The future of German mechanical engineering—Operating successfully in a dynamic

The future of German mechanical engineering—Operating successfully in a dynamic

The mechanical engineering industry is likely to undergo considerable change in the near future. This study—based on a survey of over 300 mechanical engineering companies and in-depth interviews with over 50 executives—indicates how the industry can improve its performance even further by leveraging current success patterns vis-à-vis the most important trends of the future.

Mechanical engineering is one of the fundamental pillars of the German industry. It stands for progress, performance, and reliability—both domestically and internationally. In the past 20 years, it grew by 2.2 percent a year and generated an average margin before interest and tax (EBIT) of 3.9 percent of revenue. In 2012, an EBIT margin of over 6 percent and average annual growth of almost 10 percent, compared to 2010, were achieved.

However, there are signs of change. Foreign competitors are putting pressure on the market with offerings of increasing quality and lower prices. In addition, international interdependencies are growing, adding to volatility. The imminent fourth industrial revolution, or “Industrie 4.0,” the impact of digitization on the value chain, and disruptive technologies such as 3D printing, have the potential to fundamentally change existing business models.German mechanical engineers can only secure their competitiveness if they actively shape industry trends and pursue continuous improvement. The German Engineering Federation (Verband Deutscher Maschinen-und Anlagenbau, VDMA) and McKinsey & Company detail how this can be accomplished in their industry study “The Future of German Mechanical Engineering.” In their research, more than 330 German companies were surveyed and more than 50 industry executives were interviewed. The report offers unprecedented insight into German mechanical engineering, by:

  • precisely pinpointing the success patterns of mechanical engineering companies
  • identifying the most important future industry trends
  • specifying six concrete fields of action that can help sustain the success of German mechanical engineering