While the industrial sector is large and diverse, across industry verticals some common themes exist. Industrial companies have experienced significant revenue and profitability growth in recent years, driven by a buoyant global economy, increased global trade, and significant investments in infrastructure, commercial and residential property and manufacturing capacity. Despite years of steady growth, many industrial sectors remain inherently cyclical.
As concerns about the global economy continue, industrial companies are faced with the challenge of attempting to maintain profitability despite fluctuating demand, as well as supply chain and workforce concerns. Trade barriers, changes in demand patterns, and COVID related transportation issues have exposed the difficulty of maintaining global supply chains. In any scenario western industrial companies will face growing competition from companies in developing economies, who are rapidly improving the quality of goods and services they provide.
Trends in markets that industrial companies sell to are rapidly changing. The energy sector is facing rapid upheaval with countries, producers and investors rapidly shifting their focus towards decarbonization and the energy transition. Increased infrastructure spending should help renew ageing infrastructure and accommodate changing population patterns, but investment levels are still too low and with inflation concerns growing future spending levels remain uncertain.
Across the industrials sector we are in the early stages of a digital transformation which promises to enable companies to make smarter decisions and enable greater profits. However, many companies have struggled to successfully implement these solutions. Companies across the industrial sector face growing uncertainty and need to focus on maintaining profitability in a rapidly changing world.