Industrial companies are facing critical challenges rooted in slow growth, globalization, the impact of disruptive technologies and unforeseen competitive threats. A new report from L.E.K. Consulting reveals how those companies are responding — and what the response will mean for the future of industrial companies around the globe. Key factors affecting companies, ranging from commodity producers to OEMs to distributors in multiple industrial sectors, include:
- End-buyers narrowing their lists of suppliers while demanding more customization, all in a weak pricing environment
- Sustained downward pressure on margins that demands cost reduction and productivity increases
- Value-chain disruption by new competitors leveraging technology and new business models, and high rates of innovation as companies under pressure seek more profit
- Changing ownership structures — with the emergence of new Asian owners, private equity and activist shareholders all playing a major role, thereby prompting corporate boards to re-examine their strategies
This special report was prepared following a series of in-depth interviews with CEOs and senior executives at 17 major global industrial firms, and it examines emerging trends that include new sales models and organizational structures, a sharper focus on high-yield parts of the value chain, adoption of disruptive technologies and shifts toward fast-cycle R&D.