Munich Re dissolves joint venture with Porsche
Munich Re and Porsche wanted to expand the business with factories for rent with Flexfactory. That didn `t work. The shareholders wound up the company.
The insurer Munich Re has dissolved the Flexfactory, a joint venture with the car manufacturer Porsche and the Porsche subsidiary MHP. Porsche and Munich Re confirmed this to WirtschaftsWoche. A spokesman for Munich Re said: "All operational activities have been discontinued."
Flexfactory developed service models for companies that no longer own production facilities but only want to rent them. With this Production as a Service (PaaS) approach, companies can save the high investment costs for their own systems.
PaaS is something like the Netflix of classic industry: "Imagine subscribing to a factory," says a paper from the Boston Consulting Group (BCG), the Otto Beisheim School of Management and Flexfactory last year.
Instead of owning facilities as an industrial company, it pays a fee for use. The factories can be flexibly aligned to the needs of different tenants. They share the factory. The money to build the factory, in turn, comes from third parties who build the facility and ultimately earn a return on the rental income.
That's the idea. However, PaaS has not yet had the big breakthrough in Germany .
The business model has three difficulties: You have to find a company that will build such a flexible production facility that you can adapt to the different needs of the tenants. You have to find external investors who will finance you for the long term and who are not looking for a quick buck. And you have to find tenants who then actually agree on rules for shared use.
Against the background of antitrust concerns and the protection of intellectual property, the model is delicate. Outsiders may get insights into their own production methods that would otherwise not be possible.
According to Arnd Huchzermeier, Professor of Production Management at the Otto Beisheim School of Management, the potential of PaaS is still great. In the BCG survey, 85 percent of participants said they could imagine sharing a new factory to be built with other companies. 62 percent would share existing systems. "Especially among machine builders who can provide production systems for the automotive industry, the topic is very hotly debated," says Huchzermeier. "I consider double-digit returns with the investments to be quite realistic."
The failed Flexfactory project does little to change that. Huchzermeier followed it closely. Torsten Jeworrek, who has been on the board of Munich Re for many years, initiated the joint venture. In 2020, the reinsurer and the car company announced the merger. From the point of view of Thomas Blunck, Jeworrek's successor in the reinsurance business, Flexfactory apparently no longer fits into the group's strategy.
The shareholders did not comment on the reasons for the end. Nor are the two Flexfactory managing directors, who are formally still in office.
Munich Re's decision is not a complete departure from initiatives that rely on the service business with shared resources. A spokesman said that the group "continues to invest in the Internet of Things (IoT) business area and the expansion of the IoT ecosystem" through its subsidiaries HSB and Relayr. Relayr offers a per machine based service. This model is called Equipment as a Service. Together with the machine builder Trumpf, Munich Re offers laser cutting machines for rent. Customers pay a previously agreed price for each sheet metal part cut.