For decades, Europe set the global standard in industries like automotive, engineering, chemicals, and food production. But the continent’s industrial engine is now spluttering, with growth lagging behind global peers such as the US, China, and much of the rest of Asia. By mid-2025, Eurozone industrial production was up just 1.1% year-on-year, which is significantly behind the robust rebounds seen in the US and leading Asian economies. Germany, Europe’s traditional industrial powerhouse, even faces near-stagnation, sending ripple effects through the region’s interconnected supply chains.

The reasons are clear: volatile energy prices, a persistent skills gap, sluggish productivity, and a maze of regulations that stifle investment and slow progress. In response, the EU Clean Industrial Deal, launched in early 2025 and inspired by the Draghi Report, aims to break this cycle. The Report focuses on affordable energy, streamlined regulation, stronger labour markets, and, critically, renewed competitiveness through automation and AI.

At Blume, we have seen first-hand how that automation and AI pillar can be key to unlock in Europe’s industrial future. When we first partnered with Sensorfact in 2023, it was clear that the next leap in industrial efficiency isn’t about adding more machines, but making existing ones smarter. Through its IoT-enabled platform, Sensorfact helps factories capture and analyze utility and production data. As machines, production lines, and sites become connected, even marginal improvements in efficiency, uptime, or yield can compound into major cost and carbon savings.

Reflecting on the journey from that initial thesis to Sensorfact’s eventual acquisition by ABB has crystallized our conviction about the role IoT, software, and AI play in the modern (smart) factory. It also offers powerful lessons for how Europe’s manufacturing can rebound:

• Unlock the full industrial base. The scalability and accessibility that IoT and AI offer are paramount to rolling out innovative solutions to the 350,000+ SME manufacturers that power Europe’s industrial economy.
• Build trust and prove ROI from day one. Selling digital solutions for manufacturing is rarely straightforward. Long sales cycles are the norm, where buyer personas are both experienced and discerning, yet time and resource constrained. Earning their trust hinges on demonstrating technical credibility and delivering immediate, measurable savings, something that Gen-AI makes more achievable than ever.
• Connect, compound data, and drive automation. Addressing Europe’s productivity and labour challenges requires a big leap in efficiency and smart automation. With each additional machine, production line, and site connected, the predictive power grows. This continuous data compounding fuels a shift from reactive to proactive to fully automated operations.

These lessons are already coming to life on the factory floor as a new wave of digital innovation gains momentum. With Gen AI and advanced software now within reach, manufacturers can quickly unlock the full value of connected equipment. Beyond energy efficiency, we see many other use cases that are ripe for AI disruption, including predictive maintenance to reduce downtime, smarter matching of suppliers and factories, and dynamic optimization of entire production plans.

Reviving Europe’s industrial base won’t happen overnight, and the path forward may not be linear. Success will require closing the adoption gap, doubling down on AI and automation, and strong support from the EU and industry stakeholders. Still, there’s cause for optimism: manufacturers understand what’s needed to regain competitiveness, and the wave of innovative solutions to do so are there. Sensorfact exemplifies this wave, with many more pioneering companies set to redefine the industry’s future.

 1. Eurostat, November 2025

 2. Roland Berger, August 2025

 3. Clean Industrial Deal by the European Commission, February 2025