Opportunities in the Portuguese industrial and manufacturing sectors

These global events have in fact accelerated an underlying trend on global trade that preceded them and that consisted of more integrated, closer regional supply chains.

Since the onset of Covid-19, and aggravated by the Russian war on Ukraine and the attacks on the Suez route, the world supply chains have suffered severe shocks and have been undergoing a restructuring to reduce their vulnerability and increase their resilience to global events.

These global events have in fact accelerated an underlying trend on global trade that preceded them and that consisted of more integrated, closer regional supply chains. The drivers of this structural underlying trend are multiple:

  1. Decreasing labor cost arbitrage between the East and the West, resulting both from increasing labor costs in the Far East and automation reducing labor cost incorporation in the West.
  2. Increased digital integration of supply chains reducing the need for working capital buffers and reducing cost of relationships, while increasing speed to market
  3. Increased volatility in demand requires fast and accurate supply chains, only possible with highly integrated regional supply chains

Overall, we are observing a strong re-shoring trend in most industrial and manufacturing sectors, with increasing demand within Europe (and to some extent in the US).
Portuguese industrial sectors are showing strong export growth following these structural trends for re-shoring, demonstrating that Portugal’s industrial and manufacturing sectors are in prime position to benefit from structural shifts towards re-shoring and integrated European supply chains.

Substantiating the opportunity, Portugal presents multiple highly exporting but also highly fragmented sectors, whose competitive ability would strongly benefit from increased scale and renewed management team and practices.

A huge opportunity exists to invest in the consolidation of Portuguese industrial and manufacturing businesses and to maximize value creation from consolidation synergies, supply chain shifts and optimization, automation and operational efficiency. Alea Capital Partners is in a privileged position to lead the investment in the consolidation of Portuguese industrial sectors and extract the value presented from the structural trends and the specific Portuguese context.