Made by You: Are the Future Winners Those who Control the Value Chain Integration?
Lack of Everything
There is a lot of disruption going on globally in industries:
Metals and material scarcity — with the projections of the battery electric vehicle manufacturing scaleup, there have recently been reports on that the pace might not be possible, due to lack of metals and materials required. The sources for lithium and cobalt are already alarming. As reported by Benchmark Minerals Intelligence, the lithium shortage this year is the worst ever.
The supply situation and need to have access (control) to metals I discussed previously with Prof. Roos in my See Beyond podcast S1E9.
Transportation and logistics bottlenecks — look at the consequences of the trucker blockade of the Ambassador bridge, which stands for 27% of the US-Canada trade, hurting automotive and other industries.
Logistics in general are impacted by the COVID-19, with higher rates and bottlenecks. This situation is considered to maintain 2022 and 2023.
Batteries — well just see below under the section of Made by You, so many traditional automotive OEMs forming partnerships and own facilities…
Semiconductors — we have seen the lines of cars at delivery bays waiting to get chips assembled and car production has been cut by many millions in total and cost the automotive companies 210 B$ in lost revenues in 2021. It is a worldwide shortage and affecting a variety of consumer product segments. Several companies, such as Samsung and Intel have announced the building of large-scale chip factories in the US. There are national strategies to get a leading regional position in chip manufacturing, as example in Europe with the Chips Act. The supply bottleneck does not look like being solved quickly either.
Manufacturing — with these various obstacles and bottlenecks, the need for own manufacturing assets and skills, along with increasing flexible automation might be relevant areas to consider. These are topics I recently discussed in the See Beyond podcast for flexible manufacturing, digitalization and the human-robotics interaction.
Made by You
We see many corporates establishing partnerships, joint ventures and own operations taking more control of the vertical value chain —
VW battery partnership with Northvolt.
Volvo — same here, partnership with Northvolt.
Mercedes-Benz — building 8 battery plants and acquired or partnered with various startups.
Porsche partnership with Custom Cells.
Ford partnering with SK Innovation to build 3 battery plants in the US.
Now I took examples from the automotive, as this product, manufacturing and logistics is about the most complex we have. The above listing involves both established companies as well as startups, showing that to have the right business capabilities you need partnerships. I believe personally there is more to come in other areas. Look for instance at Tesla, acquiring the industrial company ATW. Industrial automation and process control are key for manufacturing and processing, so here I believe also that the M&A activities and disruptions are likely to happen in the coming years.
So what will the future be like in 2030?
Are the winners going to be the corporates with a high vertical value chain integration, including own manufacturing?
It sounds like Henry Ford’s thinking with the Rogue facilities which was the world’s largest and most integrated industrial plant at its’ time. This type of vertical integration and control could be a likely scenario and something to consider.
Made by you gets more important, don’t rely on outsourcing as this creates risks in being vulnerable for disruptions.
Made by you will require continuous learning, addition of skills and considerations for what is critical to control next.
Made by you will also require the attraction and retention of talents.
Made by you might be the winner. What do you think?
/Mika
