Economic trends & recommendations for the industrial sector in 2016
11 January 2016
EPTDA, the EMEA Power Transmission Distributors Association, closely follows industrial and economic trends and forecasts, conducting market and economic intelligence reports to depict a clear image of the PT/MC industry and industrial production as a whole.
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.
At its most recent convention, which took place in Barcelona, the association announced surpassing its membership growth target, a year ahead of time. The EPTDA now features 259 companies as part of its membership. Close to 450 delegates and guests from 30 countries and 85 NEXGEN representatives took part in the Barcelona Annual Convention. Almost 100 delegates were attending for the first time, out of which 20 representing non-member companies, many now keen to join as a member.
EPTDA also hosted its most successful ever MD-IDEX meetings sessions with a total of 847 meetings between manufacturers and distributors members. 85 Manufacturer companies were represented at the MD-IDEX further signaling the association’s position as a powerful industry influencer.
“We are incredibly proud of the journey that EPTDA is currently on. The Barcelona Annual Convention attendance figures and the continuous commitment from our members is a strong indicator that we are powering ahead successfully on our strategy, vision and mission to strengthen industrial distribution globally,” said Hans Hanegreefs, EPTDA’s Executive Vice President.
“In the years ahead, we will evolve from a Networking Organization to a Navigator Organization to steer further development of industrial distribution across Europe, the Middle East & Africa, and beyond. We have launched several new initiatives in Barcelona to help drive this evolution through creating more business development opportunities between manufacturers and distributors but also distributors and distributors. We will invest an incredible effort in developing online PT/MC training programs offered for free to our members. We will further strengthen our brand awareness through a powerful social media dialogue with our members and industry influencers. We will continue to invest in attracting more NEXGEN leaders to become members and volunteers to serve behind the scenes of our association to prepare it for the Millennial challenge,” adds Hans Hanegreefs.
At the Annual Convention, the EPTDA also elected its 2016 Board of Directors and Curt Carlsson from Nomo Kullager, Sweden – as its new President. Curt Carlsson has been a member of the association since 2001 and has since then served in several committees and councils, and helped define the long-term strategy of the association.
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.
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.
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.
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.
EMEA Power Transmission Distributors Association (EPTDA) is the largest organisation in Europe, the Middle-East & Africa, of distributors and manufacturers of power transmission and motion control products, setting the highest commercial, environmental, social and ethical standards.
EPTDA brings together more than 250 companies - distributors, manufacturers and associates - on one common platform. Overall, the EPTDA distributor and manufacturer members represent over 26 billion euro annual sales volume of PT/MC products. The EPTDA member companies employ more than 245,000 staff worldwide, including Europe, North America, Africa and the Middle East. They are based or have representation offices across 28 countries, with most of them (top five) located in Europe (Germany, Italy, UK and The Netherlands) and the US.
The EPTDA distributor and manufacturer companies cover more than 15 product categories within the EPTDA, and are active in a range of end markets, including but not limited to Food & beverage equipment; Mining & dredging; Automotive; Industrial machinery; Agriculture equipment; Power generation; Material handling equipment; and Pulp & paper.
Members deal with OEM (Original Equipment Manufacturers) and MRO (Maintenance, Repair and Overhaul) customers. The EPTDA Associate members provide services to the PT/MC industry, in a direct or indirect way, at several levels of business operations and the supply chain.