Service, Please

by Jack Lifton on January 27, 2009

in Batteries, Hybrids & EVs, Metals & Minerals, Recycling

Bookmark and Share Print

Those who follow my articles, know that my main theme is the effect of natural resource production limits on the implementation of new technology. In 2007 the global mining industry reached a maximum production level for many critical minor metals, in particular for those I call the technology metals. The human race has effectively exhausted the highest-grade accessible ores for base, precious and minor metals. The main reason global production of metals and minerals is at the level it reached in 2007, is due to innovative mining of lower grade ores.

The mining of accessible lower-grade ores has been successful due to massive investments in exploration and process technology and so the lessening of demand may well deal a crippling blow to future production expansion. Most of the recent innovation was facilitated by the incredible ramp up of revenues by the mining industry during the so-called super commodity cycle that may have just ended or slowed. This revenue stream has now been reduced dramatically in the case of the global miners, and has vanished in the case of the junior (exploration) mining companies.

When demand returns, there will be a hesitation period during which base metal mining resumes and a longer period of waiting for prices to return to levels high enough to encourage renewed exploration, process innovation development and investment in producing from low-grade ore bodies.

In other words, we have now seen a peak in production of metals and non-energy minerals that we may not see again for some time, if ever. Yet China’s growth, for example, has declined to more than 7% per annum. This means that the flow of newly-mined raw materials will naturally flow to China.

So, I now want to shine light on a second theme: the recycling of metals as a critical source of raw materials for American industry and to offer some background on the wasteful practices of the American OEM automotive industry, my favorite whipping boy.

I accuse the OEM American automotive companies of covering up the fact that they do not know what it will cost to service the electrified cars that they are touting.

Today’s internal combustion, hydrocarbon fueled, cars, like today’s television sets, do not lend themselves to functional repairs. It is now most common for automotive dealers and repair shops to simply replace common modular systems, rather than repair or even replace individual components. A contemporary dealer shop mechanic invoice more than $60 per hour and repairs nothing; he replaces it. Higher priced components and modular systems that can be salvaged are increasingly collected as scrap, sent overseas to low-skilled-labor-cost countries and then brought back, or sold into the country that imported them, whichever most profitable. Incredibly it is now commonplace for American OEM automotive component manufacturers, even the American OEM assemblers themselves, to sell surplus or defective new components and systems into the scrap market. From there, they reappear as service parts at specialist shops, especially those of the regional and national chains that advertise as muffler or transmission repair experts.

In the early 21st century, as an example, Ford Motor Company found that it had 18,000 transmissions for the Lincoln Navigator SUV, which were, or were possibly, defective. UAW labor is so expensive that all of the 18,000 transmissions associated with the potential defect were placed in outside railcars at Ford’s Michigan Truck Assembly Plant, in Wayne, Michigan, where a team of workers and engineers was assigned to “look them over” to see if any were salvageable.

Note well, that some of them had been removed from already assembled Lincoln Navigators and that even those that had been so removed, if they were found to be OK, could not be put back! Under the Byzantine rules, those transmissions were identified and classified as “used’ and so could not be placed in a vehicle labeled as ‘new.’ Ultimately, the transmissions were sold off for a fraction of their original cost and they reappeared in transmission repair shops as “reconditioned,” if the shops were honest and as ‘new’ otherwise. Like many service parts, they were thus sold twice and the consumer paid for them each time. Once in the increased price of the vehicle they were intended for, and again as a repair part.

It is not clear how many of these used transmissions were used as new warranty replacement parts by Ford. If you read the very fine print on your warranty agreement, you will see that Ford and every other carmaker reserves the right to use reconditioned parts as warranty replacements.

The above situation is a common occurrence as is repairing an electric motor, in the form of a vehicle starter motor, or the motor from a forklift truck, or a golf cart. In fact this electric motor repair was a long established business in the USA, up until the end of the twentieth century. In Detroit, for example, many small shops provided this service to the OEM automotive industry, which was loathe constantly to replace very expensive electric motors in factory floor use. The most common repair was the replacement of worn out bearings, but it was also common to rewind the internal coils or replace a shaft.

