Europe’s industrial sovereignty ambitions should extend beyond chips, argues Anton Duisterwinkel. Reshoring is easier said than done, though.
“I was really shocked the other day. Usually, we deliver about 90 percent of our products in time and we work hard to improve that. But last months, it was only 28 percent!” There are huge issues with the supply of parts from countries like India and China, and transport costs rise quickly. “I’m really considering reshoring now,” concluded an entrepreneur of a manufacturing company in the province of South Holland. That statement would have been unthinkable a year ago.
But hold your horses! Reshoring is much easier said than done. Dutch companies currently have a very hard time finding staff, from the vocational level up to the academic level. In our crowded country, business premises are hard to find, certainly when a larger building is required or higher levels of environmental permits are needed. The challenge of building houses in the Netherlands is big enough as it is.
Basic materials are hard to come by and rapidly increase in price. Even electricity isn’t available in some business estates. More importantly: how much do we really know about mass production? Most Dutch manufacturing companies produce small series of complex products with a lot of manual assembly work. That’s a different ball game than mass production.
These factors do not make reshoring impossible, and certainly not less important. Europe needs to upgrade its manufacturing ability and capacity rapidly. Not only for chips! A boost of 40+ billion euros for manufacturing in addition to chip production is much needed and might very well be more effective. It will lead to economic growth, can be used to ensure circular production and is essential to European sovereignty.
We surely must have learned by now that it’s not a good idea to be dependent on China, Russia or even the US, given the political instability there. However, it will take many years before Europe, the Netherlands and its regions have a sound and coherent industry policy – let alone before it’s implemented and education systems are changed accordingly. Businesses can’t wait for that. They face problems now, which need to be tackled forthwith. What can entrepreneurs do? I believe they can undertake three, intimately related, steps.
First, find regional suppliers. Start in the Netherlands and go no further than Eastern Europe. Excellent suppliers do still exist and aren’t necessarily more expensive if you take transport costs into account. Quality control, change management and joint innovation are much easier and IP much safer. In any case, order a significant share of the materials and parts ‘locally’, so that these businesses don’t disappear.
Second, upgrade your supply chain. Work with your European suppliers on digitalization and circularity to lower costs, improve quality and supply secure delivery. Open new (circular) sources of materials. Many programs and vouchers are available to aid companies on these themes.
Third, increase the flexibility of your supply chain by implementing additive manufacturing. Join forces with a small number of key suppliers to adopt additive manufacturing for small and medium series of complex parts. Technologies like 3D printing and tape layering produce strong and durable parts of high quality. Production is digital, therefore cost effective and flexible. When applying these technologies, your designers will learn about the designing options and your production engineers will become enthusiastic about the flexibility and late-delivery options.
Sure, these steps don’t solve the problems of the entrepreneur today. But for now, competitors are faced with the same challenges. Customers are currently sympathetic and usually accept the delays. But this situation won’t last. Therefore, entrepreneurs should take matters into their own hands. Don’t wait for a clear, coherent and concrete industry policy in the Netherlands. No amount of water flowing through Rhine, Meuse and Schelde will set those wheels in motion, I’m afraid. Come rain, or more rain.