羅蘭貝格-DACH中處于十字路口的資本品公司（英）

CapitalgoodscompaniesinDACHatacrossroads

NOVEMBER2023

AUTHORS

SVENSIEPEN

Softlandingorsteepdownturn?

SeniorPartner

Thesearechallengingtimesforcapitalgoodscompaniesinthe

STEFANKRIEGER

Principal

DACHregion.Withorderbacklogsdecliningsignificantlyinrecent

months,theyfaceavarietyofchallenges,rangingfromgeopoliticaltensionsandeconomicuncertaintiestoclimatechangeandindustrytransformations.Signsofdownturnvarysignificantlyacross

industriesandregions,meaningcompaniesmustcollateathoroughunderstandingoftheirindividualbusinessunitsandthecontextualfactorsinfluencingeachone.Inresponsetothesechallenges,

RolandBergerrecommendsaproactiveandscenario-based

strategy.Thisinvolvesstartingwithimmediate"no-regret"initiativestoaddresspressingissues,followedbystructuraladjustmentsandlonger-termgrowthinitiativestosecurefuturesuccess.

CapitalgoodscompaniesintheDACHregionareatacriticaljunctureamidgrowingconcernstriggeredbyanuncertaineconomicoutlook.Thisisdespiteaglimmerofhopeinthefirsthalfof2023,whenmachineexportsappearedpromising.However,thistrendwaslargelythankstosubstantialorderbacklogsbuiltupduringperiodsofhighdemand.Thesebacklogshavegraduallyreducedinrecentmonths,causing

optimismtowaneasnewordersfailtoadequatelyreplenishthem.

Notably,Swissmem,theSwissassociationformechanicalandelectricalengineeringindustries,hashighlighteda9.9%declineinorderintakeforthefirstninemonthsin

2023comparedtothepreviousyear.Duringthesameperiod,salesremainedatthesamelevelasthepreviousyear(-0.1%).Similarly,VDMA,Germany'sEngineering

Federation,reportsasignificantdeclineinorders,witha13%dropinSeptember2023

contributingtoa14%decreaseforthefirstninemonthsoftheyear.These

developmentsunderscorethesubstantialchallengesfacedbythemanufacturingsectorintheDACHregion.

Decliningorde

Revenuesandor2023vs.2022

Order

intake

SourceVDMA,Swissmem,RolandBerge

rsarehittinggrowthprospectsin2023

derintakebycountry(realvalues)

Germany

-14.1%

Q1Q2Q3

Switzerland

-9.9%

Q1Q2Q3

-13.7%

-13.7%

-15.0%

-4.8%

-14.3%

-10.5%

r

Prominentindustryleadershavesoundedthealarmregardingtheuncertain

outlook.Whatstandsoutinthecurrentsituationistheunprecedentedcomplexityconfrontingmarketparticipants.Geopoliticaltensions,macroeconomic

uncertainties,highinterestrates,climate-relatedchallenges,andindustry-specifictransformationssuchashydrogen,electricvehicles,AI,ande-commerceareall

unfoldingsimultaneouslyandoftenoverlapping,potentiallymagnifyingtheirimpact.

Webelievethesecompaniesareatacriticalstageintermsofproactivelyaddressingthesechallenges,adoptingaforward-lookingapproach,andexecutingdecisive

short-termaction.Someleadingcompanieshavealreadyinitiatedworkforce

reductionsinoverheadsandoperationsofbetween5%and15%,hopingtoshedballastaccumulatedoveryearsofgrowth,increasetheirstructuralflexibility,andprepareforanticipatedrevenuedeclines.

WhilecompaniesintheDACHregionhavelonggrappledwithstructuraldeficits,

competitorsinNorthAmericahavebeenabletoadapttocostchallengesmoreswiftlyduringadownturn.Theyhaven'tjustdonethisbyreducingindirectcostsbutalsoby

shuttingdownplants,offshoringthevaluechain,andoutsourcingtosuppliers,amongothermethods.Meanwhile,Chinesecompetitorsarekeentocapitalizeonthecurrentsituationandfurtherestablishtheirpresenceinthegloballandscape.Thisstarted

earlyinareaslikesolarpanelproduction,beforemovingontovariousmachinerysegmentssuchastextiles,extrusion,andinjectionmolding,aswellasbattery

production,windturbines,andnowtheautomotiveindustry,tonamejustafew.

