2025 European Industrial Manufacturing Spending Outlook
Video Language
In this episode of Navigating the Currents of Change, Shaheen Chohan, VP of Global Analytics, and Sebastian Koot, European Regional Manager for Industrial Manufacturing, explore the key spending trends shaping the industry. They discuss major investments in sectors like automotive, semiconductors, and data centers, and analyze how innovations in AI and renewable energy are driving change.
[Intro] (00:00):
If you've been trying to understand what is driving the ever-increasing volume and momentum in capital and maintenance spending across European industrial manufacturing, and which sectors are driving the majority of the project activity that our researchers are reporting on, then this conversation will help you uncover some of the main trends being seen.
Shaheen Chohan (00:38):
Welcome to Navigating the Currents of Change. My name is Shaheen Chohan, and I'm the Vice President of Market Analytics at Industrial Info Resources, a global provider of energy and industrial infrastructure market intelligence for more than 40 years. And to help me dissect some of the trends we are seeing, I am delighted to be joined by Sebastian Koot, who leads our European research for industrial manufacturing. Welcome, Sebastian.
Sebastian Koot (01:02):
Thank you.
Shaheen Chohan (01:03):
Now, Sebastian, to kick things off, and before we delve into some of the specific spending trends that you are seeing — could you just explain to us what some of the sectors and segments are that sit within industrial manufacturing?
Sebastian Koot (01:16):
Yes. Our main focus in Europe is on automotive, heavy manufacturing, semiconductors, data centers and transportation system sectors. In addition to those sectors, we're also tracking investments exceeding $20 million in all remaining sectors, like plastic parts and product manufacturing, and fabricated metal products.
Shaheen Chohan (01:38):
Now, Europe obviously is a major manufacturer of automotive and also has a big automotive supply chain — the downstream equipment and components. Obviously, we are seeing a continued shift in end consumer preferences towards purchasing more and more electric vehicles. Are we also starting to see additional sustained volumes of capital spending moving into the electric vehicle market, or are we seeing a few challenges to that? You know, we constantly hear about the challenges around the life of batteries, lack of charging stations — or is CapEx still pouring into the sector?
Sebastian Koot (02:15):
Yeah. So the automotive sector is in transition, driven by EU regulations targeting carbon neutrality for new light vehicles by 2035. Electric vehicles are central to the shift, as you already said, and major manufacturers are investing to retool and re-equip their facilities to produce these types of vehicles. The adoption depends on consumer motivation — lower running costs are appealing, but higher upfront prices and limited charging infrastructure remain challenges. Manufacturers are also pushing for more technology-neutral policies, or even transitional measures, making the sector still very much in flux.
Shaheen Chohan (02:53):
So, Sebastian, I'm assuming then if we are continuing to see CapEx flow and increases in production capacity across Europe in the electric vehicle space, the manufacture of those vehicles must be having a positive knock-on effect for the batteries that go into these vehicles. Will that be correct?
Sebastian Koot (03:17):
Well, in Europe, battery manufacturing is struggling to match this growing demand. Recently, we've seen Northvolt withdrawal from large-scale cell production — that highlights some of the challenges that we're facing here. It leaves Europe heavily dependent on Asian suppliers for battery cells. Still, this dependency poses risks to automotive and energy sectors, especially as electric vehicle adoption continues to accelerate.
The rapid innovation in battery chemistry is another factor arising — Europe is seeing a shift towards lithium iron phosphate batteries, which offer lower cost and more supply chain guarantees compared to the traditional nickel manganese cobalt chemistries that we've seen before. At the same time, research into solid-state batteries is gaining momentum, and advanced recycling methods are becoming more and more prevalent within Europe. These present opportunities for Europe to reclaim its leadership position in battery manufacturing. But scaling production and securing the raw materials to make these batteries are still posing challenges.
Shaheen Chohan (04:13):
Sebastian, I'd like to shift gears a little bit and talk about semiconductors — obviously a market which during COVID really saw some major supply chain disruptions, and then clearly became, for many countries, a kind of strategic imperative. We've seen the US in particular committing and planning vast volumes of new grassroots production capacity, being supported by their Chips Act. Are we seeing a similar push towards adding more grassroots development and new production capacity in Europe, certainly to try and offset some of the future potential supply chain risks, should they occur?
