Why this is important to Wisconsin businesses: Sustainability and connected systems are especially in demand.
The machinery industry in the Netherlands makes a wide variety of machines, devices and parts. The entire sector is expected to grow by around 2 percent in 2018, with additional growth over the next five years, particularly for the high-tech, medical and food industries. The global position of Dutch companies in these markets is strong.
Machine construction is relatively cyclical and heavily dependent on exports (around 82 percent of sales). Thus, the economic state of the three largest trading partners is an important indicator of the health of machine building. These partners are Germany, France and the UK.
Currently, demand for industrial machinery is increasing, creating an opportunity for suppliers from abroad as demand exceeds supply. Specialized companies from around the world are needed to provide parts all along the engineering sector’s supply chain. End markets for these products are primarily in the high-tech, food, medical, and oil and gas extraction sectors. However, the first three markets are growing, whereas the last has seen a drop in sales. Companies and their suppliers that focus on innovation and on the first three above-mentioned markets (high-tech, food and medical services) are expected to perform well in the near future.
Machinery manufacturers are still insufficiently focused on sustainability and circularity. This is despite the fact that end users increasingly demand sustainable products and the government is imposing ever stricter sustainability requirements, while the EU’s environmental objectives also call on machinery manufacturers to make their production processes more sustainable. There are plenty of opportunities to operate sustainably—for example, preventive maintenance with the help of sensors and digital tools to extend the life of machines. Making machines more energy efficient also promotes sustainability. Machinery manufacturers and suppliers from Wisconsin that pay attention to sustainability and circularity will perform better in the future.
Innovation (smart industry) is crucial for better business performance because of relatively high wage costs. Innovation in machinery manufacturing focuses mainly on offering new (smart) products and the connection of machines in the chain. An example is machine-to-machine communication, allowing machine manufacturers to contribute to improving the production processes of their customers. This translates into increased in demand for connected machines and smart systems. Robotization is another example, which allows for the division of customers’ complex production processes into simple tasks so that robots can carry out more of the operations. In addition, integration of robots with new technologies such as vision, sensing and the internet of things (IoT) ensure better processing of non-repetitive actions. In other words, robots become smarter and learn to work together, resulting in growing demand. Many companies in the Netherlands are therefore investing in innovation to perform better. Dutch companies are also looking abroad for new ideas of how to implement these trends and to find reliable suppliers for these kinds of technologies.
Demand for technical staff is increasing across the entire economy of the Netherlands. This means that machinery manufacturers will have more difficulty securing technical personnel and/or that labor costs will increase, which may translate into lower operating profits. Use becomes more important than possession, meaning that machine manufacturers are delivering a service, not just a product, and must consider installation, after-sales, maintenance and service. Companies and suppliers that make the transition from ownership to use will perform better in the future.
Environmental objectives from the EU mean that machine builders need to make their production processes more sustainable. Think of less CO2 emissions and limiting energy consumption. Sustainability entails costs and may translate into lower operating results. The Dutch government and the European Commission stimulate innovation with subsidies. These subsidies provide opportunities for machine builders but can also ensure more direct competition from neighboring countries.