Economic trends & recommendations for the industrial sector in 2016

For the purpose of this article, EPTDA is sharing some of its findings and suggestions to the wider PT/MC industry in the hopes that this relevant information will be of help to the advancement of the industry as a whole.

European Industrial Production in 2016

According to the latest EPTDA studies conducted with our partners at ITR Economics (end of 2015 report), one should plan for Europe Industrial Production’s growth rate to remain below two percent until the end of 2016. This expectation is supported by the Europe Leading Indicator, which has been relatively stagnant for the September 2014-September 2015 period. Given an 11 month typical lead time, the Europe Leading Indicator is signalling that a sustained rise in Europe Industrial Production will not occur before the second half of 2016. Furthermore, slower growth in the United States and weakness in the Asia Pacific region will also weigh on export demand in the coming months.

Expect the euro to gain back some lost ground in 2016 as the macro economy improves. This will help lower commodity prices that are not denominated in euros, but will hurt export competitiveness. EPTDA members will find weakened economic conditions, especially in areas with heavier ties to commodity prices or producers. Consumer-facing segments and Eastern Europe are generally offering greater opportunities. 

Eastern Europe will generally outperform Western Europe throughout 2016. Growth in Germany and the UK will be stronger in 2016 than in 2015; but the Western region overall will see slower growth due to slower growth in Italy, Spain and contraction in France.

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 therefore following growth in these markets thoroughly.

To give you just a couple of insights, our studies show that the Europe Food and Beverage Machinery Manufacturing will see a recovery in production in early 2016, with growth foreseen through the end of 2016. Also, for the automotive industry in Europe, accelerating growth in the annual trend will persist through the end of 2016. Industrial Machinery Production will contract into early 2016, before subsequently rising through 2016.

Message from EPTDA President for the PT/MC industry in 2016

Curt Carlsson, Nomo Kullager AB, Sweden 

PWC recently published an invaluable study on the industrial trends stating that our sector will continue to prosper in 2016 and beyond, but precisely how much will depend on the efficacy and boldness of company’s investments in three key areas: digitization, expansion and people. These three areas are on top of every management’s strategic priorities in any industrial sector today.  As far as EPTDA is concerned, it is helping its members drive this agenda on an EMEA-wide scale.

Digitization

Digital tools have become the key differentiators in our business. From smart customer database management to more accurate supply chain management, from enhanced design and production to social influencing strategies, digital technology has truly changed the way we do business with our customers. Manufacturers are now collaborating more closely with key suppliers on the co-development of parts and systems and gaining better insight into the supply chains that feed manufacturing and distribution. Advanced analytics are aiding in the understanding of market trends and improving demand planning while simultaneously communicating product changes throughout the supply chain.

Expansion

The PT/MC industry has been one of the early movers and adopters of global consolidations. Given the cash-richness of the sector and the influence on the global economy, the next few years will continue to be marked by more Merger & Acquisition transactions worldwide. However, despite the fear and uncertainties that come with M&A, a strategic and successful one should help create stronger capabilities, bigger global networks, synergies in cost of operations, research and development, and price competitiveness – thus helping deliver the margins.

People

The hunt for talent has never been more competitive. This challenge is even bigger for the industrial sector, which doesn’t enjoy a glamourous image like information technology or fast moving consumer goods or other consumer focused industries. Besides, with the digital revolution, our industry requires a more holistic skillset with technical skills but also outstanding sales and interpersonal skills, thorough understanding of digital platforms, and capabilities to drive product and service innovation.
All of this requires serious training and development initiatives on company level and also the industry level. As people remain at the core of everything we do at EPTDA, we decided to take education as an important challenge for the association so that our member companies can benefit from basic online product trainings and executive management seminars throughout the year.