Signsofdownturnvary;serviceswithrecurringrevenuescouldbekey

CapitalgoodscompaniesintheDACHregionfaceacomplexarrayof

circumstances,oftenmarkedbysubstantialdifferencesacrossindustriesand

regions.Itisthereforeessentialformanagerstogainathoroughunderstandingoftheirbusinessunitsandthecontextualfactorsinfluencingthem.Amatrixof

threecoredimensionscanbeinstrumentalinunderstandingthecontextinwhichacompanyoperates:geography,verticals,andoffering.

Threecorefactors

foradeeperunder-

standingofbusiness

operations

Signsofdownturnvary

significantlyacross

industryandregions–

Companiesoffering

Geography

serviceswithrecurring

revenuesarebetter

positioned

Offerings

Verticals

SourceRolandBerger

1Geography:Chinaatacrossroads

Theeconomicslowdownisimpactingmajoreconomiesacrosstheglobe,albeit

withvaryingdegreesandunderlyingcauses.China,thecatalystforeconomicgrowthduringrecentdecades,faceschallengesstemmingfromitsrestrictiveCovid

policies,withconcernsemergingaboutthepoliticalclimateandstabilityofforeigninvestments.Thecountry'sdomesticrealestatesector,acornerstoneofeconomicgrowth,isfacingseriouschallenges,mainlyduetodefaultriskscoupledwithlowerdemand,potentiallyfurtherdampeningeconomicprospects.Chinahasannouncedseveralmeasurestobolsteritseconomy,includingan11-pointplanthattargets

domesticconsumption.

Meanwhile,escalatingtensionsbetweenChinaandtheUnitedStateshave

culminatedinmutualsanctions,withthefutureofChinaasaglobaleconomicdriverincreasinglychallenged.Inresponsetotariffthreatsandsupplychainvulnerabilities,

manyglobalcompanieswithprimarymarketsinNorthAmericaandtheEUhavebegunshiftingproductiontoSoutheastAsiaoradoptingaregionalizedapproach

2

"Seizingbusiness opportunitiesaroundserviceand

modernizationhaveprovedeffective strategies,diversifying

revenuestreams

andbuildingcustomerloyalty."

SVENSIEPEN

SeniorPartner

totheirkeymarkets–shiftingtoMexicofortheUS,forinstance,andPortugalorEasternEuropeforEurope.

However,RolandBergerbelievestheseshort-terminstabilitiesshouldnotobscure

China'spromisingmedium-andlong-termgrowthprospects.InvestinginChina

remainsbothimportantandprudentduringthistransformativephaseandstilloffersexcellentgrowthpotential,albeitmoreinthe5%CAGRdimension,ratherthanthe

double-digitgrowthofthepast.Inshort:

Chinaisnormalizingasaneconomy.

Incontrast,theUSeconomyisfacingunprecedentedinflationlevelswhile

simultaneouslydealingwithweakenedmarketdemand.Tocounterthese

challenges,thegovernmenthasintroducedstringentmonetarypoliciesand

enactedlegislativemeasuresunderitsInflationReductionActaimedatboosting

demand.Althoughtherehavebeensomerecentpositivedevelopmentsinthejobmarketandamodestuptickinretailsales,acloudofuncertaintycontinuestoloom,leadingexpertstoexpressgrowingskepticismregardinganear-termeconomic

rebound.

Amidtheseeconomicdynamics,itisimportantforDACH-basedindustrialfirms

torecognizetheongoingimportanceoftheUnitedStatesasatradepartner,

particularlyinsectorsbenefitingfromgovernmentsupportlikerenewableenergyandindustrialautomation,orfromregionalizationactivitiesofcompanieswith

majormarketexposuretotheUSsuchasEMSorautomotive.

