Key factors for machinery include population change and related resource shortages, and big data and automation in the workplace. In future it will be necessary to do more with less. For example, increase crop yields and maximize workplace productivity. Some machinery companies are boosting R&D and seeking acquisitions and partnerships to improve efficiency. Larger and better capitalized companies are likely to be better prepared for the future, and original equipment manufacturers (OEMs) with well-established dealer/distribution networks may be particularly successful. There are good opportunities in sectors such as precision farming, telematics, autonomous equipment, and analytics.
Company specific thoughts:
Deere has been developing technology for ‘smart farming’, and in 2017 it acquired the agricultural machine learning company Blue River. Deere also makes good use of GPS and other technologies such as preventative maintenance. AGCO acquired Precision Planting, which provides products to increase farm yields, and is continuing to invest in Fuse Technologies, which provides in-depth data management/farm analysis and other smart capabilities. In mining, Caterpillar is doing well with its autonomous trucks/equipment and is strengthened by its powerful dealer network for data/analytics. In commercial vehicles, WABCO seems particularly well-positioned thanks to its advanced safety features which will benefit the autonomous vehicle sector.
Industrials: Up close
The future will be determined by those who are willing to reinvest, adapt and turn future threats into opportunities.