Zero Growth in Mechanical Engineering: Why Service Is Becoming the Real Profit Lever
Germany’s mechanical and plant engineering sector is heading into another disappointing year in 2026. Instead of the modest growth many had hoped for, the industry is now expected to stagnate. For companies that still depend heavily on new machinery sales, that is bad news. For businesses with a strong service organization, the picture may look very different.
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The current situation: VDMA lowers its forecast
The VDMA has revised its 2026 production forecast downward from plus 1 percent to plus/minus 0 percent. According to VDMA Chief Economist Dr. Johannes Gernandt, the main reasons are the consequences of the war in the Gulf region, which has increased global uncertainty and once again put pressure on supply chains. A detailed report was published by the German food processing information portal, citing VDMA data: Informationsportal der Lebensmittelverarbeitung (report dated June 29, 2026).
One particularly striking indicator is capacity utilization. In April, it stood at just 77.8 percent, well below the long-term average of 85.6 percent. At the same time, incoming orders from January to April were up 3 percent in real terms compared with the previous year. In other words, demand is still there, but companies are not able to turn those orders into output at the levels that used to be typical. Around 15 percent of companies are once again reporting concrete supply chain disruptions.
Service business: well-known potential, still underused
The fact that service is a major profit driver in mechanical engineering is nothing new. A study by Roland Berger Strategy Consultants found that up to 65 percent of profits in the machinery and plant engineering sector across Germany, Austria, and Switzerland come from services. At the same time, revenue and margins from traditional offerings such as spare parts and maintenance are declining, as these activities are increasingly handled by third-party providers. More details on the study can be found via the German food processing information portal: Informationsportal der Lebensmittelverarbeitung
The ISG Buyers Guide for Field Service Management 2026 reaches a similar conclusion from a different angle: field service management is evolving into a platform-centric discipline. Companies increasingly want end-to-end control over the entire service lifecycle so they can respond more flexibly to new requirements and rising customer expectations. ISG’s original announcement is available here: Business Wire (February 17, 2026).
And yet, despite this well-established potential, execution remains a challenge. According to Roland Berger, only slightly more than half of the mechanical engineering companies surveyed were actually able to actively sell services for their installed base. The issue is not a lack of awareness. The issue is turning that potential into an operational reality.
Why so much of that potential remains untapped
When demand for new machinery weakens, capacity opens up — but that capacity is rarely redirected into service in a structured way. Lower utilization in new equipment production could be an opportunity to strengthen service capabilities. Without the right processes, however, that opportunity is often missed.
Another common problem is the lack of centralized visibility into the installed base. If a company does not systematically track which machines are installed at which customer sites, what their maintenance status is, and when the next intervention is due, it cannot build a proactive service business. It remains reactive, waiting for customers to reach out.
What structured service actually delivers
A well-organized service business can have a stabilizing effect, especially during weaker economic periods. It depends less on new capital investment decisions and more on existing customer relationships. While orders for new machinery rise and fall with customers’ willingness to invest — which is currently subdued, according to the VDMA — maintenance needs and spare parts demand for installed equipment tend to remain far more resilient.
For manufacturers, that means service is one of the few levers they can actively improve regardless of the broader market environment. But that requires a solid foundation: clear visibility into the installed base, documented and traceable service processes, and field technicians who can access the right information when and where they need it.
Conclusion
No company can influence the macroeconomic outlook for the mechanical engineering sector. But it can influence the way its service organization operates. Companies that invest now in structured processes, transparent equipment data, and effective field service management can make themselves less dependent on a market environment that is unlikely to improve in the short term.
Do you know exactly how many of your installed machines will require service next — and how much of your actual service potential you are capturing today?
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