At the 23rd Financing Day of the mechanical and plant engineering industry in NRW, the focus was on the data economy and corporate financing in challenging times.
Dr. Jürgen Schmelting, Head of the Industrial Manufacturing Department at the Fraunhofer Institute for Software and Systems Engineering, gave the participants a vivid presentation on the current status and future of the data economy in industry with the European approach of data spaces. His presentation highlighted the challenges and opportunities, but also the regulatory requirements that companies will face. He pointed out the importance of collecting high-quality data in companies in order to be able to use the high efficiency potential of this knowledge for business purposes.
Ricardo van Manen, Key Account Manager Digital Business at Flender GmbH, used the example of his company to demonstrate the business models that have emerged with digital products at Flender in recent years. Using a number of example applications, he demonstrated some of the enormous efficiency gains of the products. Start-up times or replacement intervals are significantly reduced, productivity is increased and working times and the use of resources are greatly reduced. He also emphasized the importance of high-quality process data, which forms the basis for data-based business models and artificial intelligence.
Bianca Illner, Head of Department at VDMA Business Advisory, provided insights into the financing situation of the German mechanical and plant engineering industry. The debt ratios of companies in Germany are still high and their proximity to the capital market is low. The continuing rise in the equity ratio has also resulted in a historically low rate of loan negotiations. If loan negotiations have not been concluded in the last two years, then it was primarily the rise in interest rates that caused the failure. However, the decreasing scope for banks to grant loans due to the increasing regulation of the financial sector and the simultaneous economic decline in the creditworthiness of companies could become a more frequent reason for the failure of negotiations in the future.
Mechanical engineering sector
Mechanical and plant engineering companies in Germany are looking to the coming year with a subdued mood. VDMA economic expert Olaf Wortmann reported in his presentation that there is still a noticeable reluctance to invest in Germany and abroad and expects production to fall by 2 percent in 2025, compared to -8 percent in 2024. The reason for this is both global and national uncertainties, which are having a detrimental effect on the order situation for capital goods. However, he was able to offer hope for 2025. According to the VDMA analysis, the economy in the German mechanical and plant engineering sector will pick up again from around the middle of next year, albeit slowly.
Panel discussion
Jens Fröhlich, Head of Public Loans, Sector and Transformation Advisory at IKB Deutsche Industriebank AG, Dr. Hans-Peter Mentges, Partner at DuKap Deutsche Unternehmenskapital GmbH, Bianca Illner, Head of Department at VDMA Business Advisory, Dr. Jürgen Schmelting, Head of Industrial Manufacturing at the Fraunhofer Institute for Software and Systems Engineering and Dr. Christian Terlinde, CFO at Flender GmbH, began their discussion on the current economic situation in the mechanical and plant engineering sector in North Rhine-Westphalia. This revealed concerns about the domestic political progress of new elections and the foreign policy uncertainties caused by the election of Donald Trump and the war in Ukraine.
With regard to the opportunities and challenges of the digital transformation, it became clear that the degree of digitalization in mechanical and plant engineering still varies greatly depending on the sub-sector and company size. Compared to other industrial sectors, however, it was considered to be high. It is important to recognize and take advantage of the opportunities offered by digitalization and the collection and use of data.
The panelists also predominantly saw opportunities in the industry’s transition towards sustainability and climate neutrality, as mechanical and plant engineering is an enabler for all manufacturing companies. In addition to the opportunities and costs, the risks associated with the conversion of companies were also discussed. In particular, the lack of a level playing field was criticized, as increasing reporting obligations make domestic products more expensive. Even if these regulations primarily apply to large companies, the entire value chain is affected.
Finally, the panelists drew their conclusions. The future of mechanical and plant engineering is unanimously seen as positive. Even if the assessment of the sector is becoming increasingly complex and difficult for the banking industry, it is still seen as a good investment. The good cooperation between these partners over many decades is and remains important.
Organizer
This event was organized by VDMA NRW.