Quick Hits on Transformation at Bosch
Some quick hits on Bosch’s strategy re: hydrogen & EV manufacturing, workforce issues, Generative AI, and digital tech incubation…
My colleague Jason Siegelin has been doing some amazing research on the various transformation initiatives at global industrial companies. We leverage this insight to help drive growth for our portfolio of industrial tech start-ups. I’ll be sharing these notes for different companies on an ongoing basis.
Tl;dr bullets right here, read more below if you can handle more than 140 characters at a time:
Bosch’s Hydrogen- and EV-Focused Manufacturing Strategy in the United States
Bosch’s American manufacturing infrastructure is primarily dedicated to the production of automotive components, including motors, brake components, engine parts, and electrical control systems. Since 2020, the company has aggressively expanded its automotive-focused production capacity in the United States, seeking to gain market share in the comparatively nascent hydrogen-fuel-cell market and the electric-vehicle components space.
In 2022, for instance, Bosch invested a total of $200 million to expand operations at its Anderson plant, and another $260 million to expand capacity at its Charleston plant. The investments will be used to enable the production of hydrogen fuel cell stacks in Anderson and the production of electric motors in Charleston. Such a move signals the company’s intention to supply nearby automotive-manufacturing facilities operated by BMW, Volvo, and Mercedes-Benz with alternative-fuel and electric-vehicle components. BMW’s sole American manufacturing facility is operated in nearby Greer, South Carolina, while Volvo operates a new production site in Ridgeville and Mercedes-Benz launched production at a new van-manufacturing facility in Ladson in 2023. These strategic South Carolina-focused investment decisions additionally coincide with the public emergence of Toyota North America’s intentions to build an electric-vehicle battery-manufacturing plant in nearby Liberty, North Carolina.
Bosch’s investments in expanding the capacities and production focuses of its facilities in Anderson and Charleston are some of the first manifestations of the company’s strategic plan to provide products supporting the “hydrogen economy and electromobility.” Between 2022 and 2030, Bosch plans to invest up to approximately $540 million in developing, manufacturing, and selling hydrogen fuel cell stacks, primarily for use in the automotive and power-generation industries. The company is additionally increasingly designing its powertrain solutions to accommodate hydrogen-fueled engines, along with actively developing hydrogen injectors.
Bosch’s Shifting Production Focus in South Carolina: A Worker-Competency Dilemma
Fuel cell stack production at Bosch’s Anderson facility is expected to commence in 2026. Bosch chose the plant as a new center for its production of fuel cell stacks in part due to the existing competencies of the plant’s senior employee base. The plant has long fostered the production of sensors and electronic control units for use in powertrains. The process of manufacturing such products is allegedly similar to that involved in the development of fuel cell stacks, improving the likelihood that Anderson’s labor force will more easily transition to this new, similar method of production.
Yet this perceived ease of refocusing the production efforts of the company’s Anderson facility has not completely rid Bosch’s leadership of concern regarding its Anderson employees’ ability to produce fuel cell stacks. According to Bosch, one of its hydrogen fuel cell stacks consists of approximately 3,200 individual parts, with more than 340 layers and over 100 unique components. Even for seasoned labor adept at assembling similar technologies, such a vast quantity of parts poses the risk of inadequate assembly, worker incompetency, and the inability of workers to adequately troubleshoot problems unfolding on the shop floor. This latter risk is especially imminent given the presence of new and unfamiliar production machinery deployed.
Furthermore, Bosch must recruit additional personnel to staff its new fuel cell stack-production lines in Anderson, personnel which lack the “existing competencies” which made Anderson such a prime candidate for this new production type in the first place.
Bosch has consequently demonstrated growing concerns about its ability to properly upskill and reskill its existing and newly hired labor force in Anderson. One such manifestation of this concern is Bosch’s creation of the Bosch Technical Scholars Program , an apprenticeship opportunity offered at Tri-County Technical College in nearby Pendleton, South Carolina. Apprentices enrolled in the program are paired with Bosch employees engaged in production work in the Anderson facility. At the end of the program, apprentices are automatically placed into a production technician role at the plant, an ease of employment access which signals Bosch’s comparatively inelastic and ongoing demand for skilled labor in Anderson.
