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Investing in technology at a time of transformation

Striking the right balance between ecology and economy

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JANUARY 2025

A dynamic economic and political environment has become the new normal for most sectors. Manufacturing companies and machine builders face constantly changing demands, unpredictable supply situations, and immense cost pressures while maintaining quality standards and meeting growing regulatory requirements.

That’s not just a feeling, the numbers tell the story: According to Deloitte, the year-over-year pace of growth in the US, for instance, slowed from 41.3% in September 2023 to 20.5% in September 2024. Looking ahead to 2025, manufacturers face an increasingly challenging business climate due to higher costs and persistent market volatility.

Market conditions aside, there’s mounting pressure to become more sustainable – to decarbonize, improve energy efficiency, and enhance circularity. And the industrial sector isn’t exactly a high flier in this area: In 2022, it accounted for a quarter of global energy-related CO2 emissions. To align with the NZE Scenario, it is essential that total direct emissions from industry be reduced by nearly 25% by 2030.

Despite these challenges, companies remain eager to invest in modern technology – from automation and digitalization to infrastructure – to improve efficiency and future competitiveness. Here are three proven ways to balance these investments with financial prudence:

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Elevate, don’t eliminate

One promising option in times of transformation is to modernize equipment instead of purchasing new machinery. Investing in new machines and equipment can come at a high price and with costly downtimes. Retrofitting, on the other hand, is an efficient and sustainable way to integrate the latest technologies into existing equipment. Retrofit financing options are perfectly tailored to the needs of machine builders, and they facilitate modernization. In one example of this approach, Siemens Financial Services (SFS) supported FCN-Basaltwerke, who urgently needed to upgrade a palisade production line. A tailored retrofit offer and a financing term of 72 months allowed FCN-Basaltwerke to extend the machine’s lifespan by 30 years. FCN benefited from increased productivity and significant time and cost savings compared to buying a new machine. In this way, retrofitting conserves cash flow and supports the circular economy.

Invest today, settle later

Machine manufacturers need technologies and equipment to produce their machines. Acquiring these involves high costs, and the return on investment is delayed due to long project timelines. To avoid liquidity bottlenecks, ease cash flow, and bridge payment gaps, Siemens Extended Payment Terms (EPT) can be used without impacting existing credit lines. This lets companies maintain financial flexibility also in times of transformation, as exactly this “buy now, pay later” option, for instance, allows payment terms to be extended up to 180 days.

Swedish machine manufacturer TechTribe faced the challenge of building and delivering machines for a customer. The turnkey contract required a large component inventory, tying up resources. Thanks to Siemens EPT, TechTribe was able to purchase the components from Siemens, ensure short delivery times, and effectively manage cash flow.TechTribe’s customer PulPac, a manufacturer of fiber-based products that replace plastics, is also reaping great benefits: TechTribe’s machines are not only more cost-effective, they are also more sustainable, saving almost 100% on water, consuming significantly less energy, and reducing CO2 emissions by up to 80% compared to similar products.

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Think beyond – buildings pay back

Investments in transformative times means seeing the whole picture: Industrial companies can go beyond traditional production investments to unlock new potential: their infrastructure. Did you know that real estate typically represents the second-largest cost factor on the P&L, with operating costs accounting for 80% of building expenses? Energy alone makes up 40% of these costs.
Here too, modernization can be a game-changer. Jointly with Siemens Smart Infrastructure (SI), SFS has developed Decarbonization-as-a-Service. This innovative solution allows building modernization without initial capital investment. The model is straightforward – monthly costs are covered by guaranteed energy savings, never exceeding previous operating costs. This enables strategic infrastructure upgrades while preserving capital for core business initiatives.

Interview with Madlen Junker and Thomas Geiselbrecht at Hannover Messe 2025

Get expert insights from our Financing Solution Partners for Siemens Digital Industries and Siemens Smart Infrastructure Madlen Junker and Thomas Geiselbrecht as they talked about how to bridge the gap between sustainability and market dynamics allowing for self-funding growth at Hannover Messe 2025.

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