Industrial development in Europe and the rest of the world:

some perspectives

D. Michel Judkiewicz EIRMA Secretary general

SITRA Helsinki, 10 October 2013

A few game changers

• Energy shale gas and advanced oil and gas exploration and recovery, renewable energy (e.g. North America) new

geopolitics

• Intelligent energy (smart grid)

• Big data analytics to improve productivity

• Solid modelling / 3D printers from global factories to local,

small production?

• Cloud computing, cloud process control, cloud « everything »

• Bio-based materials

• Generalization of cradle to cradle way of functioning

• Internet of things

• Smart cities

A few game changers

• Nanotechnologies atomically precise manufacturing (APM)

• Sustainability

• (Anticipatory) governance (people, planet, profit)

• MOOCS and consequences

• Social media importance

• Crowd funding

Those are current job destroyers and new job creators

Keywords: collaborative, crowdsourced, nomad, transition engineering (i.e. engineering for « long term survival of complex, democratic, industrial societies ») INNOVATION

It may well be the dawn of a new « Renaissance »

R&D - Innovation: Europe and the world

Cornell U, Insead, WIPO Global Innovation Index (GII): http://www.globalinnovationindex.org/content.aspx?page=gii-full-report-2013

• Faster R&D spending growth in emerging countries

• Leaders: the rich world (Europe, US, Korea, Australia, Japan, Israël, Honk Kong, Singapore) stay on top

• Next is China

• Newcomers: India, Vietnam, Indonesia,…

• Underperformers: Africa (ex- South Africa), Bangladesh, former USSR republics, Greece and Gulf countries where oil investments has jeopardized other investments

Innovation scorecard

Innovation scorecard 2

Some forecasts

• From Mc Kinsey insights:

• In 2000: 24 Fortune 500 companies in emerging world

• In 2025: 230

“Just as Japanese and South Korean companies became

formidable global competitors in the past half century, new

players from emerging markets, such as the Chinese

telecommunications networking giant Huawei, Brazilian

aircraft manufacturer Embraer, and India’s industrial

conglomerate Aditya Birla Group, are asserting their

presence—and many more are soon to follow”

Some forecasts

• From Mc Kinsey insights:

«We expect almost half of all large companies in 2025 to be new

ones that join the pool in the coming years. Many will become

faster-growing “gazelles” that will generate the bulk of new jobs

and value added in the global economy—along with significant

business opportunities for their suppliers and service providers.

This is not an entirely new story: in the 1970s and 1980s, many

US and European incumbents were caught unaware by the swift

rise of Japanese companies that set a high bar for productivity

and innovation. “

Some forecasts

• From Mc Kinsey insights:

« More recently, South Korean companies such as Hyundai and

Samsung have shaken up the leading ranks of high-value-

added industries from automobiles to personal electronics.

Emerging-market companies come from distinct regulatory and

corporate cultures, and they may operate quite differently

than Western multinationals. South Korean companies are a

case in point. Many South Korean firms are family controlled,

enabling them to take a longer view that supports heavier

capital investment and to build market share at the expense

of short-term quarterly profits.”

H 2020: hopes and reality

• Innovating out of the crisis ?

• R&D intensity trend (% of GNP)

• Europe 2020 = 3%, same as USA

• China 2020 = 2,5%

• Japan 2020 = 4%

• Korea 2020 = 5%

• Today, Europe is between 2 and 2,5%, above China but below Japan, USA and Korea

H 2020 and: hopes and reality

• Some EU conclusions

• Europe needs to be more flexible

• Europe needs to improve the gap between creativity and innovative products and services fulfilling a societal need

• De-industrialization is an issue

• High tech sectors in Europe: chemicals, motor vehicles, machinery and equipment, electrical devices, medical, optical and precision instruments, radio-TV and communication equipment

• Some burning issues:

• how to curb unemployment

• How to valorize SME’s R&D and creativity (partnesrhips, others,…)

H 2020 hopes and reality

• Hit parade in European R&D intensity

• Israël 4,40%

• Finland 3,78%

• Sweden 3,37%

• Denmark 3,09%

• Iceland 3,11%

• Switzerland 2,87%

• Germany 2,84%

• ….Romania 0,48%

• Huge disparity in Europe

The German case (Figures 2011)

Germany Europe avg US avg

Excellence in Science and technology

62,78 47,86 56,68

Competitiveness Automotive, environment, energy, new production technologies, chemicals

R&D Intensity

2,84% 2,03% 2,75%

The German case (Figures 2011)

• High innovation capacity

• Export oriented economy

• Germany lost leadership in pharma and optics

• Biotech, medical and ICTcould do better

• Aging population is a threat

• R&D investment sources: 1/3 public sources, 2/3 private sources

• Received highest amount of FP7 funds

• Better in patents than in scientific publications compared to competitors

• Big high level public research institutes (Max Planck, Fraunhofer, Helmholtz, Jülich,…)

The German case (Figures 2011)

• Strong manufacturing industry

• 3d largest exporter after China and USA

• Germany has and edge in competing, somewhat independant of price (image of quality and robustness of its produced goods)

• Germany exports more than 60% to UE 27, hence Germany, best in class today, is also stronly depending on the economic health of the rest of Europe for its prosperity

Possible way forward for Europe European Industrial policy conference 6 June 2013

• European Commission Vice President Antonio Tajani said:

"The crisis has demonstrated the importance of industry for economic stability, employment, innovation and the international performance of our economies.

In a period of record unemployment in Europe, putting industry back at the core of European policies is an inescapable obligation."

Possible way forward for Europe European Industrial policy conference 6 June 2013

Six Commission task forces taking actions to foster innovation in the following fields:

– Advanced manufacturing Technologies for Clean Production

– Markets for Key Enabling Technologies

– Bio-based product markets

– Sustainable industrial policy, construction and raw materials

– Clean vehicles and vessels

– Smart grids

Possible way forward for Europe European Industrial policy conference 6 June 2013

Developing alternatives to bank financing

The European Commission seeks to develop a framework for efficient, diversified and improved long-term financing for SMEs by helping to attract more private investments.

European venture capital passport: The proposal for a ‘European Venture Capital Funds’ will facilitate cross-border fundraising.

Improving SME access to capital markets: Two recent proposals are currently being discussed to attract investors through more visible SME markets and more visible listed SMEs:

– A proposal for the Markets in Financial Instruments Directive (MiFID) to sustain the development of stock markets specialised in SMEs.

Possible way forward for Europe European Industrial policy conference 6 June 2013

• “(KETs: nanotechnology, micro-nanoelectronics, advanced materials, photonics, industrial biotechnology and advanced manufacturing) are a key source of innovation.

• They provide the indispensable technology bricks that enable a wide range of product applications as they feed into many different industrial value chains and sectors in heterogeneous ways.

• They create value from materials to products and services. Due to their transversal nature and systemic relevance to European industries, KETs will catalyse the strengthening and modernising of the European industrial base as well as drive the development of entirely new

industries and breakthrough innovations in the coming years.

• They have the potential to enable sustainable, smart and inclusive growth in Europe by creating substantial jobs, by contributing to the development of products and solutions to address grand societal challenges and by ensuring the Europe can regain its place in the competitiveness race.”

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