Presentation on theme: "Enterprise and Industry Directorate-General RESER Conference 14th September 2007 Services in the context of EU policy for Enterprise and Industry Ronald."— Presentation transcript:
Enterprise and Industry Directorate-General RESER Conference 14th September 2007 Services in the context of EU policy for Enterprise and Industry Ronald Mackay DG Enterprise and Industry European Commission
3 Topics of presentation Main themes Challenges to industry Communication on industrial policy 2007 Innovation in services Interlinkage industry and services –Services as inputs to industry –Industry as service provider Productivity and competitiveness Policy sreeening in service sectors Key messages
Enterprise and Industry Directorate-General 4 Challenges to industry Mid-term review of industrial policy COM(2007)374 –Stocktaking, launch of new initiatives –Programme of work to 2009 Challenges to industry Globalisation Rate of technological advances Energy and climate change Implications for the service sector Communication on industrial policy (2005) –Integrated approach (Horizontal and sectoral initiatives) –Concrete programme of work
Enterprise and Industry Directorate-General 5 Programme 2007 - 2009 Industrial Policy Initiatives Horizontal (e.g.) –Sustainable industrial policy –Intellectual property –Structural change (anticipation) –Industry and services (policy screening) Sectoral (e.g.) –European food industry –Electrical engineering –Space; defence and security –Pharmaceuticals
Enterprise and Industry Directorate-General 6 Innovation in services (1) Expert Group Findings Commission paper SEC(2007)1059 –Services companies, generally, do not innovate less than manufacturing companies but great differences exist between knowledge intensive and other services. –Lower percentage of all service sector firms (34.0%) as opposed to manufacturing firms (39.3%) are technical innovators. –The exception are KIBS firms, which are more likely than manufacturing firms to introduce either a product or process innovation (51.5 %) Fazit: Service firms do innovate, but in a different way.
Enterprise and Industry Directorate-General 7 Innovation in services (2) Implications Policy instruments need to recognise the specificity of innovative companies in services The strong heterogeneity within services sectors has implications for policy A distinction based on R&D intensity may be more adequate than services/manufacturing ? Innovation support schemes need to focus on fast growing companies (not only in the service sectors)
Enterprise and Industry Directorate-General 8 Innovation in services (3) European Innovation Platform for Knowledge Intensive Services pilot action that will test new forms of integrated support mechanisms for knowledge intensive services with high growth operational learning platform where such new policy approaches in support of innovation in services can be tested Aims to foster technological as well as non-technological innovation (organisational innovation) in services to practically implement such good practice examples and to further develop them in support of knowledge intense services
Enterprise and Industry Directorate-General 9 Structural change (1) Structure of industry in Europe Rate of change: too slow or too fast? EU manufacturing remains specialized in medium-tech sectors and has not taken advantage of the fast growth of certain high tech sectors. European businesses have not fully exploited either the opportunities offered by ICT technologies. Also, within sectors, the EU is comparatively bad at reallocating resources to the most productive companies Anticipation (getting ready, not forecasting) and development of capacity to change Adjustment costs and the European Globalisation Adjustment Fund
Enterprise and Industry Directorate-General 10 Structural change (2) Interlinkage industry and services Service provision is mainly local. Industrial restructuring has an impact on the location, or relocation, of employment in the service sector. Will industry continue to procure essential business services close to where it is located? Does the service sector have the capacity to create alternative employment in areas affected by industrial restructuring? Impact of outsourcing/offshoring: Many services which were previously considered non-tradable are being increasingly codified, standardised, and suitable for delivery at a distance. (Digital Delivery) What framework conditions have a positive, and which have a negative impact on company strategy?
Enterprise and Industry Directorate-General 11 Industry and services (1) Importance of services as inputs Reliance of industry on wide range of service inputs But Relative absence of quality standards Lack of market transparency High transaction costs Risk of dissatisfaction with service delivered Need for procurement of business related services based on based on more objective criteria and best value for money
Enterprise and Industry Directorate-General 12 Services as intermediate inputs to industry
Enterprise and Industry Directorate-General 13 Industry and services (2) Manufacturers are also service providers Manufacturers build products but their clients want solutions Manufacturing companies increasingly provide services in conjunction with their product. Increased demand for complex systems (e.g. satellite system, mobile phone base station, transportation systems…) Business models (e.g. Public Private Partnerships, Build-Operate-Transfer) They are confronted with the same administrative and regulatory obstacles to trade as service firms, both within the EU and internationally.
