by
Stefan Vuza*
If the old Continent will continue to experience low growth, increasing inequality, and stagnant wages, the political answers will not suffice. This is why reindustrialisation is such a key policy topic; despite all the Cassandras, the battle is not yet lost and the industry and manufacturing jobs do not represent an outdated solution to Europe’s predicament.
My plea is that Europe should become serious about reindustrialisation and think about supporting European industrial champions. It is not only economically smart, but also politically appropriate, given that, in the last two decades, more and more of the workers’ vote has fed populist parties.
The world is changing and is changing fast. To come out ahead, it is well understood that the European Union requires excellent science, research, and innovation. For the industry to increase its contribution to the development of the European economy, a series of factors and elements have to be considered, taken care of or aligned: new business models, value chains built on strategic industrial innovation, proper supply of raw materials (both at the EU and global level) and material replacement, focus on clusters and technological ecosystems, implementation of advanced robotics and automation industrial symbiosis, more attention to secondary material resources and resource recycling technologies. Obviously, future industry is also about adequate skills and financing.
The success of reindustrialisation will depend on lifelong education and periodic training of the existing workforce, as resilience and adaptation in face of major changes will be the new norm. Moreover, a critical point in building the right infrastructure for the industrial recovery refers to the availability of financing opportunities at the European, regional, and national level.
I am well aware of the reluctance of European leaders to engage in discussions and bring forward policies which specifically address the topic of national industrial champions. This is perceived as a dirigiste approach, as something going against the free market and open competition principles so dear to the European policy-makers.
But solutions are necessary if Europe wants to show that it understands the current wave against globalisation and free trade. If national champions are off the table, then why not European industrial champions? The ongoing trend towards service-based economies should not prevent one from understanding the benefits of a strong industrial sector and from acting to strengthen its role, especially in those countries most hit by the crisis and where the potential exists.
In 2012 the European Commission rightly set the target of increasing the industrial sector's share of the European economy from 16% to 20% by 2020. The decline of the weight of this sector in national economies is not equally distributed across the UE, with Germany and the Nordic countries remaining highly competitive; therefore, a one-size-fits-all approach cannot work. If the words are to be matched by concrete actions, the policy-makers should go beyond analysing the price-related factors which affect the European industry and pay closer attention to the efficiency of institutions, financial markets, product markets, and labour markets.
Only by putting in place supportive conditions for companies, they can compete against non-European rivals. This will necessitate investment in education, research and infrastructure, as well as an investment-friendly climate, affordable energy and intelligent regulation. My hope is that the Brussels leaders will acknowledge how big is the today’s gap between aspiration and reality and will act swiftly and pragmatically by engaging more with the business sector.
A critical point, especially in the Central and Eastern European countries, concerns the need for more public infrastructure investment. The basic principle applied to infrastructure at both EU and national level should ultimately be the tried-and-tested formula that these scarce resources should increasingly be allocated to those areas that offer the greatest value for money.
The closer involvement of the private sector in the planning, construction, operation and funding of infrastructure could help to realise desirable and economically beneficial projects more quickly. I salute the opportunities offered by the Juncker plan and I hope that they will really help in advancing the reindustrialisation agenda.
As an entrepreneur whose companies are active in the Central and Eastern European chemical industry and are responsible for hundreds of millions of Euro in turnover, I strongly believe in the potential and benefits of a pan-European reindustrialisation policy. In views of the recent economic crisis, the idea that, in Europe, industry is a relic of the past should be once and for all abandoned.
I invite the European policy-makers to think big, not in terms of national industrial champions, but European ones. We should seek to keep or regain our competitiveness at the world scale and this cannot be done with laissez-faire policies. A public – private dialogue and partnership matched by vigorous policies in favour of reindustrialisation should become reality if we are to prevent isolationist trends and to grow again.
*Stefan Vuza is a Romanian industrial entrepreneur. He owns Chimcomplex, a leading chemical company.
By: N. Peter Kramer
