China on the rise
Industry Leaders reported stronger than expected auto and machinery demand from China. They think current levels can be supported by the country's expanding middle class and growing investments in the manufacturing sector.
Construction driving confidence
Industry Leaders remain bullish on the European business climate. Their confidence is bolstered by strong construction activity in the region's key markets, particularly Germany where the construction sector is 'under pressure' in a positive way.
Labor shortage solution
Due to the scarcity of skilled workers like engineers, manufacturing companies are exploring the use of new technologies like Augmented Reality (AR) that will allow engineers to service and repair machines remotely.
Are the benefits of new technology measurable?
- Over the past year, Industry Leaders have made a larger allocation of capex investments into Industry 4.0 technologies. This includes new capabilities in capturing and analyzing big data, cloud computing, and Internet of Things (IoT). Given that these technologies may not always have a direct impact on productivity, we asked Industry Leaders how they measure the expected return on their technology investments.
- Industry Leaders agree that it's extremely difficult to measure productivity gains and cost benefits from Industry 4.0 technologies. However, they believe it is detrimental to not participate in this "exploration phase" so they rely on their intuition when approaching new investments
- Companies must adopt an entrepreneurial approach and be willing to fail. Since many of the new investments are not asset heavy, like purchasing land or buildings, business leaders can let go of the mindset that they will be stuck with their investments for a long period of time.
- Because the learning curve is steep, Industry Leaders suggest making simultaneous investments in several small projects and try to remain agile and adapt where needed. It should be expected that most investments will fail to produce significant results, but likely one will prevail and have rewarding benefit.
- When selecting investments, Industry Leaders suggest to carefully consider the technical dependencies each project may create. Another selection criteria is to pursue projects that will provide a company a better understanding of its requirements, even if the project fails.
- Given the extensive number of new technologies, companies who are small or are dependent on the developments taking place in other parts of the supply chain, are prudently waiting to see which direction a trend develops before making investments.
Share your view
- What do you think of the current situation in Qatar?
- Do you think financial markets will experience a significant pull back within the next 1-2 months?
- How will your business be impacted by data security regulations? How are you responding?
- If you'd like to share your insights or have questions for other members, please contact SH-ILN@ubs.com
About the network
The UBS Industry Leader Network is composed of executives and entrepreneurs of privately-held companies worldwide. Network membership is offered to a limited number of clients and prospects interested in sharing their business and industry perspectives.
Each month, this report presents the key takeaways from the conversations that network participants have with CIO.
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