EN Official Journal of the European Union C 9/29

Opinion of the Committee of the Regions on ‘An integrated industrial policy for the globalisation era: Putting competitiveness and sustainability at centre stage’

2012/C 9/07

THE COMMITTEE OF THE REGIONS

— stresses that the success of a new European industrial policy depends on effective polices in areas such as economic conditions and governance, competitiveness, the structure of the financial sector and its investments, innovation and research, energy and resources, the digital agenda, new qualifications and jobs, etc;

— highlights the fact that in the process of transforming European industry, greater flexibility should be given to businesses in their employment strategies in return for adequate protection that provides income security for workers in sectors that are likely to be affected by the changes, and options for re-employment should be provided, as should re-training and support for self-employment. Lifelong learning during employment is key to ensuring a high level of employability of workers and minimising the time spent in unemployment as well as providing businesses with a new pool of skills to adapt rapidly to changes in the market. Local and regional governments have an important role to play in coordinating these actions. In addition, the European Globalisation Fund needs to be put to better use on these issues;

— advocates a greater role for the EU's local and regional authorities in shaping and implementing the Europe 2020 Strategy and in achieving the objectives set out in the communication. Reiterates the fact that the EU's local and regional authorities play a key role in boosting industrial policy and economic development, given their position on the ground and their grassroots knowledge of the structure of industry and the problems affecting businesses;

— invites the Member States and local and regional authorities to establish territorial pacts at national level to jointly formulate and implement the National Reform Programmes (NRP) and evaluate their progress together. This should coordinate and focus their efforts and political agendas on the Europe 2020 Strategy objectives and have a major impact on achieving these objectives.

Rapporteur Mr Patxi LÓPEZ (ES/PES), President (Lehendakari) of the Basque Regional Government Reference document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - An Integrated Industrial Policy for the Globalisation Era - Putting Competitiveness and Sustainability at Centre Stage COM(2010) 614 final

I. POLICY RECOMMENDATIONS

THE COMMITTEE OF THE REGIONS

1. welcomes the European Commission's commitment to developing strong, competitive, sustainable industry in Europe to achieve economic recovery, as set out in the Communication on An integrated industrial policy for the globalisation era: putting competitiveness and sustainability at centre stage (1), which is one of the seven flagship initiatives of the Europe 2020 Strategy;

2. stresses that the success of a new European industrial policy depends on effective polices in areas such as economic conditions and governance, competitiveness, the structure of the financial sector and its investments, innovation and research, energy and resources, the digital agenda, new qualifications and jobs, etc.;

3. calls for the flagship initiatives that make up the Europe 2020 Strategy to be integrated and coordinated to a greater extent;

4. is disappointed that these seven flagship initiatives have been proposed without taking into account their budgetary impact and implementation requirements;

5. highlights the fact that taking action at European level will add real value in the process of tackling global challenges and working towards the Europe 2020 objectives, by combining efforts and synergies as part of a coordinated policy approach;

6. points out that the structural changes currently occurring all over the world have shown that there are global problems and challenges which are growing in significance and affecting countries, regions and local authorities. Given our increasingly outward-looking and inter-dependent world, there is a need to implement strategic and technological instruments to achieve rapid, coordinated solutions;

7. would recall that the new competitiveness parameters have called into question the role of the EU's economy in the world, and that the Europe 2020 Strategy needs to be given a major boost to ensure the EU's economy regains its position; industry should play a key role in this process as a driver for growth;

8. supports the concept of integrated sustainability in which economic, social and environmental variables play an equal role. The protection and regeneration of the environment, the efficient management of resources, and social needs relating to the ageing population and the provision of care for dependents, are all potential economic catalysts. The process of boosting industry to make it competitive at global level must be compatible with economic and social development, and respect for the environment;

9. calls on the European Commission to place greater emphasis on the different levels of development and the need to redress imbalances which still exist across the EU – and industrial policy is one means of redressing these imbalances. The relative positions of the Member States and local and regional authorities as regards the five Europe 2020 Strategy objectives vary significantly, and the economic crisis is affecting them to a different extent;

10. highlights the fact that in the process of transforming European industry, greater flexibility should be given to businesses in their employment strategies in return for adequate protection that provides income security for workers in sectors that are likely to be affected by the changes, and options for re-employment should be provided, as should re-training and support for self-employment. Lifelong learning during employment is key to ensuring a high level of employability of workers and minimising the time spent in unemployment as well as providing businesses with a new pool of skills to adapt rapidly to changes in the market. Local and regional governments have an important role to play in coordinating these actions. In addition, the European Globalisation Fund needs to be put to better use on these issues;

