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Driving profitability in engineering

The news from the main players shows that the economic turmoil is hitting the engineering sector quite hard - which is seeing the start of a similar crisis to that faced by the automotive sector. Engineering companies will probably feel the downturn at different points in time but although the profile and length of the crisis is unclear - everyone needs to act now. This is true whether they are total solution integrators, solution designers, systems / machinery or component and part manufacturers.

Every crisis creates new winners - followed by a consolidation phase of M&A and take over activities for strategic assets. The winners in engineering will be characterised by unique technology innovation and a strong cash position. They will also have proximity to global demand and industrial trends, high market share in speciality areas or an excellent low cost position. In addition they will need effective working capital management, reliable exchange of order schedules to both customers and suppliers; a customer-driven supply chain; lean product design based on standard modules; end-to-end requirements and claims management, and a high share in service business.

These winners will:

  • secure the cash position
  • focus the portfolio
  • manage performance rigidly.

PA Consulting Group's experience based on client work for the likes of MAN or Siemens shows that strong execution will both deliver quick wins in the short term and more complex solutions in the medium to long term.

To find out more about our insights and to discuss how to succeed in the crisis, please contact us now.

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