Manufacturing the Resurgence of Manufacturing 🇺🇸
And, the role of B2B Distribution
I hope everyone had a lovely 4th of July – celebrating America’s independence with friends and family. As you know, bringing manufacturing back to the USA has been a desire of mine for many years and I was very excited to attend the Reindustrialize conference a couple weeks ago in Detroit.
The conference brought together innovators and investors looking to do exactly that: bring manufacturing back to the USA through technology innovation.
I believe we can bring manufacturing back, but it’s going to look different than it was 20 years ago. This newsletter is about Distribution Technology – so why am I talking about manufacturing?
Well, besides the personal interest, many people don’t realize that distributors do more and more manufacturing themselves. We initially wrote about this a couple months ago and provided a few examples. In today’s discussion, we’ll talk about the types of technologies demonstrated at Reindustrialize and how I can see them being relevant to B2B Distribution.
Distributors in these verticals should pay particular attention:
Industrial (manufacturing, metalworking, automotive, defense, aerospace)
Plastics
Building Materials
Automation/Electrical
Is it too early?
My overarching sentiment is that we’re in the very early innings for a manufacturing resurgence in America. There is certainly the potential for a number of break-out companies in the space and there are sophisticated investors deploying material sums of money to see that through.
SpaceX, Tesla and Anduril probably being three of the biggest breakout names to date. These companies serve the end-customer and have a branded product. A lot of the companies and technologies at this conference were focused on enabling the manufacturing processes of companies like SpaceX, Tesla and Anduril. Kind of like technology companies innovating in the infrastructure of manufacturing.
Thematically, these infrastructure kind of companies are very relevant to our fund and B2B distribution in general. In the short term, there will probably be more break-outs in the “branded product” innovators, but longer-term the “infrastructure” innovators will need to see break-out success if we have any hope of a manufacturing resurgence.
First Movers: DoD and Aerospace Industries
There’s a number of interesting companies that are using a mixture of technology and robots to make parts faster.
Speed is the primary value proposition, not so much cost savings.
Current processes require long lead times – creating a replacement part can take over a year for a damaged wing on an F35 jet.
Example company: https://machinalabs.ai
Mission-critical industries like the DoD and aerospace seem to be the first movers for these kinds of use cases. They need a replacement part that isn’t going to fail and has very high tolerance requirements. The aircraft aftermarket industry is estimated at $14B just in North America and growing at a solid 8% CAGR.1
Separate from this conference, we’ve also seen the use of additive manufacturing (fancy word for 3D printing) in Abrams tanks. Certain parts can be created with superior quality through metal 3D printing than conventional methods - and have faster lead times.
Metal Machining and Fabrication
New technologies to assist with metal machining was another area of concentration at the event. There were a variety of approaches including new additive machines, as well as software that helps the machine shop run better (MRP) and automated MES (machine execution system). Additive metal manufacturing is experiencing a lot of innovation and that was certainly on display at the conference. Software technology to help in the production lifecycle was also an area of focus with examples around MRP and new ways to think about MES.
Example companies: (sign up for Premium to keep reading!)