Improved Outlook? - Roland Berger › publications › ... · French Plants Competitiveness...

French Manufacturing Competitiveness Radar 2014/2015

Paris, March 2015

Improved Outlook?

2 French Plants Competitiveness 2014.pptx

Roland Berger's manufacturing Competitiveness Radar

We are proud to present you the third edition of our survey on French plants competitiveness.

The role of manufacturing in advanced economies is changing.

The current survey was conducted between September and November 2014, involving more than

100 plant managers and representing a broad range of French industries. The survey captures prevailing

trends on six topics:

Evolution of French manufacturing competitiveness since 2012 and its outlooks for 2015

Profit margin levels

Typical profile of competitive and non competitive plants

Keys levers to increase competitiveness

Appropriation by French plant managers of Industry 4.0

Innovation

1.

2.

3.

4.

5.

6.


1

4

4

5

8

9

9

11

14

17

Editing & printing

Pharmacy & perfumery

Mechanical industry

Automotive & transportation

Chemistry & plastics

Agri-business & household equipment

Metal working and mineral products

Electric & electronic equipment and components

Textile industry

Process industries (wood, paper, glass, building)

2014 survey results are based on contributions from French plant managers across a wide scope of industries

Source: Roland Berger Manufacturing Competitiveness Radar 2014 Survey

Number of respondents per industry

Survey responses from more than 100 plants managers

100% of surveyed plants are based in France

18% are French subsidiaries of international firms

58% of surveyed plants have more than 250 FTEs, while 21% have less than 100 FTEs. 15% have more than 1,000 FTEs

Most industry segments were covered by the analysis

Sample portrait


To p e x e c u t i v e s u m m a r y

77% of respondents consider themselves as competitive (vs. 78% in 2013), and 63% of respondents expect their competitiveness to improve in 2015 (vs. only 56% in 2013).

Margin levels were stable in 2014 and outlooks for 2015 are positive.

Smaller plants improved their competitiveness in 2014 although larger plants still are on average more competitive. The level of capital is not discriminatory between competitive and non competitive plants. Less competitive plants export less but are more exposed to international competition, a result already underlined by our past surveys.

French plants' outlook is improving – Product innovation as a key issue – Limited progress in Industry 4.0 awareness

Labor costs still poses the highest challenge to improve competitiveness, but to a more limited extent than in 2013 and 2012. Product innovation and R&D are other hot issues on which plant managers want to improve themselves. Mastering industrial processes and operational efficiency are even more important, but plant managers perception is that current performance is already satisfactory.

Competitive plants still have limited awareness of Industry 4.0 concepts although some impact is expected from cyber-security, radio frequency identification, robotics and plants super-connections.

Competitive plants innovate more and appear also more active on their product portfolio. Reflecting the increasing attention on product innovation, Marketing and R&D managers are getting more involved on portfolio reviews.

1.

2.

3.

4.

5.

6.


France may further destroy manufacturing jobs in the coming years – automation playing key role

Source: INSEE, OFCE, COE-Rexecode, Roland Berger

1 354

518

435

1771 222

Additional Job

seekers 2013 - 2023

Creation of Jobs

in Services

Destruction of

Jobs in Services

Creation of

Manufacturing Jobs

128

Destruction of

Manufacturing Jobs

Active Population

Growth 2013-2023

-50t manufacturing jobs

+837t jobs in services

Creation & destruction of jobs in manufacturing and services in France [2013 – 2023; thousands]


French industries will be impacted differently depending on their added value and their addressable markets

Commoditized products & services

Differentiated products & services

(technological advance, know-how, brands)

Local Markets (need for proximity or limited transportation capacity)

Global Markets (dematerialized service ou strong transportation capacity)

Source: Roland Berger

Added Value

Adressable Markets

Basic industries

Services to indivuals and low added value businesses

Agri-business

Automotive

Pharmacy Plastic and industry

Aeronautics & equipments

Agriculture

Electricity Production

Manufacturing specialty products

Luxury Intellectual services with strong added value

Administration

Mining and raw material extraction

Construction

Public services

Services that cannot be offshored/delocalized

Manufacturing Service Bubble size proportional to size in French economy


French competitiveness stabilized in 2014

Do you consider your plant as…

25% 22% 22%

63% 66% 64%

12% 12% 13%

Competitive

Not competitive

Very competitive

2013 2012 2014

Source: Roland Berger Manufacturing Competitiveness Radar 2014 Survey, Trendeo, INSEE

1) Plants with more than 10 employees

1.


The outlook of French plants competitiveness is improving

% of respondents considering that their competitiveness…


Very Competitive plant

Competitive plant

Not Competitive plant

77%

80%

42%

54%

61%

73%

2012

2013

2014

…has Improved vs. 2011

…was going to improve

…actually improved

2015 …will improve 59%

52%

4%

34%

39%

49%

15%

25%

52%

68%

73%

56%

1.

