Access to the latest digitalised technology is critical for precision engineering and machining companies to improve global competitiveness. At the same time they are coming under unprecedented financial pressure as globalisation drives down prices and drives up demand for quality. A global qualitative study by Siemens Financial Services (SFS) of precision and engineering companies has found smart finance is becoming increasingly important to facilitate new-generation technology acquisition.
The research shows that emerging global opportunities are being matched by globalised competition. A majority of respondents (61%) said the larger part of their competition now comes from foreign competitors, and that foreign-based competition is rising. At the same time, most (67%) said they expect their own export sales to increase over the next five years.
It is recognised that new-generation digitalised technology plays a critical role in responding to competitive threats. Digitalised technology offers precision engineering companies various competitive advantages including the ability to make more accurate products faster and at lower cost, and reducing set-up time and time to market. 80% say they are under pressure to adopt and implement the latest technology. Similarly, increasing automation and improving energy efficiency through the use of new technology, were also highlighted as important for optimising performance.
Companies are therefore looking to access a broader range of flexible financing tools in order acquire competitively critical technology. 60% said a broader range of financing techniques is ‘very important’ or ‘crucial’ in making their company more competitive and achieving growth in global markets. Asset finance was identified as a finance solution already being used; 63% said they had funded technology acquisitions in this way.
“SME manufacturers face a watershed moment, following their larger counterparts on the digitalisation journey”, comments Brian Foster, Head of Industry Finance at Siemens Financial Services. “These companies understand the importance of consistently upgrading technology to maintain competitiveness, and it’s clear that demand for alternative financing techniques will continue to increase to help cope with that challenge.”
Chief Financial Officers, Chief Executives and Production Directors of leading manufacturing companies were interviewed by phone in a qualitative research study during the period from April to July 2016 in the following countries: China, Finland, France, Germany, India, Norway, Poland, Russia, Spain, Sweden, Turkey, UK and USA. Respondents were asked to give their views on the significance of foreign competition for their business, the importance of upgrading technology in staying competitive, and the use of smart finance to enable technology acquisition.
The paper is available at www.siemens.com/the-finance-factor
For further information on Siemens Financial Services, please see www.siemens.com/finance