The machine manufacturers surveyed in the study expect digitalization to result in cost savings of 5 to 10%. However, there is still a long way to go, as the results of the study 'How to succeed:Strategic options for European machinery' show: Only a fifth of European companies have already established new business models. A third are not even considering the topic yet. Every second mechanical engineering company assumes that expertise in software development will be one of the most important recruitment criteria in the next five years. A seamless broadband infrastructure, legal certainty with regard to big data and the protection of intellectual property are crucial for the "Industry 4.0 challenge", according to Thilo Brodtmann, VDMA Managing Director and co-author of the study.

According to the VDMA survey, growth opportunities are shifting from the large emerging markets - such as China, Russia and Latin America - to smaller markets. Due to these weaker growth prospects, it will no longer be enough to grow with the market in future, explains Dorothee Herring from McKinsey and co-author of the study. "Companies must either take market share from their competitors, conquer new markets such as the ASEAN countries or broaden their offerings through services."

Agility as a competitive factor

According to the mechanical engineers surveyed, new materials and processes (44%), digitalization (39%) and flexible adaptation to new market conditions (45%) have the greatest influence on the organizational structure of companies. "Agility - the ability to react quickly to changes - will become a decisive competitive factor in the future," summarizes Dorothee Herring. This means that machine manufacturers will have to become more flexible, for example by cooperating more closely with customers and competitors and retaining IT experts.

A comparison of the strengths of global mechanical engineering companies

According to the VDMA, the European mechanical engineering industry is currently in a good economic position. The figures in the study confirm this: Between 2010 and 2014, companies in the sector generated an average gross profit margin (EBIT) of 10% and grew by 7% annually. In terms of global machine production, Europe ranks 26% behind China (38%) and ahead of the USA (14%). "Europe's strengths lie in its excellently trained employees and the resulting product and service quality," explains Wolff van Sintern from the management consultancy McKinsey and co-author of the study. In comparison, American providers tend to score points with creative business models and constant innovation. Chinese competitors, on the other hand, have a cost advantage and introduce new products to the market quickly.

Export as the most important pillar of the industry

According to the VDMA, European companies generate an average of two thirds of their turnover outside their home country. The largest market is Europe, which accounts for around 60% of sales. At the same time, mechanical engineering companies still employ three quarters of their workforce in their home country. "Free market access is very important for our export-oriented industry. In particular, non-tariff trade barriers such as different standards and certifications restrict free trade. This results in additional costs for us," says VDMA Vice President Karl Haeusgen. European mechanical engineering would therefore benefit greatly from a successful TTIP agreement and standardization.

The study by the VDMA and McKinsey Company is available for download in the whitepaper section of Computer&AUTOMATION.