4 Industrial Megatrends of 2023

Megatrends are transformative shifts that have a profound impact on the global economy and society. These powerful forces both drive and are driven by disruptive innovations that push the boundaries of what is possible. One such megatrend is the rise of renewable energy sources, such as solar and wind power. By harnessing these clean and abundant resources, we can reduce our dependence on fossil fuels and mitigate the impact of climate change. This has led to the development of new technologies and business models that are revolutionizing the energy sector and creating new opportunities for growth and innovation. This is just one example of how megatrends can catalyze powerful societal changes and bring about new levels of success and prosperity.

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If your business is currently in the process of charting its path towards Industry 4.0, you will likely need to acclimate to the multitude of changes and revolutions impacting the manufacturing industry. By doing so, you can make informed decisions about how to leverage these developments to your advantage. These challenges and opportunities are often classified as Megatrends.?This newsletter gives you a birds eye view of 4 mega industrial trends that have the ability to bring about Henry ford level revolution in the sector.

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Decarbonisation

As per a report published by the smart cube, industrial sector contributes to more than 30% of global green house gas (GHG) emissions, what is even more striking is, 5 industries - Steel, Oil & gas, Cement, Industrial gases and Aluminium generate 80% of these emissions. As governments around the world ramp up their efforts to achieve net-zero emissions, businesses are also stepping up to the challenge. In order to reduce their carbon footprint, many companies are taking action to minimize their scope 1 and scope 2 emissions. Scope 1 emissions, which are directly related to a company's production processes, are being tackled through various measures such as investing in cleaner technologies, optimizing manufacturing processes, and transitioning to renewable energy sources. Similarly, companies are also working to reduce their scope 2 emissions, which are associated with logistics and supply chain operations. By streamlining transportation routes, adopting more efficient shipping methods, and utilizing low-carbon fuels, companies are making significant strides towards their sustainability goals. These efforts not only help to protect the planet, but also demonstrate a commitment to responsible business practices that can benefit both the environment and the bottom line. Some proactive companies have started targeting scope 3 emissions that include working with their suppliers to help them become zero carbon.

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Supply Chain Volatility

In today's unpredictable market, the manufacturing industry is facing unprecedented challenges. With shifting consumer behaviors, ongoing COVID-related disruptions, and other factors at play, manufacturers must constantly be prepared to adapt and innovate in order to stay ahead of the game. These disruption have had major impact on Metals & Minerals, Electronics and Industrial gases. For example - High energy prices, economic slowdown, inflation and supply chain issues has affected metals and minerals production across the globe, wherein the share of energy cost has risen almost 4 times from 7% to 27%.

To stay ahead of the curve and to maintain visibility and streamline inventory management, companies are increasingly exploring opportunities to invest in digitalizing their supply chains. By leveraging cutting-edge technologies such as IoT devices, blockchain, and AI-powered analytics, businesses can gain real-time insights into their operations, optimize their logistics networks, and make more informed decisions about inventory management.?Also?diversifying sourcing strategy and looking to source from multiple suppliers to get competitive pricing can help organisation stay the green in uncertain times

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Rising Trade Protectionism

Supply chain volatility is fueling trade protectionism. Temporary protectionist measures can provide much-needed security during times of crisis. However, when these measures become a long-term trend without a clear end point, they can have significant repercussions on global trade and cut off major suppliers from the global supply chain. This has become a growing concern in recent years, with a report by the European research group, the Conference Board, revealing that nearly 80% of CEOs believe that an increasing number of sectors will be considered "national security priorities" over the next five years.

While protecting domestic industries and jobs is important, the adoption of protectionist measures can also have unintended consequences. It can result in higher costs for consumers, create inefficiencies in the supply chain, and reduce competition. As global trade continues to face uncertainties from geopolitical tensions, trade wars, and other factors, it is essential for policymakers to carefully balance protectionism with the benefits of free trade. A more nuanced approach that recognizes the complex interdependencies of the global supply chain and the importance of multilateral cooperation can help to ensure a stable and prosperous global economy.?

Cartelisation in Battery Minerals

As the world continues to embrace greener energy forms, the demand for battery raw materials is poised to skyrocket. The global electric vehicle (EV) market, in particular, is expected to see significant growth, with a projected compound annual growth rate (CAGR) of 22% between 2021 and 2025. As a result, the demand for lithium, a key component of EV batteries, is expected to increase 42-fold by 2040 compared to 2020 levels.

As the demand for battery raw materials continues to rise with the growth of the EV market, some countries rich in these resources are exploring the idea of forming a cartel. In particular, Argentina, Bolivia, and Chile, which represent 58% of the world's identified lithium reserves, are in talks with other lithium producers to create a global lithium cartel. Similarly, Indonesia, which accounts for 38% of global nickel production, is developing a proposal to pitch the idea of a nickel and cobalt cartel to other major producers.

If the proposed battery material cartels come to fruition, they could have significant long-term implications on the global EV market. These cartels could impact production rates, pricing, purchase negotiations, supply consistency, and the overall market structure of battery raw materials. Forming a battery material cartel may be a challenging task as the major producers and holders of reserves for nickel and lithium are a diverse group, both politically and geographically. The prospect of creating a cartel would require consensus among countries with differing economic and political priorities.

We are still early into 2023 and it would be best to mention that these are not the only megatrends that the world might experinece in the coming months and years, but these are some of that we feel will redefine industrial sector as we know

In the next month’s Zoglix COP we will take even closer look at Decarbonisation. Comment and let us know what you would like to know about Decarbonisation.

Zoglix COP is a monthly catchup on latest trends/news/whitepapers.

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