Key findings from the global Metals sector

20th CEO Survey

Metals CEOs plan for growth fuelled by efficiency, innovation and digitization

Despite modest industry growth, Metals CEOs have increasing confidence in their companies’ growth prospects.  But they’re also acutely aware of the impact that technology is having on profitability and competition. So they’re looking to strengthen and invest in innovation, customer experience and human capital. And to assist with this transformation, Metals CEOs are prioritising the development of workforce skills in problem-solving, creativity/innovation, collaboration, adaptability and leadership.

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Metals CEOs confident about growth: but is it justified?

Almost two-thirds (69%) of all Metals CEOs expect their companies to grow over the next 12 months. Looking further ahead, confidence is even greater: 75% expect growth over the next three years.

But are they too confident? Looking ahead to 2025 we expect only modest volume sales growth of about 2% for steel and 4% for aluminium. Additional factors such as China’s recent decision to reduce aluminium and steel production in a bid to reduce smog might also impact growth prospects.

In light of this subdued outlook, CEOs seeking growth should focus on value generation and targeted investments in both technology and regional footprints. These investments will require ever increasing cost efficiencies, however, as EBITDA profitability has significantly deteriorated over the last 10 years. 

Growth will be organic, fuelled by cost reduction and innovation

Most Metals CEOs are looking to drive growth organically, through cost reduction and investment in innovation capabilities. Savings generated by increased efficiencies are being reinvested to better serve existing automotive, mechanical engineering and construction industries.

New research on alloys and improved production processes, particularly for steel, has led to new and unforeseen potential to enhance ductility, yield strength and density. These advances are enabling new applications in existing customer industries. Metals CEOs are aiming to capitalise on these developments and increase competitive advantage by strengthening and investing in innovation, customer experience and human capital.

Metals CEOs are selective in their use of new strategic alliances, M&A and outsourcing to drive growth. PwC and Strategy& believe these activities are still important, particularly if they drive forward integration, digital technology, customer service and application know-how. 

What are the skills for transformation and growth?

Metals CEOs regard problem-solving, creativity and innovation, collaboration, adaptability and leadership as the most important skills to develop among their employees and teams. And we would agree: based on our experience, these skills are the key to successfully managing growth in volatile metals business environments.

Creativity and innovation will be especially important for developing new business models, inventing novel customer applications and creating alliances. Adaptability plays a critical role in assessing scenarios for growth, adjusting to new geographic footprints and creating a more entrepreneurial company culture. 

Technology will reshape competition

The majority of Metals CEOs (59%) think that technology will be a significant game changer for the industry and will reshape competition over the next five years.

And we think they’re right. In particular, we see significant potential in the digitization of processes in the supply chain, production, sales & marketing and administration. In volatile business environments with demanding customers, digitization provides more agility in asset-intensive industries like metals and enables significant differentiation. While digitization requires a significant portion of capital expenditure, it’s fundamental to company strategy and a sustained competitive advantage in the future.

Explore the data

How concerned are CEOs about the following potential business threats to their organisation’s growth prospects?

Contact us

Jock O’Callaghan
Global Mining and Metals Leader, PwC Australia
Tel: +61 (3) 8603 6137
Email

Dr Nils Naujok
EMEA Metals Consulting Leader
Tel: +49 30 88705 855
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