The Industrial Technology Revolution
Technology has been critical for industrial businesses for decades, but the ever increasing velocity of data information gathering, analysis and transfer, is set to accelerate these changes even more. Industrial internet platforms, predictive software, evolving robotics, machine learning and changing asset models are just some of the dynamic innovations impacting a vast array of industries.
Traditional companies need to embrace these changes, and seek out the best strategies for their implementation. Companies that find themselves in sectors that are at the leading edge of the convergence have a huge opportunity to grow their businesses, as players of all kinds address these opportunities and needs.
As machinery becomes more autonomous, the role of sensors is increasing exponentially, providing a myriad of data that computers can then analyze. Data points on heat, gas levels, chemical reactions, liquid flow, and surface finishes together with many other variables are enabling software to optimize production quality and speed, and develop predictive maintenance which reduces downtime and avoids costly breakdowns. In fact, the complexity of production lines is such that the numerous suppliers of component parts of the line need to develop a common digital platform to ensure all data is collected and analysed.
As these digital platforms proliferate, manufacturers are beginning to see their business offering as much a service as a product, creating a “sticky” on-going relationship with their clients.
We have seen the positive effects of embracing technology firsthand, a client introduced sensors into their continuous production presses that monitor oil temperature and pressure, product thickness and density and speed of movement in the line. Improved quality, reduction of rejects and increased velocity all combined to increase productivity and the entire 200 meter press is now controlled by one highly qualified operator, who also controls the furnaces and dryers. Predictive software ensures that optimum temperatures, pressures and speed are all maintained, alerting the operators to any possible problems before they occur.
In another instance, one of our client companies incorporated nano-technology to further understand the dynamics of raw materials when mixed with other elements and placed under pressure and heat, not just in the original formulation but also in the manufacturing process of the clients. Proprietary software was also developed to allow customers to quickly identify formulas for new products. The result has been faster product development and higher quality products, creating a much greater collaboration between client and suppliers. When Livingstone sold the business to a major multinational the technological advances in production and the deep relationships with clients were both recognized as being outstanding, leading to an above market transaction.
These dynamic and profound changes in how traditional industries are approaching manufacturing are in turn generating great interest in companies focused on testing and measurement. Industrial groups looking to expand controls in their own products, current manufacturers of testing and measurement devices and private equity groups are all extremely active in the space. Testing and measurement devices of a more generic nature, as well as niche products, are of interest.
Multiples remain high in the sector and we are seeing activity across the developed world. As these advancements in inter-connectivity accelerate, we see no reduction in the appetite of buyers to invest in the digitization of industry. Indeed, the need to quickly embrace these changes will mean that mergers and acquisitions will prove to be a key strategy in obtaining these capabilities.
This piece is part of the 2018 Global Industrials Publication.
