Shih Urges Titanium Industry to Consider Value of Needed ‘Resiliency Investments’

By Michael C. Gabriele

While there are mounting concerns over the “brittle” global industrial supply chain, compounded by disruptions caused by the Covid-19 pandemic and Russia’s invasion of Ukraine, the time has come for American manufacturers to consider investing in resiliency.

Willy C. Shih, the Robert & Jane Cizik Professor of Management Practice at Harvard Business School in Boston, interviewed in May, said it’s time for companies in the U.S. titanium industry and others to begin thinking 10 years ahead to change their investment strategies with an eye on long-term resiliency.

Shih, who spent 28 years working in industrial product development and manufacturing, aired his views in a March 6 online article for Forbes magazine (“The Titanium Chain for the Aerospace Industry Goes Through Russia”). “While Russia is mostly an exporter of resources like oil, gas and metals, one market where it’s a dominant player is for titanium and titanium forgings,” he wrote. “Many people are waking up to the potential consequences of a longer-term stoppage in the flow of these critical materials. We long ago pointed out the loss of forging capacity in the United States for large metal parts as a critical deficiency,” referring to his 2012 book Producing Prosperity – Why America Needs a Manufacturing Renaissance.

In the Forbes article, Shih expressed his concerns for the U.S. titanium industry, and recalled the shuttering of two major domestic titanium sponge production plants in 2016 and 2020. “These operations faced cost pressures from foreign competition, as well as suffered through the aerospace manufacturing downturn that came with the pandemic. The terrible situation in Ukraine and Russia will put a lot of pressure on titanium supply chains, and Boeing warned about this in January. With all the grim news coming from that part of the world, this vulnerability hasn’t received widespread attention outside of the industry—yet.”

Declaring that he “loves titanium” and its superior properties for strength and corrosion resistance, Shih acknowledged that many business leaders realize the critical questions regarding strains in an over-extended global supply chain. “The question is: what do we do?” He answered the question by underlining his thoughts on strategic moves needed to invest in resiliency. This could involve establishing cooperative manufacturing consortia, which are narrowly focused to capitalize on process technology innovations (like additive manufacturing).

“Boosting productivity is tied to the core capabilities embodied in people when it comes to manufacturing technology.” He suggested that the titanium industry should continue to focus on the scale-up of additive manufacturing spherical powders to compete for applications currently occupied by stainless steel and aluminum as one path to boost productivity.

Shih readily acknowledged that, when it comes to a dialogue on investing in resiliency, the sticking points are: who will pay for it, and how might it upend current best business practices? Investments in resiliency might mean keeping idle production capacity at the ready in order to guard against potential supply chain problems. “But Wall Street penalizes companies for idle capacity,” Shih said. Other established business philosophies, such as maintaining low inventory levels and just-in-time delivery from vendors, would also need to be reconsidered.

The lessons from the turmoil caused by the global pandemic and the war in Eastern Europe are that “unpriced risks” and supply chain disruptions are no longer a vague concern in the distant future; rather, they’re highly likely, near-term threats that are becoming part of the annual business cycle. Weighing the benefits of “reshoring” some suppliers is a complex endeavor and would involve finding ways to spur demand from domestic vendors compared with lower-cost offshore companies. Global competition is stiff in North America, Asia and Europe for manufacturing sectors such as aerospace and automotive. Given this environment, Shih urged business leaders in the titanium industry to identify their respective vulnerabilities and address the issues the long-range “value of resiliency” in the years ahead.