Potential Stranded Capital Analysis
on EPA Light-Duty Technology
Cost Analysis
&EPA
United States
Environmental Protection
Agency
-------
Potential Stranded Capital Analysis
on EPA Light-Duty Technology
Cost Analysis
Assessment and Standards Division
Office of Transportation and Air Quality
U.S. Environmental Protection Agency
Prepared for EPA by
FEV, Inc.
EPA Contract No. EP-C-07-069
Work Assignment No. 3-3
NOTICE
This technical report does not necessarily represent final EPA decisions or
positions. It is intended to present technical analysis of issues using data
that are currently available. The purpose in the release of such reports is to
facilitate the exchange of technical information and to inform the public of
technical developments.
United States
Environmental Protection
Agency
EPA-420-R-11-019
November 2011
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CONTENTS
Section Page
Executive Summary 1-1
1 Introduction 1-3
1.1 Objectives 1-3
1.2 Capital Investment and Tooling Definitions 1-5
1.3 Case Studies Evaluated 1-6
2 Methodology for Developing Stranded Capital Investment and Tooling Values 2-7
2.1 Analysis Set-up: 2-7
2.2 Stranded Capital & Tooling Case Study Steps 2-11
3 Key Assumptions in the Stranded Capital and Tooling Analysis 3-13
4 Case Study Results 4-13
5 Glossary of Terms 5-15
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LIST OF FIGURES
Number Page
Figure 2-1: Sample Stranded Capital Section of SCTA Worksheet 2-9
Figure 2-2: Sample Stranded Tooling Section of SCTA Worksheet 2-10
Figure 2-3: Stranded Capital and Tooling Case Study Steps 2-12
11
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LIST OF TABLES
Number Page
Table ES-1: Potential Stranded Capital Analysis Results ($/New Vehicle Technology
Configuration) 1-2
Table 4-1: Summary of Potential Stranded Capital and Tooling Estimates 4-14
111
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Potential Stranded Capital Analysis on EPA Light-Duty Technology Cost
Analyses
Executive Summary
The United States Environmental Protection Agency (EPA) contracted with FEV, Inc. to
determine incremental direct manufacturing costs (IDMC) for a set of advanced light-
duty vehicle technologies. The technologies selected are on the leading edge for
reducing emissions of greenhouse gases in the future, primarily in the form of tailpipe
carbon dioxide (CO2). Examples of technologies evaluated include: downsized
turbocharged gasoline direct-injection (GDI) engines, advanced transmissions (e.g., 8-
speed automatic, 6-speed dual clutch), and hybrid electric vehicles.
To develop incremental direct manufacturing costs, advance vehicle technology
configurations were evaluated against baseline vehicle technology configurations,
representative of the current state of design, and having similar overall driving
performance. For each case study, both the new and baseline configurations utilized a
common set of boundary conditions for the analysis (e.g., technology maturity,
production year, production volumes, manufacturing location, equipment life). Using the
same boundary conditions for both analyses, a consistent framework for all costing work
was established. A detailed description of the costing methodology used to develop the
incremental direct manufacturing costs can be found in EPA report "Light-Duty
Technology Cost Analysis Pilot Study (EPA-420-R-09-020)."
In selected cases where the boundary conditions and parameters assumed in the primary
analysis differ, an adjustment can be made to the incremental direct manufacturing cost
accounting for these differences. Examples of case study specific parameter adjustments
are volume differences, technology maturity differences, timeframe differences, and
production duration differences.
Using conservative assumptions, this report investigates the potential saddling of cost
onto a new technology configuration as a result of the production equipment and/or
tooling for the baseline configuration being abandoned before the planned fully
depreciated life. An applicable scenario is when a new technology configuration is
launched into production forcing a baseline technology out of production prematurely. In
this case any production equipment and/or tooling, which can only be used to produce the
baseline technology, and which cannot be redispositioned to another plant continuing to
make the baseline technology, would be removed from service and sold for scrap. It is
assumed the financial loss associated with abandoning capital investment and tooling
from the baseline technology configuration would indirectly be recovered by the new
replacing technology over some number of years of its production.