The propulsion (traction) motors being used today in electrified cars such as the Toyota Prius, and which will be used in battery-powered cars, are large and expensive and frequently contain, or are connected to, computer controls and regulators. Toyota does not want them to go out of the hands of its authorized dealers even for a major mechanical repair such as a bearing replacement. Also, whereas carmakers employ hundreds of engine designers, manufacturing specialists and line workers, today there are no American OEM automotive assemblers that produce electric motors for propulsion purposes in-house.

Where are the dealer shop motor repair specialists going to receive their training? From where are the electric motors going to come? I don’t know the answers, but I do know that the neodymium-iron-boron permanent magnets in those motors use the rare earth neodymium that comes only from China today. I also know that the scrap electric motors generated in America almost entirely go back to China for disassembly and removal of the neodymium-iron-boron permanent magnets. I also know that the scrap motors are sold for steel, or aluminum and copper values and that nothing is paid here for the neodymium. This means that every time a scrap electric motor is exported to China, the neodymium, even if it is returned (It may go into the Chinese domestic market) to us in the form of permanent magnets for a starter, alternator, propulsion, servo, or computer hard drive motors, is billed to us for a second, third, or fourth time with no offset for its scrap value.

Perhaps for the billions of dollars of taxpayer money being “loaned” to the American OEM car makers there should be a condition that every ounce of strategic metal be accounted for, that every part scrapped be accounted for, and that both should be paid for at fair market price by any person buying them.

Perhaps the strategic and critical metals used in the USA should be recycled here in the USA, and perhaps it should be a law that such recycled material must be utilized first, to manufacture new or repair parts for any manufactured goods made in the USA by any company receiving federal assistance.

No one has ever had a business repairing individual batteries. Lead-acid batteries, universally used up to and including the present time, are too cheap to contemplate repairing.

But if we are entering a new era of electrified vehicle power trains and battery packs that cost thousands of dollars each, what can we expect to see in the way of the development of a service industry for this type of vehicle component? Let’s be clear there is no vehicle power train battery repair or maintenance industry in the USA today, with the possible exception of Toyota and Honda authorized car dealer shops. I’m leaving out Ford, because although Ford has sold 100,000 hybrids equipped with nickel-metal hydride batteries in the last five years, it is still asking dealers to ship the cars or the batteries to a central location for any but the simplest repairs. Ford does not have enough training supervisors or equipment so that every dealer can be certain of obtaining the training or the testing equipment. In addition it must be noted that such training and equipment are very expensive and must be subsidized by the company, which in these economic times is not a priority.

The biggest problem with servicing propulsion battery packs is that they are systems; they have built-in computers and they are connected to the vehicle cooling and engine management systems (in the case of a hybrid). Even if a dealer mechanic using a diagnostic machine were to find a computer problem in, or in connection with, the battery pack the battery packs are not built for ease of repair.

Not only that, but for lithium batteries the chemistry has only just now been chosen by General Motors. The rush to market is going to preclude careful study of what breakdowns might occur, in what period, and what the repair or replacement protocol is to be. Clearly companies embarking on the use of lithium-ion batteries can have almost no clue how to repair failures, much less on how to train and equip their dealers to do so.

The information to build a repair system will come from irate customers. The money will supposedly come from the same place.

No one knows what education the repairmen of the future will need. Undoubtedly sometime after the complaints pile up, the wise solons of Washington will allocate funding for educating repairpersons. Undoubtedly they will overlook the fact that education in basic mechanical and electrical skills must start in the second grade and even that only after the necessary teachers have been trained first. I predict it will be more than 10 years before an electrified car can be routinely repaired anywhere in the USA.

In the meantime your tax dollars will be used to outsource the manufacturing of replacement components and systems, such as assembled battery cells, to foreign countries. The practice of repeatedly buying the same strategic and critical metals will continue until the Federal government forces it to stop by making it uneconomical.

The good news is that this poorly conceived and even more poorly executed program, the electrification of the vehicle, probably won’t happen or will happen only as fast as the repair and maintenance infrastructure can be built. Get your shovels ready.

Bookmark and Share Print

Comments on this entry are closed.

Previous post:

Next post: