SUSTAINABILITY

• Attempts at promoting sustainability, controlling, and reducing greenhouse gas emissions from production plants have led to the implementation of stringent regulations in Europe, such as the Kyoto Protocol, Euro V, and Euro VI.
• Government organizations such as the EU Emission Standards have designed specific regulations and guidelines to "improve safety and reduce environmental and health hazards."

• As such, manufacturers are increasingly focusing on ways to promote cleaner production processes. Specific industries are turning to the use of filters to protect their machinery and equipment, as well as to improve its shelf-life.

• This trend is driving more manufacturers to install filters and increasing the replacement frequency of filters in compliance with government regulations. It is expected to drive increased demand for filtration systems and aid market growth.
• Fluid filters are expected to see a surge in demand in automotive, industrial, and defense applications. This growth is due to benefits such as "providing clean fluids to improve the oil recovery process efficiency and protecting the equipment parts."
• Cummins is following a two-year test and development program to meet Euro VI regulations to achieve "nearer-to-zero emissions."

DIGITALIZATION

• The growing trend of digitalization in advanced techniques/digitalized processes involving compact electric circuits, semiconductors, and sophisticated software drives market stakeholders to invest in research and improve industrial filtration products to match the "increased capacity and improved filtration performance" needs in certain industries.
• For example, the healthcare industry is experiencing transformative advances that prompt the use of filtration technologies such as microfiltration and ultrafiltration (rather than chemical technologies) to operate technologically advanced devices required for diagnostic and medicine research.
• This trend would most likely be seen in technologically advanced regions such as Europe and North America.
• In the automotive aftermarket, the high rate of adoption of advanced technologies when fabricating auto parts is expected to drive the market in Europe. Also, the increasing level of digitalization in component sales in the region will place Europe with the second-largest share of the automotive aftermarket behind the Asia-Pacific.
• Several technological advancements in the industrial filtration market in Europe are employed to save costs and improve quality.
• Freudenberg Group invested €8.5 million to develop a new training facility for trainees to obtain firsthand experience of industry digitalization and automation trends. This facility is available to its Freudenberg Filtration Technologies division. The company's digitalization in industrial air filtration includes the networking of indoor air monitoring, which aims to minimize energy use and realize significant cost savings.
• Hella KGaA Hueck & Co., is a German automotive parts supplier that established a unit (Mobility Solutions) to promote digital business models in the aftermarket category.

RESEARCH STRATEGY

European Industrial Filtration Market Size

• On the global scale, the estimate of the industrial filtration market size is $29.47 billion for 2020. While one study projects a market size of $41.1 billion in 2025 at a CAGR of 6.9%, another study projects a market size of $48.52 billion in 2026 at a CAGR of 4.3%. Both CAGR projections cover the forecast period.
• According to a recent research study, the estimate of the European industrial filtration market size is around 24%, which is about $7 billion for 2020.
• The industrial filtration market falls under different categories, namely, "type (air and liquid), filter media, product, and industry." On the other hand, the liquid filtration market can be categorized by filter media, non-woven, fabric, and end-users.
• A research study showed that in 2019, the liquid segment of the market accounts for the larger share of the industrial filtration market.
• Another study projects that the liquid segment of the industrial filtration market will continue to account for the larger share of the market.
• The study hinged the projection on the fact that "almost every industry has to treat the wastewater, including processing water." By application, these industries include power generation, chemicals and petrochemicals, paper and paints, mining, food and beverages, and healthcare.
• Among all the segments based on application, the healthcare industry will continue to account for the largest proportion in the industrial filtration market. This is so because of the increasing demand and "the requirement for high purity raw materials, both in liquid and gaseous forms."

European Industrial Liquid Filtration Market Size

• According to a study published in November 2019, the market size of the liquid filtration market was estimated at $2.1 billion in 2019. The study further projects a market size of $2.9 billion by 2024 at a CAGR of 6.5% for the period of the forecast.
• The end-users in this market are industries in biopharmaceutical, food and beverage, mining, chemical, and others.
• According to the study, the estimate of the European industrial liquid filtration market size is around 23% of the global market size, which is about $483 million for 2019.
• Some prominent companies operating in the European market include Kufferath AG, Autotech Nonwovens Pvt Ltd., Eaton, Filtercorp International Limited, the Kraissl Company, Fibertex Nonwovens A/S, Valmet, and Hollingsworth & Vose.

