European industrials - innovation and tariff resilience explained

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Nov 25, 2025

Sebastian Siersted, an equity investment analyst at Capital Group, reveals how European industrials have transformed into innovative powerhouses. He discusses the shift from traditional manufacturing to software-centric models, showcasing how companies like Siemens are increasing margins and reducing cyclicality. Sebastian argues that local production strategies insulate these firms from tariff threats, and he highlights the competitive edge in industrial software driven by data and AI. His insights emphasize the agility and resilience of European industrials in today's complex market landscape.

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INSIGHT

European Industrials Have Reinvented Themselves

European industrials have transformed from diversified, cyclical groups into focused automation and electrification leaders.
They now sell higher-value solutions and have globalized their customer base, reducing reliance on Europe.

INSIGHT

Software Is Driving Recurring Revenue

European industrials are shifting from hardware-only to software and recurring-revenue models.
Software, digital and services now form a material and higher-margin part of profits and reduce cyclicality.

INSIGHT

Localization Creates Durable Moats

Industrial markets remain highly localized despite global brands and products.
Localized R&D, specs and distribution create durable moats that are hard for outsiders to displace.

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Far from the traditional image of industrials as an old economy, slow growth, low innovation sector, many of these companies have changed beyond recognition in recent years. Equity investment analyst Sebastian Siersted focuses on the European industrials space and outlines why he feels businesses in this part of the world have an innovation head start on peers around the world and are well insulated against any future tariff threat.

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