I recently stumbled across another article telling everybody things like that Europe and its industry will soon collapse, that we have lost our competitive edge, and so on. While those articles are doing their best to create opinions, we at ARC are more interested in creating knowledge.
ARC Advisory Group continuously researches automation markets, their structure, the players, and other important factors. Just a few weeks ago, we finished our client report on the European Automation Champions. While the details are for clients only, I want to share some of the key observations and a summary with you. Our sample consisted of around 100 European automation companies, and we analyzed their portfolio, size, product, go-to-market strategy, strengths, etc.. We segmented the market into 4 different segments along two axis:
The X-axis shows the companies’ solution capabilities. On the left are companies that focus primarily on product business, while companies on the right have high solution capabilities. This does not mean that all products are sold via solution business. Large parts can still be sold indirectly or simply as components.
The Y-axis shows the industry split and know-how. In the upper part are companies that span across many industries, while the bottom ones are more focused. It is important to see this chart as purely descriptive. A company on the top right is not necessarily “better” than any on bottom left in terms of growth or profitability. A focused company can outperform the market but is also more exposed to disruptions.
Broad Solution Providers: These companies have a broad offering in hardware and software. They cater to a broad set of industries, from discrete to hybrid to process. Their value proposition is typically the integration between the products combined with the know-how of vertical markets.
Technology Specialists: These companies have a limited product offering, but they supply them in many different industries. Their products are typically best-in-class.
Industry/Application Experts: These experts often have a broad offering but focus on a dedicated set of industries or sometimes applications, such as intralogistics. They understand a specific vertical and application very well and provide solutions to it.
Focused Companies: Narrower in scope in terms of industry and products. These companies provide a mix of best-in-class, solution portfolio, and industry focus. Often, these companies are rooted in a specific product/vertical, but have expanded their offering over the years
Below you find a short list with selected and illustrative companies. If you are interested in the reasoning behind the classification, the complete list, or detailed profiles, please let us know.
SWOT of the European Automation Eco-System
A company is never alone and is always stronger in an eco-system. It needs suppliers of components, customers, technology partners, etc. Many studies have demonstrated the competitive advantage of clusters, and many government bodies (on country and regional level as well as the European Union) are pushing the formation of these clusters. Based on the result of the analysis of 100 automation companies, we created a SWOT analysis of the European Automation eco-system / cluster, describing the strengths, weaknesses, and challenges for the cluster as a whole. This is shown in the next chart.
Overall, I personally think there is absolutely no reason to panic. When it comes to high-end automation (from sensors to controller/HMI), European companies remain at the top and are the leaders globally. Especially the strong local eco-system is a USP of Europe and not seen in any other region. Japan is closest with its strong collaboration between local players.
Certainly, there are distinct topics, where other countries / regions are leading. This also includes future topics, such as semiconductors, electronics, battery manufacturing, or (partly) robotics. Here, European companies are more fast followers than leaders, and it remains to be seen, how these eco-systems will develop. Among the biggest drawbacks is certainly that none of the hyper-scalers is Europe based. While AWS or Microsoft continue to invest here and increase their presence, they remain American companies with whom many of the European Automation vendors collaborate, but ultimately have little direct influence.