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Tesla
An IDRA Group gigapress developed and installed for Tesla Motors.

Disrupting the Disruption

Dec. 19, 2023
Financial markets’ fixation on disruption shows a disregard for procedures and for performance. They want opportunities for profit more than improvements in processes or products.

An $80- to 100-million acquisition by General Motors would be notable on the evidence of its cost alone, but Tooling & Equipment International is more than a portfolio asset for the automaker. It is a disruptor of expectations. Analysts and investors that follow GM frequently diminish it as a slow-mover, a cautious and less attractive option to flashier automotive options, namely Tesla Inc.

TEI brings intellectual property to GM now, and displays a taste for “innovation” that the automaker rarely is credited for showing. As a designer/producer of tooling for gravity and low-pressure casting molds, cold-box and hot-box coremaking, and lost-foam casting production, TEI’s also reinforces GM’s metalcasting capabilities.

But what thrilled the automotive in-crowd about this purchase is that TEI had been a contributor to Tesla’s effort to develop and implement “gigacasting” – the supersized high-pressure diecasting method that the EV builder uses to cast unitary automotive body structures. Tesla gigacasts single-piece chassis for its best-selling vehicle, the Model Y.

Gigacasting, or “megacasting,” has lit up investors’ interest in automotive manufacturing because it purportedly slashes production time and costs. It “disrupts” an industry that occupies huge volumes of capital by producing a single unit rather than forming, handling, and assembling thousands of parts. People who know little or nothing about automotive design and production are nevertheless thrilled that there is a way to disrupt the traditional process, and deliver finished products faster and with less commitment of funds.

Now, a word here about words: Listen to or read the transcript of any executive presentation or analyst conference call and you’ll soon learn how fixated the questioners are with this notion of disruption. They will identify something valuable (e.g., a vehicle) and assume that it can be manufactured in some other way, faster and more cheaply – meaning that valuable object can be produced with a lower marginal cost. When they identify that other way, they’ll push to make it happen. They want to create an incident in the market in order to capitalize on the moment, not to improve the process or the products.  

Financial markets’ fixation on disruption shows a disregard for procedures and for performance. They are not primarily interested in the outcome either – merely the opportunity to be part of the disruption. The disruptive instinct is to destroy competition by eliminating it. Then the consumers will have just one choice, the one that the disruptors backed.

This does not mean that Tesla or GM, or TEI, have been wrong to study and implement ways to enhance tooling design and improve high-volume casting processes. Before buying the company GM worked with TEI to design tooling for an award-winning casting that forms a chassis segment for a new Cadillac model.

In fact, foundries and diecasters have been working for decades to develop complex castings that minimize fabrication for structures and systems, in transportation and other market segments. They’ve recognized that simplifying design and assembly can manifest weight savings or enhance structural performance. The innovation of gigacasting is in the dimensions of the finished chassis, which sped Tesla past the incremental time and cost savings gained by casting four or five large components and welding them together.

And having seen that progress, GM and other automakers will match it where they can. General Motors surely made the acquisition not to disrupt anything but to gain a comparable advantage ,by having access to the tooling design and production resources of TEI.

There are still worse ways that progress can be disrupted, and one of these was announced recently by the French Automobile Distribution Assn. FEDA warned the government there that gigacasting is having a “perverse effect” on consumers and the environment. The trade association predicted that vehicles assembled from giga-parts will be prohibitively expensive for car owners to repair, and that production of replacement parts will consume materials and energy unnecessarily.

It’s not an especially persuasive argument for keeping things exactly as they are, without improvement or adjustment. But it is similarly opportunistic to the analysts and investors who can identify how a transaction will occur, and not how a product or a producer can gain value. The value grows from the process, not the ending of it.