Future Market Size

• The 2019 study projects a CAGR of 6.5% between 2019-2024.
• According to another 2019 report, "Europe liquid filtration market is expected to grow with a substantial CAGR in the forecast period of 2019 to 2026."
• Based on the 6.5% CAGR, the projection for 2020 will be $514.36 million, while that of 2024 will be $661.7 million.
•  Industrialization and urbanization in new economies are some attributes contributing to the growth of the liquid filtration market. Germany and the UK are among European countries that will be beneficiaries of "high consumption of liquid filter media by 2024 due to increasing industrialization."
• Other contributing factors to the market growth are "the stringent regulations on industrial and municipal wastes."
• During the forecast period (2019-2024), the study predicts that the food and beverage end-user should witness the fastest growth in the global liquid filtration market.

Research Strategy

Calculations

CAGR (European Industrial Filtration Market)

• Globally, the estimate of the industrial filtration market size stands at $29.47 billion in 2020.
• A recent research projects this market size at $41.1 billion in 2025, while another research stated a market size of $48.52 billion in 2026. The CAGR projections of these two reports cover the forecast period at 6.9% and 4.3%, respectively.
• According to the recent study, the estimate of the European industrial filtration market size is around 24%. This estimated market size will amount to about $7 billion in 2020.
• The industrial filtration market falls under different categories, namely, "type (air and liquid), filter media, product, and industry." Whereas, the liquid filtration market can be categorized by filter media, non-woven, fabric, and end-users.
• In 2019, a research study showed that the liquid segment of the market accounts for the larger share of the industrial filtration market.

CAGR (European Industrial Liquid Filtration Market)

• The end-users in the liquid filtration market are industries in biopharmaceutical, food and beverage, mining, chemical, and others.
• Some prominent companies operating in the European market include Kufferath AG, Autotech Nonwovens Pvt Ltd., Eaton, Filtercorp International Limited, the Kraissl Company, Fibertex Nonwovens A/S, Valmet, and Hollingsworth & Vose.
• According to a 2019 report, the market size of the liquid filtration market was estimated at $2.1 billion in 2019 and $2.9 billion by 2024.
• The study placed the CAGR for the period of this forecast at 6.5%.
• According to the study, the estimate of the European industrial liquid filtration market size is around 23% of the global market size. This estimated market size amounted to about $483 million in 2019.

Future Market Size

• As mentioned above, the 2019 study projects a CAGR of 6.5% between 2019-2024 for the European industrial liquid filtration market.
• Another 2019 report substantiated the market growth rate, stating that "Europe liquid filtration market is expected to grow with a substantial CAGR in the forecast period of 2019 to 2026."
• Based on the 6.5% CAGR, the projection for 2020 will be $514.36 million, while that of 2024 will be $661.7 million.

European Market Determinants for CAGR

•   Industrialization and urbanization in new economies are some attributes contributing to the growth of the liquid filtration market.
• Germany and the UK are among European countries that will become beneficiaries of "high consumption of liquid filter media by 2024 due to increasing industrialization."
• Other contributing factors to the market growth are "the stringent regulations on industrial and municipal wastes."
• According to a study, the liquid segment of the industrial filtration market will continue to account for the larger share of the market. The study hinged the projection on the fact that "almost every industry has to treat the wastewater, including processing water."
• During the forecast period (2019-2024), the study predicts that the food and beverage end-user should witness the fastest growth in the global liquid filtration market.

Research Strategy

Calculations

Robert Bosch GmbH

• Robert Bosch GmbH has its headquarters in Gerlingen, Germany. 
• Bosch's mobility solutions include powertrain solutions, chassis systems control, starter motors, generators, and others. The company sells high-quality spare parts that make driving safer, more relaxed, and more eco-friendly. Bosch also sells pedal-assist eBikes systems to customers, dealers, and manufacturers. Besides, drivers benefit from Bosch's state-of-the-art testing technology.
• In 2018, Bosch reported sales of €47 billion from mobility solutions.

