...In the factory/process manufacturing space
The factory/process automation space is undergoing major changes that will completely redefine the industry. Powerful exogenous forces have been acting on the industry with accelerating speed for more than a decade now creating new opportunities and challenges to the manufacturers of automation products. As a result, the deck of industry players is being reshuffled: the quick and nimble will thrive, the slow to adapt will fall by the way-side.
Key forces shaping the new face of the industry:
- The introduction of new technologies (such as wireless shopfloor communication technologies) are starting to tear down the wall traditionally separating the process from the discrete world.
- The pervasive adoption of “lean and mean thinking” leads to the stripping out of entire service, maintenance and repair departments at the manufacturers’ site. Suppliers of instruments and automation control products that are able to offer “one-stop-shopping” solutions have clear competitive advantages over “mere” products suppliers.
- The need for lower cost of manufacturing bases and new market opportunities drive manufacturers closer to low labor cost countries and/or new markets. Vendors of factory/process automation products that follow their customers to new shores offering “one-stop shopping solutions” will have a leg up.
Endress+Hauser has long ago recognized the emergence of those trends and acted with agility in addressing them. In an interview with GGI, Klaus Riemenschneider, President of the Endress+Hauser supervisory board, sheds some light on the measures the company has adopted over the last ten years or so. Result: both the company’s top and bottom lines have been growing faster than the ones of their peers – an unmitigated success.
Hans Nagl of ABA-Invest, an Austrian government agency, agrees: his country too – long ago – has seen the shift of manufacturing to lower cost Eastern Europe. As Hans explains, Austria has been succeeding in becoming a logistics and manufacturing hub for many multinational enterprises. Austria offers a premium location in the heart of Europe, a highly educated and stable workforce, a population steeped in the practices of doing business with Eastern European cultures, a modern infrastructure with logistics and supply lines to the Eastern European centers of commerce.
On a slightly different note, Roger Humm, our UK associate, examines how the sub-prime lending crisis has affected mid-market M&A in the UK. As opposed to the US and some European countries, the UK seems – so far – to remain largely unharmed by the fall-out of this summer’s financial crisis. The Northern Rock incident remains an isolated case. In some quarters, though, the “housing market” and “personal debt” are being closely monitored with a subdued degree of concern about early signs of irrational exuberance.
I hope that you enjoy this selection of timely contributions and – as always – I encourage you to write or call us with your comments.