Changes in Manufacturing, particularly in the mechanical, electrical, electronic and metalworking industries Speaker: Željko Pazin Director at Orgalime Executive Director of EFFRA

Manufacturing & Europe Background Manufacturing & Europe How important is manufacturing for Europe? Despite the continued fall-out from crisis, manufacturing means a lot for Europe: 20 % Direct jobs 67 % Exports 65 % Business R&D Expenditure Manufacturing in Europe remains diverse Importance of manufacturing now recognised by EU and its member states... ....but also by Europe’s competitors

Production in 4 engineering sectors Source: Eurostat Monthly data 2010=100

Engineering industries & EU manufacturing 36% of enterprises ​ Source: Eurostat – data refer to 2013

European Manufacturing Production (2011) Mechanical, electrical, electronic, metalworking & metal industries employ some 10.3 million people in the EU and in 2012 accounted for some €1,840 billion of annual output. The industry not only represents some 28% of the output of manufactured products but also a third of the manufactured exports of the European Union. Mechanical engineering represents 9% of EU’s manufacturing production Metal Articles Production value in 2011 Source: Eurostat

What should be the basis of our debate today? Our experiences in the past Studies/Predictions Understanding the limits of our actions Good actions that can be done within our limits EU ME has strong innovation intensity higher than competing economies and highest among EU industries on average. The technological strength of the EU ME is distributed over a broad range of subsectors, which is not the case for US and Japan. This can be assigned to the know-how in different technologies and the ability of EU companies to co-operate in multidisciplinary projects To keep these advantages we must become better in exploiting research: This starts with better participation of companies from the beginning of projects, so that the resulting products are market-oriented. To achieve this, rules must become easier, so that SMEs can participate.

Investment in R&D is Part of the Solution to Recover from the crisis Importance of Investment Investment in R&D is Part of the Solution to Recover from the crisis

EU mechanical engineering a leading global actor Pan-European industry Technologically leading position Winner in globalisation Enabling energy and resources savings ME industry’s production volume remained unchanged in 2012 after an expansion -well above the average - of 11.5% in the year before Since 2000 EU’s ME represents roughly 40% of ME’s turnover. We have a clearly leading role in comparison to our major competitors This is partially attributed to EU’s infrastructure’s level. Despite the given lack in price competitiveness, the EU ME had gained shares in global trade, up to 37.2% in 2010 from 33.8% in 2000. ME has penetrated the Chinese and Japanese market in the past decade. Results were not so good for the US market, but this trend is starting to change. Moreover, changes in production processes account for a significant part of potential energy and resources savings Therefore it becomes clear why we should ensure ME’s presence in the EU and apply policies that would attract more investment (The graph on this slide is result of rough calculations based on the annual turnover’s change in the different economies as presented in the Commission’s study. Therefore, it is not to be used for very specific referencing) Source: Study on the competitiveness of Mechanical Engineering, European Commission, 2012

Digital technologies Factories of the Future Cyber-Physical Systems Selection of digital issues impacting on & being addressed in the ‘Factories of the Future’ PPP Cyber-Physical Systems Complex Systems Factories of the Future Big Data Cloud Internet of Things Augmented Reality

Establish correct framework conditions Correct Framework Conditions & support for Research & Development support for Skills Development Europe needs to be the place for new investments Establish correct framework conditions Stable legislative framework: esp. for SMEs Strong financing capacity Europe needs to stay on the top of technological development and quality of the industrial workforce Industry and research’s collaboration is indispensable Skills development and Life long learning EU ME has strong innovation intensity higher than competing economies and highest among EU industries on average. The technological strength of the EU ME is distributed over a broad range of subsectors, which is not the case for US and Japan. This can be assigned to the know-how in different technologies and the ability of EU companies to co-operate in multidisciplinary projects To keep these advantages we must become better in exploiting research: This starts with better participation of companies from the beginning of projects, so that the resulting products are market-oriented. To achieve this, rules must become easier, so that SMEs can participate.

Thank you for your attention zeljko.pazin@effra.eu zeljko.pazin@orgalime.org