Sebastian Koot (04:58):
So the semiconductor shortages that were exposed during COVID showed Europe's vulnerability and the need for reshoring. Efforts to expand European chip manufacturing are underway, but progress is uneven. Legacy players like Intel are struggling, and we've seen them withdraw from announced investments in Poland and Germany of recent. Europe maintains a leadership position in chip design and high-precision manufacturing equipment, particularly through ASML lithography technology. Meanwhile, domestic innovation is growing in photovoltaic cell production, creating cost-competitive, locally produced alternatives. Policymakers are increasingly supporting strategic chip projects, aiming to reduce supply risks for automotive, industrial and consumer electronics products. However, Europe must balance incentives, investment speed and skills development to fully capitalize on this opportunity.
Shaheen Chohan (05:48):
Sebastian, I'd like to now talk a little bit about where many of those semiconductors and chips are going, and focus a little bit on the data centers sector. This is just a booming story — we're seeing huge amounts of brand-new grassroots capital investments being committed around the world, and a major ramp-up in data center capacity. We're seeing a lot of that happening in the US, and that's also being very heavily supported by the Trump administration. Are you and your researchers also seeing similar levels of data center capital development across Europe?
Sebastian Koot (06:31):
Yeah. So data center investments in Europe are accelerating at a tremendous pace. However, they do not come without challenges. Some of the legacy hubs we have — Frankfurt, London, Amsterdam, Paris and Dublin — are getting more and more congested. There's scarce real estate that suits this particular purpose. Power supplies are struggling, and we're not getting enough network connections to make sure everybody has enough bandwidth.
Shaheen Chohan (07:03):
Sebastian, I want to come back to this statement you just made around power provision. Now, data centers by nature are huge consumers of electricity and power. And if I just look at the US as a kind of proxy or example, they are really worried about the potential draw on electricity supply coming from this mega wave of data center capacity build-out. Is that as much a consideration in Europe? Is that one of the kind of potential impediments? And if so, will we see data center capital investments and new capacity coming on specifically aligned with where there's sufficient electricity?
Sebastian Koot (07:41):
Yeah, the concerns in Europe are quite similar, mainly driven by public awareness of data centers being big energy consumers. The strategic investments are also following. So, for example, in the UK, we're seeing the permitting process going in for both the electric connection but as well as a natural gas connection — so which one comes in first would determine the strategic trajectory of the project, potentially even including its own power unit to produce electricity on site, not being dependent on a grid connection anymore.
Shaheen Chohan (08:11):
So if it is power on site, is that going to be renewables? I'll be seeing solar, wind, potentially supporting some of this on-site generation?
Sebastian Koot (08:20):
So for renewables, the data center companies are looking at their power purchase agreements, where they're heavily banking on wind and solar power being delivered through the usual companies, as well as some of their investments leading to expansion of current wind parks, or even the start of new wind parks. And also, new opportunities are arising, especially Scandinavia and Iceland — they offer renewable hydropower and cooling advantages. Poland and the Baltics are also emerging as competitive hubs, leveraging innovation, cost efficiency and EU funding to back up the investments there. Spain is becoming a gateway to Africa, the Middle East and the Americas through new subsea cables that land in that country.
AI demand is surging, driving exponential power growth, with one-megawatt racks expected to be on site by the decade's end. On-site power generation and advanced cooling, including direct chip and immersive solutions, are key. Waste heat recovery for district heating and nearby industries boost social acceptance and help the investment get along within the countries. AI sovereignty is a priority, with native-language large language models creating demand for new AI factories within the countries. Automation, from logistics to precision assembly, will further drive growth in the AI and data center sector.
Shaheen Chohan (09:43):
Now, Sebastian, consumer purchasing preferences clearly swayed towards sustainability — you've talked a little bit about how data centers are adopting and adapting to this through additional new renewable power supply, putting those on site. How are renewable fuels influencing the manufacturing sector, both from an operational perspective, but also, what are some of the considerations for new-build grassroots developments?
Sebastian Koot (10:08):
Renewable fuels influence heavy manufacturing. Legacy engine manufacturers are adopting e-fuel, biogas and hydrogen to meet stricter regulations and standards, prompting facility upgrades and expansions in their current factories. Household technologies — heat pumps, boilers and hydrogen-ready boilers — are also pushing legacy producers to invest in fuel-competitive solutions. Progress is slow, due to certification and fuel availability within the countries.
