Dear Friends,

We’re proud to introduce Bain & Company’s first Global Machinery & Equipment Report.

The industrial machinery and equipment industry has reached a critical juncture. While the industry has never stood still, it’s undergoing the most fundamental evolution seen in years, and these changes will only accelerate over the next decade. Machinery and equipment executives are investing heavily in major transformation initiatives as they face a whirlwind of forces: digitalization and its implications for talent and workforce management; disruptions and reconfigurations of global supply chains; and the push for more sustainable operations and organizations that are more diverse, equitable, inclusive, and socially and environmentally conscious. The exact manifestation, timing, and impact of these trends will likely differ across the machinery industry’s various subsectors, creating a lot of uncertainty for management teams. And that uncertainty has only increased with the war in Ukraine inducing a humanitarian crisis that is rattling Europe and the world. Although the war’s impact on the machinery and equipment industry is not yet fully understood, it will likely affect every company in some way, from supply chain disruptions to rising material prices.

We’re launching this report to highlight what industrial machinery and equipment players across the world are doing today in response to these dynamic forces, and to unpack the no-regrets moves they can take in the next two to three years to address them. The report’s objective is to translate what these big trends mean on a practical level for machinery companies and their leadership teams, with a focus on what we’re seeing in the market and how best-in-class companies are approaching individual elements of a much broader transformational agenda.

Undoubtedly, the machinery and equipment company of the future will look much different. The report explores some of the most significant changes underway:

• The traditional industrial conglomerate model is giving way to more focused and specialized businesses. All machinery and equipment companies are reevaluating their business portfolios, pruning in some areas while adding new capabilities and offerings in higher-growth segments, often through M&A. Machinery and equipment has also become one of the most attractive industrial sectors for private equity funds in recent years, delivering significant value.
• In reshaping their portfolios, many machinery companies are revamping their approach to products and services. They will increasingly be anchored in comprehensive solutions (as opposed to single products), with integrated hardware, software, and service offerings. This trend touches each piece of the business and is fundamental to where the industry is heading, so you’ll see across the report how this will play out in different ways, including the technology shift and the movement toward advanced service models.
• As their products and services evolve, more machinery and equipment companies will wield sustainability as a commercial differentiator. They have an opportunity to not only improve the sustainability of their own organizations and supply chains, but also to play a critical role in helping customers achieve their sustainability goals.
• More companies will pursue “verticalization,” with offerings tailored to their most precious customer segments and solutions frequently codeveloped with customers.
• Consequently, machinery companies are modernizing their go-to-market strategies, making them more systematic and guided by data.

In order to pull all of this off, machinery and equipment companies are evolving their organizational models. Many of the leading companies are decentralizing. They’re making each business unit more accountable for developing strategy, driving innovation and high performance, and achieving successful outcomes, while headquarters plays more of a lean, supporting role. Many leadership teams are continuously experimenting with more modern, flexible operating models that make their companies more nimble.

We’re seeing that many companies have already embarked on this transformation journey and are making progress. We look forward to discussing the report with you, and we’re interested in hearing your feedback and observations on the industry’s opportunities and challenges that lie ahead.