Micro Factory Retailing
Lead Researchers: Dr Paul Niewenhuis, Dr Peter Wells,
Clovis Zapata (Alumni), Margarete Seitz(Alumni),
Andrew Williams (Alumni)
The MFR project
The Micro Factory Retailing (MFR) project came about as a result of a simple question: what would a sustainable automotive industry look like if it were designed from a fresh start today? The work is lead by Dr Peter Wells and Dr Paul Nieuwenhuis.
To be sustainable the resulting industry and the cars it produced would have to be economically viable, socially relevant and environmentally sound. Moreover, any example that embodied the principles of MFR would have to survive in the context of an existing automotive industry organised along very different lines, and in a culture of automobility that might find it difficult to accept environmentally optimised vehicles.
As such, the MFR project proceeded on the basis that the existing mass-production automotive industry with its characteristic ‘fire and forget’ approach to car manufacturing had an inherently unsustainable business model no matter what the technologies employed in the cars. Our work on the historical trajectory of the automotive industry had shown that growing capital intensity and the privileged position given to manufacturing economies of scale had resulted in a pattern of high risk, low return and chronic over-supply. It was evident therefore that a radically different business model would be needed.
The MFR project was inspired in a positive sense by glimmers of possibility seen in the operational practices and business models of existing small-scale car manufacturers. While no actual example of the totally of the MFR concept could be found in practice, individual elements could sometimes be identified within these existing businesses. Hence the MFR projected proceeded on this basis to create a comprehensive new business model for vehicle manufacturers that would have the effect of redesigning the structure and value-creation practices of the entire automotive industry. In this respect, the MFR project therefore originated as a purely idealised or hypothetical idea, a way of breaking the institutional impasse and organisational conventions that apparently made it impossible for the mainstream industry to achieve a transition to sustainability within any meaningful timeframe.
Crucially, the MFR project was not conceived as a way of competing with the existing vehicle manufacturers directly on their terms. Rather, it was seen as a way of creating a business that changed the terms of competition to its own advantage, and in a way that existing vehicle manufacturers would find difficult to emulate or contain. Thereafter, by changing the ways in which customers are provided with vehicles, it becomes viable to introduce the innovative body and powertrain technologies that also underpin sustainable mobility.
Under MFR the traditional large-scale, centralised and capital intensive vehicle manufacturing sites and their associated long logistic lines to distribute cars to dispersed franchised dealers are replaced by a network of combined factory-retail outlets that also serve as the main point of contact for aftersales, service, maintenance, repair and even end-of-life vehicle recycling. Each MFR unit would be able to produce say 5,000 units per annum compared with a typical car manufacturing operation making 250,000 to 350,000 per annum. Usually, low volumes mean high per unit costs in the automotive industry. However, the MFR approach recovers some of this extra cost by not having an expensive distribution system (typically accounting for 35-40% of the price of a car in the traditional system), by having much lower capital costs in production and model design, and by securing a much higher proportion of the lifetime earnings stream from a car. Meanwhile, consumers actually pay a lower lifetime cost on a per-mile basis compared with the traditional system of buying a car outright as new.
Once the initial concept was created, the research task was more one of validating and exploring the concept in more detail. This activity thus allowed potential weaknesses to be addressed, or potential advantages to be enlarged. Equally, the ‘research’ has been very much a process of communication within and without the mainstream industry; testing ideas, encouraging others to re-think their market entry strategies, and finding the wider ramifications of the concept in terms of such issues as the benefits of diverse, decentralised economies for local resilience.
The MFR project is so radical that it rather defies conventional comparison with existing practice or normalised measures. MFR concepts are not reducible to an individual technology or design. The veracity of the analysis is therefore open to dispute. For example, the normal practice in vehicle assembly is to use a paint shop to paint the car bodies, at some significant environmental and economic cost. The MFR approach allows the paint shop to be dispensed with in its entirety depending upon the choice of vehicle body technology and material. Similarly, at present the use of MFR concepts exists at the margins of the mainstream automotive industry, although it is important to note that even such marginal participation was not evident when the MFR project was launched. Hence, an important element of our ‘proof’ of the economic, environmental and social benefits of MFR lies in the adoption of the concepts by these new entrants.
