Factories are no longer what they used to be. In large factory halls, machines have decimated the workforce, and now the bell has tolled for some of them as well. Industry 4.0 has brought a new trend – microfactories. These are smaller production facilities that utilize cutting-edge tools and solutions to achieve competitive advantages. They offer a new level of flexibility and scalability that larger, traditional factories struggle to achieve. They are highly automated and technologically advanced, small to medium-sized, yet possess significant processing potential. They consume less energy and materials than traditional factories: up to 90% less water, 50% less chemicals, and 80% less energy, and they require fewer workers as they employ new technologies.
Small Dimensions, Big Opportunities
Artificial intelligence (AI), machine learning, big data, and other innovative technologies help microfactories eliminate waste, optimize processes, and personalize production. Microfactories are modular and can produce large quantities of products. The concept is based on the small dimensions of production equipment and systems tailored to the size of the product, which reduces the size of the factory, investment, and operational costs.
The first microfactory was conceived in 1990 at the Mechanical Engineering Laboratory (MEL) in Japan when Japanese engineers began working on reducing machine tools and production systems. In 1996, MEL developed a micro-lathe smaller than a human palm, after which a prototype of a complete machining factory was created. Three years later, it produced the first desktop production system for manufacturing micro-ball bearings.
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On the wings of Industry 4.0 tools such as the Internet of Things, artificial intelligence, and even smart factories, new microfactories are expected to revolutionize manufacturing and supply chains. They are reportedly set to meet the growing demand for localized production and on-demand manufacturing.
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Then, the Japanese company Nidec Sankyo developed a desktop computer assembly factory composed of various units of standardized sizes and interfaces. Japanese innovations inspired experts from the German Fraunhofer Institute for Manufacturing, Engineering and Automation (FhG-IPA) and the Swiss EPFL to conduct intensive research to develop a unique mini-factory system with a modular design and a desktop milling and drilling machine for micro-machining. Subsequently, advancements in new manufacturing technologies such as 3D printing opened the way for commercial production in microfactories. The first microfactory was established in 2010 by Local Motors in Phoenix, where it produced the Rally Fighter car.
First Equipment
Other manufacturers followed, and the number of microfactories grew across various industries, with this innovative production concept also being embraced by some startups. The automotive industry, clothing production, household appliances, and electronic waste processing are among the leading industries currently producing in microfactories. While some companies invest in the development of new and advanced technologies necessary for building microfactories, Bright Machines and Buhler, for example, produce the required equipment and technology.
Case Study
The British electric vehicle manufacturer Arrival is also among the first to decentralize vehicle production in local microfactories with a small footprint that utilize cell-based robotic assembly instead of traditional production lines. Each cell in the production infrastructure can be replicated in large numbers as it uses about seventy percent of identical components, resulting in lower overall production, development, and assembly time, as well as reduced energy consumption and emissions.
Arrival’s advanced robots and software enable the production line to quickly adapt to changes without human intervention. By using modular hardware, its microfactories can be assembled more easily, are more compatible, and are easier to replace when necessary. This also means that Arrival can customize products to meet customer demands while simultaneously reducing potential waste. Microfactories, with much smaller quantities of products than large factories, are set up by Arrival in existing business premises or warehouses, requiring minimal investment, and become profitable after just six months of operation, providing significant savings and flexibility in operations.
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Among the five main trends in the development of tomorrow’s industry or, more popularly, Industry 5.0, microfactories stand out again. The automotive industry, clothing production, household appliances, and electronic waste processing are among the leading industries that already produce in microfactories.
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There is also a significant difference between the investment in building Arrival’s microfactory and a large factory. Arrival’s costs fifty million dollars, while a traditional large factory for, say, automobile production costs at least one billion dollars. The difference between traditional factories and microfactories is that the former first produce large quantities of products that are sold to customers through large and expensive distribution, while microfactories produce on demand. Furthermore, it is much easier to set up several small high-tech production units close to customers, which simultaneously allows for sales, and microfactories also function as sales points. Another issue is that products from large factories are standardized, so changing their design requires a significant investment due to changes in production tools, which is not the case with microfactories. Due to their flexibility, it is possible to change product designs at no cost or at very low costs.
Custom Clothing
Microfactories are intended for the production of small series of products with different designs or specifications. For example, some in the clothing industry produce personalized garments, each piece tailored to the user. Customers can send a custom design to the manufacturer via an app and receive customized and styled clothing in just one day. This stimulates market demand growth, and the manufacturer is assured of selling the product as it is made only after a confirmed order. Large factories maintain large inventories of products that require large warehouses, increasing production costs, while microfactories do not need this, reducing operational costs and providing a high return on investment.
Domestic Example
Although Croatian designers claim that domestic manufacturers are not interested in designing microfactories, there are indeed some. One example is a startup with a symbolic name, Microfactory, founded and owned by mechanical engineer Nikola Blažević. Microfactory, located in 150 square meters in the Recro business center in New Zagreb, specializes in additive technology and three-dimensional printing. A large part is occupied by the production facility, where a two-meter tall purple statue of a golfer is placed in one corner, the first 3D print by Blažević made to order for an Irish artist even before he founded the company. A smaller part of the business space is used for educational purposes.
Microfactory employs six people. With the establishment of the startup, Blažević began developing two projects: the first is the 3DPrintaj platform, which combines education and the use of equipment for many companies and educational institutions in Croatia and the foreign market, and the second is the development of his own solution intended for the global market, 3D printers Modax Machines. Microfactory produces various products according to client requirements, with additive manufacturing always being the base, while other production methods are applied in collaboration with partners. The startup operates profitably, exports ten percent of its products and services, and its clients in the domestic market include AD Plastik, Bugatti Rimac, Infinum…
Experts predict that the number of microfactories will increase in the next ten years, not only because manufacturing technology has significantly advanced in recent years, driven by artificial intelligence, which increases productivity by 15 to 30 percent and reduces downtime by as much as 50 percent.
Trend Trajectory
Although most products are manufactured in large factories whose mass production brings significant revenue, there are indications that this will not last. Most of these factories are located in Asia, Eastern Europe, and South America, areas with low production costs, primarily due to lower labor costs, which makes products cheaper. However, the pool of cheap labor in these parts of the world is shrinking as young people no longer want to work in low-skilled jobs, and other business costs have begun to rise significantly.
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There is still a call for the development of new microfactories as they are estimated to be more energy-efficient than traditional plants and would reduce production costs. They reportedly consume less energy and materials than traditional factories: up to 90% less water, 50% less chemicals, and 80% less energy, and they require fewer workers as they utilize new technologies.
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Additional problems are created by delays in the delivery of goods. Production costs will only continue to rise, and wage increases are necessary to ensure enough employees in large factories. Furthermore, raw materials and distribution are becoming more expensive, which will increase the prices of products manufactured in these parts of the world, making microfactories a winning formula for solving these problems.
Additionally, it is important to consider the changing demands of customers, who increasingly seek personalized products. A study conducted a few years ago showed that more than 50% of consumers in developed countries want personalized products and are willing to pay a higher price. Due to changing customer needs and restrictions on sourcing products from low-cost countries, large manufacturers will have to change their production strategies and open microfactories. Small, technologically advanced, and flexible production facilities located close to customers will also become sales points and stimulate the production of small series of customized products, saving logistics and transportation costs between 25% and 40% of product prices. According to FutureBridge, microfactories could be the answer to the changing dynamics of consumers that will outweigh the limitations of cheap sourcing destinations, and also the right solution to the potential threat of a new wave of global protectionism.