1-1
-------
Within the context of this report, the term stranded capital and stranded tooling will be
used to define capital investment and tooling which has been decommissioned prior to
the end of its fully depreciated life. In the FEV analysis, the fully depreciated life and
useful life are assumed to be the same as a means of simplifying the analysis.
The foundation for the stranded capital and tooling analysis are the previously completed
EPA Light-Duty Vehicle Technology Cost Analysis case studies. For each case study,
the FEV manufacturing team assembled a cost estimate for the total capital investment
and tooling, which could only be used to manufacture the baseline technology. Any
baseline technology capital investment or tooling, or portion of capital investment or
tooling, which could be used to manufacture other products, was not included in the cost
estimate. Using a straight-line depreciation method, the estimated stranded capital and
tooling impact was calculated for three, five, and eight years. The average useful life
used in the calculation was ten years with an assumption of zero residual value. The sum
of the stranded capital and tooling for each of the evaluated periods (i.e., 3, 5, and 8
years) was then divided by 2,250,000 new technology vehicle units; 2,250,000 vehicle
units representing the sale of 450,000 units/year over five years (450,000 x 5).
Table ES-1 the results for six case studies are presented, showing the potential stranded
capital impact at three, five and eights years of product life, based on the methodology
and set of conservative assumptions described in the report. The table includes the
results for two dual clutch transmission (DCT) studies, an 8-speed automatic
transmission (AT) study, two downsized (DS), turbocharged (T), gasoline direct injection
(GDI) studies, and a powersplit hybrid electrical vehicle (HEV) study.
Table ES- 1: Potential Stranded Capital Analysis Results
($/New Vehicle Technology Configuration)
Replaced
Technology
Conventional V6
Conventional V8
6-speed AT
6-speed AT
6-speed DCT
Conventional V6
New
technology
DSTGDI 14
DSTGDI V6
6-speed DCT
8-speed AT
8-speed DCT
Power-split HEV
Potential Stranded capital cost per vehicle
with new technology,
with product life ended after:
3 years
$56
$60
$55
$48
$28
$111
5 years
$40
$43
$39
$34
$20
$79
8 years
$16
$17
$16
$14
$8
$32
1-2
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1 Introduction
1.1 Objectives
The objective of this work assignment is to determine the potential magnitude of stranded
capital investment and tooling costs, associated with the launch of a new advanced
vehicle technology configurations, prematurely replacing existing/baseline technology
configurations. The case studies investigated in this analysis are based on advanced
technologies considered leading edge for reducing emissions of greenhouse gases in the
future. Further, the case studies selected for this analysis are the same for which FEV has
previously developed incremental direct manufacturing costs as part of prior work
assignments completed for EPA.
In the original incremental direct manufacturing case studies, the same boundary
conditions and parameters were employed for both the baseline and new technology
configurations evaluated. This methodology provides a common framework for costing,
allowing a good means of comparison. As part of these established boundary conditions,
it was assumed both the baseline and new technology configurations would run their
planned full production life cycle. Additional details on the incremental cost analyses
can be found in the following published reports and in reports being prepared for
subsequent case studies.
• Light-Duty Vehicle Technology Cost Analysis - Pilot Study (EPA-420-R-09-020)
• Light-Duty Vehicle Technology Cost Analysis - Report on Additional Case
Studies (EPA-420-R-10-010)
• Light-Duty Technology Cost Analysis, Power-Split and P2 HEV Case Studies
(EPA-420-R-11-015)
To understand the tooling and capital investment financial impact of the baseline
technology not running a full production life cycle, the potential result of a new advance
replacement technology being regulated into production too quickly, EPA contracted
with FEV to conduct a potential stranded capital investment and tooling analysis. It is
recognized that an accurate analysis would need to know just how quickly the new
technologies (government standards) were phasing in, and would also be very specific to
individual companies, factories, and manufacturing processes, particularly in regard to
finding alternative uses for equipment and facilities. Such a thorough analysis would be
a prohibitively large undertaking. Nevertheless, in order to account for the possibility of
stranded capital costs, FEV has performed a bounding analysis, using conservative
assumptions, of the potential stranded capital costs associated with rapid phase-in of
technologies due to new standards, using data from FEV's primary teardown-based cost
analyses.
