Benchmarking study forecasts significant market changes in the large industrial plant manufacturing sector

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In the course of ongoing digitalization, the construction of large-scale plants is facing significant market changes, for which companies have to prepare intensively.

The status of digitisation in international large-scale plant engineering and construction and the market requirements in 2025 were the focal points of a cooperation of the VDMA’s Large Industrial Plant Manufacturers´ Group and the auditing and consulting firm PwC.

One key finding their joint study: the market share of digital, data-controlled services will have tripled by then and will change business models. The study identifies specific capabilities to enable large-scale plant construction companies to fully exploit the market potential in 2025. These include, for example, knowledge of change management, mastery of agile methods in project management, the promotion of a founder mentality and the development of intelligent logistics concepts that can be used to optimise construction site processes in particular. 

The study examined the state of digitalization in international large-scale plant engineering and the market requirements in 2025. The leading German companies were compared both with traditional and with new, more digitally driven competitors worldwide, their market position was benchmarked and possible fields of action were identified.

Based on a quantitative survey of more than 40 plant manufacturers and numerous interviews with international industry experts, the study shows that the technology-oriented business models ("technology enabled"), which dominate the market today with a share of around 60 percent, will lose considerably in importance by 2025. By contrast, digital, data-driven services ("open digital") will more than triple their market share by 2025. "In this changing environment, skills such as agility and flexibility are becoming increasingly important," explained Dr. Hannes Storch, member of the management board of Outotec GmbH & Co. KG and deputy spokesman of AGAB, on the occasion of the publication of the study in Frankfurt.

Large-scale plant construction companies have to adapt quickly to the changing market situation and the new customer requirements. Based on a digital reference model, the study has identified 18 specific capabilities for large-scale plant construction that are necessary to fully exploit the market potential in 2025. These include, for example, knowledge of change management and agile project management methods, the promotion of business incubators and the development of intelligent logistics concepts which help to optimize construction site processes.

"The analysis shows that German large-scale plant manufacturers have already achieved remarkable successes in building up the required capabilities and are clearly ahead of their competitors in some areas," explained Christian Elsholz, plant engineering expert at PwC and project director of the study. This is particularly the case with the further development of cyber security and virtual reality, which 94 percent of German plant constructors regard as crucial future capabilities. "Against the backdrop of radical technological upheavals and rapidly changing customer requirements, however, it is important that companies continue to push ahead with their digital transformation," said Elsholz. "Transparency of processes and close cooperation with partners within the value chain, particularly within the framework of integrated platforms, are becoming key success factors.

In contrast to international competition, German large-scale plant constructors rely predominantly on the development of internal skills in connection with digitalization. Only to a small extent they do purchase external know-how via the market. "In order to successfully master digital change, the industry must open up more strongly and retain more experts with a high level of digital expertise," says PwC manager Elsholz. “The company's own scope for decision-making, attractive development opportunities and modern working time models have proven to be helpful instruments.”

In conclusion, it can be said that the large-scale plant construction industry sees digitalization increasingly as an opportunity to become more efficient and to optimally meet customer requirements. It also became clear that considerable investments are still required in order to meet the expected changes in the market by 2025. "There are no general solutions for this. However, the study provides a guideline that each company can use individually to define the key steps to digital success," summarizes AGAB deputy spokesman Storch.

 

Against the background of radical technological upheavals and rapidly changing customer requirements, it is important that companies continue to consistently drive forward their digital transformation. Transparency of processes and close cooperation with partners within the value chain, for example within the framework of integrated platforms, are becoming key success factors. 

 

You can download the final study and a photo of Dr. Hannes Storch, Managing Director & Vice President Metals and Chemicals Processing, OUTOTEC, and Deputy Spokesman of the VDMA Large Industial Plant Manufacturers" Group at this page.
 
The VDMA Large Industrial Plant Manufacturers´ Group is the most important network of large-scale plant construction companies in Europe. It represents an annual order intake of 18 billion euros and around 54,000 employees in Germany. As a network-oriented association, the VDMA already offers many formats - such as the Engineering Summit - which provide scope for dialogue with partners from the value chain.

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