TheEuropeanUnion,alreadygrapplingwitharangeofchallenges,iscurrentlyexperiencinganoticeabledeclineinmomentum.AlongstandingEuropean

economicpowerhouse,Germanynowfacesmajorhurdlesandisonthevergeofrelinquishingitsglobaldominanceintheautomotiveindustryduetothe

transitiontoelectricvehicles..

AccordingtoarecentsurveybyRolandBerger(link)whichinvolvedmorethan650restructuringexpertsacrosstheDACHregion,thereisgrowingpessimismregarding

thefuture,andconcernsaremountingthatGermanymaylagbehindonthe

internationalstage.Keyworriesrevolvearoundskilledlaborshortages,elevatedinflationrates,andcontinuouslyescalatingenergycosts.Asubstantial62%oftherespondentsinoursurveyanticipateawaveofrestructuringinthemonthsahead.Certainly,industrialcompaniesintheDACHregionwillbekeentoseetheirhomeeconomysupportglobalgrowthwhilesimultaneouslyreducingtheirrelianceondomesticmarkets.

Verticals:Strongvariationingrowthprospectsacrossindustries

Theoutlookforvariousindustrysegmentsvariessignificantly.Sectorssuchas

metalprocessing,automotive,andtextilemachineryareundersignificantpressure,asareenergy-intensiveenterprisesingeneral.Thecapitalgoodssegmentsthat

experiencedasurgeduringthepandemic,particularlythoselinkedtoareaslikehomeimprovementandtextiles,arenowexperiencingaswiftnormalizationorcorrectionphase.Thisisresultinginreduceddemand,coupledwithmargin

pressuresfromheightenedpricingcompetition.Theeffectisreinforcedbyhigh

stocklevelsthroughoutthevaluechain,leadingtolowerorderlevelsandthuslessneedforproductioncapacitiesandrelatedinvestmentincapitalgoods.

Theconstructionindustryshowsregionalvariations.Economicuncertaintiesandrisinginterestratesareplacingpressureonresidentialconstruction,withexpertsexpectingactivitiestoremainsubduedatleastuntilmid-2024.Incontrast,non-

residentialandinfrastructureprojectsremainmoreresilient,benefitingfrom

localizedproductionandgovernment-backedinitiatives.Chinafacesunique

challengesfromthestrugglesofmajorrealestatecompanies.Despitegovernmentinterventions,marketconsensusseesariskofprolongedstagnationinChina'srealestatesectoruntil2025andlow-digitgrowthuntil2030.

Thesearealsochallengingtimesforcapitalgoodscompaniessupplyingthe

automotivesector.Theindustryisundergoingmajorstructuraltransformation,requiringestablishedplayerstoregaintheirmarketpositionandadapttheir

technologyportfolioaccordingly.Companiesinthisspacemustcontendwithdelayedinvestments,demandvolatility,andregulatoryimpact.

Nevertheless,certainsectorscontinuetoperformwelldespitethechallenges.

Aerospaceandenvironmentaltechnologycompaniesarethriving,alongwiththoseinvolvedinenergytransformationprojectslikehydrogen/electrolysers,carbon

captureandusagetechnologies,orpowertransmission.Inparticular,companiesfocusingonrenewableenergyareprofitingfromanincreasingnumberofpublicandprivateinvestments.Atthesametime,theoilandgasindustryisfacingan

unexpectedresurgence,drivenbygeopoliticaleventsanduncertaintiesaboutenergysecurity.Therearealsosectorsthathaveprovenresistanttoeconomic

downturnssuchaspharmaceuticalsandmedicaltechnology.Theyhaveexperiencedstableorevengrowingdemandandthusalsoincreasedtheirneedforproductionequipment.

3Offering:Companieswithrecurringrevenuestreamsare

wellpositioned

Capitalgoodscompaniesinsectorslikeelevators,turbochargers,power

generationequipment,andprocessingandpackagingmachineryhavefound

resiliencethroughservice-andwear-partorientedmodels.Elevatorcompanies,forexample,offermaintenanceandmodernizationservices,whileturbochargermanufacturersprovidediagnosticsandrepairs.Powerequipmentproviders

offermaintenanceanddigitalsolutions,andmachinerymanufacturersextendservicesbeyondmanufacturing.

