4 minute read 26 Apr 2024
Robotics control engineers setting and maintain spare parts

Belgium’s industry: what are the opportunities for sustainable growth?

By Bart Deckers

EY Belgium Strategy and Transactions Partner

Business transformation leader. Converting strategy into execution. Creating long term value. Growth by innovation. Soccer and hockey fan. Proud father of 3 teenagers. Italy and wine lover.

4 minute read 26 Apr 2024

Though manufacturing in Belgium faces many challenges, there are opportunities for the sector to remain a stable factor in our economy.

In brief

  • In order to thrive amidst the current challenges, manufacturers should be focusing on technology, personalized products, flexibility and sustainability.
  • Investments and a constant effort to keep reinventing are needed to move collectively towards Industry 5.0, a new generation of production companies.
  • A robust European regulatory framework and consultation between companies and governments are essential to strengthen the sector against other industrial powers.

Bankruptcies, layoffs, and scaled-back production are common headlines about the industry sector in Belgium. Is there still potential for manufacturing in our country, with challenges like high costs, limited personnel, regulations, and insufficient framework? There are still possibilities, but it’s crucial to act on them now.

The evolution of the industrial sector has taken such a rapid pace today due to geopolitical shifts. An example of this is changing power relations. In recent decades, the major international players in Belgium have focused on globalization and finding efficient, cost-friendly ways of working - such as moving certain activities abroad. However, due to conflicts and shifting power relations, a number of certainties from the past are not so certain anymore. Moreover, price is no longer the sole determining factor for all customers. While there is still a segment that is not interested in sustainability, there are also more and more consumers who prioritize sustainable production over affordability.

Companies already working on a transformation can expect positive results, as long as they keep going. Anyone who has not yet invested today, faces a more difficult challenge to catch up.
Bart Deckers
EY Belgium Strategy and Transactions Partner

The four characteristics of the manufacturing industry today

Technology

To continue to flourish within these shifts, manufacturers are required to scrutinize every step of their operation. Technology plays a major role in this. Everything is moving so fast today that companies are obliged to be agile, but also to develop the capability to work in a future-proof manner. AI, Internet of Things, blockchain: these are all technologies that have emerged very quickly and are here to stay. Companies have to embed them in their daily work, which requires the necessary knowledge.

The transformation must not only manifest itself in processes, but throughout the entire business model. Belgian companies that do well internationally incorporate the latest technologies into their processes, but also into their products and services. The leading companies today are those that are reinventing themselves and will continue to do so.

Personalized products

This transformation is essential because there is an increasing demand for personalized products. Technology makes it easier than ever to meet that demand, so companies need to look for the right technologies and infrastructure to customize their production lines.

Innovative techniques such as 3D printing and AI-streamlined production lines make it possible to create even more value for customers in a cost-efficient manner.

Flexibility

This constant effort to keep reinventing requires flexibility, which is not yet self-evident in every sector. In the automotive industry, for example, changing customer demand is seen as the biggest challenge. Companies want to respond, but if developments do not proceed as quickly as expected or the logistics chain lags behind, it leads to difficult situations. That is why we see a movement toward regionalization instead of globalization, with local suppliers gaining popularity again. Being able to switch quickly is therefore essential and requires clear, efficient processes, a broadly deployable workforce and smooth collaboration and communication at all company levels.

Sustainability

Finally, the shift to sustainability is also reaching cruising speed. While in recent years this factor was often seen as a burden, today it is an absolute necessity. Both in the way of doing business and when developing products and services, companies must pay attention to the footprint of what they do. Although not obvious, they have to reconcile stricter regulations and cost efficiency. Not many companies have found the ultimate solution for this; it’s a matter of balancing your sustainable ambition with the economic reality.

The most important principles for the new generation will be: evolutionary business models, constant, safe and efficient use of data, an agile supply chain and an evolution toward a circular economy.
Bart Deckers
EY Belgium Strategy and Transactions Partner

Anyone who has not yet started will have to chase

The economic climate does not allow for unbridled investment. Companies already working on this transformation can expect positive results, as long as they keep going. Anyone who has not yet invested today faces a more difficult challenge to catch up. They have to maintain focus and invest in the right things.

It is clear that investments are needed, because we must collectively move towards Industry 5.0, a new generation of production companies. The most important principles for that new generation will be: evolutionary business models, constant transformation in line with changing customer needs, safe and efficient use of data, an agile supply chain with an interaction between global, regional and local supply chains and an evolution toward a circular economy, in which you make optimal use of resources. A workforce transformation must be included: the skills needed in the past are not the same as the skills we need in the future. All these efforts together can lead to a new way of working, a way in which the Belgian industry can remain a stable factor in our economy for decades to come.
 

And what does the government do?

The Belgian industry cannot flourish without a solid European framework. Although regulations are often a delaying factor and, therefore, sometimes defeat the purpose, it is through a clear policy that European industry can strengthen itself against other industrial powers. It is especially important that companies consult sufficiently with governments, both Belgian and European.

For example, during a recent consultation in Antwerp, dozens of CEOs of European industrial players drew up a ten-point plan in the hope of achieving a European Industrial Deal. This plan can help create a framework that makes it possible to produce in an efficient, economical but also sustainable manner. This text has now been signed by more than a thousand leading companies, agencies and organizations, which underlines its importance. It was discussed in detail at the European summit in April 2024 and new government initiatives will undoubtedly follow.

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Summary

To face the many challenges, Belgium’s industry has to focus on leveraging technology, offering personalized products, enhancing flexibility, and prioritizing sustainability. Manufacturers need to embrace Industry 5.0 principles, which emphasize evolutionary business models, efficient data use, agile supply chains, and move toward a circular economy. Companies that have not yest invested in this transformation today, will face a difficult challenge to catch up. A strong European regulatory framework and effective consultation between companies and governments are vital to strengthen the industry against global competition.

About this article

By Bart Deckers

EY Belgium Strategy and Transactions Partner

Business transformation leader. Converting strategy into execution. Creating long term value. Growth by innovation. Soccer and hockey fan. Proud father of 3 teenagers. Italy and wine lover.