Breaking the Bottleneck | Issue 11
[05/21/2023] Semi Workforce Shortage, IEA Clean Tech Manufacturing Report & More!
Breaking the Bottleneck is a weekly manufacturing technology newsletter with perspectives, interviews, news, funding announcements, market maps, and a startup database. If you know any founders, executives, or experts in the space, I would love to chat here!
Content I Enjoyed This Week 🏭🗞️🔬
News:
The US Semiconductor Industry Faces a Worker Shortage [NY Times]
The United States is experiencing a semiconductor manufacturing boom fueled by substantial federal funding, but a crucial challenge remains: finding enough skilled workers to fill the thousands of well-paying jobs created by this expansion. The industry is facing a shortage of workers due to a lack of awareness and interest, limited enrollment in relevant academic fields, and competition with big tech companies for skilled engineers. Additionally, immigration rules make it challenging to attract foreign-born talent. Estimates suggest a shortage of 70,000 to 90,000 workers in the semiconductor industry over the next few years. To address this issue, the Biden administration plans to create workforce hubs and promote training programs to attract underrepresented groups. Companies like Intel and Micron are investing in partnerships with educational institutions to train technicians and expand relevant curricula. However, there are concerns about the availability of enough skilled workers to meet the industry's demands. Efforts are being made to change perceptions, increase enrollment, and provide training opportunities to ensure a sufficient workforce for the growing semiconductor manufacturing sector.
Schnieder Electric Expands North American Manufacturing Presence [WSJ]
Schneider Electric is opening factories in El Paso, Texas, and Monterrey, Mexico, to produce circuit breakers and electrical panel boards. They also plan to expand their Tlaxcala, Mexico, plant. The company aims to develop a local supply chain and their goal is to have the finished goods supplied to customers in those regions instead of shipping products globally. They strive to manufacture 99% of their products locally, with the remaining 1% produced elsewhere. The company had already been moving toward a regional manufacturing model, but the pandemic accelerated the urgency of the shift. The company aims to build shorter and more resilient supply chains to meet the increasing demand for its products in North America. Their revenue in the region grew by about 25% in the first quarter of the year.
NAM Response to EPA Carbon Proposals [Plant Services]
The U.S. Environmental Protection Agency (EPA) proposes new carbon pollution standards for coal and natural gas-fired power plants to prevent up to 617 million metric tons of carbon dioxide and eliminate other harmful pollutants. In response, the National Association of Manufacturers (NAM) raises concerns about the potential impact on the economy and energy security. They argue that implementing the proposed standards would require rapid deployment of nascent technologies or lead to the shutdown of a significant portion of power generation, which poses risks to the economy.
When is it better to insource production? [Industry Week]
There is a growing trend of insourcing among U.S. manufacturers due to shifting consumer demand patterns and supply chain disruptions. The success of Tesla in insourcing critical parts has influenced other global manufacturers to reassess their supply chain strategies. It offers advantages such as improved product quality, faster time-to-market, enhanced supply chain visibility, and the implementation of best practices. Insourcing can also help minimize the impact of macroeconomic events and eliminate hidden supply chain costs. However, there are financial implications to consider, such as significant capital investment and increased labor costs. The analysis should also account for maintenance costs and the availability of skilled workers. Insourcing may require building new capabilities and expertise, leading to potential time constraints and limited internal flexibility
Can the World Make an Electric Car Battery Without China? [NY Times]
The article highlights China's dominant position in the global lithium-ion battery supply chain, which gives it significant economic and geopolitical advantages. China controls a substantial portion of the world's rare minerals necessary for battery production, including cobalt and lithium. It has achieved this through a long-term strategy of acquiring stakes in mining companies worldwide, including in Congo, which has the majority of the world's cobalt supply. China also possesses a significant refining capacity for battery minerals, benefiting from cheap land, energy, and less stringent environmental regulations.
Moreover, China leads in manufacturing battery components such as cathodes, anodes, separators, and electrolytes. Chinese companies have invested in a cheaper alternative to traditional cathode materials, known as LFP, which has gained market share. China also dominates battery assembly, producing the majority of battery cells and electric cars globally. Its expertise in battery production, lower labor costs, and more equipment manufacturers contribute to its competitive advantage.
Biden Administration Tamps Down Talk of US-China Decoupling [Bloomberg]
The Biden administration is trying to assure allies that it is not seeking a long-term rupture or "decoupling" of the US and Chinese economies, but many are skeptical. The US has been working to limit China's access to critical technologies and has plans to impose further restrictions on US investment in China. US officials acknowledge that not everyone believes their assurances and are attempting to appease nervous allies. The administration's goal is to create a "small yard, with a high fence" by limiting China's access to certain technologies. However, China sees the US as trying to restrain its rise and accuses it of leading a campaign against it. While some allies are starting to emulate the US's policies, many prefer a more pragmatic approach. The window for the US and China to find a calmer path is narrowing and engaging with China could become a political liability for the Democrats in the 2024 US presidential election.
Research/Blogs:
The State of Clean Tech Manufacturing [IEA]
Here are some highlights from the most recent report:
Installed manufacturing capacity posted strong year-on-year growth for batteries (72%), solar PV (39%), electrolyzers (26%), and heat pumps (13%). Wind manufacturing capacity grew much more modestly at around 2%.
For the first time, announced projects for battery manufacturing capacity could cover virtually all of the 2030 global deployment needs of the NZE Scenario. Furthermore, if all announced projects were to come to fruition, solar PV manufacturing capacity would comfortably exceed the deployment needs of the IEA’s Net Zero Emissions by 2050 (NZE) Scenario in 2030.
Manufacturing operations are highly geographically concentrated: currently, four countries and the European Union account for around 80-90% of global manufacturing capacity for the five clean technologies examined in this briefing. China alone accounts for 40-80% of these technologies. If all announced projects were to be realized, these shares would shift to 70-95% and 30-80% respectively.
China appears well positioned to capture USD 500 billion, or around 65% of the projected output from global clean technology manufacturing capacity in 2030, including both existing and announced projects.
Podcasts/Video:
Everything You Need to Know About Semiconductors [TKP]
Luminar’s New High-Volume Manufacturing Facility
Twitter:
Chinese Car Manufacturing Compared to Europe
Manufacturing Deals
Anybotics- A swiss based robotics company offering an end-to-end robotic solution to automate industrial inspections
$50 million [Series B] - Led by NGP and Walden Catalyst and joined by Bessemer Venture Partners, Aramco Ventures, Swisscom Ventures, Swisscanto Private Equity, and others.
Alloy Enterprises - A novel additive manufacturing system provides high throughput of aluminum parts
$26 million [Series A] - Led by Piva Capital and joined by Unless, Flybridge Capital, MassMutual Catalyst Fund, Footprint Coalition, Congruent Ventures, and Riot Ventures
Ethernovia - A an ethernet chip company developing a seamless, holistic and streamlined hardware and software system
$64 million [Series A] - Led by Porsche Automobile Holding SE, and joined by Qualcomm Ventures, AMD Ventures, Western Digital Capital, and others
VoxelSensors - A company building 3D perception solutions that blend the digital and physical words
€5 million [Series Seed] - Led by Capricorn Partners and Qbic