Jun 27, 2021

Billionaire Kumar Birla Champions Regional Supply Chains

AdityaBirlaGroup
Alibaba
globalisation
Regionalisation
Elise Leise
3 min
As multinationals try to recover from the pandemic, Kumar Birla has a solution—narrow your scope and invest in reliable, regional suppliers

As the head of the Aditya Birla Group, a US$46bn firm that operates in 36 countries, Kumar Mangalam Birla is no stranger to splashy strategic moves. Yet his recent announcement that he no longer wants to acquire globally distributed supply chains stood out. While many companies have struggled to cope with shipping backlogs, his firm has chosen to pivot and focus on regional networks. Said Birla: ‘We wouldn’t look at a company or a business where you source in one corner of the world and sell in another’. 

 

He cited protectionism, the pandemic, and the limited movement of products and people around the world as ABG’s primary causes of lost profits. And they aren’t alone. Over the past year, 900 of the U.S. and Europe’s biggest IT, defence, and financial services firms have lost an average of US$184mn apiece

An Era of Global Disruption

Over the past few decades, low shipping rates and rapid delivery times have lulled multinational firms into a false sense of security. In the early 2000s, companies chose to take on significant global supply chain risks in exchange for increased profits. First, it made sense to manufacture higher-value goods, such as electronics, in low-cost regions throughout Southeast Asia, India, and Africa. Second, first-tier suppliers started to outsource the manufacturing of specific components to second-, third-, and even fourth-tiers—leaving supply chains with extremely limited visibility. 

 

So when COVID-19 disruptions struck certain regions, companies were caught unprepared. Usually, these events come few and far between. But over the past ten years, we’ve seen a number of ‘black swan’ events that have thrown the supply chain industry into chaos. Here’s a quick history of the most significant events in recent years, thanks to the MIT Sloan Management Review

 

  • 2010. China creates export quotas for rare earth elements. 
  • 2011. The Tōhoku Earthquake hits East Japan; flooding sweeps throughout Thailand. 
  • 2016-present. Trade wars between the U.S. and China hurt suppliers. 
  • 2020-present. COVID-19 pandemic shuts down international shipping ports.

 

Now, Kumar Birla is one of many who want to re-evaluate how we run our supply chains. Though his company has acquired 40+ companies in the last quarter decade, Birla intends to build up local hubs rather than expand operations. 

 

Why Pursue Regionalisation? 

Combine Chinese economic dominance, global supply chain vulnerabilities, and major government policy shifts around the world, and you have a storm brewing on the horizon for big multinational firms. As Brookings noted, ‘the biggest risk for trading opportunities in the developing world is growing protectionism in more advanced economies, often dressed up as national security protection’. 

 

Altogether, from the U.S. to the European Union, governments are trying to protect their domestic supply chains, secure adequate stockpiles of materials, and build world-class local networks. Consider Biden’s recent executive order, which seeks to bring semiconductor manufacturing back to home soil, or Japan’s bid to open more memory chip fabrication factories near Tokyo. The Aditya Birla Group intends to react in kind. Said Birla: ‘We’re looking at regionalism as a very big theme’. 

Will Others Follow Suit? 

In the post-pandemic economy, global businesses must decide whether to expand or contract. On one hand, the Alibaba Group’s Cainiao Smart Logistics Network recently launched a direct flight between Hong Kong, China, and Lagos, Nigeria. On the other, the Japanese government is desperate to make its chip manufacturing domestic. Indeed, as two supply chain strategies diverge in a post-pandemic world, the one businesses take may make all the difference. 

 

Yet Birla is confident that regionalisation is the right call. According to his words at the Qatar Economic Forum, even necessary cross-border transactions should be smaller in scope. And as the Bloomberg Billionaires Index now lists his net wealth at US$10.4bn, up 52% from 2020, he may have the cash to test his theories out. ‘Regional hubs, regional presence, regional employment, catering to regional demand’, he stated. ‘We’re a global company rooted in local economics’. 

 

Share article

Aug 2, 2021

Liberty Global Transaction Solutions announces new EMEA team

LibertyGTS
EMEA
Business
Leadership
2 min
Part of Liberty Mutual Insurance, Liberty Global Transaction Solutions Group has announced new members of its EMEA team

Liberty Global Transaction Solutions Group has announced several new members of staff to its EMEA team, which covers Europe, the Middle East, and Africa. Part of Liberty Mutual Insurance, the company has appointed Daniel Muller to the role of Co-Head of Germany, Austria, and Switzerland (DACH). Muller has held several senior positions since joining Liberty Mutual Insurance five years ago.

Liberty Global Transaction Group’s EMEA team members 

Joining him also a Co-Head for the DACH region is Sebastian Schmitt, who worked for the company as an M&A Underwriter. He has been a part of the company for the past three years. Talking about the changes to the team, Liberty GTS President, Rowan Bamford, said: “Our EMEA business has continued to outperform significantly throughout 2021. The new structure will help us to continue this momentum and grow further.”

Other appointments include Louise Nordkvist who will take up the role of Head of Nordics. She has also been with the company for the last 3 years, beginning her career as an M&A underwriter based in London.

The new members will report to Markus Messinger, Head of EMEA at Liberty Global transaction Solutions. “Markus will have overall responsibility for the EMEA business and will work directly with me on the strategy to build out our footprint across the region, while his new team will take responsibility for the region in their respective titles,” said Bamford. 

Filling the role of Head of Southern Europe will be Nick Lunn, former Executive Director, M&A, Transactional Risks, Finex Global at Willis Tower Watson. Lunn had worked in the role for just less than three years.

Henry Pearson is another addition to the team, joining as the new Co-Head of London and Emerging Markets. His previous role was as a Senior Underwriter which he started when he joined the company in 2018.

The final addition is Adam Smith who will also assume the role of Co-Head of London and Emerging Markets. As part of the position, he will responsible for underwriting transactions in Ireland, the UK, Central and Eastern Europe, the Baltics, the Middle East, and Africa. 

 

Share article