ZF Friedrichshafen AG

• ZF Friedrichshafen AG has its headquarters in Friedrichshafen, Germany. 
• The company develops an "innovative solution in the future-oriented fields of efficiency, safety, autonomous driving, and e-mobility." ZF also specializes in vehicle motion control to ensure comfort.
• The company reported revenues of $36.5 billion in 2019.

Continental AG

• Continental AG has its headquarters in Hannover, Germany. 
• Continental AG sells electronic and hydraulic brake, chassis control systems, sensors, advanced driver assistance systems, airbag electronics and sensorics, electronic air suspension systems, windscreen washer systems, headlight cleaning nozzles, and tires.
• The company's automotive sales in 2019 amounted to €26.5 billion.

Valeo SA

• Valeo SA has its headquarters in Paris, France. 
• Valeo SA is a global automotive supplier that designs innovative technologies and systems which make vehicles "more intuitive, autonomous, connected, and environmentally friendly."
• Valeo sells driving assistance systems that "makes driving safer, more autonomous, and better connected through perception systems and artificial intelligence." The company also sells powertrain systems that make internal combustion engines cleaner.
• Valeo sells visibility systems that enhance the travel experience in autonomous vehicles.
• In 2019, Valeo SA reported annual revenues of $21.08 billion. 

Faurecia

• Faurecia has its headquarters in Nanterre, France. 

• Faurecia sells seat systems that increase comfort and safety as a way of offering its customers premium quality. The company also sells full interior systems such as door panels and center consoles. Besides, Faurecia offers clean mobility innovative solutions.

• The company's revenues in 2019 amounted to $20.34 billion. 

Gestamp

• Gestamp has its headquarters in Madrid, Spain. 
• Gestamp sells body products and large components and assembly parts, such as bonnets, roofs, doors, and mudguards, as well as other high quality, class-A surface. The company also sells assembly parts that are used to create the visible exterior skin of vehicles.
•  Other products that Gestamp deals with include important structural and crash-related elements, such as floors, pillars, rails, and wheel arches, which, together with the exterior skin components and assembly parts, form the essential upper and under body (platform) structures of vehicles.
• Gestamp also sells chassis parts, which are important for the dynamics, performance, and safety of vehicles.
• The company's revenues in 2019 amounted to €9,065 million. 

Research Strategy

Selected Findings

Alfa Laval AB

• Alfa Laval AB is a world leader and a leading global provider of first-rate products in the areas of heat transfer, separation, and fluid handling.
• In addition, the company has a wide geographical reach. Its products are sold in more than 100 countries.
• The revenue per employee of the company has been increasing over the past 4 years. It has increased from SEK 2.06 million in 2016 to SEK 2.14 million in 2017, SEK 2.42 million in 2018, and SEK 2.68 million in 2019.
• The company has an above investment grade rating of BBB+ from S&P, and the same has been stable since 2014. Such a stable above investment grade rating profile helps the company to keep its cost of debt under check and get favorable leverage terms from the lenders.
• The company has a lot of pending litigation cases against it. As of December 31, 2019, Alfa Laval was named as a co-defendant in a total of 698 asbestos-related lawsuits with a total of approximately 698 plaintiffs.

MANN+HUMMEL

• The company has locations in over 80 countries across the globe, with its headquarters based in Ludwigsburg near Stuttgart. It has presence across all the major continents in the world, including Asia, Africa, North America, South America, Europe, and Australia.
• The company has won several rewards and recognition over the past several years for the quality of its services. Some of these include 'General Motors Supplier of the Year 2018', 'CES Innovation Award', 'Ford Top Supplier Award for MHTH', 'Caterpillar Bronze Supplier 2018', 'International Parts Award for MHMX', and 'Corporate Responsibility Award for MHES' among others.
• The company has an innovative debt management strategy. It uses green financing to raise funds and was the first automotive supplier worldwide to issue a green bond as a financing instrument in 2017. Such bonds help the company to reduce its overall cost of capital and encourage sustainable growth.
• The company has a strong focus on the research and development of innovative products and has made huge investments in the same. In 2018, the company spent EUR 140 million (3.5 percent of sales) on research and development activities.
• In addition, it has set up a dedicated IoT Lab in Singapore to develop digital products and services. Such strong R&D infrastructure allows the company to stay ahead of its competitors.

