Following is a description of the main trends and driving forces in Indutrade’s markets.
Focus on core businesses
Many industrial companies in northern Europe are narrowing their focus to their core businesses. In many cases, non-core activities are being given lower priority, which leads to a decline in the level of knowledge in these areas. Consequently, industrial companies today have a greater need to work closely with suppliers that possess a high level of technical expertise and knowledge about their customers’ processes and needs. This is well in line with Indutrade’s strategy and business orientation.
Greater demand for services
Many customers are striving to reduce the size of their internal service and maintenance departments as they concentrate on their core businesses. This is leading to growing demand for service and support, which opens up opportunities for Indutrade to extend its service and offer complementary services.
Fewer suppliers
Industrial companies are generally striving to use fewer suppliers in an effort to lower their administrative overhead at the same time that close alliances with a limited number of suppliers contribute to shorter lead times and thus lower levels of tied-up capital. As a result, each supplier is expected to be able to offer a broader range of products and services, which normally benefits large technology sales companies. One way in which customers can reduce the number of suppliers is to use the same supplier for several geographic markets. Many large customers regard the Nordic region as a single market, and Indutrade believes it will become increasingly important to be able to deliver throughout the Nordic region.
Indutrade’s objective is to offer a wide range of products with pan-Nordic coverage in the respective niches, thereby creating conditions to be a comprehensive supplier.
Relocation of production to low-cost countries
Industrial production is being relocated away from the Nordic countries and the rest of Western Europe to low-cost countries.
The effect of this shift on Indutrade is limited, mainly because the Group has chosen to focus on customers with recurring needs in sectors deemed as having solid enough bases to maintain competitive production in Indutrade’s home markets.
Consolidation among manufacturers
When a manufacturer acquires a company, this can result in Indutrade’s subsidiaries acquiring more products in their product range. However, there is also a risk that growing suppliers will choose to invest in their own sales organisations. Consolidation among manufacturers is also creating opportunities for suppliers to provide leading products due to greater allocations of capital to research and development. This, in turn, enhances the competitive strength of Indutrade’s products.
Increased imports from low-cost countries
In Indutrade’s markets as a whole, a general trend can be seen in the rise of imports of products and semi-finished products from countries outside of Europe, mainly China and India. Several of Indutrade’s suppliers have moved parts of their production to low-cost countries. This trend is expected to continue and lead to lower prices, thereby enabling Indutrade to maintain its competitive strength.