…was going to improve

…actually improved


Most plant managers expect profit margins to increase in 2015 – Still 20% of respondents in distress


% of respondents considering that their profit margin level….

33%

…has

decreased 36%

…has

increased 31%

…has remained

stable

23%

…will

increase 41%

…will remain

stable 39%

…will

decrease

59%

27%

14%

45%

35%

20%

Competitive / Very competitive

In 2014 vs. 2013

From 2014 to 2015

Not competitive TOTAL

45%

23%

32%

35%

30%

35%

2.


81%83%

71%

2013 2012

-2% + 12 pts

2014

Smaller plants seem to perform slightly better, but size not a strong differentiating factor

Plants considering themselves competitive or very competitive, function of sales


75%79%82%

- 3 pts

2014

-5%

2013 2012

Plants with sales < 50 M EUR

Plants with sales > 50 M EUR

3.


Share of exports in sales is increasing – but no clear correlation between competitiveness and level of exports

Share of export sales on total plant sales

45%41%42%

2014 2013 2012

46%

38%41%

2012 2014 2013

49%

36%39%

2014 2013 2012

3.

Very competitive Competitive Not competitive


Competitive or Very competitive Not competitive

…however, less competitive plants suffer more from international competition

Competitive landscape - % of non French first competitors


68%67%60%

+ 7 pts

2014 2013 2012

86%

74%78%

- 4 pts

2014 2013 2012

3.


Competitive plants do not necessarily invest more

Average investments (% of sales) per competitiveness level

Source: Roland Berger Manufacturing Competitiveness Radar 2014 Survey,

4.8%4.9%

5.5%

2014 2013 2012

5.6%

4.6%

5.4%

2014 2013 2012

5.0%4.8%

5.5%

2012 2014 2013

3.

Competitive and very competitive plants Not competitive plants TOTAL


Improving industrial processes and operational efficiency more critical than labor costs – Possible CICE effect

16%

35%

45%

54%

56%

61%

66%

69%

71%

73%

79%

80%

81%

82%

84%

91%

91%

Local network of same industry actors

Local infrastructures

Public support

Marketing

Plant size

Group size

Energy costs

R&D

Labor costs

Product innovation

Manufacturing flexibility

Sales force

Supply chain

Labor qualification

Raw material purchases

Operational efficiency

Industrial processes Critical issues

Important issues

Secondary issues

% of respondents considering the criteria either critical or very critical

Source: Roland Berger Manufacturing Competitiveness Radar 2014 Survey,

4.

2014

2

3

1

4

6

7

8

9

5

10

12

13

14

15

16

11

17

vs. 2013

+1

+1

-2

+4

-1

+3

-2

-1

-3

=

=

+1

-1

+1

-1

=

=


Labor costs still too high – Increasing share of innovation and R&D as critical productivity mismatch

Operational efficiency 14%

R&D 17%

Product innovation 23%

Labor costs 34%

7%

Industrial processes 8%

Manufacturing flexibility 9%

Supply chain 10%

Public support 12%

Sales force 13%

Local infrastructures -15%

Plant size -13%

Group size -8%

Local network of same industry actors 1%

Labor qualification 2%

Energy costs 4%

Marketing 5%

Raw material purchases

Competitiveness mismatch


This chart measures the difference (or mismatch) between the number of respondents considering a criteria critical and those regarding themselves as actually competitive on this criteria.

Rationale =

+1

+5

+7

=

-4

-1

+3

-6

-1

-5

+2

-1

+1

-3

-3

-6

4.

2014 vs. 2013

Critical issues

Important issues

Secondary issues

2

3

1

4

6

7

8

9

5

10

12

13

14

15

16

11

17


Competitive plants are more worried about innovation and R&D than just labor costs

Manufacturing

flexibility

Raw material

purchases

Labor

qualification

Product

innovation Supply

chain

R&D Labor

costs


% of respondents considering themselves competitive on a criteria considered critical1)

1) Number of respondents considering themselves competitive over number of respondents considering the criteria as critical, amongst all respondents of their respective "competitiveness category"

Competitive plants Not competitive plants

2014

27% 40%

2013

19% 28%

2014

24%

50%

2013

67% 55%

2014

41% 49%

2013

63% 56%

2014

64% 71%

2013

74% 67%

2014

59% 74%

2013

63% 76%

2014

64% 81%

2013

67% 77%

2014

77% 81%

2013

85% 83% 88%

2014

59% 82%

2013

78%

4.

