What Trends Will Ensure Growth For 3M In Western Europe In The Future?

Western Europe is a key market for 3M (NYSE:MMM), with the region contributing $4.7 billion to the company’s sales in 2016. The company operates in 17 countries in the region, with 20,000 employees, including 1,300 scientists and technicians.

The region presents an attractive landscape for 3M, as it constitutes 22% of the global GDP, and is the largest exporter of manufactured goods and services. Moreover, the region has a highly skilled workforce, and is home to many of the world’s largest companies. This has brought forth an appealing environment for 3M, as the GDP and IPI (Industrial Production Index) are both expected to grow approximately 1.5% through 2020. Below we’ll highlight certain trends that will ensure growth for the company in the years to come.

1. Increased Digitalization

The European Commission has put forth a Digital Agenda which aims to utilize the potential of Information and Communications Technologies (ICTs) to foster innovation, economic growth, and progress. The main facets of this involves the achievement of a single digital market, strengthening online trust and security, promoting fast and ultra fast internet access, and investing in research and innovation. This is stated to be achieved through public-private partnerships. Digital commerce is considered to be a key growth segment going forward. Given the region’s advanced financial services sector and high smartphone usage, the growth in digital transactions are expected to be considerable.

2. Industry 4.0

The European manufacturing sector has lost ground in the past two decades to developing economies. However, to maintain high quality services, an innovative and creative manufacturing industry is crucial. Industry 4.0 is the current trend of automation and data exchange in manufacturing technologies. This consists of cyber-physical systems, the internet of things (IoT), and cloud computing. The term originates from a project undertaken by the German government which promotes the computerization of manufacturing. The Horizon 2020 R&D funding program, implemented by the European Commission, has allocated approximately €17 billion for “Industrial Leadership,” as a result of which the manufacturing sector is set to get a boost in terms of advanced computing, sensor technologies, and robotics. Several European countries have launched national initiatives to stimulate the achievements of the Industry 4.0 plan.

3. Increased Sustainability

Sustainability has long been at the center of European development. According to the UN “development must meet the needs of the present without compromising the ability of future generations to meet their own needs.” For 20 years, sustainable development has been one of their fundamental objectives since it was included in the Treaty of Amsterdam as an overarching objective of EU policies. The adoption of the UN 2030 Agenda for Sustainable Development reflects the need to reel in the harmful trends impacting economic, social, and ecological growth. While significant progress has been made on a number of fronts, such as reduced poverty and increased access to education, the spread of ICT has the potential to accelerate the achievement of the set goals. While growth remains necessary, the region recognizes the need for it to be socially inclusive and innovative. Green technology capability can be considered a competitive advantage, paving the way for greater sustainable growth. The Sustainable Development Index measures 149 countries, comparing their current progress with baseline measurements taken in 2015. The top performers have been listed below, with Europe constituting a majority of the countries.

4. Aging Population

The aging in Europe is a demographic phenomenon characterized by a decline in fertility, decrease of the mortality rate, and a higher life expectancy. Low birth rates and a higher life expectancy have skewed the population pyramid of Europe, resulting in an older population, and this trend is set to continue. By 2050, 37% of the population in the region is projected to be over 60 years old, compared to only 27% in North America, presenting major healthcare demands. In order to cope with the increased strain it will place on the resources of the economies, a radical shift is needed in the way the services are provided.

At present, the European economy loses €240 billion every year due to sick leave, about 2% of GDP. The sicker the population gets, the greater the financial burden. These economies would face declining productivity coupled with increased healthcare costs if nothing is done. This could lead to the implementation of sustainable healthcare models, focused on early prevention and identification, centered on the needs of patients and caregivers.

Have more questions on 3M? Have a look at these links below:

• 3M Delivers A Surprise In Its First Quarter
• R&D: One Of The Driving Factors Behind 3M’s Growth
• 3M Teams Up With Alphabet’s Verily For Population Health Management Tools
• What Trends Will Ensure Growth For 3M From Developing Markets In The Future

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