Financing Investments and Growth - 2

Strong decline in foundation and start-up investments

A further breakdown of investments is based on the goal or the action with which it will be followed: Investments that are necessary for maintenance (replacement investments), and those which are made to increase the capital stock (net investments). (9) The results of the survey show that many companies have used the recovery in 2013 to expand their business, whereas in 2014 the greater trend towards capital preservation is evident. Whilst the share of the net investments in the previous year was 26%, only 21% of investments in this area are planned in 2014, which represent a decline by 19% (see fig. 17). These changes are almost entirely due to the reduction of 56% in foundation and start-up investments.

Diversification investments are on the increase

For the current year however, companies are planning a stronger focus on diversification investments: compared with 2013, 28% more companies want to invest in this direction.
Diversification strategies are frequently pursued by companies when the markets are saturated with the current products, when competition has the upper hand or when there would be better market opportunities for new products.

Automotive and Pharmaceutical/Chemical industries invest mainly in measures of rationalisation

Whilst diversification investments are found almost equally in all industry sectors, the Automotive and Pharmaceutical/Chemical industries focus on rationalisation investment for their machines or systems. In the Service sector and in other Manufacturing industries replacement investments are primarily observed. Logistics, Retail and Machinery/Equipment have planned increased expansion investments in 2014.

from: Barometer Cost Management 2014 by Expense Reduction Analysts & SIIE EBS Business School

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