Digitisation beginning to pay dividends: EU engineering industry forecasts strong growth in 2017

The European engineering industry is on track for strong growth in 2017 and 2018, as the benefits of industrial digitisation and the rise of new data-driven business models begin to pay dividends across the sector.

Official figures for 2016 put the total turnover for the EU engineering industry at €1,997 billion, while employment stood at 11 million. The forecast growth in output of 4.0% for 2017 has been accompanied by a general economic recovery both within the EU and globally. This upward trend has been mirrored in investment figures, which are climbing again following a period of underinvestment between 2010 and 2015 – something that has been reflected in a positive upswing in business confidence indicators over the last twelve months.

Tomas Hedenborg, President of Orgalime, is clear on what is driving this impressive performance: digital innovation. “We have been talking for some time about how digitisation is boosting productivity in our factories, and how the data generated is fuelling innovative new business models and growth opportunities,” he explains. “This year, the figures leave no doubt that these innovations are already making a difference to companies’ bottom lines – and we are only at the beginning of this digital transformation.” Looking ahead to 2018, the outlook remains positive with forecast growth only slightly lower at 3.5%. Employment is also set to rise by 0.9% next year: this will mean that between 2014 and 2018, the European engineering industry will have created a total of over 300,000 jobs.

However, a number of challenges continue to loom on the horizon. Uncertainty surrounding Brexit, and the persistence of populism and anti-globalisation sentiment remain a concern for investors, as does the tendency for lawmakers to move towards regulating the budding data economy. Moreover, engineering companies are facing skills shortages and upward pressure on wages, which could impact European industry’s global competitiveness. In this context, a supportive industrial policy strategy will be key to safeguarding and building on recent gains.  “What happens in the coming year, especially at the regulatory level, will be decisive in how far industry can develop the potential of digitisation and the use of data,” points out Adrian Harris, Director General of Orgalime. “While we are seeing a welcome growth in investment in Europe right now, the recovery is still very fragile. We must ensure we nurture this new found growth with a stable framework that enables our companies to continue innovating and continue creating jobs and growth.”

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