Economic/ Global Trends

Energy, Material Shortages, and Reconfiguring Supply Chains Take Center Stage at Germany’s Hannover Messe 2022

Noel Nevshehir, Automation Alley
June 23, 2022
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Automation Alley’s Director of International Business, Noel Nevshehir, shares insights from Automation Alley’s recent Trade Mission to one of the world's largest advanced manufacturing tradeshows.

Automation Alley, in partnership with the Michigan Economic Development Corporation (MEDC), recently led a trade delegation of 10 Michigan companies to participate in Hannover Messe (i.e., Hanover Fair) in Germany. As one of the world's largest annual tradeshow focused on advanced manufacturing, it underscores how technologies have converged in the last decade into what we know today as Industry 4.0 (or the Fourth Industrial Revolution). Hannover Messe generally attracts 6,500 exhibitors and 250,000 visitors from around the world.

Although attendance was down this year as the world economy slowly emerges from COVID-19, the enthusiasm for seeing the latest industrial technologies was not. Designed to increase operational efficiency and productivity while lowering costs, the technologies underlying Industry 4.0 attest to how companies can heighten their global competitiveness by subscribing to a software-first approach in designing, engineering, and manufacturing new product developments. Speakers and exhibitors also presented remedies to combat climate change through the interplay of digitization, artificial intelligence, automation, and sustainable energy solutions. 

The show aligned well with this year’s theme on “Industrial Transformation" concentrating on digital twinning of smart factory floors and the products that they produce. Energy, material shortages, and reconfiguring supply chains of the future garnered a lot of attention due to the following five factors: 1) decoupling of trade and investment flows between the West and China; 2) China’s saber rattling in the South China Sea (think Taiwan); 3) Russia’s military adventure into Ukraine; 4) COVID-19; and 5) the radical shift away from internal combustion engines (ICE) to electric vehicles. An additional factor as to why the world is facing supply chain issues is the dearth of talent and workforce skills plaguing many nations’ abilities to become more innovative and speed up product development lifecycles. The future pipeline and, if you will, supply chain of students lacking STEM skills will continue to hamper our ability to stimulate economic development, create wealth, and raise living standards.  

Circling back for a moment to the transition from ICEs to EVs, the world risks jumping from one cartel of oil-producing states to nation’s that control the lion’s share of critical minerals and rare earth materials required to power electric batteries. These minerals include lithium (80% of the production comes from China), cobalt (60% of the supply comes from the not so Democratic Republic of Congo), copper, magnesium, and nickel. A number of these countries share values that run counter to the West’s economic and national security interests. Anecdotally, the experts in the Hannover Messe’s Energy Pavilion struggled to respond to these hurdles in a way that does not violate the immutable laws of chemistry and physics, while meaningfully tackling concerns about climate change and the environment in general. Supply chain bottlenecks may slow or even jeopardize the goal of decarbonizing our planet as outlined in the Paris Agreement.  

Another point of discussion at the show was that we are beginning to witness globalization in reverse with the acceleration of near shoring production closer to home or to friendlier shores. Additive manufacturing (3D printing), automation, and robotics are viewed as work arounds to mitigate future supply chain disruptions and material shortages. In a world polarized by democratic versus autocratic nations, international trade and foreign direct investment flows will see a significant reduction and less economic interdependence among nations.

One final observation at Hannover Messe, Automation Alley seems to be in sync with current and future trends in the Industrial Internet of Things. However, many government officials and business and industry executives from around the world share our nation’s struggle trying to help small and medium size manufacturers adopt and implement Industry 4.0 technologies and processes within their enterprises and supply chains, too. They universally agreed that manufacturers face financial, technological, and cultural hurdles. The latter for the first time received the most attention at Hannover Messe.  

Institutionalized workplace cultures that do not readily accept change are on the critical list because transforming organizational mindsets in the face of disruption is challenging even if done incrementally. It requires the ability to unlearn what has been learned because old thinking crowds out new thinking. Hungarian mathematician John von Neumann observed that “for progress, there is no cure.” Yet, for progress to occur, we have to let go of foundational knowledge and cognitive habits that made us successful in the past but now stand in the way of embracing the future.

Noel Nevshehir, Automation Alley
Noel Nevshehir, Automation Alley

Noel Nevshehir is director of Automation Alley’s International Business Services and Global Strategic Partnerships. In this role, Nevshehir is responsible for leading Automation Alley’s trade mission program and foreign direct investment efforts. He is also responsible for seeking out global strategic partners that align with Automation Alley’s Industry 4.0 mission.

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