Viessmann and robotics - parallels

Viessmann sells its air-conditioning division and the Minister for Climate and occasionally also the Minister for Economic Affairs, Habeck, presumably a co-originator of the sale, is shocked. This fright also of other politicians is reminiscent of the reaction when KUKA was taken over by Midea. Here we have a first parallel to robotics.

Reason for sale excessive demand?

I always like to refer to the book "Save Capitalism" by Robert Reich. The former U.S. Secretary of Labor under Clinton writes in the book that the large corporations do not make party donations to obtain contracts, but to change the regulations. After all, whoever determines these has a grip on the markets. Habeck has regulated quite naively and thus overnight turned Viessmann's oil and heating division into a restructuring case. Because it is clear that demand for oil and gas heating systems is collapsing. (Added to this is the already weak new construction economy as a result of the interest rate increases). On the other hand, market potential has been created in the form of heat pumps. Of course, tapping this market costs money and opens up market entry opportunities for Asian competitors, who have been building comparable air-conditioning systems in large numbers and with a high degree of automation for decades, that they did not have before. The government has reshuffled the cards.

Ultimately, Viessmann has the same problem as our automotive industry: the gradual phasing out of an old, obsolete technology and, in parallel, the rapid development of a new one. It is obvious that the one who only has to take care of the development of the new technology and does not have to consider old structures has a clear advantage. This was also experienced by the industrial robot manufacturers, whose operating systems were not as pliable as those of the new competitors. Kuka acted accordingly.

Viessmann can't do anything about the effects of the transformation, yet some politicians and even the Handelsblatt are now accusing the company of not having focused on the heat pump in time. I don't think there was ever a really big shortage with it. That's why the statistics seem helpful to me:

As can be seen, there were initially years of moderate growth or even stagnation (until around 2015). Then there was a jump and then moderate growth again (until 2019). Only then did the boom begin. Robotics, especially cobots, had a jump in sales in 2021. It is still considered a technology of the future, but it cannot show a boom at the moment. Well, dear critics you think Viessmann was asleep, should robot manufacturers now build up capacity in the expectation that the market will take off promptly? Large Asian corporations like Yaskawa (apparently expanding its plant in Slovenia) or FANUC can do this. The smaller German startups, however, cannot. So much for the second parallel between robotics and Viessmann.

Viessmann and robotics need partners

Many robotics customers need the support of integrators who integrate the robot into existing processes and program it. This is more or less an established equilibrium. The third parallel is that one's own product can hardly be sold if there are no partners or their capacity is too small. In addition, these partners can recommend another product. They are often stronger than subcontractors. With the heat pumps it was actually always to be read that there would be a lack of craftsmen. The shortage of craftsmen was mentioned as a limitation of the legal objective. Now suddenly there is also talk of Asian competition, but the consequence would be the same: If there is a strong demand, there would be a shortage of craftsmen or integrators, but not of hardware. I.e., the latter could come under price pressure because the installation end is more powerful. The limited pricing power is thus the fourth parallel.

Viessmann was highly rated

Despite the possibly limited positive outlook (Asians - price pressure?, limited partner capacities, power shortage?), Viessmann was valued at twenty times EBITDA. The fifth parallel to Robotics is the high valuation. As a difference to it, however, also that the Viessmann investor comes from the industry. Perhaps he has another reason for paying such a high purchase price. And of course, the sellers may have had other reasons for selling than the officially stated reasons.

Are we networking? LinkedIn
-> Go to the Cobot group on LinkedIn (link). The author is also a consultant (robotics, tech & finance). Hardly anyone is likely to have a comparable market overview.