Commission Vice-President Günter Verheugen: Promoting the Competitiveness of European Engineering, Orgalime 50th Anniversary

April 26, 2005

Brussels, 22nd April 2005

Orgalime 50th Anniversary
Brussels, 22nd April 2005

Madam President, Chairman, ladies and gentlemen,

Let me begin by first of all wishing you happy birthday on this the 50th Anniversary of your Federation. I am delighted to be here with you to celebrate this occasion and to outline the steps the European Commission is taking to promote the competitiveness of Industry and notably the engineering industry.

With thirty-three national associations representing 130,000 companies, ORGALIME is the largest industrial federation in Europe. The engineering companies, mostly SMEs, supply the capital goods for virtually all industrial sectors. They contribute significantly to the European economic development both directly, and indirectly.

Engineering is one of the main motors for growth in Europe, but this is also a sector where competition is intense from newly developing markets and where the ability of industry to remain competitive is a key determinant in ensuring that engineering will also remain one of the main motors for growth in Europe.

Competitiveness is not just the key to assuring a rosy future for Europe’s engineering industry, it is also the key to delivering growth and employment and sustaining the European social model. That is why the so-called Lisbon Strategy launched in 2000 had the ambitious goal of making the EU the most competitive, knowledge based economy in the world by 2010.

However, between 2000 and 2004 the productivity gap between the US and the EU far from closing actually widened. The EU in simple terms was not fulfilling the objectives of the Lisbon Strategy in terms of economic growth, investment in research, generation of employment.

The reasons for this are clear: The original Lisbon Strategy was perhaps not best suited to organise the delivery: too many objectives, to many procedures, unclear division of responsibilities, a lack of ownership and which perhaps matters the most a lack of awareness and of a sense of urgency in the broader public. To be fair, the implementation of the first-half of the reform package of the Lisbon Strategy also took place in quite unfavourable macroeconomic conditions, with sluggish growth, high unemployment and detoriating finances, particularly in some large European economies.

It is imperative to reverse this trend and unlock the European potential by changing the manner in which we pursue the Lisbon Strategy and concentrating on that which is really urgent: more growth and employment in Europe. That is the aim of the Mid-term Review of the Lisbon Strategy adopted by the Spring Competitiveness Council which sets the policy framework within which this European Commission intends to relentlessly promote growth and employment. This is what matters in Europe and this is where our priority and focus lies.

We have to increase our ability to create jobs, to raise our capacity to grow through improvements in education and innovation, and to ensure that Europe remains an attractive location for investment and research.

But at the same time, the new Growth and Employment Strategy needs to engage the Member States much more closely. These goals can only be achieved in the closest possible partnership between Member States and the Commission. National political forces need to play a substantially enhanced role, both in determining and in implementing and in monitoring the measures commonly adopted.

This will materialise in the form of annual national plans, which will bring the Member States step by step closer to the final Lisbon goals. To make things simpler and more coherent, there will be just one national growth programme and a single EU growth plan focusing on key areas such as an effective internal market, free and fair trade, better regulation, improving European infrastructure, investment in research and development, boosting innovation, creating a strong industrial base, more and better jobs, an adaptable workforce, better education and skills.

For its part, the Commission will use all the means at its disposal to ensure we deliver on our tasks and guide and support this process.

European integration and Enlargement

One of the best tools we benefit from in the European Union and that can help us boost growth and employment is the fast rate of economic integration.

The economic integration of the engineering equipment markets of the old 15 Member States and the new 10 Members has accelerated since the beginning of the 1990s. Currently 70% of the sales of engineering products of the new Member States are destined to the old Members whilst nearly 30% of the output of the old EU 15 is sold on the market of the new EU10. The latest EU enlargement has created the single largest market for engineering equipment in the world, worth € 570 billion, subject to common legislation, administrative procedures and customs union. We are speaking here about a win-win situation and one which should deliver new markets and benefits to all of you.

The prospects for further enlargements foresee similar benefits in the integration of South Eastern Europe. I would encourage all of you also to profit from the business opportunities offered by the EU Neighbourhood Policy in Eastern Europe and the South Mediterranean Rim.

