Europe's industrial future on show in Hannover

When future hopes collide with present realities adjustment is inevitable, and in Europe this is driving the momentum to reinvent industries and create more competitive, resilient and sustainable companies.

The collision between the European Commission’s newly launched Industrial Strategy in 2020 and Covid-19 prompted a reassessment of how to ensure global competitiveness. Alongside disrupted demand and a supply chains crisis, Europe emerges from the pandemic facing a war that exacerbated energy price rises, commodity shortages and inflation.

Yet these challenges only served to reiterate industry’s critical role in our future by driving growth and creating the jobs, skills and new ways of working that we will need tomorrow. As a result, policymakers and business leaders have focused on what is required to reinvent manufacturing for an era of unprecedented change. While Europe’s industrial trajectory remains the twin transition towards net zero and digitalisation, lockdown highlighted the need for greater resilience and autonomy in a dynamic global context.

All these themes come together at this week’s Hannover Messe 2023, the world’s premier industrial trade fair, under a consensus that technology innovation is crucial to Europe’s destiny. Indeed, technology, which used to be the disrupter, is now the enabler—a certainty in turbulent times. It is a primary source of competitive advantage that can generate new possibilities to accelerate growth. To thrive in the new order, industrial companies need a strong digital core as a foundation for reinvention.

The good news is that European industrial companies have accelerated tech investments in the past two years: 81% have stepped up implementing cloud services (versus 70% in other regions) and 76% have increased deployment of AI and automation (versus 64%).

There is another important reason why transforming industry is urgent—the battle against climate change, in which Europe plays a leading role. And despite concerns for unstable energy systems, the majority of engineering and manufacturing companies across Europe has ambitious CO2 reduction plan to decarbonise their internal operations and the products they make.

Having a strong digital core will also help accelerate sustainability. Significant emissions cuts are achievable with existing digital technologies, such as cloud, AI, edge technology and digital twins. For instance, migrating to the public cloud can reduce CO2 emissions by 59 million tons per year, equivalent to taking 22 million cars off the road. Virtual twins can not only unlock additional benefits of a trillion euros of economic value, but also help cut emissions by 7.5 Gt by 2030.

Also, I have often highlighted the crucial role governments can play to support the twin digital and sustainability transitions, including by removing regulatory barriers and providing financial support. The European Commission's recent Net Zero Industry Act is another step in the right direction—welcome in particular for its focus on addressing skills shortages. It will ease burdens on companies reinventing themselves and help Europe maintain its leadership in the green tech revolution.

Industrial reinvention is synonymous with the sustainable reinvention of manufacturing, logistics and product development, shifting from efficiency to green growth and innovative business models. Given that industry is a cornerstone of Europe’s economy, its future success is critical to the region—and a measure of our commitment to a better world.