Shaheen Chohan (10:39):
Now, Sebastian, I do want to shift gears a little and talk about the current geopolitical situation, and I guess a somewhat still fractious kind of relationship with the US and certainly the Trump administration. We've seen very recently a meeting of the European heads, as well as the Ukrainian leader, in Washington, and a lot of things are still yet to play out. But one message from the Trump administration is that the European countries need to lean more into their NATO budgets and contribute higher levels of spending. What does that mean, then, as a knock-on effect for defense-related capital investments?
Sebastian Koot (11:25):
In June of this year, the NATO members agreed to up their defense spending to 5% of their GDP, with about 3.5% on core defense budget. This shift is driving European nations to expand indigenous defense capabilities, including ammunitions, arms and military equipment. The EU's Readiness 2030 initiative is supporting local production and reducing reliance on external suppliers. Additionally, the European Defense Fund is being directed towards European-made weapon systems, enhancing self-sufficiency in defense procurement. While past tensions with the Trump administration have created uncertainty, Europe is increasingly focused on strengthening its own defense industry and reducing its dependency on external parties and allies.
Shaheen Chohan (12:09):
Now, staying with the Trump administration and Europe, but shifting a little bit towards the relationship around trade disagreements — or agreements, depending which side of the coin you're sitting on — we've obviously seen the Trump administration release and put in place the current trade tariffs on European members, and also the UK. Now, the US is a big market for the European manufacturing sector. What are some of the implications from the current higher levels of trade tariffs on European members? Are we going to see some of the planned projects that you and your researchers are tracking — can we see those potentially at risk?
Sebastian Koot (12:52):
The biggest sector to be hit by the tariffs is the automotive sector. The European car manufacturers' biggest export sector is the US market. While a new EU-US trade agreement aims to reduce these tariffs, the US has yet to implement this change, leaving exporters uncertain and impacting trade flows and following investments for machinery and industrial equipment, such as turbines, pumps, construction equipment and machine tools. Major exporters like Germany, Italy and the Netherlands are facing margin pressures due to the tariffs. The EU is exploring responses to support these sectors.
European aerospace, including aircraft assembly and parts manufacturing, remains a strong, competitive market. The recent trade agreements exempt these sectors from tariffs, preserving their competitiveness in the US markets, and investments are still going strong.
Shaheen Chohan (13:44):
So, Sebastian, I'd like to capture your view on whether you expect to see more European automakers potentially shift some of their current European-based capital commitments, maybe start building more plants — doing auto expansions directly in the US. Do you think that could be one of the outcomes of these tariffs?
Sebastian Koot (14:09):
So as we're seeing the tariffs come to the forefront, European car manufacturers have to rethink their investment strategies. So the car type that is favored in the Americas is a larger type of car, while in Europe we're looking for a smaller, more affordable vehicle. So the investments within Europe will be tailored towards the smaller, more affordable vehicles. However, some of the car manufacturers have a foothold within America — we expect that some of the planned expansions and investment there will be geared towards producing the larger vehicles that are more prevalent within the US market.
Shaheen Chohan (14:39):
I'd like to talk a little bit about technology. To some extent, the manufacturing sector has always been, I guess, at the forefront, certainly of automation, adoption of technology to improve operations and also production performance. What are some of the new technologies that are being introduced? When we were talking prior to this podcast, you talked about something called the new Industrial Revolution. Can you just share a little bit about what that means?
Sebastian Koot (15:09):
Yeah. The manufacturing industry has always led in adopting new technologies, and today a new industrial revolution is unfolding. This is driven by digital innovation, smarter processes and sustainability. Digital twins are now dynamic, predictive models powered by AI and real-time data, enabling virtual testing, prototype simulation and real-time monitoring, cutting down on downtime and speeding up the development process. AI and machine learning are transforming design, production and logistics, optimizing performance, reducing costs, and enabling smarter, faster decision-making.
