Opinion of the Committee of the Regions on 'Benchmarking: implementation of an instrument available to economic actors and public authorities` (98/C 64/01)

THE COMMITTEE OF THE REGIONS,

having regard to the Communication from the European Commission on Benchmarking: Implementation of an instrument available to economic actors and public authorities (COM(97) 153 final);

having regard to the decision taken by the European Commission on 18 April 1997, under Article 198c of the Treaty establishing the European Community, to consult the Committee of the Regions on the matter;

having regard to its decision of 11 June 1997 to direct Commission 1 for Regional Development, Economic Development and Local and Regional Finances to draw up the relevant opinion;

having regard to the draft opinion (CdR 245/97 rev.) adopted by Commission 1 on 12 September 1997 (rapporteur: Mr Valcárcel Siso);

having regard to the Communication from the European Commission on Benchmarking the competitiveness of European industry (COM(96) 463 final);

having regard to the European Parliament report on the abovementioned communications and on the Commission staff working paper concerning a European quality promotion policy for improving European competitiveness (SEC(96) 2000),

unanimously adopted the following opinion at its plenary session of 19 and 20 November 1997 (meeting of 19 November).

1. Introduction

1.1. The Committee of the Regions considers that the development of the EU's industrial competitiveness is a key factor in social development, which is achieved through the steady improvement of productivity and of the quality of goods and services.

Boosting competitiveness is also the key to consolidating and creating jobs in EU companies.

1.2. Company competitiveness rests on a series of internal and external factors which can be compared and analysed with a view to identifying best practices and then adapting them to the situation of each company. This comparison is conducted by using a technique known as benchmarking.

1.3. Since no company is best in all aspects and there is no region where the operating conditions are optimum at all levels, benchmarking will always be beneficial for all the parties being compared, as they will become acquainted with the best practices for boosting competitiveness.

1.4. The various sectors that make up the industrial fabric of the Member States generally have a regional basis; this means that any improvement or loss of competitiveness will have a direct impact on the inhabitants of the region concerned. Thus, without prejudice to EU or national industrial policies, action by the regional authorities is of vital importance as they are the tier of authority closest to the grassroots, and are most familiar with the problems and able to tackle them more quickly.

2. The utility and benefits of benchmarking

The Committee of the Regions:

2.1. Notes that, since the purpose of benchmarking is to identify best practices, it is important to define the fields of study very precisely and obtain sufficient information to facilitate the transfer of know-how and experience, as benchmarking is of particular benefit if each factor is analysed rigorously.

2.2. Considers that benchmarking will be beneficial not only for large companies; its application will be especially useful for small and medium-sized businesses, as they have fewer means of obtaining through other channels the information that is necessary in any benchmarking process.

2.3. Considers that while isolated changes are welcome, it is important that businesses concentrate on programmes for boosting productivity over the long term and securing steady improvements in the quality of their goods and services. This can be furthered by the regular and structured use of benchmarking.

2.4. Notes that benchmarking within the EU can be done at company and sectoral level, and can also cover the framework conditions in which the players operate. Benchmarking of the framework conditions in which countries and regions operate will reveal any factors which make it difficult for their industries to become more competitive.

3. External factors

The Committee of the Regions:

3.1. Considers that benchmarking of the framework conditions in which countries and regions operate is vital in order to identify conditions which particularly promote competitiveness, as lack of competitiveness places a major brake on industrial development.

3.2. Considers that, in order to assess the competitiveness of these framework conditions, it would be helpful to use the following parameters:

a) R& D infrastructure;

b) education and labour force;

c) corporate governance;

d) labour market regulation;

e) labour costs;

f) corporate taxation;

g) energy costs;

h) telecommunications infrastructure costs;

i) general infrastructure (e.g. connections with the rail and road network, ease of access to airports);

j) complexity and speed of administrative procedures;

k) availability of financial support.

3.3. Stresses the need for both national governments and regional authorities to adopt effective measures for removing the obstacles that make it difficult for businesses to realize their full production potential. Benchmarking studies which compare regions would be extremely useful and would help to improve the framework conditions.

3.4. Considers that sectoral benchmarking can be very important for stimulating cooperation between companies, which the EU highlights as one of the principal mechanisms for improving competitiveness.