Similar concerns have motivated the deployment of upskilling and reskilling programs for employees at Bosch’s Charleston plant. The facility commenced production of electric motors in 2022 after being targeted for the aforementioned investment of $260 million.
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Other, non-American sites already engaged in the manufacture of these more-novel technologies include Bosch’s Stuttgart-Feuerbach facility in Germany (producing hydrogen fuel cell power modules) and the company’s Chongqing facility in China.
A Demonstrated Need: Generative AI for Worker-Assistance and Knowledge Management
The (1) growing complexity of Bosch’s electrified and hydrogen-focused products and (2) the growing complexity of the machines used to manufacture and assemble them demonstrate Bosch’s need for an LLM-based “assistant” technology for maintenance management, new-trainee success, and operational efficiency. Such a need is demonstrated by more Bosch sites than the company’s facilities in South Carolina: product innovation and the subsequently dynamic nature of knowledge and competencies required of workers is a constant across all Bosch facilities.
Responding to this need, in November 2023, Bosch Ventures, Bosch’s corporate venture capital unit, co-led a Series B investment in Aleph Alpha , a German generative AI startup. Bosch and nine other corporate and institutional investors, including Hewlett Packard Pathfinder, Nvidia Venture Capital, and SAP, invested a total of $500 million in Aleph Alpha for its Series B funding round.
Bosch Ventures is to-date an active investor in Aleph Alpha, holding a 6% stake. Aleph Alpha develops generative AI-based, NLP-oriented applications for use in industrial, financial, and public-sector applications. Based in Heidelberg, the company initially came to prominence in the Baden-Württemberg technology scene, refining its value proposition in a regional, research-intensive AI startup ecosystem in the Stüttgart-Tübingen area known as Cyber Valley .
Bosch actively plans to integrate Aleph Alpha’s technology into its internal sales, finance, and production operations in Europe and beyond. Bosch’s generative AI strategy as of mid-January 2024 specifically entails the use of Aleph Alpha for the creation of internal LLMs, for a variety of use cases, which ingest proprietary, domain-specific information and data. More broadly, manufacturing managers and quality engineers in the company’s German manufacturing operations have used several preliminary models developed with generative AI to train computer vision-based systems to autonomously detect product defects on production lines.
On January 24th, 2024, Bosch additionally completed its deployment of Oracle Digital Assistant (“ODA”), a generative AI-based chatbot assistant, for use in various digital customer service applications. The company intends to deploy similar chatbot- and LLM-based applications at its manufacturing and R&D facilities, applications with which it can expedite workers’ retrieval of process-specific knowledge. Bosch’s use of Oracle for various other ERP and analytics infrastructure creates a strong relationship-specific incentive for Bosch to expand its use of ODA and similar, future Oracle LLM technologies in its manufacturing operations.
To successfully sell generative AI-based solutions into Bosch’s industrial operations, Bosch’s tight relations with both its German peer Aleph Alpha and its long-time partner Oracle must be circumvented with a superior, more tailored value proposition. One strategy to do so is to emphasize the industrial focus of such a solution, given the lack of industry-specificity of Aleph Alpha and the pseudo-retail focus of ODA.
Bosch’s Grow Platform: Incubating New Business Models for Internal Use
In addition to the receipt of investment from Bosch Ventures, an additional pathway through which new technologies can be deployed in Bosch’s manufacturing operations is the company’s Grow Platform . The Grow Platform is a corporate incubator which fosters the financial and product-oriented expansion of startups selling digital, AI-informed technologies into industrial operations.
The initiative incorporates successful products incubated within it into Bosch’s digital product line, products which to date include the company’s Digital Twin IAPM product and Bosch Spatial Data, the latter of which is a spatial modeling and three-dimensional simulation platform for the monitoring of buildings and industrial operations. Products incubated within the Grow Platform may also be leveraged internally at Bosch’s production sites.
Corporate Information
Headquartered in the German municipality of Gerlingen, west of Stüttgart, Bosch earned a revenue of $95.24 billion in 2022, employing over 420,000 individuals worldwide.