At the same time, additive manufacturing is moving from prototypes to full industrial production in aerospace, automotive, medical devices, and high-performance tooling, with Europe leading through innovators like EOS, Renishaw and Materialise, to name some of the companies that make Europe great. These technologies give heavy industries like automotive, aerospace, shipbuilding and machinery greater flexibility, faster lead times and localized production. They improve material and energy efficiencies, reduce waste, and support sustainability within the supply chain and manufacturing processes. Together, these innovations define a smarter, faster, greener and more flexible industrial revolution across the whole of Europe.
Shaheen Chohan (16:30):
So, in closing, Sebastian — we have an economic and trade environment that clearly still has headwinds. It still remains challenging, certainly, I think, for the remainder of this year, and I guess to some extent into next year. When I look at GDP data, and I always reference the IMF, I think we are going to see improved economic growth next year, which is great, but the macro picture still, I think, remains pretty challenging. What do you think European manufacturers need to do to remain competitive on the global stage?
Sebastian Koot (17:00):
Yes, I mean, so Europe is looking at many challenges to stay at the forefront as a manufacturing region.
First, Europe must advance digitalization and advanced manufacturing — investment opportunity here is in AI, automation, robotics and smart factory platforms, technologies that will drive productivity and competitiveness across Europe.
Second, Europe needs strategic supply chains and true industrial sovereignty. Opportunities exist in reshoring critical production, developing EU-based suppliers, and investing in logistics and advanced materials to secure resilience.
Third, Europe must lead on green and low-carbon manufacturing. This creates vast opportunities in renewable energy, electrification and decarbonization solutions for household goods and manufacturing processes.
Fourth, Europe must close the skills gap and build the workforce of the future. Investments here mean supporting technical and engineering education, vocational training, digital learning platforms, and facilitating large-scale reskilling for green and digital jobs that we need in the future.
And last, Europe needs a competitive and stable policy framework that opens opportunity for investors, so companies that are ready to expand production in Europe need to be helped and confident in a protected, fair trade environment and simplified regulations. And most of all, we need to support EU-made goods.
Shaheen Chohan (18:19):
So that brings us to the conclusion of our podcast. A very big thanks to you, Sebastian, for sharing your insights and perspectives today — very much appreciated. And a very big thanks to all of you who've tuned in. If any of you have any further questions about any of the points discussed today, then please do reach out to myself or to Sebastian via our contact details that you can see here. Thanks again for joining us. I hope we have helped you all better navigate some of those currents of change that we're seeing.
If you've been trying to understand what is driving the ever-increasing volume and momentum in capital and maintenance spending across European industrial manufacturing, and which sectors are driving the majority of the project activity that our researchers are reporting on, then this conversation will help you uncover some of the main trends being seen.
Shaheen Chohan (00:38):
Welcome to Navigating the Currents of Change. My name is Shaheen Chohan, and I'm the Vice President of Market Analytics at Industrial Info Resources, a global provider of energy and industrial infrastructure market intelligence for more than 40 years. And to help me dissect some of the trends we are seeing, I am delighted to be joined by Sebastian Koot, who leads our European research for industrial manufacturing. Welcome, Sebastian.
Sebastian Koot (01:02):
Thank you.
Shaheen Chohan (01:03):
Now, Sebastian, to kick things off, and before we delve into some of the specific spending trends that you are seeing — could you just explain to us what some of the sectors and segments are that sit within industrial manufacturing?
Sebastian Koot (01:16):
Yes. Our main focus in Europe is on automotive, heavy manufacturing, semiconductors, data centers and transportation system sectors. In addition to those sectors, we're also tracking investments exceeding $20 million in all remaining sectors, like plastic parts and product manufacturing, and fabricated metal products.
Shaheen Chohan (01:38):
Now, Europe obviously is a major manufacturer of automotive and also has a big automotive supply chain — the downstream equipment and components. Obviously, we are seeing a continued shift in end consumer preferences towards purchasing more and more electric vehicles. Are we also starting to see additional sustained volumes of capital spending moving into the electric vehicle market, or are we seeing a few challenges to that? You know, we constantly hear about the challenges around the life of batteries, lack of charging stations — or is CapEx still pouring into the sector?