1
-o
-------
A planned production life of 10 years was assumed for all equipment and tooling. The
cost impact of canceling production of the baseline technology after three, five and eight
years was evaluated. For each production run scenario (i.e., 3, 5, and 8 years) total
potential stranded capital investment and tooling values were developed. For this
analysis, the assumption is the early introduction of the new advance technology is
responsible for prematurely ending the production life of the baseline technology.
Therefore, the new technology should be accountable for recovering the stranded capital
investment and tooling from the baseline technology configuration. Amortizing the
combined total stranded capital investment and tooling by 2,250,000 new advance
vehicle units (450,000 units per year x 5 years), an added cost per vehicle was established
for each production run scenario.
A simple, three-year baseline product cancellation example to illustrate the above:
• $100,000,000 of dedicated baseline technology production equipment is identified
to produce part "ABC."
• Assuming a straight line depreciation, and 10-year useful life, depreciated value
per year is equal to $10,000,000.
• Following three years of manufacturing, the baseline technology is replaced by a
new technology configuration "XYZ."
• Part "ABC" is used in no other product made at this factory or another factory,
and the equipment used to make part "ABC" is not reconfigurable to make some
other part.
• Remaining value of baseline equipment at point of cancellation $70,000,000 (7
years x $10,000,000 depreciation expense/year).
• Amortization volume based on estimated new vehicle technology configuration
sales over five years equals 2,250,000 vehicle units (450,000 units/year x 5 years).
• Estimated additional cost per new vehicle technology unit, accounting for baseline
stranded capital and tooling equals $31.1 I/vehicle ($70,000,000 stranded capital
and tooling 72,250,000 vehicle units).
1-4
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1.2 Capital Investment and Tooling Definitions
Capital investment is defined as the facilities, machines, and other equipment used in the
manufacturing process that are not directly in contact with the part produced. Simple
examples of capital investment include stamping presses, injection mold machines,
welding equipment, and diecast machines. Tooling, on the other hand, is generally the
part-contacting components of the manufacturing process. In relationship to the example
listed for capital investment, a stamping die, injection mold, weld tips, and diecast molds
would all be examples of tooling. There are grey areas as to what constitutes tooling
versus capital equipment, especially for component assembly processes. Generally, the
OEM (original equipment manufacturer) will have detailed definitions for the less clear-
cut manufacturing operations. For this analysis, a deeper understanding of what is
considered capital investment versus tooling is not required.
All capital investment and tooling has a useful life expectancy, typically based on
anticipated service hours or units produced. For example, assume a progressive stamping
die has a purchased financed value of $250,000. The life expectancy of the stamping die
is eight years, producing 450,000 engine brackets per year with a zero dollar residual
value at end of the die's life. The company that owns the die is using a straight-line
depreciation method to expense the die. If, after four years, the part produced by the die
is considered obsolete, approximately half the value of the die ($125,000) is
unrecoverable (i.e., stranded tooling). Because the majority of tooling is generally
considered dedicated, stranded tooling is generally more prevalent in comparison to
stranded capital investment. This is especially true when automotive part and vehicle
manufactures purchase production equipment with higher flexibility; a trend which has
been growing over the last several decades. For the incremental direct manufacturing
case studies, FEV assumed a flexible manufacturing environment when developing the
cost models. FEV also assumed multiple manufacturing facilities and/or production lines
existed, producing similar products, facilitating the ramping down of baseline production
components and the ramping up of new technology components.
In the previous engine bracket example, the progressive stamping die would be run on a
400-ton stamping press (capital investment). Since the stamping press can run several
different parts, simply by switching out the production dies, the stamping press would not
become stranded upon deletion of the engine bracket. The terminology used within this
analysis to identify capital investment, which can be utilized to produce several different
parts, is referred to as flexible capital investment.