Seizingbusinessopportunitiesaroundserviceandmodernizationhaveprovedeffectivestrategies,diversifyingrevenuestreamsandbuildingcustomerloyalty,whichareparticularlycrucialintimesofeconomicuncertainty.Overall,the

transitiontowardserviceandmodernizationofferingsalignswiththebroaderindustrytrendofdeliveringcomprehensivesolutionsandservices.

Outlookforselectedcapitalgoodsegments

Marketprospects2023/2024

Positivesignals

?FlowControl

Steadymomentumwithcaution

?Energyequipment

?Industrialautomation1

?Motioncontrol

Facingheadwinds

?Buildingtechnology2

?Packaging&processing

?Powertools

positivstagnatingnegativ

1Includingconstructionequipment2Includingrobotics

SourceRolandBergerestimate

Whyaproactiveapproachandconsistent

"no-regret"activitiesarevital

Inthefaceofuncertaintypairedwithmajorstructuralchanges,companiesmustadoptaproactivestancetosuccessfullyweatherthestorm.RolandBerger

recommendsdividingperformanceimprovementandgrowthmeasuresintothreekeycategoriesthatareadaptabletodifferentscenarios:no-regretactivities;

structuralenhancement;andlong-termgrowth.Whilenotimperative,weseevalueinadoptingascenario-basedapproach–preparingplansforthedifferentdegreesofeconomicchallengesotheycanberapidlyimplementeddependingonactual

developments.Seetheinfobox"Ourperspectiveonscenarioplanning"formoredetails.

Startwith"no-regret"activities

Initiatingno-regretactivitiesshouldbeastandarditemoneverycompany'sagendaduringbudgetphasesorregularperformancereviews,particularlyafterturbulenttimesandrapidgrowthperiods,suchasthoseexperiencedduringtheCovidera.

Theseactivitiesservetoshedinefficienciesandreduceunnecessarycostswithoutcompromisingthecompany'smarketsuccess.

Typicalareasoffocusencompasstrimmingoverheadandfixedcostswithout

jeopardizingcompetitiveness.Additionally,transparentdemandforecasts,whichcanmirrorvariousscenarios,shouldpromptcompaniestoproactivelyadjust

resourcelevelsandcapacities.Thisallowsthemtomaketheircostbaseflexiblebyplanningwithaleanerresourcestructureandfootprint,potentiallyrelyingona

temporaryworkforcetomanagefluctuations,pushingautomationofoverheads,andoffshoringtolowercostlocations.

Furthermore,topmanagementshouldestablishclearambitionsregarding

operationalefficiency,whichmustbeupheldduringadownturn.Bysettingclear

expectationsfortheleadershipteam,theycanidentifyimprovementmeasuresthatgobeyondcontinuousimprovementactivities.Thesemeasuresmayincludeprocessautomationandrealizingcostsynergiesinareassuchassharedservices.

Procurementemergesasacriticalfocus,asbothdirectandindirectexpenditures

havesurgedduetorisingcostsforrawmaterials,components,andservices.Capital

goodscompaniescanseizethisopportunemomenttooptimizepurchasing

expensesbyengaginginrigorousprocurementprogramsandrenegotiatingtermswithsuppliers.

Lastly,itisessentialtoaddresspotentialcashflowstresswhenenteringa

downturnperiod.RolandBergerrecommendsforecastingandplanningcashflowdevelopmentwithforesight.SettingthresholdsandplanningwithmorerestrictiveCAPEXexpenditurescanhelpsafeguardthecompany'sfinancialstabilityduringchallengingtimes.

