Machinery

Industry 4.0 is putting traditional machinery OEMs under threat as digital providers look to move into the space as new competitors.

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What is the current position of the machinery industry?

The machinery industry faces significant challenges amidst the struggling global economy in 2024 and these challenges have spilt into 2025. Inflationary pressures on critical commodities like steel and aluminum are placing strains on profit margins, while high interest rates are limiting customers’ capacity to finance large machinery purchases. Although supply chain disruptions are gradually easing, they still weigh heavily on the industry’s operations. Moreover, the persistent shortage of skilled labor remains an ongoing concern, adding to the complexities faced by the sector.
Sustainability and decarbonization will likely be a key concern in 2025. Many machinery companies are anticipated to boost their investment in R&D capabilities and exploit developments in decarbonization and recycling technology.
Increasing vertical integration will provide manufacturers with greater visibility into their operations and gives them a better understanding of the processes involved throughout their supply chain. This heightened visibility allows manufacturers to improve their forecasting and planning when taking orders or designing and marketing new products.

Machinery Industry Trends & Challenges

Machinery companies face a number of opportunities and threats to their businesses. The companies best placed to deal with a challenge will consider it an opportunity, while those poorly prepared will face it as a threat.
Before the COVID-19 crisis, there were several trends that machinery companies were responding to. As the industry recovers from the pandemic, some of those trends remain, and some new challenges have emerged. Those include:
– Additive Manufacturing
– Artificial Intelligence
– Electronics and Software Introduction
– Internet of Things
– Product-as-a-service
– Sustainability
– Digital twins
– Economic performance, incentives and directives
– Sustainable material sourcing
– Product efficiency and reporting

New technologies and procedures that are quickly developed and commercialized can increase productivity and cut expenses, which is vital in this post-COVID world. Furthermore, the transition toward operational and digital efficiencies will almost certainly be accelerated by emerging technologies, changing company models, and rising M&A activity. Particularly, digital thread and smart factories provide a variety of productivity- and efficiency-improving technologies that can shorten cycle times and speed up time to market.
Ongoing challenges restrain overall confidence regarding revenue growth. Operational effectiveness and profitability are declining as a result of labor shortages and unstable supply chains. The cost of commodities, including steel, aluminium, and other materials, has increased due to shortages.
Here are some of the key challenges facing the industry:
– Cybersecurity
– Geopolitical tension
– Labor shortages
– Regulatory compliance
– Supply chain disruptions
– Unfavorable economic conditions.
– Trade Wars/Tariffs
– Government restrictions
– Tight macro environment

For more in-depth information about the Machinery industry, check out our e-learning course and Industry Insights platform.

E-learning course & Insights Platform

E-learning course

Self-paced e-learning
CPE-approved
Designed for customer-facing professionals

Objectives

Identify the industry terminology
Identify the relationships between typical companies in the industry supply chain and understand the structure of a typical business
Pick out some of the major issues faced by Machinery companies in today’s industry
Differentiate between the initiatives they take to respond to business issues

Cambashi Ltd is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE sponsors through its website: http://www.nasbaregistry.org

Industry Insights Platform

Tactical industry intelligence updated in real-time by industry experts.
The latest trends & challenges, business drivers, products & services, and technology.
Key players and consumer perspective
Industry terminology and metrics
Deeper knowledge across a variety of industry subjects

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Machinery Industry Related Professions

The machinery industry’s workforce is complex and varies by region. Managers & Supervisors oversee operations, coordinate tasks, and ensure smooth functioning within the industry. Professionals, such as engineers and designers, play pivotal roles in research, development, and innovation, driving technological advancements. Semi-professionals contribute essential technical skills, often involved in assembly, maintenance, and quality control processes. Meanwhile, AEC & MFG Workers form the backbone of production, engaged in manual labor and operating machinery.

Geographic variations significantly impact the distribution of these occupational groups. In regions with advanced industrial infrastructure like North America and Western Europe, there tends to be a higher concentration of Professionals and Managers & Supervisors due to the emphasis on innovation and managerial expertise. Semi-professional and shop floor worker roles may still exist but are often supplemented by automation and advanced technologies. In contrast, emerging economies in APAC, South America, and parts of Eastern Europe may have a larger proportion of semi-professionals and shop floor workers, reflecting their reliance on labor-intensive manufacturing processes and lower levels of automation. However, as these regions modernize and invest in technology, the distribution may gradually shift towards more professional and managerial roles. Understanding these geographic variations is crucial for workforce planning and adapting to changing industry dynamics.

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Software Market in the Machinery Industry

Between 2020 and 2024, the technical software market in the industrial machinery industry increased each year, although growth rates have fluctuated. In 2018 the market experienced a significant surge of +16%, driven by heightened demand for advanced design and manufacturing solutions across major geographies. This growth was fueled by increasing adoption of Computer-Aided Design (CAD) software, as manufacturers sought to enhance their product development processes, enabling more efficient design iterations and faster time-to-market.

However, in 2019 the growth rate fell to +5%, influenced by global economic uncertainties and trade tensions impacting industrial investments. This slowdown persisted into 2020, with a marginal +1% growth rate, as the onset of the COVID-19 pandemic disrupted supply chains and dampened capital expenditures. Nonetheless, the market rebounded strongly in 2021 with a remarkable +15% growth rate, as manufacturers sought solutions to enable remote collaboration, automate manufacturing processes, facilitate simulation and analysis, and centralize product data management. In 2022, growth bottomed out at +1%, indicating demand outpaced supply following the pandemic. In the years that followed the industry looks to have settled on a growth rate closer to +5%.

In regions with well-established manufacturing sectors such as North America, Western Europe, and Central Asia, there tends to be higher adoption rates of advanced technical software. These regions often have a strong emphasis on innovation, investment in research and development, and a skilled workforce, which fosters the adoption of technical software. Emerging economies in regions like Eastern Europe and South Asia are also experiencing increasing adoption of technical manufacturing software as they seek to modernize their industrial base and attract foreign investment.

The machinery industry develops and incorporates some of the most advanced technologies of any manufacturing sector. These technologies cover not only machine development but also production and supply.

Industrial machinery is at the forefront of digital transformation and Industry 4.0. This requires IT infrastructure to support enterprise systems both internally and/or externally – i.e. in the cloud. Aging workforces, an increasing shortage of skilled labor, and ongoing supply chain challenges have forced manufacturers to embrace automation and new production technologies such as robotics and cobots.

Here we can see the relative sizes of the Computer-Aided Technologies (Mechanical CAD, Mechanical CAE, CAM) and PLM software sectors in the global machinery market. The total is worth approximately $US3.1 billion annually. Note how MCAD is the largest segment, which highlights the importance of engineering design in the machinery sector.

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Design/Engineering/Manufacturing Software Market Share – Machinery Industry

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