US innovative power and Chinese cost leadership are putting mechanical engineering in Germany under pressure. In order to avoid a sell-off, expert Harald Schönfeld advises a multi-pronged strategy.
Harald Schönfeld recommends mechanical and plant engineering companies to adapt to the changed competition at an early stage
Springer Fachmedien Wiesbaden
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Mechanical and plant engineering in Germany is under pressure: Similar to the German car industry, it could fall into the trap between American innovative strength and Chinese cost leadership, which means there is a longer-term risk of German companies being sold out to Chinese investors. This scenario is outlined by Harald Schönfeld, founder of Unitedinterim and an expert in interim management at the UN think tank Diplomatic Council.
According to Schönfeld, mechanical and plant engineering faces numerous challenges, including software, robotics, artificial intelligence (AI), the Internet of Things (IoT), satellite networks, deglobalization and supply chain problems. Although many manufacturers are facing up to digitization, the necessary development of skills in software, robotics, AI and IoT is challenging the financial and innovative strength of many companies. According to Schönfeld, there will no longer be any technical machine or system in the future without AI. However, most manufacturers are still networking their devices in the IoT without even dealing with AI.
US advantages in software, satellites and microchips
According to Schönfeld, many machine and plant manufacturers lack software competence. The industry can therefore hardly keep up with US digital companies. Like AI, global satellite communication will also shape mechanical and plant engineering in a few years, where US companies like Kuiper and Starlink are also leaders. Furthermore, US manufacturers made themselves independent of chip suppliers with microprocessors they developed themselves and gained a further competitive advantage over German companies.
According to Schönfeld, local medium-sized companies may not be able to withstand the pressure to innovate from the USA in the long term. Companies that have come under pressure, which the specialist also explicitly includes the so-called hidden champions, could then appear as a “rescue in an emergency” if they were bought by Chinese investors, not least because, for geopolitical reasons, they are willing to pay prices well above the world market level pay.
Target knowledge building and strategic partnerships
In contrast to the automotive industry, Schönfeld still sees scope in mechanical and plant engineering to adjust to the competitive situation at an early stage and take countermeasures. Specifically, he advises companies to adopt a multi-pronged strategy:
- In-house software, AI and IoT know-how should be deepened.
- Due to the continuing lack of software developers, strategic partnerships with providers of programming capacities should be concluded.
- Logistic chains should be made more flexible in order to be able to maintain operations in the event of unexpected events of any kind.
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