Diversified Industrials

KPMG's broad definition of what encompasses the industrial industry is engineering technology that includes aerospace & defense, machinery and electrical equipment, metal processing and metal products. Though many segment specific issues exist, there are four recurring themes across these diverse markets in which KPMG works with its clients:

Strategy Implementation - What shape should my business be in to compete in the future?

The speed of change means that five-year plans are no longer so relevant. Strategy has to be reviewed more frequently to identify market opportunity and appropriate positioning to enhance returns. KPMG combines engineering experience from advisory services and corporate finance experience to identify the right approach, acquisition targets or merger opportunities to create a more attractive investor proposition.

Globalization - How do manufacturers of all sizes deal with global supply and customers?

Industrial products markets are rapidly globalizing. The consolidation of customer markets such as automotive, aerospace and white goods is having its effect on the supply chain. These factors combined with the e-business revolution mean that every business is now global.

KPMG has launched a new process to enable an informed decision to be made on whether to "make or buy" engineered components. The process provides costing of overheads, labor rates and operations such as machining, welding, injection molding and assembly. Several major industrial multinational companies have already used this system.

Cost Reduction - How to address total costs from tax to machine tooling?

Excess capacity, uncertain demand and lower cost competitors are leading to virtually negative inflation and massive cost down pressures for manufacturers. KPMG approaches this issue holistically rather than trying to squeeze yet more cost savings from the supplier base. Global sourcing, e-business and international acquisitions are all means to reduce costs. KPMG utilizes a wide range of services to drive savings straight to the bottom line.

Customization / Added Value - How to enhance margins through focus and service?

Many manufacturers focus on supply chain costs and operational efficiency without the same attention to customer needs. Cost efficiency must be matched by added value and agility to meet customer needs and improve shareholder value.

Key themes:

• Development of services to manage product's lifetime with the customer
• Creation of associated software systems
• Joint R&D with customers
• Forward integration to manage parts of the customer's business

KPMG's approach is to help ensure a wide multi-functional understanding of the client's business and their environment. Then to apply the relevant skills that can make the most difference to support clients in their search for improved operational effectiveness.

KPMG applies the skills relevant to client needs. This may be acquisitions experience to lower cost manufacturing or improve distribution and service. It may be customer and market reviews to assess which global niche to develop or, application of new processes to support faster implementation of innovations.

KPMG's services for industrial markets are aligned to support our clients with the principal issue of shareholder value through initiatives aimed at these four themes. KPMG helps its industrial clients demonstrate to their shareholders that they offer a competitive rate of return through growth, added value and cost control.

A Global Chairman, supported by an industry leadership team and a network of country-based professionals, heads KPMG's Global Diversified Industrials practice.

• Global Chair Diversified Industrials:
  Bill Kimble, KPMG in the U.S., +1 713 319 2148
• Global Executive Diversified Industrials:
  Michele Haffner, KPMG in the U.S., +1 212 872 3641