In comparison, dedicated capital investment is production equipment constructed to only
manufacture one part. If the part becomes obsolete, independent the reason, the capital
becomes stranded. In some cases where a portion of the capital equipment can be reused,
the equipment is considered semi-dedicated. Therefore, only a defined portion becomes
stranded.
1-5
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More discussion on the designation of dedicated, semi-dedicated, and flexible capital
investment and tooling will be covered in the methodology section (Section 2.1).
1.3 Case Studies Evaluated
The specific cases evaluated within this report include those previously studied for
developing incremental direct manufacturing costs for a set of advance light-duty
technologies: technologies aimed toward reducing greenhouse gas emissions. This work
was completed by FEV for EPA.
The six advance technology configurations analyzed were:
• A 2.0L, 14, 4-valve, dual overhead cam (DOHC), dual variable valve timing (d-
VVT), turbocharged, gasoline direct injection (GDI) engine, compared to an
equivalent conventional 3.0L, V6, 4-valve, DOHC, d-VVT, naturally aspirated
(NA), port fuel injected (PFI) engine.
• A 3.5L, V6, 4-valve, dual overhead cam (DOHC), d-VVT, turbocharged, GDI
engine, compared to an equivalent conventional 5.4L, V8, 3-valve, single
overhead cam (SOHC), VVT, NA, PFI engine.
• A 6-speed wet dual clutch transmission (DCT), compared to an equivalent 6-speed
automatic transmission.
• An 8-speed automatic transmission, compared to an equivalent 6-speed automatic
transmission.
• An 8-speed wet DCT, compared to an equivalent 6-speed wet DCT.
• An 2.5L NA PFI engine, electronically control continuously variable transmission
(eCVT) power-split hybrid electric vehicle (HEV), compared to a conventional
3.0L NA PFI engine, 6-Speed AT baseline vehicle.
1-6
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2 Methodology for Developing Stranded Capital Investment and
Tooling Values
FEV assembled a cross function team (CFT) of manufacturing experts (employees and
those otherwise under contract) to perform the analysis. The CFT, with an average
relevant experience level of 24 years, employed technology expertise from several areas,
including: design and development, vehicle integration, production development,
manufacturing engineering (supplier and OEM), cost estimating, and product
benchmarking.
The core members of the CFT first developed the methodology and tools required to
conduct the analysis as discussed in detail in Section 2.1. Following the analysis set-up,
the first case study was selected for the evaluation. The study steps are presented in
Section 2.2 along with the aid of Figure 2-2. The same process steps were repeated for
all technologies evaluated.
2.1 Analysis Set-up:
1) Determine and define the conditions for establishing "Stranded Capital & Tooling."
Determination based on input from EPA and other sources reviewing prior "Light-
Duty Vehicle Technology Cost Analysis" studies. Examples of established analysis
boundary conditions include:
• Average investment and tooling fully depreciated life of 10 years
• Production life duration for baseline equipment: 3, 5, and 8 years
• Total new vehicle technology configuration amortization volume (5 years x
450,000 vehicle units/year)
2) Determine case studies to best represent the impact of Stranded Capital losses in total
effort to implement emission reduction technologies.
3) Develop stranded capital and tooling analysis (SCTA) worksheet (Figure 2-1 &
Figure 2-2). Key worksheet data fields include:
A. Component/Assembly Name
B. Investment & Tooling description
C. Investment & Tooling Categorization
D. Investment & Tooling Value as New (i.e., estimated purchase cost)
E. Estimated Stranded Capital Investment and Tooling Loss (3, 5, and 8 years)
4) Developed categorization of investment and tooling.