Sebastian Koot (02:15):
Yeah. So the automotive sector is in transition, driven by EU regulations targeting carbon neutrality for new light vehicles by 2035. Electric vehicles are central to the shift, as you already said, and major manufacturers are investing to retool and re-equip their facilities to produce these types of vehicles. The adoption depends on consumer motivation — lower running costs are appealing, but higher upfront prices and limited charging infrastructure remain challenges. Manufacturers are also pushing for more technology-neutral policies, or even transitional measures, making the sector still very much in flux.
Shaheen Chohan (02:53):
So, Sebastian, I'm assuming then if we are continuing to see CapEx flow and increases in production capacity across Europe in the electric vehicle space, the manufacture of those vehicles must be having a positive knock-on effect for the batteries that go into these vehicles. Will that be correct?
Sebastian Koot (03:17):
Well, in Europe, battery manufacturing is struggling to match this growing demand. Recently, we've seen Northvolt withdrawal from large-scale cell production — that highlights some of the challenges that we're facing here. It leaves Europe heavily dependent on Asian suppliers for battery cells. Still, this dependency poses risks to automotive and energy sectors, especially as electric vehicle adoption continues to accelerate.
The rapid innovation in battery chemistry is another factor arising — Europe is seeing a shift towards lithium iron phosphate batteries, which offer lower cost and more supply chain guarantees compared to the traditional nickel manganese cobalt chemistries that we've seen before. At the same time, research into solid-state batteries is gaining momentum, and advanced recycling methods are becoming more and more prevalent within Europe. These present opportunities for Europe to reclaim its leadership position in battery manufacturing. But scaling production and securing the raw materials to make these batteries are still posing challenges.
Shaheen Chohan (04:13):
Sebastian, I'd like to shift gears a little bit and talk about semiconductors — obviously a market which during COVID really saw some major supply chain disruptions, and then clearly became, for many countries, a kind of strategic imperative. We've seen the US in particular committing and planning vast volumes of new grassroots production capacity, being supported by their Chips Act. Are we seeing a similar push towards adding more grassroots development and new production capacity in Europe, certainly to try and offset some of the future potential supply chain risks, should they occur?
Sebastian Koot (04:58):
So the semiconductor shortages that were exposed during COVID showed Europe's vulnerability and the need for reshoring. Efforts to expand European chip manufacturing are underway, but progress is uneven. Legacy players like Intel are struggling, and we've seen them withdraw from announced investments in Poland and Germany of recent. Europe maintains a leadership position in chip design and high-precision manufacturing equipment, particularly through ASML lithography technology. Meanwhile, domestic innovation is growing in photovoltaic cell production, creating cost-competitive, locally produced alternatives. Policymakers are increasingly supporting strategic chip projects, aiming to reduce supply risks for automotive, industrial and consumer electronics products. However, Europe must balance incentives, investment speed and skills development to fully capitalize on this opportunity.
Shaheen Chohan (05:48):
Sebastian, I'd like to now talk a little bit about where many of those semiconductors and chips are going, and focus a little bit on the data centers sector. This is just a booming story — we're seeing huge amounts of brand-new grassroots capital investments being committed around the world, and a major ramp-up in data center capacity. We're seeing a lot of that happening in the US, and that's also being very heavily supported by the Trump administration. Are you and your researchers also seeing similar levels of data center capital development across Europe?
Sebastian Koot (06:31):
Yeah. So data center investments in Europe are accelerating at a tremendous pace. However, they do not come without challenges. Some of the legacy hubs we have — Frankfurt, London, Amsterdam, Paris and Dublin — are getting more and more congested. There's scarce real estate that suits this particular purpose. Power supplies are struggling, and we're not getting enough network connections to make sure everybody has enough bandwidth.
Shaheen Chohan (07:03):
Sebastian, I want to come back to this statement you just made around power provision. Now, data centers by nature are huge consumers of electricity and power. And if I just look at the US as a kind of proxy or example, they are really worried about the potential draw on electricity supply coming from this mega wave of data center capacity build-out. Is that as much a consideration in Europe? Is that one of the kind of potential impediments? And if so, will we see data center capital investments and new capacity coming on specifically aligned with where there's sufficient electricity?
Sebastian Koot (07:41):
Yeah, the concerns in Europe are quite similar, mainly driven by public awareness of data centers being big energy consumers. The strategic investments are also following. So, for example, in the UK, we're seeing the permitting process going in for both the electric connection but as well as a natural gas connection — so which one comes in first would determine the strategic trajectory of the project, potentially even including its own power unit to produce electricity on site, not being dependent on a grid connection anymore.
