Elżbieta Bieńkowska – Commissioner for Internal Market, Industry, Entrepreneurship and SMEs
Brussels, European Parliament – Committee on Industry, Research and Energy (ITRE)
Chairman Buzek, Honourable Members, when I stood before you for my nomination hearing, I made a promise to work with you closely and keep you informed.
A few days ago, I wrote to Council Ministers about how we can improve Europe’s industrial competitiveness.
I felt that it was important to meet with you as soon as possible to explain the letter and to give you a chance to ask any questions.
I thought that it would be useful today to provide some wider context:
- Why we need a new approach to industrial competitiveness;
- What our approach will mean in practice;
- And how we can deliver it.
Why we need a new approach to industrial competitiveness
Chairman Buzek, Honourable Members, we have a proud industrial heritage in Europe.
Industry represents 35 million jobs.
It generates more than half of our exports.
It finances 80% of private research and development.
It makes an important contribution to economy-wide productivity gains.
But it needs to be more than a heritage.
It needs to be a future.
And it needs to generate jobs now and in the decades to come.
This is why President Juncker has made a robust industrial base a priority for this Commission.
In sectors such as engineering, aerospace, chemicals, pharmaceutical and automotive we are world leaders.
We obviously have to maintain this position and even reindustrialise Europe.
We have businesses that are constantly at the cutting edge of innovation, research and development.
Three quarters of firms have introduced innovations in the past three years.
But we face major challenges.
We have an investment gap of 400 billion Euros in terms of productivity.
The economic crisis hit our manufacturing sector particularly hard.
It declined by 9.2% between January 2008 and January 2014.
Between 2000 and 2014, employment in manufacturing fell in all Member States except one.
Across the EU, it fell by 16%.
In the UK and Portugal, it fell by over 30%.
Our economic recovery has been much slower than other parts of the world.
EU manufacturing production in 2014 was still 9% lower than its peak in 2008.
In some key areas, we are falling behind our competitors.
For example, we are not investing enough in new technologies.
The amount invested by EU companies in research and development is only forty per cent of the amount invested in the US.
A new survey shows that almost half of European manufacturing companies have not used advanced manufacturing technologies in the past and do not plan to use them in the next year.
And even where we have traditionally led, we are coming under strong competitive challenge.
The European Union is now only the fourth innovating region on the world, behind South Korea, the United States and Japan.
For example, in the chemical sector, Europe is losing its advantage compared to the US due to the exploitation of shale gas by American firms.
But it is about more than statistics.
About lack of flexibility.
I had a very telling – and disturbing – example just the other day.
A very large multinational with significant operations around the world told me how it had a project for which it would recruit 500 highly qualified engineers and researchers for a project of at least 2-3 years’ duration.
It had existing operations in a large, founding Member State of the EU.
It could have found persons with the relevant qualifications in that Member State and would have preferred to go ahead in that location.
But it finally decided that it could not take the risk.
If after the 2-3 years’ peak, the company would no longer need all of those persons, it could not adapt.
So against its preference, it built the resource for this project outside Europe.
500 high value added jobs for at least 2-3 years, lost for Europe. Not to mention the long-term impact on R&D.
Who in Europe gains from that?
What our approach means in practice
We have to be wise in our choice of solutions.
There are some who seem to think that the solution is to shut the door on our foreign competitors or impose additional requirements.
I understand that view but I do not believe that it is the right way forward.
All it does is to reduce choice and increase costs for consumers and companies using those products.
The solution is to raise OUR game.
We need to provide a supporting framework for our businesses to adapt and grow.
We need an open, integrated approach to industry.
So that is what our new industrial approach is all about.
First, we need to facilitate firms’ integration into the Single Market and into global value chains.
Global value chains and networks are how the world works today.
There is hardly a product today which was made by just one enterprise.
No longer does one company, in one factory, in one place, research, design and produce a whole product from start to finish.
Different parts of the product are developed by different competitive companies in different factories and offices across the world.
Our most successful companies work within seamless value chains.
Thanks to new digital technologies, the distinction between manufacturing and services is more and more blurred.
This leads to radical changes that are already taking place.
First, digitalisation allows manufacturers to respond to individual customer demands without losing the advantages of scale.
This is called customised mass production.
Second, for companies it is becoming easier and more profitable to bundle goods and services together.
And third, this will impact the whole business environment.
Products will be offered as one: the manufactured good and accompanying service.
To show what this means, take the automotive sector.
A car will become more and more an individualised product – or even unique.
Beyond that, car manufacturers already not only sell their cars, but also after-sales services on maintenance or safety.
The job of a car manufacturer might change from just selling a car to selling a complete mobility service.
It will also allow companies to exploit added value along the whole value chain.
We must not only help EU companies be part of these value chains.
But we must also ensure that we remain leaders in these most high-value added areas.
But precisely because goods and services are becoming so interconnected, restrictions on services will hurt the sale of goods.
So we need to remove the main obstacles to BOTH goods and services in our Single Market.
