New industrial revolution communication

10 October 2012
by eub2 -- last modified 10 October 2012

Europe needs to reverse the declining role of industry for the 21st century with the aim to deliver sustainable growth, create high-value job and solve societal challenge that we face. Immediate action should contribute to reverse the current downward trend from its current level of 15.6% of EU GDP to as much as 20% by 2020. Therefore the Commission proposes a number of priority actions to stimulate investments in new technologies, to improve the business environment, to access to markets and to finance, particularly for SMEs, and ensure that skills meet industry’s needs. Europe's industry is well placed to assume this role: Europe is a world-leader in many strategic sectors such as automotive, aeronautics, engineering, space, chemicals and pharmaceuticals. Industry still accounts for 4/5 of Europe's exports and 80% of both Europe's exports and of private sector R&D investment comes from manufacturing. If confidence comes back, and with it new investments, Europe's industry can perform better and start growing again. This is the core message of a communication tabled by European Commission Vice President Antonio Tajani in Brussels today. The actions proposed by this Communication should also contribute to reduce competiveness gap across Member States and EU regions.

Today the Commission has also adopted two reports on Competitiveness: the New Industrial Performance Scoreboard on the Member States which looks at five key areas: manufacturing productivity; export performance; innovation and sustainability; business environment and infrastructure; and finance and investment (MEMO/12/760); and the European Competitiveness Report 2012 which analyses the main globalisation trends in the last 15 years and the implied costs and benefits and the challenges ahead for EU businesses.

Lack of confidence triggers lack of investment

Market uncertainty, financing problems, lack of demand and skills shortages triggered lack of confidence which in turn triggered lack of investment and job losses in industry.

Pillars of the reinforced industrial policy are:

Investments in innovation - providing the right framework conditions for investments, to rapidly return to pre-crisis levels, with a focus on six priority areas, with enormous potential for growth and jobs in Europe: advanced manufacturing technologies for clean production, key enable technologies, bio-based product markets, sustainable industrial policy, construction and raw materials, clean vehicles and vessels and smart grids. Member States as well should play their part and should prioritise investments in these six areas.

Better market conditions – improvements in the functioning of the Internal Market and opening up international markets. The Commission will concentrate on selected themes where significant improvement can be achieved quickly: improving the Internal Market for goods, fostering entrepreneurship with regards to the digital single market which is expected to grow by 10% a year up to 2016, protecting intellectual property rights and further promoting the internationalisation of EU SMES around the world, reaching 25% (from 13%) in the medium term.

Access to finance and capitals – to improve lending to the real economy by better mobilising and targeting public resources, including those of the EIB – which should allocate between EUR 10 and 15 billion in additional lending for SMEs - and of the Structural Funds, and by unlocking private funds through the elimination of remaining obstacles for venture capital funds and the facilitation of cross-border operations by smaller companies.

Human capital and skills – equipping labour force for industrial transformations, notably by better anticipating skills needs and mismatches. In this area, the Commission will in particular further promote cooperation of employers, workers and relevant authorities through the creation of European Sector Skills Councils and of Knowledge and Sectors Skills Alliances.

In order to ensure the proper implementation of these actions, the Commission will closely monitor a number of key variables.

1. Investment

Gross fixed capital formation as a share of GDP was 18.6% in 2011. Before the crisis, it reached 21.25% of GDP in 2007. The investment effort needed to improve our productivity would require pre-crisis investment levels in 2015 and average levels of above 23% until 2020. Investment in equipment is currently between 6 and 7% of GDP. To improve of productivity and introduce new technologies it should recover pre-crisis levels and grow sustainably at rates above 9% of GDP until 2020.

2. Internal market trade

Trade in goods in the Internal Market is currently just below 21% of GDP. In a reinvigorated Internal Market, this rate should 25% by 2020.

3. SMEs

In conformity with Commission aspirations for the Digital Agenda flagship Market, the number of small firms engaging in e-commerce selling should increase to reach 33% by 2015. The proportion of SMEs exporting inside the Internal Market was 25% according to the 2009 survey. The medium-tem objective is to have SMEs equally engaged in market outside the EU as within the internal market.

Background

The communication responds to the important challenges the European industry faces as a result of the current economic crisis and presents a number of priority actions designed both to assist recovery in the short and medium term and to ensure the long-term competitiveness and sustainability of European industry. It also reviews the situation of EU industry since the Commission's flagship initiative "An Integrated Industrial Policy for the Globalisation Era"1 adopted in October 2010 in the context of the Europe 2020 strategy. 

Communication

Source: European Commission