European machinery companies: Achieving balance through innovation

• Published in: McKinsey Insights
• Main Authors: Bayerlein, Samuel, Schleyer, Thorsten, Herring, Dorothee
• Format: Magazine Article
• Language: English
• Published: New York McKinsey & Company, Inc 06.09.2023
• Subjects: COVID-19; Labor shortages; Manufacturing; Productivity; Europe; North America; Germany

The European machinery sector continues to operate within an uncertain and volatile macroeconomic environment characterized by the ongoing war in Ukraine, the resulting energy crisis, and persistent supply chain challenges. Rising costs are likely responsible for the margin pressure: cost of goods sold increased to 70.5 percent, on average, an increase of nearly 0.5 percentage points from 2021. The inventory ratio for German machinery companies increased for the fifth year in a row, likely in response to persistent supply chain disruptions facing the global economy. In the European region, the number of open jobs rose by approximately 70 percent between 2020 and 2022. Since the beginning of 2022, this number has hovered slightly above 500,000 vacancies.