Can our tool, die and mouldmakers make the adjustment to an EV-dominated future?

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by Nicolette Beharie

As the federal government accelerates its zero-emission vehicle goals, Canada’s tool, die and mouldmakers servicing the lucrative automotive industry are rising to the challenge.

In June, the Government of Canada announced that by 2035 all new light-duty car and passenger truck sales must be zero-emission vehicles. This move significantly speeds up the previous goal of 100 per cent sales by 2040. Earlier this year, the federal government released the 2030 Emissions Reduction Plan: Canada’s Next Steps for Clean Air and a Strong Economy. This provides an ambitious plan for Canada to reach its climate targets, including the goal of achieving net-zero emissions by 2050. And the new vehicle sales mandate for 2035 is a key step towards reaching Canada’s emissions reduction goals.

A New Road Map for Success
Canada’s future ban on gas-powered vehicle sales will result in an influx of new electric vehicles (EVs) – leading up to 2035 and beyond. But in the meantime, tool, die and mouldmakers continue to service both the traditional internal combustion engine (ICE) market and the emerging electric engine market.

In June, Volvo announced that its entire lineup of cars in Canada will consist of mild-hybrid, hybrid or electric vehicles equipped with Google built-in for 2023 vehicles. According to a press release from Volvo, the effort reflects another step towards its ambition to offer only pure EVs by 2030 and to be carbon neutral by 2040. Volvo is not the only automaker to announce its EV goals and forecasts in recent years. In 2021, BMW Group estimated that 50 per cent of its deliveries will be fully electric by 2030. Volkswagen also expects all-electric vehicles will exceed 70 per cent of its sales volumes in Europe and 50 per cent in China and the U.S. by 2030.

Jonathan Azzopardi, president and CEO of Laval Tool & Mould Ltd. in Tecumseh, Ont., says servicing both the ICE and EV markets creates a tremendous opportunity for the mould industry, as the move toward electrification increases the need for plastic parts by volume. “We can turn uncertainty into opportunity if [we] can mitigate the risks.”

According to information from Merge Ahead: Electric Vehicles and the Impact on the Automotive Supply Chain, the rise of EVs poses a particular risk for auto suppliers. “Even if some markets, such as the U.S., remain heavily ICE-focused in the near term, the global shift to EVs should be top of mind for suppliers everywhere,” says the report from PwC, a leading professional services firm. “Indeed, PwC analysis shows that EVs may represent approximately 14% of global new vehicle sales in Europe and China by 2025 — up from 1% in 2017. Many suppliers who provide components for vehicles powered by internal combustion engines may face a significant threat if they cannot adapt.”

Although the trend toward lightweighting in the automotive industry is not new, the demand is expected to increase with the onslaught of new EVs.

David Glover, co-owner of Harbour Technologies in Windsor, Ont., suggests some of the new lightweight material can be challenging to work with. “Depending on what they are using for lightweighting, a lot of times there isn’t as much science behind it. For example, if you’re using a composite material, it’s not as easy as the steel component. Slight changes in fabric pattern can drastically change the strength of the structure that you’re building. You don’t open up a book to figure that out. There’s a lot more trial and error,” he said, adding that more development and tooling is needed for cutting different types of materials.

However, Glover points out there are ways for smaller companies to help mitigate these risks through data and research support. This includes claiming research and development components through the Canadian government or connecting with universities that are conducting research on new materials.

Tim Galbraith, general manager at Cavalier Tool & Manufacturing Ltd. in Windsor, Ont., suggests business opportunities for tool, die and mouldmakers stretch beyond EV production. “There’s a big business in charging stations,” he says. “That’s a growing [area] that people are not paying attention to.” In July, the federal government marked Electric Vehicle Week by announcing $3.95 million in funding to install EV chargers across the country. Prime Minister Justin Trudeau also revealed a historic deal with Umicore to bring a new world-leading EV battery components facility to Ontario’s Loyalist Township. Through the new partnership, Umicore, a circular materials technology company, plans to invest $1.5 billion to establish the net-zero facility. This will play a significant role in Canada’s domestic EV supply chain. A few months prior,  Stellantis and LG Energy Solution Ltd. had announced a $5.2-billion investment to build Canada’s first large-scale electric vehicle battery plant in Windsor, Ont.—the largest investment in Ontario’s automotive history.

Navigating the Risks
The emergence of EVs has introduced new OEMs (original equipment manufacturers) into the automotive industry. While this leads to increased business potential for suppliers, it also presents new challenges.

According to Galbraith, “the instability of the newcomers to the market is the biggest challenge we’re facing right now.” Azzopardi agrees, adding that suppliers are used to working with mature OEMs who have established processes and financing.

Before a part goes into production, suppliers typically make the upfront investments needed to do the work. Traditional OEMs often pay suppliers after the part has gone into production, which Azzopardi says can take up to two or three years. “That’s a very vulnerable time for tool companies,” he says, adding that it’s difficult to take that financial risk with newer OEMs because “three years from now they might not be around.”

Glover suggests this same risk exists when suppliers are required to provide upfront investment in materials they haven’t used before. “There’s a risk that you might end up with a non-performing part that your customer is not going to accept, and you might have spent a lot of money in manufacturing it.”

In order to mitigate these financial risks, Azzopardi says the government needs to support suppliers and “play a better role in helping us to capture more business.” This begins with taking a closer look at the risks associated with this trend and the impact it may have on the future. Azzopardi adds the government should pay particular attention to “small- to medium-sized businesses that could really capitalize on these opportunities.”

Jeanine Lassaline-Berglund, president of the Canadian Association of Moldmakers (CAMM) in Windsor, Ont., suggests finding qualified labourers is another significant challenge in transitioning to EVs. “We’re at a skills crisis right now,” she says, adding that businesses are struggling to meet their obligations at a relatively cost-effective price point, as they often pay workers for overtime or unconventional hours. “A lot of [CAMM] members are being held back from growth because they can’t find the available talent they need.”

Lassaline-Berglund says the shortage of labour is due to several factors. Baby boomers leaving the workplace, the slow adoption of technology to replace those skills, and a decrease in students pursuing trades and technical skills are among the factors. “It’s the perfect storm,” she says. “And we’ve been talking about it for 20 years with little to no action.”

Preparing for the Future
As EVs become more mainstream, the PwC report suggests makers of exhaust systems, fuel systems, and transmissions for ICE vehicles face the prospect of disruption. “Those lacking financial flexibility and digital wherewithal are likely to struggle the most,” says the report. “Although PwC expects that adoption will grow at a modest pace for now, EVs’ share of the automobile market will likely begin to expand more rapidly in the medium term. OEMs and suppliers alike should start preparing for that future today.”

Despite the potential risks, Glover is confident that Canada’s tool, die and mouldmakers are resilient enough to survive the EV transition. “We’ve always been at the forefront of change,” he says. “Look at how much the car has changed in the past 10 years, and we’ve always adapted.”

Although the future is uncertain, Galbraith encourages businesses to stay ahead of the curve. “This is the long game, and there will be survivors and there will be amalgamation in the industry,” he says. “It’s important to make your mark and get a footprint out there and get accepted at this point – so that when the opportunities expand, you will be able to capitalize on them.” SMT

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