European machine tool makers will face increasing pressure on margins as e-business opens up fierce global competition, industry leaders predicted this week.
Mergers are likely to follow as firms try to take advantage of cost savings, according to Keith Bailey, managing director of BSA Tools and president of Cecimo, the European machine tool business trade body. `We will see more companies coming together in a more cohesive response to the threat from the US and the Far East,’ he said.
Industry watchers have been warning for some time that internet-driven marketing and sales look set to squeeze out the productivity gains that machine tool makers have made over recent years. Some estimates suggest costs will have to come down by a further 30% in Europe over the next five years to stay competitive.
`Machine builders will be under pressure to cut their workforces and the capital required,’ said Jorn Keck, a senior official at the European Commission’s enterprise directorate. `Only later will the wealth-creating effects creep in as companies became more competitive and win new business. The question is how the two effects will counter each other,’ he said.
Latest EU figures show that e-business in Europe is currently worth e17bn (£11bn). This figure is expected to grow 20-fold over the next three years. Other forecasts suggest business-to-business e-commerce will account for 7% of world GDP by 2003.
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