4th ENGINEERING SUMMIT 2015
A conference report by 1155PM consultants GmbH.
The German mechanical and plant engineering sector enjoys a superb reputation around the world for the outstanding quality of its products. But the political tension with Russia and the competition by Asian and North American manufacturers are becoming increasingly worrying factors within the industry. The Engineering Summit, organised for the fourth time by the German Engineering Federation (VDMA) on 1 and 2 December 2015 in Mannheim, offered 300 top-level representatives from companies within the mechanical and plant engineering sector an ideal opportunity to take stock.
The numerous talks plainly indicated that despite consistent growth, the industry is increasingly feeling the pinch of competition from China and South Korea. More than that, the companies are already working on strategies to allow them to manufacture more profitably and efficiently. It seems that the introduction of flexible and modular solutions within plant engineering is becoming an important instrument in the global struggle for market shares. Some mechanical and plant engineering companies continue to place their trust in German virtues, drawing attention to the inflexible and loss-making practices of businesses operating in Asia. There was unanimous agreement between the attendees when the discussions turned to the topic of Industry 4.0. The introduction of new technologies would be a good way of setting German manufacturers further apart in the global competition for the best solutions and services.
The delegates also mentioned the development of human resources within companies, and the necessity for them to introduce robust claim management systems. Many of the speakers highlighted the importance of these two aspects in order for companies to preserve their long-term competitiveness.
In the following, you will find a summary of the talks given by the individual company delegates at the 4th Engineering Summit, as seen through the eyes of the team representing 1155PM consultants GmbH, Mr Jürgen Hahn and Mr Martin Janowski:
1. Trends and developments in industrial plant engineering; Mr Dieter Rosenthal, Member of the Board, SMS group GmbH
Mr Dieter Rosenthal’s talk outlining current and future requirements for companies in industrial plant engineering was first up in an event that continued in the extremely successful tradition of previous years.
His talk focused not only on the question of the extent to which plant engineering companies will be required to incorporate within their business models more global influences such as the spread of urbanisation in Asia, climate change, the scarcity of resources, and transformation processes in social and demographic conditions. He also discussed the opportunities that plant engineering companies can exploit to secure a strong position over local competition in China through greater customer focus, more flexible product design and greater proximity to the market.
2. Quo vadis plant engineering? Current economic trends in a challenging competitive environment; Mr Klaus Gottwald, speaker, VDMA Work Group for Large-Scale Plant Engineering
The following shows a brief summary of the results obtained from a survey conducted by VDMA on economic trends within plant and large-scale plant engineering, which also touched on industry-specific issues with a special focus on increasing competition from the Far East:
The industry is likely to see a slight increase in order intake over 2016, despite the fraught economic situation.
The markets in the Middle East, South America and Southeast Asia offer the greatest potential for the engineering sector in 2016.
Demand from China and Western/Eastern Europe remains sluggish.
The industry will experience a further intensification in competitive pressure.
The main competitors for German plant engineers / mechanical engineers come from China and Western Europe.
The increasing internationalisation of the industry will continue unabated; most of the companies within the sector will step up their global efforts in terms of engineering, procurement and sales.
How can companies boost their competitiveness? “Best-cost-country-sourcing”; improvements in procedure during the quotation phase; upgrades in the service business; and the protection of technological leadership were seen as the most important factors.
3. What do our Asian competitors do differently, i.e. what makes them strong? A case study of cooperation; Dr Hans Nicolaus Rindfleisch, Managing Director, TÜV Süd Chemie Service GmbH
Dr Hans Rindfleisch from TÜV SÜD Chemie Service GmbH gave a fascinating talk on the efficient performance and quality of plant engineering companies from Asia (above all China, Japan, South Korea), which in recent years has produced an ever-tightening spiral of competition with plant engineers from the West. His conclusion: European plant engineers are still some way ahead in terms of engineering. But in terms of construction they are inferior to their Asian competitors, who maintain tight organisation and communication, and who clearly delimit responsibilities.
4. Turbulence on the commodities markets – implications for plant engineering; Mr Ulf Herrlett, Vice President Innovation & Development, Air Liquide Global E&C Solutions Germany GmbH
Mr Ulf Herrlett, Vice President Innovation & Development, Air Liquide Global Service GmbH used his talk to explain which implications turbulence on the commodities market may have for companies in the plant engineering sector, and how they can mitigate the risks of elevated volatility and highly dynamic commodity markets through diversification of their product portfolios, location policies and through focus on their target groups:
The price of oil will only experience a slight rise to $80 by 2020.
China’s economic growth will slump from 6.8% in 2015 to 6.5% in 2016.
Are the boom times over for US shale gas?
Upstream investments will follow the price of oil. A large number of projects have been postponed indefinitely, or are already shelved.
We will need a rock solid economy to bring progress to non-petroleum-based projects for as long as the price of oil hovers around the profitability threshold.
The greater the dependency of engineering companies on the oil business, the more they will feel the repercussions of a reduced oil price.
5. International HR acquisition: Methods, opportunities, risks; Mr Jan Christoph Schüler, Country HR Manager, ABB Deutschland AG
Mr Jan-Christoph Schüler from the ABB Group used his talk to shed light on the topic of increasing internationalisation from an HR perspective, providing insight into the specific strategies that ABB uses to recruit and retain foreign specialists. Mr Schüler also described initiatives aimed at recruiting staff for international locations. He reported how ABB is increasingly focusing on the introduction of measures to prevent – even demographically caused – brain drain due to the departure of long-standing employees.
6. Repositioning R&D in an international context – the protection of intellectual property rights, Dr Hannes Storch, Vice President Sulphuric Acid/Off-gas, Outotec GmbH & Co.KG
Mr Hannes Storch from Outotec gave an immensely topical talk on the following issue: How can companies protect their intellectual property in view of the increasing internationalisation of R&D? He used a number of case studies and practical examples to present a series of possible solutions. His main points were:
Research & development must be considered a technological driver of growth.