Shaheen Chohan (08:11):
So if it is power on site, is that going to be renewables? I'll be seeing solar, wind, potentially supporting some of this on-site generation?
Sebastian Koot (08:20):
So for renewables, the data center companies are looking at their power purchase agreements, where they're heavily banking on wind and solar power being delivered through the usual companies, as well as some of their investments leading to expansion of current wind parks, or even the start of new wind parks. And also, new opportunities are arising, especially Scandinavia and Iceland — they offer renewable hydropower and cooling advantages. Poland and the Baltics are also emerging as competitive hubs, leveraging innovation, cost efficiency and EU funding to back up the investments there. Spain is becoming a gateway to Africa, the Middle East and the Americas through new subsea cables that land in that country.
AI demand is surging, driving exponential power growth, with one-megawatt racks expected to be on site by the decade's end. On-site power generation and advanced cooling, including direct chip and immersive solutions, are key. Waste heat recovery for district heating and nearby industries boost social acceptance and help the investment get along within the countries. AI sovereignty is a priority, with native-language large language models creating demand for new AI factories within the countries. Automation, from logistics to precision assembly, will further drive growth in the AI and data center sector.
Shaheen Chohan (09:43):
Now, Sebastian, consumer purchasing preferences clearly swayed towards sustainability — you've talked a little bit about how data centers are adopting and adapting to this through additional new renewable power supply, putting those on site. How are renewable fuels influencing the manufacturing sector, both from an operational perspective, but also, what are some of the considerations for new-build grassroots developments?
Sebastian Koot (10:08):
Renewable fuels influence heavy manufacturing. Legacy engine manufacturers are adopting e-fuel, biogas and hydrogen to meet stricter regulations and standards, prompting facility upgrades and expansions in their current factories. Household technologies — heat pumps, boilers and hydrogen-ready boilers — are also pushing legacy producers to invest in fuel-competitive solutions. Progress is slow, due to certification and fuel availability within the countries.
Shaheen Chohan (10:39):
Now, Sebastian, I do want to shift gears a little and talk about the current geopolitical situation, and I guess a somewhat still fractious kind of relationship with the US and certainly the Trump administration. We've seen very recently a meeting of the European heads, as well as the Ukrainian leader, in Washington, and a lot of things are still yet to play out. But one message from the Trump administration is that the European countries need to lean more into their NATO budgets and contribute higher levels of spending. What does that mean, then, as a knock-on effect for defense-related capital investments?
Sebastian Koot (11:25):
In June of this year, the NATO members agreed to up their defense spending to 5% of their GDP, with about 3.5% on core defense budget. This shift is driving European nations to expand indigenous defense capabilities, including ammunitions, arms and military equipment. The EU's Readiness 2030 initiative is supporting local production and reducing reliance on external suppliers. Additionally, the European Defense Fund is being directed towards European-made weapon systems, enhancing self-sufficiency in defense procurement. While past tensions with the Trump administration have created uncertainty, Europe is increasingly focused on strengthening its own defense industry and reducing its dependency on external parties and allies.
Shaheen Chohan (12:09):
Now, staying with the Trump administration and Europe, but shifting a little bit towards the relationship around trade disagreements — or agreements, depending which side of the coin you're sitting on — we've obviously seen the Trump administration release and put in place the current trade tariffs on European members, and also the UK. Now, the US is a big market for the European manufacturing sector. What are some of the implications from the current higher levels of trade tariffs on European members? Are we going to see some of the planned projects that you and your researchers are tracking — can we see those potentially at risk?
Sebastian Koot (12:52):
The biggest sector to be hit by the tariffs is the automotive sector. The European car manufacturers' biggest export sector is the US market. While a new EU-US trade agreement aims to reduce these tariffs, the US has yet to implement this change, leaving exporters uncertain and impacting trade flows and following investments for machinery and industrial equipment, such as turbines, pumps, construction equipment and machine tools. Major exporters like Germany, Italy and the Netherlands are facing margin pressures due to the tariffs. The EU is exploring responses to support these sectors.
European aerospace, including aircraft assembly and parts manufacturing, remains a strong, competitive market. The recent trade agreements exempt these sectors from tariffs, preserving their competitiveness in the US markets, and investments are still going strong.