2-7
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A. Investment Categorization Definitions:
i) Flexible : Can be used to manufacture parts in either the baseline or
new technology configuration (0% stranded)
ii) Re-Useable : Equipment can be used in alternative industries, equipment
sold off at defined percent (50% stranded) of remaining value
iii) Semi-Dedicated : Approx 50% of equipment is flexible (50% stranded)
iv) Dedicated : Custom manufacturing equipment (100% stranded)
B. Tooling Categorization Definitions
i) Flexible : Can be used to manufacture parts in either the baseline or
new technology configuration (0% stranded)
ii) Perishable : Frequent replacement of tooling (0% stranded)
iii) Semi-Dedicated Tooling : Approx. 50% of tooling is dedicated (50%
stranded)
iv) Dedicated : Commodity-specific (100% stranded)
2-8
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Indented Bill of Materials
01 23456789 10 11 12
Ford 3.5L Engine (Surrogate)
OEM Engine Assembly
2 Piston & Rod Assembly
2 Cylinder Head and Camshaft Assembly
2 Block mach ne
2 F B ock cubed mach ne
3 F Block- Trimmed
4 F Block-Cast
5 F Block-Raw Materia
3 F - Liners Cylinder Block
2 F Dowel, Heads
2 F Dowel, Heads
2 F Dowel, A/C Compressor
2 F Dowel, Alternator
2 F Dowel, Bell Housing
2 F Plug, Coolant, Block, Large
2 F Pug, Coolant, Block, Medium
2 F Plug, Coolant, Block, Small
2 F Coolant Diverters
2 F Plastic Protector
1 F Main Bearng, Crank, Top
1 F Thrust Bearing, Crank, Upper
Investment
Description
Investment
Categorization
Flexible :
Re-Useable :
Semi-Dedicated :
Dedicated :
(Definitions in Comment Box)
Investment
Value
"New"
Assembly Equipment f 1 $ 3,000,000
| 1
1 1
Non-sync pallet transfer 1 1 $ 4,500,000
(assemble valve train 1 1
complete and test) 1 1
CMC machines, semi-flex JDD I $ 13,125,000
assembly machines & I I
washers, robot load, part I I
pallets (rgh. Machine, I I
assemble brg. caps, finish I 1
machine, wash, assemble 1 1
plugs, air test & inspect (V tol 1
1 configuration) 1
Included above
Trim Press
Die Cast Machine
NA
Commodity Pricing
Commodity Pricing
Commodity Pricing
Commodity Pricing
Commodity Pricing
Commodity Pricing
Commodity Pricing
Commodity Pricing
Commodity Pricing
Stamping press
Mold press
Bearing manufacturing equip.
Bearing manufacturing equip.
FLX
FLX
FLX
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
FLX
FLX
FLX
FLX
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Estimated Stranded Investment Loss
Resale Loss
50%
3 Years
Remaining Investment
Value
70%
$
$
$ 2,100,000
$ 3,150,000
$
$
$ 9,187,500
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
5 Years
Remaining Investment
Value
50%
$
$
$ 1,500,000
$ 2,250,000
$
$
$ 6,562,500
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
8 Years
Remaining Investment
Value
20%
$
$
$ 600,000
$ 900,000
$
$
$ 2,625,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Figure 2-1: Sample Stranded Capital Section of SCTA Worksheet
2-9
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Indented Bill of Materials
01 23456789 10 11 12
Ford 3.5L Engine (Surrogate)
OEM Engine Assembly
1 Engine Assembly
2 Piston & Rod Assembly
2 Cylinder Head and Camshaft Assembly
2 Block machine
2 F Block cubed machine
5 F Block-Raw Material
3 F - Liners Cylinder Block
2 F Dowel, Heads
2 F Dowel, Heads
2 F Dowel, A/C Compressor
2 F Dowel, Alternator
2 F Dowel, Bell Housing
2 F Plug, Coo ant, Block, Large
2 F Plug, Coo ant, Block, Medium
Tooling
Description
Assembly part pallets,
spindles, multi-spindle
heads, special spindle
columns, part feeders, air
test seals and mounting
plates, gauges
Machining - part pallets,
tooling, machining part
programs, inspection
Drogram, special gauges
Assembly- part pallets,
spindles, multi-spindle
leads, special spindle
columns, part feeders,
gauges
Washers - part programs
Part Handling - dunnage,
robot programs
Dies
Molds
Cast tube
Tooling Categorization
Flexible
Perishable
Semi-Dedicated Tooling
Dedicated
(Definitions in Comment Box)
™
Tooling Value
"New"
$ 4,800,000
$ 14,000,000
$
$
$
$
$
$
$
$
$
Estimated Stranded Tooling Loss
3 Years
Remaining Tooling
Value
70%
$
$
$ 14,560,000
$ 2,240,000
$ 3,360,000
$
$
$ 9,800,000
$
$
$
$ 157,500
$
$ 9,843,750
$
$
$
$ 14,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
5 Years
Remaining Tooling
Value
50%
$
$
$ 10,400,000
$ 1,600,000
$ 2,400,000
$
$
$ 7,000,000
$
$
$
$ 112,500
$
$ 7,031,250
$
$
$
$ 10,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
8 Years
Remaining Tooling
Value
20%
$
$
$ 4,160,000
$ 640,000
$ 960,000
$
$
$ 2,800,000
$
$
$ 45,000
$ 2,812,500
$
$
$
$ 4,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Figure 2-2: Sample Stranded Tooling Section of SCTA Worksheet
2-10
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2.2 Stranded Capital & Tooling Case Study Steps
1) Select case study for stranded capital and tooling evaluation.
