Issue #47 - The Future of Manufacturing
Topics this time: the factory of the future, solving hardware problems, digital twins, European industrial startup hubs, and new investments in Q3 2023.
👋 Welcome to Issue #47 👋
I hope you had a nice summer. Based on your feedback in my last newsletter, I won’t do any changes to the format or focus of this newsletter.
With Kwest, we’ve onboarded more installers on our platform including the first customers in the heat pump and smart meter segment. We’ve launched new features (eg. automated quality management) to help them increase the first-time-right rate for an installation and reduce rework and repeat site visits. I’ve also written a new blog post on how I think AI-augmentation can transform field services amidst the skill shortage. Reach out here if you want to learn more about that. Lastly, I did an interview with Inbolt where we’ve discussed topics such as digital twins, data connectivity, and product adoption in manufacturing.
Got a friend or colleague interested in the future of manufacturing? Help me spread the word by sharing the newsletter if you like it!
Thanks for reading The Future of Manufacturing! Subscribe for free to receive new posts and support my work.
I. What I’ve enjoyed reading 👇
💥 US manufacturing boom and the labor crisis
Despite a significant surge in manufacturing construction spending in the US (see this graphic), employment in the sector has remained stagnant over the past year, posing challenges in finding workers to staff the new factories. The construction spending on US manufacturing nearly doubled from $110 billion in May 2022 to $194 billion in May 2023. The boom is driven mainly by construction for computer, electronic, and electrical manufacturing. The manufacturing skills gap, characterized by a lack of highly technical and manual expertise in the labor market, could lead to 2.1 million unfilled jobs by 2030, potentially costing over $1 trillion in that year alone. Similar to other Western countries, we need to work with urgency to solve the labor crisis.
🏭 What’s important for the factory of the future according to Bain
Manufacturers have used Lean, TPM, TQM, and Six Sigma for years, but the future demands more. According to Bain, the factory of the future will be smart, digital, dynamic and sustainable at the same time.
Challenges like sustainability, competition, and changing customer expectations require innovation. A new production system approach combines design principles and tools, including circular design, smart production and adaptability of the whole production system. From Bain’s point of view, the future involves digitally-enabled shop floors, flexible layouts, circular value chains, and adaptive organizations. The graphic below shows that sustainability will be a big priority in manufacturing to drive changes to the shopfloor in the next 2 years:
✨ Nvidia bets that factories will be software-designed
Nvidia's CEO, Jensen Huang, revealed that the company's strategic move in 2018 to embrace AI-powered image processing with ray tracing and intelligent upscaling has paid off massively. They reinvented their hardware, software, and algorithms to enable this shift, which has not only transformed consumer GPUs and gaming but also proved highly valuable in machine learning development. Huang emphasized that this is just the beginning, as AI-driven models will play a central role in various industries where he highlights manufacturing: “Entire factories will be software-defined and robotic, and the cars they’ll be building will themselves be robotic. So it’s robotically designed robots building robots”.
🥵 Solving hardware problems
Alex George from P9 Capital has written a post about opportunities in improving hardware-related challenges in the physical world. His four main areas of interest are: embedded system tooling, software for hardware teams, software for physical assets, and what he calls “smart AI”. Advantages for hardware-focused investments in the tech sector are defensibility, high switching costs, and various upsell opportunities.
P9 Capital has recently made another hardware-related investment with Sereact. Sereact is developing user-friendly and flexible robotics solution for automating pick-and-pack processes by combining language models and computer vision. Air Street also co-led the $5M seed round together with P9 Capital.
🏭 The power of digital twins
Ben Blume from Atomico has published a new post about digital twins that have evolved since the 2000s, creating digital copies of physical systems using sensors. They've moved to the cloud, becoming more accessible and powerful with AI and simulations. Some digital twins even directly control physical systems for ongoing improvements which he sees as a game-changer for smarter business operations.
With Atomico, he has led a $19M Series A at Dexory. Dexory is combining stock-scanning robots with powerful warehouse analytics to give its customers accurate, real-time visibility of their inventory and warehouse operations.