3.5. Underlines the fact that an increase in competitiveness through the use of comparative assessments must not bring about a one-sided reduction in worker protection rights; on the contrary, there must, as the Commission itself points out, be an adequate level of stability and job-security. Against the background of the ongoing drive to achieve greater flexibility in work, labour law and social law must clearly be observed in employment relationships and in the distinction to be drawn between wage-earners and the self-employed. There must be no question of reducing standards of protection as a result of comparisons with non-EU markets.

4. Internal factors relating to quality and competitiveness

The Committee of the Regions:

4.1. Basing itself on the studies carried out by a group of European consultancies, which identified the main factors that determine business quality and competitiveness, calls for the use of benchmarking as an instrument for continually improving management procedures and systems. The factors to be assessed are as follows:

a) quality and time-frames for the development of new products;

b) quality of suppliers;

c) process automation;

d) manufacturing flexibility and time-frames;

e) quality of the manufacturing process;

f) maintenance;

g) distribution strategy;

h) quality of customer service;

i) human factor;

j) information systems and organization.

4.2. Considers that although a comparative assessment of companies working in different institutional and cultural environments is not easy, the advantages gleaned from such an assessment can do much to improve quality and competitiveness.

5. Application to the public authorities

The Committee of the Regions:

5.1. Notes that the public authorities contribute significantly to the GDP of the Member States as they are an important provider of goods and services, whose efficiency and effectiveness has an important influence on industrial development.

5.2. Considers that the public authorities should benchmark their activities with the priority aim of improving the services which they offer to businesses and to the public.

5.3. Considers that it is the responsibility of governments to adjust legislative and financial conditions so that it is easier for companies to become competitive, bringing these conditions closer to those in the regions of the EU which are better placed.

5.4. Calls on governments to make comparisons between the policies pursued by different regions and countries regarding such aspects as industrial development, job creation and environmental protection, so that the most successful practices in each field can be passed on.

5.5. Also calls on governments to devote special attention to education and public health programmes, with a view to identifying and disseminating the most worthwhile policies and practices regarding, for example, the relation between training, companies and occupational health.

5.6. Attaches special significance to environmental aspects, as increases in company competitiveness must be sustainable from the point of view of the environment and the quality of life, which must be enhanced continually. Hence the importance of adopting environmental measures, taking account of regional interests in this field and in the optimum use of energy resources, making greater use of renewable energy sources, and pooling experience among regional and local authorities.

5.7. Calls on governments to liberalize their economies and bring in mechanisms to encourage competition, drawing on successful experiences in this field in different countries.

5.8. Considers that in order to reinforce the applicability of the importance of benchmarking for public authorities, the High Level Group on Benchmarking should include representatives of local and regional government.

6. Conclusions

The Committee of the Regions:

6.1. Warmly welcomes the European Commission's analysis of benchmarking as a preliminary industrial policy exercise.

6.2. Recognizes that although companies are the main protagonists in industrial competitiveness, it is important that the EU and its national and regional authorities promote active policies for exchanging and comparing experience.

6.3. Emphasizes the importance of benchmarking the performance of SMEs, as they form the basis of the industrial fabric and make it more competitive, thereby also helping to consolidate employment.

6.4. Supports initiatives such as the recently established European benchmarking network, set up by the European Foundation for Quality Management, and its possible linkage with the Global Benchmarking Network. Where information about international competitors is available, and where these are more advanced than those in the EU, the world class standard should be specified.

6.5. Calls on governments to use benchmarking as a mechanism for evening out regional differences, by comparing local conditions and industries with a view to boosting competitiveness and thus speeding up wealth creation.

6.6. Suggests that pilot benchmarking schemes be carried out via some of the European support programmes and via the various programmes for encouraging cooperation and experience-swapping between regions that have a similar industrial base.

6.7. On the basis of its positive appraisal of the Commission communication and the launch of pilot schemes in the fields envisaged therein, suggests that pilot benchmarking schemes be carried out on such aspects as industrial development, job creation, environmental protection and public administration, drawing on existing European programmes and the various cooperation and experience-swapping programmes between regions that have a similar industrial base.

6.8. Asks the Commission to establish mechanisms for making resources available, so that regional and local authorities can initiate benchmarking processes that help them to identify and apply the best techniques in all their fields of work.

6.9. Urges regional and local authorities, development agencies, employers' organizations and trade unions to use benchmarking techniques to carry out studies of industrial competitiveness in different regions and sectors.

Brussels, 19 November 1997.

The Chairman of the Committee of the Regions

Pasqual MARAGALL i MIRA