2) Transfer component and assembly part names/descriptions from baseline Comparison
Bills of Materials (CBOM) developed in the prior tear-down studies into the SCTA
worksheet.
3) CFT team review of stranded capital and tooling SCTA worksheet. Team members
are assigned subsystem and system responsibilities based on industry experience.
4) Using the baseline and new technology CBOMs (developed in primary teardown
analyses), identify potential capital investment and tooling in the baseline technology
configuration, which is not likely to be transferable to the new technology
configuration.
5) Based on Step 4 above, define manufacturing processes in detail, identifying
equipment and tooling requirements. Summarize details in SCTA worksheet.
6) From the categorization menu in the SCTA worksheet, establish categorization codes
(e.g., flexible, dedicated, semi-dedicated) for investment and tooling items captured in
Step 5 above.
7) Enter in investment value ($) for components/assemblies with capital investment
identified as re-useable, semi-dedicated, or dedicated. For tooling identified as
dedicated or semi-dedicated, enter in tooling value ($).
8) The SCTA worksheet automatically calculates the stranded capital and tooling values
for the three-, five-, and eight-year truncated production periods.
9) At the bottom of the SCTA worksheet, a combined total stranded capital and tooling
value is calculated for each of the truncated production periods.
10) An estimated cost per new advance technology vehicle is calculated for each
truncated production period, using the values derived in Step 9 along with the total
estimated new advance vehicle sales during a five-year period (i.e., 450,000 units/year
x 5 years = 2,250,000 vehicles)
2-11
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CBOM
1
Existing unit cost impact:
DEFINE OF TOOLING & INVESTMENT
PARTS SAME OR
DIFFERENT?
SAME
DIFFERENT
No
Consideration
For New and Baseline
$0
Define for
TOOLING
Flexible
Perishable
Tool & Investment
Estimate
DEFINE
RULES
Define for
INVESTMENT
- Flexible
- Reusable
Transfer tooling and investment impact
(assuming tools were bought then scrapped)
Analysis based on 3-, 5-, and 8-year value remaining scenarios
Figure 2-3: Stranded Capital and Tooling Case Study Steps
2-12
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3 Key Assumptions in the Stranded Capital and Tooling Analysis
Listed below are the key assumptions made as part of the stranded capital and tooling
analysis.
• All manufacturing equipment was bought brand new when the baseline
technology started production (i.e., no carryover of equipment used to make the
previous components that the baseline technology itself replaced).
• Manufacturing equipment and tooling used to make the baseline technology
components is straight-line depreciated over a 10-year life.
• Factory managers do not optimize capital equipment phase-outs (i.e., they are
assumed to routinely repair and replace equipment without regard to whether or
not it will soon be scrapped due to adoption of new vehicle technology).
• Estimated stranded capital is amortized over five years of annual production at
450,000 units (of the new technology components). This is the same annual
production volumes used in the incremental direct manufacturing cost studies.