Better regulation

I have gone on record as saying that Better Regulation will be the hallmark of my stint as Commissioner for enterprise and industry. These are not empty words and I believe we are already witnessing a fundamental change in culture and atmospherics in the Commission.

Let me though be clear what I mean by this oft used term better regulation. I am talking about the need to create a business-friendly regulatory environment with a well-functioning internal European market. I am talking about the need to fight excessive red-tape, to look carefully and understand the impact of our legislation upon those who generate wealth, prosperity and jobs BEFORE we embark upon a journey of discovery and discover only too late the unfortunate consequences of our well meaning but ultimately mis-guided intentions. Businesses need a positive regulatory environment. This is one of the key determinants of competitiveness, growth and employment performance. If we get this right you, the industry, will deliver growth and employment.

No longer as Ronald Reagan, once so bluntly put it, will the most feared words in the English language be “I am from the government and I am here to help’. A statement which, let us be honest, in the past could equally have applied to the so-called helpful official from the European Commission.

What now really matters is to do the job and to implement our new strategy. Its time to act and the Commission has already started

The recent Communication on “Better Regulation for Growth and Jobs” proposes therefore concrete measures, both at Community and Member States’ levels, that should help European industry to operate in a regulatory framework that creates the right incentives for business, cuts unnecessary costs and removes obstacles to innovation.

I intend to ensure a systematic use of impact assessment and public consultation before any initiative is adopted. In the elaboration of new legislative proposals and of their accompanying impact assessments all Stakeholders will be given ample opportunity to be heard and to contribute. For example they can indicate policy options that they feel should be included in impact assessments. To this end, Better Regulation should also become an essential part of the national “Lisbon programmes”.

I also intend to ensure that where legislation is not needed and voluntary commitments or other tools can equally deliver the same results, then this is the approach that will be adopted. We will not legislate for the sake of it.

The recent agreement on the Eco-design file, the “directive on energy-using-products” will offer you ample opportunities to show that you can do better and quicker than the legislators! Let me also say as an aside, that I was delighted to see the way in which my services worked closely with Orgalime throughout the legislative process on this file to ensure that the version finally adopted by the Parliament and Council remained business friendly.

The Commission is also taking measures to codify and simplify existing legislation. The Communication adopted last month on better regulation provides for, amongst other objectives, the minimisation of administrative costs and burdens imposed by legislation and the simplification of EU and national legislation already adopted. In this respect we are considering the proposal of the Engineering Industry for a catalogue of Community and Member States’ regulations affecting engineering products.

I would like to add now a word about SMEs who are particularly predominant in the engineering sector. Like no other business form they have helped to shape Europe’s economic profile and they will be at the heart of future growth in Europe and need to put them at the centre of our policies and thoughts. At their best, they are the powerhouses of European prosperity. But they are also much more sensitive to changes in the regulatory and economic environment. Creating channels of Communication to better understand our policies but also the needs of Small and Medium-Sized business will be an important step forward towards Lisbon’s success.

Indeed we need to be particularly sensitive to their needs and circumstances and address the major issues of access to finance and attitudes towards entrepreneurship about which I will say a word later. I intend to do my bit by revisiting our current SME policy to find the room for improvement, for change towards the better, the more efficient. Member States are certainly committed to do the same.

Fostering Research and Development innovation

Let me turn now to the question of research and development and innovation. Europe wants and needs to base its competitiveness on high technology value added products and our knowledge and technical skills.

We need to invest in such areas to deliver the growth of the future. Many of you will be aware that the Commission has proposed to increase the budget of the so-called Framework programme of Research and Development from the current 17.5 Billion Euro over a four year period to 70 Billion Euro over 7 years. A number of the areas in this programme will be of direct interest to you - the engineering industry and I would urge you to seek to benefit from the possibilities offered. This, I believe, is one key area where EC funding can make a real difference. We need though to ensure that these funds are industry driven and industry relevant. To this end, the Seventh Framework Programme will see increase use of industry friendly tools such as Technology Platforms which will allow industry to define the research agenda and priorities and Joint European Technology Initiatives which will help to mobilise a critical mass of public private funding in key areas.

