The ISM manufacturing Purchasing Managers’ Index (PMI) fell to 48.7 in May from 49.2 in April, below the 49.5 expected for the month. Additionally, the ISM reported that new orders fell to 45.4 and prices paid also fell to 57.0. What does the weaker manufacturing data mean for energy companies and the growth of EV charging infrastructure?
ABB (ABBNY, ABBN.SW) Chairman Peter Voser said the company isn’t seeing a slowdown in electrification and automation in general, but is noticing a slowdown in U.S. subsidies and grants tied to building out electric vehicle charging infrastructure.
“This has to be a private-sector led effort. We’re the world leader in the chargers themselves, but we’re not building the infrastructure for them,” Voser told Catalyst’s Madison Mills in studio, “But this definitely needs more private funding and investment, because I think the demand is there in the electric vehicle space.”
Voser, the former CEO of Shell (SHEL), has spoken out about President Biden’s tariffs on Chinese imports, particularly EVs.
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This post Luke Carberry Morgan.
Video Transcript
now.
Manufacturing data released this week showed weakness in May.
This marks the second consecutive month of slowdown in manufacturing growth.
Learn how CEOs and executives in the sector are thriving in the automation and electrification of manufacturing.
There’s Peter Boser.
He is the current chairman and former CEO of Shell and will be appearing in the studio.
Peter, thank you so much for being here.
Thank you very much.
Thank you for inviting me.
So I want to start with the data we’re seeing about potential weakness in manufacturing.
To what extent are you aware of that in your role at BB?
What does that look like for companies focused on electrification and automation?
No such slowdown was observed.
Short-cycle orders are actually rising, which is usually a good sign that the economy, which has been declining for the past few quarters, is doing much better than expected.
So far, I think we’re still in a better situation than expected.
But uncertainty will remain in the second half.
This is interesting given that the first half of the year data was a bit worse in that respect.
So we’ll just have to wait and see in the second half.
But I want to know while you’re here what you’re seeing in the EV space.
I know a large part of your revenue comes from building new energy systems, but you said that when it comes to EVs, you need to modernize the entire electrification network.
Where do you expect this update to come from?
Do you expect the private sector to step in to develop infrastructure?
Do you think the public sector will be corporate-led?
I think it has to be primarily private, and it has to start with the utility companies that actually provide us with electricity.
This means that the network needs to be developed further.
If you are in the US, the US infrastructure and some of the laws are certainly helpful, but even more so when it comes to charging infrastructure.
In my opinion, it has to be a private sector driven initiative.
We are a world leader when it comes to the Charter itself, but we haven’t built the infrastructure for it.
But this clearly requires more private funding.
I think there is demand on the electric vehicle side, so more investment is needed.
We are seeing a slight slowdown at the moment as subsidies are disappearing from the market.
However, in the long term, I believe there will be a shift to a new energy system known as electrification.
So we urgently need infrastructure investment, and that should come from utilities and other new entrants into the space.
We heard that Mercedes will temporarily suspend operations at its battery factory due to weak demand, how will this impact your business?
Obviously, that might mean lower bills for us.
But given the backlog, we don’t expect this to have a huge practical impact, because we believe that infrastructure should typically precede use of the technology in the car itself.
In recent years, the opposite has happened.
A lot of cars were coming and we saw American electronics becoming popular in Europe.
It’s an ion.
Right now it is the government and the private sector that are building the infrastructure and that is why I think this will happen.
I think at this stage in the industry, we’re selling a lot of fees.
However, there is a trend towards slowing.
There is no doubt about that.
But in the long term, I totally agree.
It’s very positive.
I want to talk about China.
Corporate executives like Elon Musk are now visiting China and voicing their support for not imposing tariffs on Chinese-made EVs in light of the potential tit-for-tat tariffs and resulting escalation of tensions between the US and China.
How does that affect you and where do you think you fit in?
Are you talking about tariff discussions?
When it comes to money in China, I think there are two answers.
Now I have to tell you that there was no global supply chain.
So the percentage of what we produce that we sell in a country, be it the US or China, is about 85%.
In Europe it’s around 95%.
This is where we produce and sell our products.
So tariffs are now less important for the U.S. For example, there was a situation in 2016-20 when tariffs on steel were actually rising.
And if you can prove that, say, you can’t produce steel in the United States, you usually get a favorable response from Washington that the tariffs won’t be that high because it’s ultimately the American consumer who pays.
So, we will see how this plays out in the form of imposing tariffs on imports from other countries for products that cannot be produced domestically.
I think we need to find other solutions than just actually raising tariffs, because ultimately, as a government that really operates globally, it’s the American consumer that’s going to pay the price.
But I’m curious what it’s like to walk the tightrope between the US and China.
How do you navigate a conversation in such a tense situation?
As a company we believe we have an obligation to consider these risks, which is why we have a Plan B and a Plan C in China.
If something happens in Taiwan or something happens in the technology war, we will use different technologies from China for our local business.
That means we don’t use Western technology and we have to adapt our systems to be able to actually produce and sell.
We look at this from a macro perspective and then we break it down into a micro perspective so that we can actually manage the country.
On the one hand, that is certainly a concern.
But on the other hand, we’re also paid to deal with obstacles in the road, and that’s what we do in terms of planning, risk management, and so on.
I like the “it’s hard, but that’s what we get paid to do it” sentiment.
Finally, as a director of IB MA, I would like to hear your opinion.
It was really about navigating the transition to the AI ​​boom and, for example, launching a fund for startups. What was the atmosphere like in your meetings with the board?
What decisions were you involved in?
This paved the way for a successful transition and adoption of I at IBM. I’m not an official spokesperson, but I can give you an answer.
I think we’ve been winning under the management and leadership over the last few years.
Obviously, IBM was positioned in a very different way, starting with its big acquisition of Red Hat, which was the basis of the strategy that we use with similar spinoffs as well.
Indeed, the board discussions have been focused on emerging technologies and I have been leading those discussions over the past few months.
In 23 years, I expect Quantum to dominate the boardroom.
I think IBM is a B2B business.
This is not a B to C business, so I think there is a tremendous opportunity in the industry with I. I think IBM is well positioned to really come in and grab a fair market share in this space.
And I don’t think that’s reflected yet in all the articles I see about IBM.
B2B business will come next after B2C business, so the quantum discussion has already started.
Of course, that’s a long-term strategic focus for IBM, so I think it’s something we’re all looking forward to, Peter.
Now, to discuss the future of Quantum, we need you to join us.
After this, the AI ​​boom will come to an end.
We are delighted that you have joined.
Thank you for coming to our studio.
Thank you very much.
Thank you for calling.
It was Peter Boa.
He is Chairman of BB and former CEO of Shell.