II. About industrial Startups and Companies
📍 European industrial startup hubs on the rise
Despite a slowdown in venture capital investments, the European industrial tech sector is showing resilience since early 2022. It’s one of the most well-funded sectors in Europe and has attracted $5.7bn in VC money last year. That’s a 3.6x increase compared to 2018 with $1.6bn. In this article, NGP Capital gives an overview of the European industrial tech sector, including a map of the main hotspots for industrial tech innovation (see below). A recent article in techEU also highlighted the European industrial tech sector by listing 10 European robotics startup to watch.
🏭 Investments in full-stack startups: does it work?
Investing in full-stack systems, like robotic automation, is more than just numbers. The challenge for these type of “full-stack startups” isn't just about cost. It's ensuring that the systems they’re building perform reliably in complex real-world scenarios. While automation's value proposition keeps growing due to rising labor costs, the key is delivering performance that matches customer expectations. Achieving high operational availability, consistency, and easy implementation are crucial, and going slow at first can prevent costly mistakes. Eclipse Ventures, a venture fund focused on full-stack startups, has published a post about what they look for when working with founders building full stack systems.
💸 Northvolt received a fresh $400M investment
Canada's Investment Management Corporation of Ontario (IMCO) has invested $400M in battery producer Northvolt to support its lithium-ion battery production expansion and potential IPO. Northvolt, backed by companies like BMW and Volkswagen, aims to become Europe's largest battery manufacturer. IMCO's investment through convertible notes aligns with themes related to a transition to a lower-carbon economy and reshaping global supply chains. Northvolt, valued at $12 billion in 2021, has been exploring an IPO that could value the company at over $20 billion. The investment reflects IMCO's strategy to diversify its assets in continental Europe and Britain.
🤑 IFS has acquired Poka for $200M
Swedish enterprise software giant IFS has acquired Poka, a company offering communication and skills development tools for manufacturing workers. The deal is estimated to be close to $200M. Poka's "connected worker" platform is used by 250,000 users across over 2,000 factories, including brands like Nestlé, Mars, and Bosch. The platform helps workers learn tasks, solve problems, and share knowledge.
🤑 Jungheinrich has acquired Magazino for an undisclosed sum
Jungheinrich has acquired Magazino, a robotics specialist, in a strategic move. This full acquisition follows Jungheinrich's 21.7% stake in Magazino since 2020. The deal's financial details remain undisclosed. Magazino, with its expertise in mobile robotics, will continue to operate independently within Jungheinrich, leveraging the larger corporation's global sales and service network. This acquisition is seen as a significant step in enhancing Jungheinrich's automation capabilities in the intralogistics sector.
III. Additional funding news in short 👇
👉 Fero Labs (US): has raised a $15M growth round led by Climate Investment for its AI-driven manufacturing process optimization software. Read more…
👉 b:bot (FR): has raised €20M led by Eiffel Investment Group for its plastic recycling robots. Read more…
👉 ThingTrax (UK): has raised a £4.3M pre-Series A round co-led by Concentric, Superseed and Puma Private Equity for its manufacturing performance platform. Read more…
👉 Tractian (US): has raised a $45M Series B led by General Catalyst and Next47 for its AI-based industrial asset monitoring solution. Read more…
👉 Pico MES (US): has raised a $12.4M Series A led by Bosch Ventures for its modern manufacturing execution system. Read more…
👉 Fulcrum (US): has raised a $18M Series A2 (this probably means a second Series A) led by Bessemer Venture Partners for its ERP for small to medium-sized manufacturers. Read more…
👉 Limble (US): has raised a $58M in Series B led by Goldman Sachs to grow its modern CMMS. Read more…
IV. Additional content and the I4.0 Landscape
My Industry 4.0 Landscape
I’ve updated my Industry 4.0 Landscape in July 2023. There are nearly 600 active startups in this landscape. Click on the link for a larger version.
If you think there is something missing, then please let me know.
Thank you for reading The Future of Manufacturing! Subscribe for free to receive new posts and support my work.