Selected Findings

Ahlstrom-Munksjö

• Ahlstrom-Munksjö has a global network of sales offices and 45 plants in 14 countries.
• In terms of its competitive advantage, most of Ahlstrom-Munksjö businesses have a global leadership position. The company also offers high-value products that focus more on customer requirements, instead of industry standards.

• Ahlstrom-Munksjö focuses its efforts on continuously improving customer experience. They collect in-depth customer insight by regularly carrying out a global Voice of the Customer study which aims to understand their customers’ needs, expectations, and market trends.
• One of its key priorities is sustainability, which the company views as a strategic competitive advantage that strengthens its business relationships and also brings value to its customers.

• Ahlstrom considers its strong partner network one of its key strengths. Its value proposition is centered on "innovation, quality, and service."
• The company also provides solutions that use fewer resources, safer materials, and have a lower impact while still providing better performance than alternative options.
• In terms of its filtration segment, Ahlstrom-Munksjö maintains global leadership in engine filtration and also has a growing position in industrial air filtration. Additionally, they have a broad and unique technology platform and strong R&D capabilities in industrial filtration as well as expertise in developing tailor-made engine filtration systems for customers.

• Price increases to its products may also drive the company's oversea customers to purchase from competitors, which has impacted its sales and EBITDA in the past.
• In 2018, Ahlstrom-Munksjö's sales were negatively impacted due to industry-wide de-stocking. The company also experienced a sharp decline in market demand.
• In terms of its filtration segment, the demand for its filtration products remained at a low level in the third quarter of 2019.

Eaton

Countries

• Eaton operates in 60 countries, including Argentina, Australia, Austria, Belgium, Bolivia, Brazil, Canada, China, Switzerland, Thailand, Trinidad & Tobago, Turkey, United Arab Emirates, United Kingdom, United States, Venezuela, and several others.

• A key competitive advantage of Eaton's is their commitment to ethics and integrity.
• The company promises to "do business right" and commits to following the highest ethical practices and standards of behavior in business.

• Sustainability is also central to Eaton's vision and is a growing aspect of its business success.

• Eaton is a trusted brand among customers, it has strong distribution channels, and global businesses with scale. Additionally, its strengths include a "broad range of product and solutions capabilities, a large installed base that creates aftermarket, and market knowledge and application expertise."
• In 2019, Eaton’s Hydraulics business had sales of $2.2 billion. Their Hydraulics segment is a global leader in hydraulics components, systems, and services for industrial and mobile equipment. The Hydraulics segment includes its Filtration business, which offers filtration systems solutions.

• In 2019, the company had a decrease in organic sales due to weakness in "global mobile equipment markets and destocking at both distributors and OEMs." Its operating margin also decreased to 11.2% due to lower sales volumes, operating inefficiencies, and an unfavorable product mix.

KEY FINDINGS

• The company operates in Canada, Mexico, the USA, India, China, Indonesia, Japan, Korea, Morocco, South Africa, Denmark, Germany, France, Italy, Austria, Netherland, Russia, Spain, the United Kingdom, Australia, Brazil, Argentina, Colombia, and Venezuela.

Competitive Advantage

• Forward-looking innovation is the key competitive advantage of Freudenberg. The company develops leading-edge industrial technologies, high-quality products, and solutions for 40 market segments.

Strengths

• Freudenberg has a constructive working environment which enables all employees to continuously develop their skills. The company values all its employees and allows them to grow their individual skills.

Weakness

• Freudenberg's 2018 consolidated profit dropped from €700.1 million to €602.4 million due to lower investment income and a decline "in the pro-rata results from associated companies."