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European companies facing a year of great challenges

“Europe’s Industry in Transition”, the Europe-wide survey carried out by Aras in late fall 2022, expects 2023 to be a year of unprecedented challenges for the European manufacturing industry. 90% of companies expect major instability to continue beyond 2023. The survey revealed, among other things, that digitalizing the supply chain is an important building block for building resilience.

Across Europe, the manufacturing industry is struggling with an unprecedented number of challenges. Exploding energy costs and unstable supply chains are currently causing the greatest problems.
Almost nine out of ten companies expect uncertainty to remain just as high in the coming years. The manufacturing industry’s most important strategies for securing the future are comprehensive digitalization and closer cooperation with suppliers. This is the result of the recent survey, “Europe’s Industry in Transition”.

More than 440 top decision-makers from 19 European countries were surveyed on behalf of the product innovation platform Aras. The survey participants are employed in companies with a minimum turnover of 40 million Euros in the automotive, aerospace & defense, mechanical engineering, medical technology, chemical, pharmaceutical, and food industries.

“Against the backdrop of a worrying mix of skyrocketing energy costs, geopolitical risks, and increasing labor market risks, the European industry is currently most concerned about fail-safe production.
In response to unstable supply chain, 40% of companies have already implemented closer cooperation with their suppliers, another 39% are working on it, and 17% are planning more intensive collaboration with suppliers”, said Luigi Salerno, General Manager Italia.
What is striking when comparing countries within Europe is that concerns about the supply chain are particularly noticeable in the United Kingdom. In the wake of Brexit, every British company has already implemented closer cooperation with suppliers.

Digitalizing the supply chain to build up resilience

Digitalizing the supply chain is another important building block for building resilience. “36% of companies have already redesigned their supply chain with digitalization in mind, and another 42% are in the process of doing so”, said Salerno. Around one in three companies has responded to unstable supply chains with product changes and just under one in four have relocated production sites.

According to Salerno, the pressure on companies has never been greater, but the survey results are also encouraging. “For example, eight out of ten companies admit that the prospect of permanently unstable supply chains is a cause for concern. However, thanks to the countermeasures that have already been implemented across Europe and some that are still planned, the manufacturing industry can better position itself to face future crises”.

The challenges have never been greater than today

This forward-looking focus is also necessary because the waters will remain rough for European companies. For instance, nine out of ten survey participants believe that the challenges facing their companies have never been as complex as they are today. When asked about the future, respondents indicated that things are not likely to get easier, at least in the medium term.

“88% of survey participants believe that the next few years will continue to be just as uncertain. In the face of these challenges companies must act, including by regularly reinventing themselves and exploiting the efficiency benefits of digitalization for themselves.
This is the only way they can withstand the economic upheavals of the multicrisis”, concluded Luigi Salerno.

Source: InMotion by Publitec

Read also: Sustainability in Automotive: just ambition or real action?
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