It is not always possible to achieve innovation alone; partnerships are important.
Black box concepts are needed to protect proprietary technological developments.
Rigorous personal contact with business partners is essential to build trust.
A solidly structured and defined R&D process is key to the protection of intellectual property.
7. Global engineering: Efficient organisation of the worldwide planning process; Mr Carsten Pott, Global Head of Engineering, Siemens AG
Mr Carsten Pott from Siemens AG used his talk "How to organize the global Engineering process efficiently" to highlight how his company achieved successful internationalisation within engineering through the establishment of a site in Gurgaon (India). This company was particularly concerned to create an engineering department in India that would operate on an equal footing with its partners, and that would act autonomously while still maintaining certain core competencies from Germany.
8. Internationalisation in value added: Globalisation strategies as seen by a medium-size company; Mr Ulf Meusel-Böhm, Managing Director, Coperion GmbH
Mr Ulf Meusel-Böhm from Coperion addressed the issue of internationalisation/globalisation, this time from the perspective of a medium-sized plant engineering company. Among other things, he focused on the improvement of collaboration with customers in an international environment, and on streamlining the process chain in order to model globalised structures.
9. Keynote: Strategic competition factors; Herr Jens Michael Wegmann, Chief Executive Officer, ThyssenKrupp Industrial Solutions AG
The keynote on the second day of the conference, given by Mr Jens Michael Wegmann, presented the strategies that his company – ThyssenKrupp Industrial Solutions – uses as a diversified technology corporation to successfully walk the tightrope between a high degree of local presence with at times substantial customer proximity on the one hand, and an efficient, global network on the other.
Put succinctly, the challenges are as follows:
The general market environment is becoming increasingly testing.
The trend toward greenfield projects is persisting.
Customers are demanding a higher share of local value added.
Here are the summarised opportunities:
The agreement of partnerships with major EPC contractors.
The expansion of construction and assembly capacities.
The establishment of a stronger presence on the local markets.
10. New planning structures within plant engineering: Life sciences vs. chemical plant engineering; Dr Jürgen Hinderer, Head of Engineering, Bayer Technology Services GmbH; Mr Christian Wissel, Head of Engineering, Covestro AG
Dr Jürgen Hinderer (Bayer Technology Services) and Mr Christian Wissel gave the second talk of the morning, in which they discussed structural changes within the company and provided an outlook on the strategies that these two companies plan to employ in future.
11. Reducing lead times: Ideas, methods and successful examples; Dr Heiner Röhrl, CEO, Primetals Technologies Austria GmbH
Dr Röhrl from Primetals Technologies gave a fascinating talk in which he highlighted the importance of the time it takes to build a plant. He presented concepts (e.g., standardisation and modularisation) that can help substantially reduce plant construction times as a factor in delivering greater competitiveness in times of stagnating markets and heightened competitive and cost pressure. Dr Röhrl used the Tangshan Cold Mill Complex Project to elucidate how project lead times that would otherwise be 24 months can be reduced to 20 months. This was made possible by:
The use of standardised modules and the definition of clear requirements at the start of the project.
The parallel application of engineering processes and disciplines.
Prefabrication of components after upstream testing.
The use of an optimised logistics concept.
12. Mr Markus Ströbel, Managing Partner at Bausch + Ströbel GmbH outlined how plant engineers and machine suppliers can operate hand-in-hand within international projects – as seen in the innovative approach taken by the Excellence United alliance
Mr Markus Ströbel from Bausch + Ströbel GmbH used the last talk before lunch to present Excellence United, a strategic alliance between owner-managed companies specialised in the manufacture of machines and plants for the pharmaceuticals industry. Here he placed particular emphasis on good collaboration between the companies and on a trusting relationship between the members of the alliance. This procedure allows even medium-sized companies to withstand the pressure of the international markets through consistent exploitation of synergy within project management, sales and marketing.
13. Industry 4.0 in plant engineering: Revolution or evolution? Mr Thomas Waldmann, Director, VDMA Work Group for Large-Scale Plant Engineering; Thorsten Helmich, Managing Director, maexpartners GmbH
Mr Thomas Waldmann from the VDMA Work Group for Large-Scale Plant Engineering and Mr Thorsten Helmich from maexpartners addressed the implications of Industry 4.0 for companies within the plant engineering sector. Their talk focused in particular on analysing the expectations associated with Industry 4.0, before going on to describe the challenges that plant engineering companies will be forced to overcome as Industry 4.0 gradually takes effect.
14. Big data – Potential for the future of plant engineering; Mr Jörg Breuer, Head of Engineering, Technip Germany GmbH
Mr Jörg Breuer (Technip Germany GmbH) moved seamlessly from the topic of Industry 4.0 to look into the potential that big data offers plant engineering. The interesting areas he highlighted included the ramifications for EPC plant engineering projects and how big data can help reduce project life cycles and costs, monitor tasks and work, provide tailored information and achieve greater overall quality within project fulfilment.
15. Outlook: Faster, safer and better project fulfilment thanks to data-centric management processes; Mr Clemens Pulles, Manager Capital Projects IM/IT Business Improvement, Shell Global Solutions International BV
Mr Clemens Pulles from Shell Global Solutions International BV rounded off the conference with an English-language talk in which he looked into how data-centric fulfilment processes can contribute to fast, safe and better project management.
The Engineering Summit yielded some different ideas on future developments within mechanical and plant engineering, and the presence of senior management from the companies demonstrated once more the immense importance of this conference. 11:55 PM consultants GmbH is already looking forward to the next Engineering Summit in summer 2017.