Orgalime Blog

These are challenging times for Europe and for the manufacturing industry. “Unresolved public and private financial imbalances within the EMU and the subsequent decline in business confidence are now leading to low demand for engineering products in the EU” is how Orgalime reported this ‘impasse’ in November 2012. Indeed, it has been a number of years that we in Orgalime have been warning policy makers that Europe was not on the right track for providing growth and jobs. As the industry which supplies capital goods to all other sectors of the economy, we have seen the signs of low investment in Europe in the internal market. As with all things that come to a head, politicians are at last waking up to what is happening.

We are of course grateful that, at a political level, our message is beginning to be heard and understood. For the first time in Brussels, this is at the highest level, since Commission President Barroso voiced his clear support for our industry when he attended our event in the European Parliament, during our General Assembly, where we launched a joint manifesto ‘Manufacturing a Stronger and Greener Europe’ with our sister organisation, CEEMET. It has been well received and was a timely answer to the Commission’s Communication on re-industrialising Europe.

Obtaining recognition at the political level in Brussels is, however, just a start. It is only just over a year ago that, in a joint letter to Presidents Barroso and Van Rompuy, twelve Heads of State and Government suggested that in terms of priority areas for growth in Europe, “action should start in the services sector” with industry being hardly mentioned. Now the Heads of State have, for the first time, decided to hold two specific debates on industrial policy and industrial competitiveness in June this year and in February 2014.

And then will come the hard part: implementing those reforms which are needed to make Europe a more attractive place for manufacturing investment. Our manifesto gives clear indications of what needs to be done. It will however be rather difficult for many governments and indeed for the European institutions as a whole to move away from business as usual – printing regulation, much of it ill-conceived and punishing for industry. This has become a habit and only now are regulators beginning to understand the cumulative impact that this is having on manufacturing and therefore the wider economy. This is rather late given the horrendous reality of unemployment in much of Europe and particularly youth unemployment: in several EU member states 30-40% of school and university leavers who are unemployed and in a few other countries this is even higher. Other countries of course are in better economic health.

If we are pragmatic, we cannot expect that the European taxpayer is going to provide extensive funding whether at national or European level to boost the European economy. We have been hoping to a see a shift of spending towards more investment in innovation, in modern technological infrastructures all of which would provide a boost to jobs, but old habits – die hard: the agricultural sector although it employs relatively few people today is still considered as the strategic sector by a number of governments. Therefore more efforts will have to be made to ‘re-industrialise’ Europe through other avenues and this means creating the right framework conditions which will incite manufacturing investment in the EU and allow companies to grow, generate a profit and employ more staff.

Extracts from our manifesto explain what we are seeking:

• The cost of doing business needs to be reduced

• Investment and operating conditions in Europe need to be improved

• A supportive framework is needed to keep a full industrial supply chain

• High-tech infrastructure modernisation must be fostered , thus facilitating the early adoption of new technologies in Europe by implementing a policy framework which promotes competition, investment and innovation in these markets

• Regulation must really aim to ensure the right framework for more growth, jobs and investment: policies must be goal-oriented without prescribing technologies; the impact of new regulation on companies and the cumulative impact of regulation must be thoroughly assessed in advance; regulation must be more stable and predictable and also reflect investment cycles; ex-post evaluation of implemented legislation must be the standard

• There must be better market surveillance, adopted regulation must be respected – not only that: policy adopted must be followed

• A more welcoming attitude towards manufacturing investment

Maybe, just maybe, we should all pull together in order to market ourselves better – it appears that our image is sometimes portrayed in some quarters, in a rather outdated manner. After all whilst our technologies are there to solve tomorrow’s problems (as well as those of today!), we are proving that we can indeed combine the jobs and prosperity required by our citizens whilst still respecting the environmental and ecological needs that our fragile planet demands of us. The engineering industries in Europe in particular, have probably contributed more to ‘greening’ the planet than we are given due credit for.

A last word on this to underline what we mean: a CEO from our industry recently commented that when he was looking at where to site a new production facility in Asia, an ambassador from one of the countries he was considering travelled up to his company offices here in the EU to discuss with him what the country’s government could propose to attract the investment there. When first considering the alternative – investing at home, the welcome given to him by the local authorities had first and foremost included the list of regulations and restrictions to respect and permits to be obtained. There are no prizes for guessing where the investment was made. We will not stop companies from investing close to their markets abroad – clients often expect it – but we must never forget that Europe is the first market in the world and that our industry’s success is based on this and on our exports.

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