The Factory Itself is the Machine that Builds the Machine

With much fanfare, electric car maker Tesla announced in 2014 its plans for a giant battery factory in Nevada, dubbed the Gigafactory.

If nothing else, the scale of the planned facility is unprecedented. When the factory is complete, it will be the largest building in the world by footprint at some 10 million square feet, and, if all goes according to plan, it will eventually churn out enough batteries to power 1.5 million Tesla Model 3s annually.

Supply Chain Digest Says... The next great American manufacturing frontier is here. What do you say? Click here to send us your comments Click here to see reader feedback

But there is something different beyond the massive size of the place.

Tesla founder Elon Musk recently said that ""We consider [the factory] to be a product. The factory itself is the machine that builds the machine. It actually deserves more attention from creative problem solving engineers than the product that it makes."

In fact, writing this month in Inc. magazine, Lisa Calhoun, a general partner in venture capital firm Valor Ventures, says the Tesla Gigafactory is "reinventing" US manufacturing in three important ways:

1. Integrated, product-centered factory design: Tesla's re-engineered manufacturing method takes the product, and then engineers backwards to a system that can build this product. The point of the factory-as-product is to reduce unit cost through intense process engineering and energy intelligence.

Calhoun argues the conceptually, there has been little advance in the basic process of manufacturing since Henry Ford invented the modern assembly line, even given advances from thinks like automation and Lean practices.

Now, Calhoun says, the "Tesla Gigafactory represents a fundamental refocus of the system of manufacturing around the integrated product it is built to create at scale."

That in turn leads to two other fundamental shifts that will lead to the Tesla Gigafactory redefining "made in America."

2. 5-10x Increase In Production Capability: Tesla expects its Gigafactory to create a minimum of a five-fold increase in manufacturing output for its batteries--and perhaps as much as a 10x increase.

"When you think about it, how did we improve your phone? It was by increasing the clockspeed and the density. The same principles apply to manufacturing," says Musk.

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The Gigafactory is based on Musk's audacious system-thinking approach to reinventing a process from input and output fundamental variables. In the future, we might need a Musk's Law of Manufacturing similar to how we used Moore's law as a thumb rule for chips, Calhoun says.

3. Net Zero Emissions and Carbon Neutral Manufacturing: Finally, Calhoun says, the third way the Gigafactory is fundamentally changing manufacturing is around energy efficiency. Musk's opening remarks at the unveiling of the Tesla Gigafactory were, "Tesla's mission is to accelerate the transition to sustainable energy."

"One way to think of manufacturing efficiency is how long a journey did that molecule take from when it was mined. So if it was mined in one part of the world, and eventually does several trips around the world before it ends up in a finished product, that's fundamentally expensive," Musk also observed.

The Gigafactory is a production system designed to put as much energy back on the grid as it takes. Further, it's also designed not to pollute air, ground or water. This is carbon neutral, non-polluting approach is so transformational that for much history of manufacturing, it has been considered impossible.

Tesla's Chief Technical Officer JB Straubel is also quoted as saying "We are going to build a zero-emissions facility, just like that car. So, instead of fighting this battle in hindsight, we just said we are not even going to have a natural gas pipeline coming in to the factory, so we didn't even build it. There's a heat pump technology that is way more efficient than just burning natural gas for steam, and then we have a facility that has basically no emissions."

Calhoun concludes her piece by noting that "This demand-centered production - where the product's needs determine the most efficient production flow - turns manufacturing on its head. The net zero energy stance and design density reveal a unit economics approach that will revitalize how America makes things in the future."

She closes by saying: "The next great American manufacturing frontier is here."

One thing SCDigest notes is that in recent years, many have warned the US is almost incapable of really large scale factory development. For example, a a2009 article in Businessweek said that many US manufacturers " find it almost impossible to achieve scale in the U.S." due a variety of hurdles, from taxes to red tape encountered when creating large factories here.

So hats off to Elon Musk if he can indeed successfully pull off this vision. Is it a model for revitalizing US manufacturing? We’re not so sure about that, but clearly there is some different thinking going on here at Tesla.

Will the Gigafactory lead to a rethinking of US manufacturing? Or is it a "one off' that only works for making millions of batteries? Let us know your thoughts at the Feedback section below.

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