Industry advancing economics

According to the latest EPTDA studies conducted with our partners at ITR Economics, annual industrial production in Europe is expanding mildly, up 1.0% from last year. Despite this shift into year-over year expansion, expect growth to remain modest and annual Production to grow only moderately through 2015. Trends in Eastern and Western Europe have deviated. Annual Eastern Europe Industrial Production is accelerating, gaining 4.0% from last year. Annual Production will expand 4.3% in 2014 compared to 2013. Western Europe Industrial Production, on the other hand, is contracting on a year-over-year basis and will not experience any sizable annual growth through at least 2015. Industrial Producer Prices in the EU28 rose by 0.1% in June (monthly basis) largely due to rising energy prices, up 0.3% over the same period. 

Eastern Europe (and also Turkey) has become a sought market for industrial production, many Western European companies choosing to move their production here (even in the detriment of Asian off-shoring). Having a better quality vs. rapport than in Western Europe (lower fixed costs, lower employee salaries and lower employee benefits) and having the advantage of being closer by to Western European customers than Asian countries, countries in Eastern Europe and also Turkey are experiencing considerable growth in their industrial production. This means not only that there is scope for finding new partners and manufacturers there but these regions have also become a new hot spot for finding industrial customers.

For this reason, EPTDA has taken the lead and started exploring these emerging markets, not only in Turkey and Eastern Europe but also in the Middle East and Africa, unlocking new potential for its members there.

Economic outlook for end user markets

Power transmission products are indispensable for markets such as automotive, oil & gas, industrial machinery production thus the performance of these end-user markets heavily influences the economic performance of the PT/MC industry. EPTDA is thus following growth in these markets thoroughly. 

To give you just a couple of insights, our studies show that while growth in annual Europe Food & Beverage Machinery Production is accelerating, there are indications that slower growth in this sector is imminent. On the other hand, Annual Europe Automotive Production is at its highest level in nearly six years and rising. However, internal trends indicate that the pace of growth will slow imminently into the middle of next year as the overall economy in Europe will weaken. As for many other end user markets, the Automotive production industry sees a much more accelerated growth in Eastern Europe than in Western Europe, with many Automotive companies shifting production from the later to countries such as Poland, Czech Republic, and Romania.

White paper on end user trends

Talking about end user markets, the EPTDA distributor members, responsible since 1998 for promoting and developing best industrial practices and continuing education, shared their market experience and identified major trends in the end-user industries in a White Paper on End User Trends published earlier this summer. Some of these trends are highlighted in this article.

In Europe, re-shoring by the OEM (Original Equipment Manufacturer) industry is a frequent practice; as a consequence, this industry has the ability to provide end users with innovative and secure machinery solutions. Mechanical solutions are increasingly linked to motion, actuators, drives and controls. The teams who try to find solutions for end user factories are joint teams of mechanical and electrical engineers who are responsible to steer the factory’s robot generated output.

Trust in the distributor is a rising trend, as it shows in Italy, where industrial customers reward the added-value provided by distributors. PT manufacturers who try to deliver directly to end-user are often dismissed because of the lack of timely tailored delivery; limited service level and lack of liability.

Customers in general want to reduce their delivery risk as much as possible. Therefore, the approval duration is increasing for new products so time allocation needs to be slightly modified. In addition, new purchasers are younger and more open to change and exploiting new product solutions so in  order to keep up with this new trend, manufacturers and distributors need to be flexible and constantly  create and prepare new solutions. Customers are liable for their output and welcome EPTDA distributors as qualified advising distributors in the business chain. The most important buying factor remains On-time delivery! Both manufacturers and distributors need to make sure that the product gets to the end customer in time.

Should you be interested in reading the complete report on end user trends you can find it on the EPTDA website, www.eptda.org

EU competition law compliance

As part of its business intelligence tools provided to its members ETPDA is closely following EU legislation and highlights to its members EU policies and regulations that are of great relevance to them. EU Competition law is one of them. EU Competition law covers illegal practices (such as cartels and monopolies) that prevent fair competition in a certain industry or sector.

EU competition law is a very important legal aspect for companies in the power transmission and motion control industry and industrial production as a whole, taking into account that cartels are usually born at different levels of the supply chain, out of distribution agreements between suppliers and re-sellers. For this reason, all players in the industry need to be aware of the dangers of not complying with EU law and of how to have a pro-active approach and create a supportive strategy of compliance with the law.

An active and supportive strategy of compliance with the law and business ethics can certainly enhance a company’s reputation and attractiveness for promotional and recruitment purposes, in much the same way as an explicit environmental or family-friendly agenda would do. An effective strategy enables a company to minimize the risk of involvement in competition law infringements, and the costs resulting from anti-competitive behaviour.

The fines which the European Commission imposes on companies that infringe EU competition rules can be very substantial, even as high as 10 % of a company’s annual worldwide turnover. It should be noted that fines may be imposed even where the illegal purpose of an infringement was not actually achieved.