partner should include a company can be flexible on lead times; can scale production as required; is collaborative and ready to alter design at the drop of a hat; and who has optimised their own supply chains.

Paragon Rapid Technologies’ dedicated CNC division, Paragon CNC Technologies has made significant investments in machine technologies to support this paradigm shift in manufacturing requirements. We offer a contract manufacturing service to facilitate EV production, founded upon a wealth of industry expertise and designed around supporting complex, high-mix, low volume production. Partnering with us will enable you to invest in the evolving machinery requirements without having to maintain more traditional machine requirements. Your supply chain remains flexible and accountable.