Operational

efficiency


Our 2014 manufacturing survey updates French plant managers awareness on Industry 4.0

Overview of a selection of Industry 4.0 key concepts [selection]


Cybersecurity

> Technologies, processes and standards (ISO 27001) enabling organizations to protect computers, networks and data from unauthorized access

Big data

> Refers to data so large, complex or rapid that it is difficult to process using traditional database and software techniques

Cloud computing

> The capacity to share computing resources – typically through the Internet - rather than having local servers or personal devices to handle applications

Plants super-connection

> Connection of machines, work pieces and systems, to create intelligent networks along the entire value chain that can control each other autonomously

3D printing

> Also called additive manufacturing. A process of making a three-dimensional solid object of virtually any shape from a digital model

> Allows customizable, one-off production with virtually no waste

Augmented reality (AR)

> Real-world environment digitally enhanced by computer-generated sensory input such as sound, video, graphics or GPS data

Robotics

> Technology dealing with the design, construction, operation, and application of robots in order to improve productivity, product quality and worker safety

Radio frequency identification (RFID)

> Automatic identification method, relying on storing and remotely retrieving data using devices called RFID tags or transponders

Rapid prototyping

> Group of techniques using in particular 3D computer aided design data to rapidly and efficiently turn innovative ideas into scale models

5.


Competitive plants do not necessarily have a better awareness of Industry 4.0 concepts

Réalité augmentée 27%

Plants superconnection 30%

Big data 31%

Cloud computing 34%

3D printing 46%

Robotique 50%

RFID 55%

Cybersecurity 86%

23%

36%

27%

27%

55%

36%

77%

73%

15%

26%

21%

11%

19%

44%

35%

61%

14%

32%

36%

27%

27%

36%

50%

73%


Industry 4.0 key concepts overview – Understanding and expected impact

Amongst competitive plants

Amongst non competitive plants

Have a good / very good understanding

Qualify topic as to be impactful / very

Have a good / very good understanding

Qualify topic as to be impactful / very

5.


Industry 4.0 "hot topics" are cyber-security, robotics and radio frequency identification (RFID)


Industry 4.0 key concepts overview – Understanding and expected impact

Well understood

Impactful

-9

-26 -14

-22 -16 -9

-38 -4

88%

26% 35% 32% 58% 48%

62%

30% 52%

32% 48%

60% 69% 47%

85% 83%

15% 22% 42%

58%

21% 22% 39% 36%

63% 61% -1 +2 +5

-7

-15

-1 +3

+2

15% 15% 24% 22% 27% 23%

2014 2013

5.

Cybersecurity Robotics RFID Plants super-connection

Big data 3D printing Cloud computing Augmented reality

Cybersecurity RFID 3D printing Robotics Cloud computing Plants super-connection

Big data Augmented reality


Competitive plants work more intensively their product portfolio – With focus on innovation and renewal

…more than

25% of plant sales 9%

…between 10%

and 25% of plant sales 23%

…less than

10% of plant sales 68% 58%

16%

25%

Share of sales

generated by

products

launched after

1st January 2013

Frequency of

product

portfolio review

…at least once a month 9%

…several times a year 14%

…once a year 55%

…less than once a year 23%

14%

35%

23%

28%

✓ ✓


Non competitive plants Competitive plants

6.


Marketing and R&D managers are key managers to be involved on product portfolio reviews

Portfolio review [percentage of respondents]

57%

64%

64%

66%

68%

78%

83%

89%

Supply chain

Manufacturing

Sales

Finance

R&D

Top management

Marketing

Management control 53%

57%

62%

69%

75%

75%

Adapt pricing

Abandon products

or clients

Allocate production

between plants

Develop new products

Invest or not

Improve efficiency

and processes


6.

Who is involved… What decisions are taken…


Organization of R&D and Marketing (in site/off-site/centralized) does not appear as a relevant criteria for performance

36%

64%

20%

45%

50%

50%

85%

Marketing

Sales

Product development

Research

Product industrialization

None

Limited

Strong

7%

42%

51%

30%

47%

48%

48%

96%Teams

located in

plants

Involvement

in innovation


6.

Non competitive plants Competitive plants


Michel Jacob, Managing Partner France

Max Blanchet, Senior Partner

Emmanuel Bonnaud, Senior Partner

Georges de Thieulloy, Partner

Candice Rodriguez, Marketing & Public Relations

Amsterdam Barcelona Beijing Beirut Berlin Boston Brussels Bucharest Budapest Casablanca Chicago Detroit Doha Dubai Düsseldorf Frankfurt Gothenburg Guangzhou Hamburg Hong Kong Istanbul Jakarta Kuala Lumpur Kyiv Lagos Lisbon London Madrid Manama Milan Montreal Moscow Mumbai Munich New York Paris Prague Riga Rome São Paulo Seoul Shanghai Singapore Stockholm Stuttgart Taipei Tokyo Vienna Warsaw Zagreb Zurich

We thank the following

people for collaborating to

produce this study:

To be part of our 2015 survey,

please send your email to:

[email protected]

PARIS OFFICE 62-64, rue de Lisbonne

75008 Paris Phone +33 1 53670-320

Improved Outlook? - Roland Berger › publications › ... · French Plants Competitiveness...

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