But as the experience with the Apple IPOD shows, whose underpinning technology was developed by an EU research institute but where the results were not commercialised in the EU but rather by Apple, it is not enough to have good research skills, we need to be able to commercialise the research results and through these deliver growth and employment. That is why innovation is so important.

Europe lags behind the USA in 10 out of 11 innovation indicators and even within the EU significant national differences exist. It is therefore not surprising that innovation is one of the cornerstones of the Growth and Employment strategy.

The Commission has recently adopted the new Competitiveness and Innovation Framework Programme (CIP). This aims to work hand in hand with the Framework Programme and support the commercialisation of research results and help foster a new spirit of innovation in Europe.

We need to shift from the current fragmented networking, projects and support services in the area of innovation to a coherent cooperation of European, national and regional innovation policies. Innovation happens locally, but teamworking and networking are crucial for its success. We also intend to ensure that a far greater percentage of funding under the structural funds will be used to promote innovation and thus growth and employment. The specific needs and performances of sectors will also be more strongly taken into account.

We must create a new innovative spirit in Europe – a spirit that is going for change, is taking the risk and willing to enter unknown territory.

Encouraging more Europeans to be entrepreneurs

Besides innovation, the CIP puts the emphasis on another competitiveness factor, namely entrepreneurship which is closely knitted to innovation.

The European Union must ensure that there are sufficient successful entrepreneurs in Europe to make economic growth possible. Entrepreneurship is not only a driver for competitiveness, growth and ultimately job creation, but also a vehicle for personal development. Entrepreneurship is about blending risk-taking, creativity and innovation with sound management.

Compared to the US, people’s inclination towards entrepreneurship in the European Union needs to be improved. Recent surveys indicate that only 45% of the Europeans would see themselves as entrepreneurs, whilst the rest would prefer to be employed. Also, there is less involvement in new entrepreneurial initiatives, less firm growth and more adversity towards risk-taking.

In order to improve the European entrepreneurial performance the Commission adopted the Entrepreneurship Action Plan in 2004. This Plan aims to unlock the potential for entrepreneurship in Europe by fuelling entrepreneurial mindsets and encouraging more Europeans to become entrepreneurs. We are trying to help new entrepreneurs and the enterprises they create to deliver growth and competitiveness. This is being achieved, amongst other means, by improving the flow of finance to new enterprises and high-risk enterprises and by creating a more SME-friendly regulatory and administrative framework.

Looking towards the future, the Commission is already working on the identification of key actions for 2006-2008. The new actions will be discussed with European business organisations in the coming months. I would encourage your Sector through Orgalime to participate in this discussion.

A modern industrial policy

By way of conclusion, let me refer to one last issue that is of particular concern for all of us: the modernisation of industrial policy which is a basic building block to achieve the Lisbon objectives. Europe needs a modern industrial policy to create a favourable framework for our industry. We have to adjust today’s policy to tomorrow’s requirements.

The Galileo project and aeronautics are powerful examples of successfully pooling European excellence; both cases bring significant benefits to the European economy. These synergy come from jointly addressing research, regulatory and financing challenges at the European level in domains where individual Member States cannot succeed. However, these projects should not be seen as the typical modern industrial policy that we aiming for, they are rather the exception.

What matters is to set stable and predictable framework conditions under which individual sectors can successfully develop. My services are currently developing a Communication on Modern Industrial Policy that will aim at developing a work programme on Industrial Policy for my mandate. In particular, this Communication will focus on how the horizontal framework conditions can be further strengthened and screen the individual sectors with a view to drawing up an inventory of challenges and possible actions at a sectoral level. This approach will, therefore, provide a framework as well as a programme for the work on individual sectors that we intend to bring forward over the next years. This is not a return to the protectionism of old but a policy that will create the necessary horizontal conditions to allow industry in general to prosper.

With this, I hope you have gained a clearer picture of how Community policy will address the key competitiveness factors for industry as a whole but also for your sector. I can assure you that I together with President Barroso intend to ensure that over the next five years the whole focus of this institution is on playing its role in the delivery of growth and employment. Thank you for your attention.

Item source: SPEECH/05/254 Date: 25/04/2005 Previous Item Back to Titles Print Item

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