Allensbach Study: Mechanical engineering companies anticipate loss of technological leadership / China offensive and migration of services continue to put pressure on business models

• Only 14 per cent of mechanical engineering companies have established technology partnerships with US or Asian companies to date
• 72 per cent are responding to structural changes by relocating production steps to regions with lower costs
• One fifth (20 per cent) are considering investing in (AI) start-ups

Mechanical engineering companies that see themselves affected by a possible loss of technological leadership are showing a mixed pattern of responses. 86 per cent are investing more heavily in building up their own software and IT expertise, with a further three per cent planning to do so in the short term. 73 per cent are working on accelerating their innovation cycles. Around two-thirds are intensifying their cooperation with universities and research institutions or are planning to do so (66 per cent). The same number want to focus their business more strongly on niches in the future, while a further 14 per cent are already strongly focused on niches today. Technology partnerships with US or Asian companies currently exist in 14 per cent of cases, with a further 21 per cent planning to establish such collaborations.

‘The fact that a majority of mechanical engineering companies expect to lose their technological leadership would have been unthinkable just a few years ago. We are already seeing this in the market today in some cases, such as in tool and injection moulding machine manufacturing,’ says Philipp Oemler, Senior Managing Director at FTI-Andersch, FTI Consulting's consulting unit specialising in restructuring, business transformation and transactions. ‘The decisive factor now is how companies respond to this. Traditional instruments such as focusing can be useful in individual cases, but they fall short if they are not part of a holistic transformation. In many cases, simply “continuing to grow with the market” will no longer be enough. What is needed are targeted adjustments to business models, portfolios and value creation in line with the new competitive realities.’

Further structural changes: China's offensive in Europe and the takeover of services by third-party providers

Almost all of the mechanical and plant engineering companies surveyed believe it is likely that Chinese companies will increasingly enter the European market in the coming years (93 per cent). More than half consider this to be very likely (52 per cent), while a further ten per cent state that this market entry has already taken place in their segment. For 19 percent of companies, this would have a very strong impact on their own business, and for another 38 percent, it would have a strong impact – meaning that a total of 57 percent would be significantly affected.

29 percent of mechanical and plant engineering companies also report considerable or limited financial disadvantages because maintenance and support services are increasingly being taken over by third-party providers – for example, through the use of artificial intelligence, automation or digital platforms.

‘Competitive pressure in mechanical and plant engineering is increasing on several levels at once: new regional competitors as well as players from the software and service sectors. In some cases, this is leading to significant declines in sales in the service business,’ says Philipp Oemler. ‘This raises the very specific question for every company of where it can differentiate itself and where it cannot. This clarity is a prerequisite for targeting investments and avoiding misallocations.’

Companies are responding to structural disruptions with these measures

In response to increasing structural disruptions, many mechanical and plant engineering companies that feel affected are relying on a combination of technological, organisational and strategic adjustments. Four out of five companies are developing their own digital service offerings or plan to do so in the near future (80 per cent). 72 per cent are relocating production steps to regions with lower costs or are preparing to do so. A clear majority are also investing in additional software and AI expertise and focusing their business more strongly on specialised niche markets.

Only a good third of mechanical engineering companies are planning new revenue models such as pay-per-use or monitoring-as-a-service (37 per cent). Twenty per cent are considering investments in specialised (AI) start-ups in order to secure additional momentum in a targeted manner.

‘Our observations from our consulting practice coincide with the results of the Allensbach study: many companies have reacted actively in recent years, but rather conservatively and with a focus on specific areas,’ says Philipp Oemler. "In mechanical engineering, against the backdrop of the new market conditions, decisions will be made less about individual measures and more about whether technology, service and commercial logic can be combined into a coherent business model. This is precisely where the decisive leverage lies for individual companies. Accordingly, we are seeing a sharp increase in the area of comprehensive transformations."

The entire study is available for download here.

Methodology

For the German Economic Pulse 2025, the Allensbach Institute for Public Opinion Research conducted a telephone survey of a total of 169 German industrial companies on behalf of the management consultancy FTI-Andersch. The focus was on energy-intensive industries (64 companies), mechanical and plant engineering (58) and automotive companies (47). Around 80 per cent of the interviews were conducted with board members or managing directors, the rest with division heads from the areas of finance, strategy and sales.

About FTI-Andersch

FTI-Andersch is a management consultancy that supports its clients in the development and implementation of sustainable future, performance and restructuring concepts. FTI-Andersch actively supports companies that are facing strategic, operational or financial challenges and change processes, or that want to align their business model, organisation and processes for the future at an early stage. Its clients include, in particular, medium-sized companies and corporations that operate internationally. FTI-Andersch is part of the FTI Consulting Group (NYSE: FCN) with more than 8,100 employees worldwide.