The second part of our new industrial approach is to foster the modernisation of EU industry.
We need to encourage our firms to adapt.
- Be it by digitising;
- By developing energy-efficient technology;
- Or by adopting other new cutting-edge technologies.
Once again, many EU firms are already succeeding.
Let me give you an example on digitisation: Last week I met a company active in the field of Big Data and data security.
It provides technical solutions to protect industrial data from unintended sharing or access by third parties.
It is the only European firm competing eye-to-eye with four American competitors on a global scale.
We need more firms like this.
But what these companies need are clear rules on the use of Big Data and promoting open access.
This means a workforce with the right skills.
If currently one fifth of university graduates work in low- and medium-skills jobs, there is something wrong with our education systems.
It means getting our workforce ready for the digital age.
There is a shortage of ICT professionals that needs to be addressed.
Let me give you an example on moving energy-efficient and low-emission technologies: the European pulp and paper industry.
It is transforming from a typical commodity supply industry to a solution provider.
It is working with agriculture, forestry, waste management and recycling companies to find new alternatives to fossil feedstock.
Last week, the EIB granted a loan to a Finnish bio-product pulp mill.
I will also support this industrial transformation.
We have to improve efficiency of all our energy sources.
Energy efficiency first – is a key principle of the Energy Union that I fully support.
Energy efficiency will also lower emissions.
We have to work towards lowering emissions in a cost efficient way and in close cooperation with industry.
I believe that there is no contradiction between a competitive industry and one that lives up to the climate and energy challenge and we need to lead this discussion in close cooperation with the industry.
To do so we have to use all available technologies. We should not favour certain technologies over others.
And finally, we need a secure energy supply.
It is important to stress that preserving energy mix is not only important for our industry but also and foremost for our security.
But if Europe wants to remain a significant player on a global stage, our industry has to innovate and create more advanced technologies.
Let us take as example two sectors where Europe is at the forefront of the technological and industrial excellence: Space and Defence.
On space, Europe through its two main programmes Copernicus and Galileo is developing a competitive and highly innovative industry.
The successful launch this night of the second Copernicus Satellite shows the know-how of Europe in the field.
These programmes are not just about space policy, they are about benefits for citizens through new applications and services across the internal market.
This is a good example of an integrated value chain.
Additionally, there is no defence policy without a strong defence industry.
Over the last years, we see a dramatic decrease in research spending.
If we don’t stop this trend we will soon put into danger our capacity to answer security challenges we face.
This is reason why we need a strong European defence industry which is investing in research, remaining the leader of innovation and taking the full benefits of the integrated internal market.
I believe the EU can and must support the efforts of Member States and industry, especially in research in defence.
I will therefore propose next year to launch of a three years Preparatory Action on Research in defence for which I hope to receive your support.
I will also propose a Road-map on Security of Supply which will attempt to place the defence industry in a more European integrated value chains at the same time respecting the specificities and sensitivities of this sector
The third part of our new approach is ensuring a business-friendly environment.
Smart technology needs a smart industrial climate.
A few months ago, we heard from the CEO of a firm that produces medical devices.
The Single Market had enabled his company to expand cross-border.
But to raise finance, he had had to go to the US.
We need to change that.
How we can deliver it
First, we must constantly be looking for opportunities for growth.
This is why instead of one isolated strategy, we have put industrial competitiveness at the heart of the Commission’s policy.
This is what ‘mainstreaming’ means.
All the main initiatives of this Commission are supportive of our approach.
The Digital Single Market strategy.
The Energy Union package.
The renewed Circular Economy Package.
The Capital Markets Union.
The European Fund for Strategic Investments.
And most importantly of all, this autumn’s Internal Market Strategy.
We need an Internal Market Strategy that boosts investment.
A Strategy that promotes innovation.
A Strategy that helps our SMEs and start-ups.
And a Strategy that benefits our consumers, without whom there will be no market.
Second, we must have a joined-up view.
We must constantly be looking at how we can use our funds as effectively as possible.
We must optimise their use.
We must make sure that our legislation works through stronger enforcement.
But we must go beyond this.
We must combine these elements in the most effective way possible.
This is why I reorganised the DG to break down the silos.
This is a change of mentality.
Instead of individual action plans for the steel sector, pharma sector and the like, we have one integrated plan.
Third, we must work in partnership.
Partnership between the Commission and businesses.
Business can help us identify the most urgent needs and the most adequate instruments to address them.
We need partnership between businesses and authorities in Member States.
We need partnership between the Commission and Member States in the context of the European Semester.
And we need partnership between the EU institutions.
Our joint role is to create the enabling conditions for companies to tap that potential.
Our joint role is to empower our businesses to succeed.
We have to make best use of our Single Market instruments which will lead to the creation of more jobs in Europe.
We can do it whilst protecting our consumers.
We can do it whilst being open to the world.
We can create many more jobs in Europe.
Now and in the generations to come.
That is our goal and it is one we can achieve.