Industrial Strength

European Industry Needs Urgent Overhaul, warns E.U.

Deindustrialization of Europe
Halting the de-industrialization of Europe is a challenging task.
  • Why it matters

    Why it matters

    If Europe continues to lose key industry to Asia and other emerging markets, economic growth may slow and unemployment may rise.

  • Facts

    Facts

    • The European Commission’s report on industrial competitiveness said the Continent must act quickly to stem the loss of its traditional industries.
    • The commission’s president-elect, Jean-Claude Juncker, has named economic growth as his top priority.
    • Europe’s industrial companies struggle with access to credit, a shortage of qualified workers and high energy costs.
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    Audio

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The European commission has promised to take urgent action to reverse the decline of Europe’s manufacturing industry.

Recent data shows that the sector’s share of the value of goods and services produced in 2013 was just 15.1 percent, down from 18.5 percent at the start of the millennium. It hit rock bottom in the recession year of 2009 at 14.8 percent. In 2013, it recovered slightly, but not enough to reverse the downward trend.

“Without pursuing targeted policies on both a European and member-state level, we will not succeed in dealing with the negative consequences of the crisis,” said a spokesman at the European Commission in Brussels.

Belgium, Britain, France, Italy, Austria, Luxembourg, Sweden and Finland are the worst hit countries, with stagnating or declining sectors.

Some companies, notably Germany, Denmark, Ireland and the Netherlands, are still relatively successful, but the European Commission warned that these companies too need to take action to retail their lead. Within the next decade, Germany will need to invest heavily in its infrastructure and ensure the availability of risk capital and a qualified labor force in light of the country’s aging population.

“It will be my No. 1 objective to create growth again, and that will be the common guideline in all the proposals we make.”

Jean-Claude Juncker, European Commission President-Elect

The new commission, which begins work in November, has promised to make the revitalization of the sector a priority.

Jean-Claude Juncker, the European Commission’s president-elect, has announced that around €300 billion ($387 billion) is to be mobilized in the next three years for public and private investments. This will benefit, among other sectors, infrastructure, broadband technology and energy networks.

Europe’s industrial companies, especially the small and medium-sized ones, are challenged by a shortage of employees and high energy costs. They also find it hard to access credit.

The European Union has encouraged member countries to lower their administrative hurdles for start-ups and press ahead with research and development.

Former Finnish prime minister, Jyrki Katainen, the commission’s incoming vice president for competitiveness and investment, will take charge of the program, and coordinate industry, digital economy, climate and energy policies, as well as regional policies, on the 28-member commission.

 

Deindustrialization in Europe-01

This article was translated by Bob Breen. Vinny Kuntz also contributed to the story. The author has reported from Brussels for Handelsblatt since 2010: To contact him: ludwig@handelsblatt.com

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