F

Initiaten

Threekeycat

Proactiveprepar

egoriestoimproveperformanceandgrowth

ationforpotentialdownturns

irstpriority

o-regretactivities

verhead(G&A)

dfixedcosts

ilizecostbase;

stcapacities

ambitionsfor

nalefficiencyandingaspirations

urecashflow

pany'soperations

Removeburdensandenhancestructure

incl.potentialdivestment

Assessbusinessportfolio

Optimizeglobalfootprintandsupply-chainset-up

Reviewtarget

operatingmodel

Scenariospecificvariation

Investingrowthand

securelong-termsuccess

(Re-)prioritizegrowth

areas,fosterinnovations

ApplyFutureofSelling

principles

Matchgrowthtargets

withCO2commitments

High

Scenarios

Drop

Downturn

Recession

Trimoan

Flexib

adju

Set

operatiospend

Secforcom

Low

SourceRolandBerger

Removeacompany'slegaciesandrecalibrateitsstructure

Uncertaintimespresentanopportunemomentforcompaniestorefocustheir

attentionandallocateresourcesmorestrategically.Nowistherighttimetoassesstheportfolioofbusinessfieldsandconsidertheircontributionstothecompany'ssuccess.Thisevaluationcanleadtodivestmentsofnon-strategicandlow-

performingbusinesssegments,providingclarityonwheretochannelresourcesmoreeffectively.

"Incurrent

uncertainty, companiesmust actswiftlywith'no-regret'activitiestoaddresspressingissues."

STEFANKRIEGER

Principal

Severalcompanieshavealreadylaunchedinitiativestooptimizetheirglobal

footprintsandsupplychains.Somearedrivingregionalizationandplacingtheir

manufacturinglocationsclosertokeyendmarkets.ThismightbeMexicofortheUSmarketorEasternEuropeandPortugalforEurope.Geopoliticaltensionsandthe

lessonsfromCovidhaverevealedthevalueofresilientregionalstructures,evenforglobalenterprises.Thosewhooperategloballyshouldreassesstheirapproachestoworldwideoperationsandconsideradaptingtheirfootprintaccordingly,extendingbeyondmanufacturingtoincludeotherkeyfunctionslikeengineering.Thisstrategynotonlymitigatesrisksbutalsoenhancescost-efficiencyandreducesfuture

carbonemissions.

Intimesofuncertainty,companiescanalsorefocusbyassessingtheirtarget

operatingmodel.Werecommendcreatingaleanorganizationalstructurefor

improvedefficiencyandagilitywhileencompassingcomprehensiveend-to-end

processdesigntooptimizeoperationsacrosstheentirevaluechain.Additionally,

arobustdataandsystemarchitecturecansupportseamlessinformationflowandanalytics,whichprovidesagreatbaseforamigrationto

SAPS/4HANA

.Thisholisticapproachtothetargetoperatingmodelnotonlyenhancesthecompany'scurrentcapabilitiesbutalsopositionsitforfuturegrowthanddigitaltransformation.

Emergestrongerfromthedownturnandsecurelong-termsuccess

Emergingstrongerfromacrisisinvolvesatwo-foldstrategy:first,optimizecoststructuresandensureadaptabilityduringdownturns;second,understandtheimportanceofprioritizinggrowthareasandaligningorganizationalresourceseffectively.Thisapproachisparticularlyrelevantforcompaniesexposedto

industriesundergoingfundamentaltransformationsliketheautomotivesector.Navigatingsuchuncertaintimesrequireslong-termpositioningandforesight.

TheB2Bsaleslandscapeisalsoevolving,drivenbytheintegrationoftechnologylikeAIandtheInternetofThingsaswellaschangingcustomerpreferences.

Successfulcompaniesleveragetheseemergingdigitaltechnologiestoenhance

theirmarketactivities,enablingthemtocreateadistinctiveandpersonalizeduserexperiencethroughoutthecustomerjourney.Thisnotonlygivesthemacompetitiveedgebutalsooptimizestheiroperationalprocessesandefficiency.RolandBergerpredictsthatapproximately70%oftheB2Bcustomerjourneywillsoonbedigital,

withtheremaining30%followingtraditionalapproaches.Our‘FutureofSelling'approachshedsmorelightonthisvision.

Lastly,aligninggrowthtargetswithdecarbonizationambitionsiscrucial.

Short-termcostreductioneffortsmayseematoddswithcarbonreductioncosts,butlong-termsustainabilitygoalsarenon-negotiable.Strikingthisbalanceis

paramountforacompany'sresilienceandlong-ter