“Green – Lean – Digital” – our point of view

The European industry, especially in Germany, is suffering from weak growth and recession. High production costs and interest rates are aggravating the financial situation. The key question is how to finance the necessary transformation while maintaining competitiveness. B&C believes that increasing productivity is the key. But increasing productivity requires full concentration and new ways of thinking.

Our point of view
The last few years in the steel and metal industry have been dominated by the development of concepts and measures to implement the green transformation. Driven by the subsidies that were promised for the first time in the “Handlungskonzept Stahl” in 2020, as well as the full order books and lucrative business of recent years, the necessary investment sums apparently played only a subordinate role.

However, European industry in general and Germany in particular are suffering from a significant slowdown in growth, with Germany even in recession. Prospects for a rapid recovery are limited. At the same time, highly increasing input costs (especially energy) are impacting profit margins, as the cost increases cannot be passed on 1:1 to customers, and the comparatively high interest rates have increased the cost of capital. This brings us to the key question: how to finance the necessary transformation while maintaining or regaining competitiveness?

There is only one solution: increase productivity! This is the only way to achieve profitability, competitiveness and thus survival (see Figure 1). And survival is of course also a prerequisite for a net-zero transformation.

Source: Statista

Figure 2 shows the productivity growth rates in Germany over the course of time.

The trend is clear: productivity potential is no longer lying on the street but requires full concentration to realize. This is certainly not a new insight, but the focus can no longer be solely on productivity in the sense of headcount reduction as has often been postulated in the past. Labor costs as a percentage of value added in metal production are currently well below 10%. Reducing headcount is therefore no longer as effective as it has been in recent decades. The order of the day is therefore to think differently about productivity and to strive for a redesign that uses more intelligence in the process.

The focus is on topics such as “just good enough”, the use of digital solutions, e.g. in waste optimization, or the intelligent use of the inhouse scrap. The beauty of this is that lean and digital production and business processes tend to be green as well, contributing to the green transformation.

We therefore believe that the new “Green – Lean – Digital” competence bundle is the key to building up the necessary strength and achieving cost efficiency. This will ensure long-term competitiveness while laying the foundation for mastering the Herculean task of the green transformation. At this year’s Metal Meets event, we also discussed these aspects and practical approaches in detail with leading minds from the industry.

We would be happy to discuss with you in person what exactly the “Green – Lean – Digital” competence bundle could look like in your company and what approaches B&C can contribute to this.

Your contact:

Marc Hartmann,
Senior Partner

Print article