4 Case Study Results
The results for the stranded capital and tooling analyses for the six evaluated case studies
are captured below in Table 4-1. In the table, the total stranded capital and tooling values
are present for each technology at each production truncation period. The "New" column
in the table represents the estimated purchase price of the baseline vehicle technology
capital and tooling prior to any depreciation. This value only represents the portion of
equipment and tooling which cannot be used to manufacture any other component or
assembly without extensive rework and financial burden.
A unit cost, in addition to the total lump sum values, is also present in the table. These
values represent the total stranded capital and tooling lump sum values amortized over
five years at 450,000 units/year of the new vehicle technology configurations.
Because many of the detailed spreadsheet documents generated within this analysis are
too large to be shown in their entirety, electronic copies can be accessed through EPA's
website http;//www.epa.gov/otaq/climate/publications.htni
4-13
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Table 4-1: Summary of Potential Stranded Capital and Tooling Estimates
Summary of Potential Stranded Capital & Tooling Estimates
Component
Engines
3.0L V6 NA PFI to 2.0L 14
Turbo GDI
5.4L V8 NA PFI to 3.5L V6
Turbo GDI
Transmissions
6-Speed AT to 6-Speed DCT
6-Speed AT to 8-Speed AT
6-Speed DCT to 8-Speed
DCT
Fusion Eng. & Trans.
Conventional V6 to Power-
split HEV
Costs
Inv. & Tig. $
$/Unit
Inv. & Tig. $
$/Unit
Inv. & Tig. $
$/Unit
Inv. & Tig. $
$/Unit
Inv. & Tig. $
$/Unit
Inv. & Tig. $
$/Unit
New
$181,781,500
$80.79
$194,417,889
$86.41
$205,756,250
$91.45
$163,786,250
$72.79
$89,553,000
$39.8
$387,537,750
$172.24
@ 3 Yrs.
$126,827,050
$56.37
$135,672,522
$60.30
$123,039,875
$54.68
$107,503,375
$47.78
$62,687,100
$27.86
$249,866,925
$111.05
@ 5 Yrs.
$90,590,750
$40.26
$96,908,944
$43.07
$87,885,625
$39.06
$76,788,125
$34.13
$44,776,500
$19.90
$178,476,375
$79.32
@ 8 Yrs.
$36,236,300
$16.11
$38,763,578
$17.23
$35,154,250
$15.62
$30,715,250
$13.65
$17,910,600
$7.96
$71,390,550
$31.73
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5 Glossary of Terms
Dedicated:
Custom manufacturing equipment (100% Stranded).
Equipment design is specific to a component design such that
there is minimal opportunity to retool and little value other
than scrap metal. Dedicated hardware within the
manufacturing process, while often generic in its component
design, is in many cases configured in such that it is less
likely to be reused.
Flexible:
Can be used to manufacture baseline or new technology parts
(0% Stranded). Equipment is generic and oftentimes an off-
the-shelf design that can be easily redeployed for other
component manufacturing within some constraints (turning,
milling, work envelop size, etc.)
Capital
Investment:
The facilities, machines and other equipment within the
manufacturing process that are not directly in contact with the
part produced. Among auto manufacturers, investment is also
referred to as the facilities and equipment part of process
(versus part-contacting tooling, cutting tools, fixtures, gauges,
etc.).
Perishable: Frequent replacement of tooling (0% Stranded). Perishable is
often referring to the wearable part of the cutting tool or part-
contacting components of the process that are prone to wear
or have a given life.
Re-Usable: Equipment can be used in alternative industries, equipment
sold-off at defined percent of remaining value. Equipment
can be components of either dedicated or flexible equipment.
Semi-Dedicated: Approximately 50% of equipment is flexible and 50%
dedicated or stranded
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Stranded Capital: The abandoned equipment costs, either as new, or at reduced
value when replaced after a prematurely truncated period of
time in production.
Stranded Tooling: The abandoned tooling costs, either as new, or at reduced
value when replaced after a prematurely truncated period of
time in production.
Tooling: Generally the part-contacting components of the
manufacturing process, such as part-contacting cutting tools,
fixtures, gauges, etc.
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