Enterprise and Industry Directorate-General 14 Servo-industrial sector (Austria) Servoindustrieller Sektor Kernkonzept Produzierender Bereich Fachverbände der Bergbau und Gewinnung von Steinen und Erden Sachgütererzeugung Energie-und Wasserversorgung Bauwesen +industrieorientierteTeile des Dienstleistungssektors Kernkonzept Produzierender Bereich Produzierender Bereich Erweitertes Konzept der Industrie Bergbau u. Gewinnung v. Steinen u. Erden Sachgütererzeugung Energie- u. Wasserversorgung Bauwesen Produzierender Bereich & Industrienahe Dienstleistungen Sachgüter- erzeugung Sachgütererzeugung Erweitertes Konzept der Industrie & Produktionsorientierte Dienstleistungen Anm.: Die Industrienahen Dienstleistungen beinhalten die Vermietung beweglicher Sachen ohne Bedienungspersonal (NACE 71), die Datenverarbeitung u. Datenbanken (NACE 72) sowie die Erbringung v. unternehmensbezogenen Dienstleistungen (NACE 74). Die Produktionsorientierten Dienstleistungen umfassen: 1/3 Handel, Reparatur v. Kfz u. Gebrauchsgütern; 1/3 Beherbergungs- u. Gaststättenwesen; 1/3 Verkehr u. Nachrichtenübermittlung; 1/2 Kredit- u. Versicherungswesen; 1/2 Industrienahe Dienstleistungen erweitert (Realitätenwesen [NACE 70], Forschung u. Entwicklung [NACE 73]). Quelle: IWI (2007)
Enterprise and Industry Directorate-General 15 Servo-industrial complex
Enterprise and Industry Directorate-General 16 Services in the economy DG ECFIN study 2007 Sources: EUKLEMS COMTRADE Industry classification: NACE @ 2 or 3 digits Usual caveats about methodology: how reliable are the figures?
Enterprise and Industry Directorate-General 17 Manufacturing and tradeable services % total value added % total employment World export growth Food and beverages151,862,257,3 Chemicals241,941,6712,2 Rubber and plastics250,990,618,2 Basic metals270,730,8312 Fabricated metal281,821,588 Machinery292,080,978 Electrical machinery and apparatus, nec310,90,67,5 Radio, television and comm. equip.320,520,318,5 Medical, precision and optical instruments330,570,1810,6 Motor vehicles341,421,137,5 Electricity, gas and water supplyE2,170,5920,8 Other business activities746,9713,097,2 Other service activities930,721,2870,7
Enterprise and Industry Directorate-General 18 Labour productivity performance (growth during period 1995-2004 in %) EU25US 50 - Sale, maint. and repair of motor vehicles7,275,5 51 - Wholesale trade27,252,8 52 - Retail trade14,658,1 H – Hotels and restaurants-1,311,8 62 - Other air transport6,657,9 63 - Other supporting and auxiliary transport activities-242,2 65 - Financial intermediation46,769,4 66 - Insurance and pension funding-13,410,3 73 - Research and development-1,646,4 74 - Other business activities-7,717,1 90 - Sewage and refuse disposal-5,137,6 92 - Recreational, cultural and sporting activities4,321,7 93 - Other service activities-11,111,8
Enterprise and Industry Directorate-General 19 The EU productivity problem EU market services have contributed relatively little to growth (Sectoral contribution to business sector productivity growth) (Source OECD, Scarpetta, 2007)
Enterprise and Industry Directorate-General 20 Services productivity A shared problem Productivity growth in services lags behind that of manufacturing, but the service sector is already large, and still growing. Productivity increases in industrial sectors may have a ceiling, which is determined by the relatively low productivity of service inputs Industrial companies employ increasing numbers of people in internal service functions. Their overall productivity growth will reach a limit if they do not tackle the issue of services productivity. Services productivity is too important to leave it entirely in the hands of the service providers.
Enterprise and Industry Directorate-General 21 Initiative on Industry/Services (1) Rationale The cost, quality and productivity of certain service sectors, have an impact on the competitiveness of industry. Regulations which affect the performance of professional and other business services, financial services or the retail and distribution sector also have an impact on industry. In addition, competitive network industries enhance the competitiveness of industry as a whole. Industry is both a user and provider of a growing range of services related to innovative technologies and products.
Enterprise and Industry Directorate-General 22 Industry related services Service sectors with close linkage to industrial sectors Quality, price and competitiveness of the service sector has impact on competitiveness of many industrial sectors Examples: Engineering services Creative industries (Design, Architecture, Advertising) Other Business Services Network services (Distribution, Communications) Facility Management Recycling, Waste disposal Methodology: Same form of competitiveness analysis as applied to the industrial sectors could be applied to these (or other) service sectors
Enterprise and Industry Directorate-General 23 Initiative on Industry/Services (2) Methodolgy Identification of key areas of interdependency Policy screening of relevant service sectors Identification of obstacles to increased competitiveness and market failures Assessment of impact on industry Assessment of need for intervention
Enterprise and Industry Directorate-General 24 Initiative on Industry/Servicesvice (3) Knowledge Competition Regulation Environment External Competitiveness Employment and Geographic dimension Competitiveness Assessment: Structural data and indicators:
Enterprise and Industry Directorate-General 25 Challenges for the service sector Provide more inputs to policy development –Industry, innovation, SME, Research –Internal Market, Public procurement, Intellectual property –Trade, Competition Emphasise contribution to economic growth and job creation –Lisbon strategy, National reform programmes, Community Lisbon Programme Invest in more R&D Invest in more innovation Increase productivity Increase use of standards
Enterprise and Industry Directorate-General 26 References and links Mid-Term Review of Industrial Policy COM(2007)374 http://ec.europa.eu/enterprise/enterprise_policy/industry/index_en.htm Innovation in Services SEC(2007)1059 http://www.proinno- europe.eu/index.cfm?fuseaction=nwev.NewsReader&news=1918&lang=EN&top icID=90&parentID=0 EU Industrial Structure 2007 http://ec.europa.eu/enterprise/enterprise_policy/competitiveness/2_indics/ indics_compet.htm Industriebuch 2007 Industriewissenschafliches Institut (IWI) Vienna
Enterprise and Industry Directorate-General 27 The End Thank you for your attention