Shaheen Chohan (13:44):
So, Sebastian, I'd like to capture your view on whether you expect to see more European automakers potentially shift some of their current European-based capital commitments, maybe start building more plants — doing auto expansions directly in the US. Do you think that could be one of the outcomes of these tariffs?
Sebastian Koot (14:09):
So as we're seeing the tariffs come to the forefront, European car manufacturers have to rethink their investment strategies. So the car type that is favored in the Americas is a larger type of car, while in Europe we're looking for a smaller, more affordable vehicle. So the investments within Europe will be tailored towards the smaller, more affordable vehicles. However, some of the car manufacturers have a foothold within America — we expect that some of the planned expansions and investment there will be geared towards producing the larger vehicles that are more prevalent within the US market.
Shaheen Chohan (14:39):
I'd like to talk a little bit about technology. To some extent, the manufacturing sector has always been, I guess, at the forefront, certainly of automation, adoption of technology to improve operations and also production performance. What are some of the new technologies that are being introduced? When we were talking prior to this podcast, you talked about something called the new Industrial Revolution. Can you just share a little bit about what that means?
Sebastian Koot (15:09):
Yeah. The manufacturing industry has always led in adopting new technologies, and today a new industrial revolution is unfolding. This is driven by digital innovation, smarter processes and sustainability. Digital twins are now dynamic, predictive models powered by AI and real-time data, enabling virtual testing, prototype simulation and real-time monitoring, cutting down on downtime and speeding up the development process. AI and machine learning are transforming design, production and logistics, optimizing performance, reducing costs, and enabling smarter, faster decision-making.
At the same time, additive manufacturing is moving from prototypes to full industrial production in aerospace, automotive, medical devices, and high-performance tooling, with Europe leading through innovators like EOS, Renishaw and Materialise, to name some of the companies that make Europe great. These technologies give heavy industries like automotive, aerospace, shipbuilding and machinery greater flexibility, faster lead times and localized production. They improve material and energy efficiencies, reduce waste, and support sustainability within the supply chain and manufacturing processes. Together, these innovations define a smarter, faster, greener and more flexible industrial revolution across the whole of Europe.
Shaheen Chohan (16:30):
So, in closing, Sebastian — we have an economic and trade environment that clearly still has headwinds. It still remains challenging, certainly, I think, for the remainder of this year, and I guess to some extent into next year. When I look at GDP data, and I always reference the IMF, I think we are going to see improved economic growth next year, which is great, but the macro picture still, I think, remains pretty challenging. What do you think European manufacturers need to do to remain competitive on the global stage?
Sebastian Koot (17:00):
Yes, I mean, so Europe is looking at many challenges to stay at the forefront as a manufacturing region.
First, Europe must advance digitalization and advanced manufacturing — investment opportunity here is in AI, automation, robotics and smart factory platforms, technologies that will drive productivity and competitiveness across Europe.
Second, Europe needs strategic supply chains and true industrial sovereignty. Opportunities exist in reshoring critical production, developing EU-based suppliers, and investing in logistics and advanced materials to secure resilience.
Third, Europe must lead on green and low-carbon manufacturing. This creates vast opportunities in renewable energy, electrification and decarbonization solutions for household goods and manufacturing processes.
Fourth, Europe must close the skills gap and build the workforce of the future. Investments here mean supporting technical and engineering education, vocational training, digital learning platforms, and facilitating large-scale reskilling for green and digital jobs that we need in the future.
And last, Europe needs a competitive and stable policy framework that opens opportunity for investors, so companies that are ready to expand production in Europe need to be helped and confident in a protected, fair trade environment and simplified regulations. And most of all, we need to support EU-made goods.
Shaheen Chohan (18:19):
So that brings us to the conclusion of our podcast. A very big thanks to you, Sebastian, for sharing your insights and perspectives today — very much appreciated. And a very big thanks to all of you who've tuned in. If any of you have any further questions about any of the points discussed today, then please do reach out to myself or to Sebastian via our contact details that you can see here. Thanks again for joining us. I hope we have helped you all better navigate some of those currents of change that we're seeing.
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*This episode is brought to you by Industrial Info's Latin American Office in Argentina.