BIG INTERVIEW
IT’S TIME FOR THE GOVERNMENT TO ACT is building a new semiconductor factory in Germany. The Group is one of the biggest suppliers of electronic components to the automotive industry, and it simply can’t suffer this type of disruption again.
The current economic climate is one of the most challenging times of my career, says Carl Arntzen, CEO of Worcester Bosch.
“The new site will take a couple of years to come online so Worcester Bosch won’t start getting supplies until the end of 2023, but it is a long-term investment.
It’s been a year since Business Direction last spoke to Carl. At the time his focus was on innovation and sustainability, as the company looked ahead to a new post-pandemic era of business. Today however, the company – like many others - faces a double whammy of uncertainty caused by the lingering effects of lockdown and the cost-of-living crisis. At the time of writing, the new Prime Minister had yet to be announced. Carl echoes the sentiment of every business in the country when he says it’s time for the new government to provide desperately needed positive leadership in these unprecedented times. “Yes, business is a real challenge at the moment,” Carl concedes. “Like every other company we’ve suffered a huge impact from ongoing supply constraints, shortages of raw materials, and price increases. “Our issues are mainly linked to supply, but the semiconductor electronics shortage is the origin of our problems if we drill down to the root cause. “Bosch is big enough and ugly enough to compete on the global supply chain market; however, the problem doesn’t actually lie with our built-in electronics
systems. Our sub-suppliers are struggling to get parts to make sub-components, so we are doing a lot of spot buying on the open market to help them complete the part on our behalf!” Carl adds, “Our sales volumes will be severely affected this year because of these supply issues, and profitability will take a hit from increased running costs. Worcester Bosch will still make a profit, but dramatically reduced from our traditional standpoint. “We are very lucky to be part of the global Bosch Group, which is self-financing overall, but our financial performance needs to recover to continue investing and innovating in the future.”
IS GLOBALISATION WORKING? Globalisation and Just In Time have been industry buzzwords for many years, but their methodologies aren’t faring well in such exceptional headwinds. Does Carl see a shift in strategy? “Well, I can confirm that as a direct consequence of our supply issues, Bosch
“The current climate presents a real challenge to traditional thinking around global supply chains, not only in electronics but in many other areas too. At the moment, Just In Time simply isn’t working and in fact, we are carrying inventory – a dirty word in our business!” he says wryly. Like every other business leader, Carl had hoped the economic turmoil would have settled by now, but extraordinary demand is still rocking the boat. “It looks like these issues will run over into 2023, so we continue to plan ahead. Demand has started to drop off a little bit, which will help our supply chain recover. But that in turn will present other challenges for us as a business.”
MAINTAINING GREEN MOMENTUM The political vacuum at the centre of UK government also presents a massive headache for businesses, not least Worcester Bosch. Carl explains, “Clarity is needed around the government’s 10-point plan for its green industrial revolution. We’ve very conscious that some of our current technologies look set to be banned by the end of this decade or early in the next one.
Our research teams have been really encouraged by our hybrid field trial results, where a small heat pump is added to a gas or oil boiler system. The heat pump covers basic space heating requirements, and the boiler kicks in if temperatures fall below zero, or for a quick heat or hot water boost. It leads to a dramatic drop in carbon emissions, plus consumers get used to not relying solely upon gas or oil for their heating. 026
September/October 2022