11. advocates a greater role for the EU's local and regional authorities in shaping and implementing the Europe 2020 Strategy and in achieving the objectives set out in the communication. A number of local and regional authorities have built up wide-reaching skills and experience in the field of economic and industrial development, and of other policies which are directly related to competitiveness. The fact that they work alongside decision-makers and key economic stakeholders means that they can manage public policies more effectively;

12. supports the territorial pacts agreed between regions and Member States which give commitments to meeting the Europe 2020 objectives. Aligning objectives, common strategies and funding for industrial policy will have a positive impact on achieving greater economic growth;

13. recognises the role of stakeholders promoting the economy (2) in the regions and cities: they give impetus to industry, and their actions are crucial for increasing the involvement of businesses, the social partners and ordinary Europeans in EU industrial policy;

14. calls on the European Commission to draw up a specific programme for each of the priorities set out in the communication to make it easier to supervise the implementation of the new industrial policy;

15. suggests that the European Commission, in collaboration with the Committee of the Regions should implement a follow-up and evaluation procedure providing a regular update on milestones achieved in implementing industrial policy, so that synergies are created and resources shared towards achieving the same objective; and calls for qualitative and quantitative indicators to measure developments in industrial policy, covering aspects such as job creation, competitiveness, sustainable development and progress as regards innovation;

European industry and the new competitive challenges: A new economic environment entailing structural change

16. welcomes the key role that the initiative gives industry in the new model of European growth, as it is a sector of crucial importance to our economy and has a vast impact on other economic activities;

17. recognises that the very concept of industry has changed. ‘Diffuse industry’ – or new industry – has become a key part of the economic stage we are currently at, and high value added services are required for the development of this form of industry;

18. points out that industrial policy should move beyond a sector-specific approach and become a competitiveness policy that takes a broad approach to actively supporting businesses, as is required in the new context of industrial change;

19. stresses that the EU should invest in areas that have the greatest socio-economic potential, and calls for greater focus on the smart development of a knowledge-based EU economy, strategic investment in R&D, and training geared to science, technology and non-technological innovation for example;

20. notes that industry in the EU is highly dependent on primary materials and energy resources which are increasingly expensive, difficult to source, and depend on the international political situation;

21. stresses that one of the key objectives should be decoupling economic growth from the greater use of resources;

22. considers, therefore, that as strategic priorities for EU industrial policy we should develop processes to manage these resources more efficiently, find alternatives for raw materials and increase the use of renewable sources of energy;

23. would recall that demographic changes will be linked to new models of consumption. The ageing of the population in developed countries will make new demands on social-welfare benefits, but will also provide an opportunity for industry and services. The rise of the middle classes in emerging countries will be another potential source of opportunities for development and innovation;

24. recognises the role that emerging countries play in the new geo-economic map that is now developing. The emerging countries will play an important role, given that they have attractive markets demonstrating substantial growth, and will also play an important part in direct investment flows and the growing demand for technology and R&D;

25. agrees that there is an urgent need for structural reforms given the sweeping changes that are affecting the business environment: a new competitive model is required at global level that takes into account the rise of emerging countries, information and communication technology and skills, and the transition to a low-carbon economy;

26. calls for the obstacles that limit the growth of businesses to be removed, and for businesses to work together to find solutions. Challenges on internationalisation, innovation and sustainability cannot be tackled in isolation;

27. emphasises that opportunities should be created for businesses to reach an efficient situation working within specific niches. So the EU could end up with niche, multinational SMEs. In fact, specialisation is one of the strategic aspects that will be key in making businesses more competitive: they will have to develop more sophisticated products and services that are geared towards more specific segments of the market and offer greater added value;

28. underlines the urgent need to ensure there are people who are well-trained and have the skills required to work in the knowledge industry, and to make the industry an attractive place to work, given the difficulties in filling posts in strategic areas for the future, such as research and science, engineering, health, and mathematics. The skills and knowledge of workers should be updated on an ongoing basis, and training should be focussed on the needs of new sectors and new technologies, not just in the interests of the industry, but also to help workers who lose their jobs to adapt quickly to new sectors and technologies;

29. points out that there is a need to enhance versatility and a multi-disciplinary approach, and also focus on personal skills such as team-working and openness to change to better cater for the needs of industry;

30. considers there is a need for our industries to develop a ‘globalisation reflex’ and adapt to the new context of international competition, which is by its very nature a changing context. Globalisation has intensified competition by opening up the markets to new competitors who have new means of getting around and obtaining information;

31. stresses that globalisation is a joint challenge for the whole of society and not only for businesses. To ensure that European businesses really commit to internationalisation and are competitive at international level, individuals, universities, training centres and the scientific and industrial community also need to take an international approach and incorporate this culture in their strategies;

32. underlines that the value chain has become fragmented, highlighting the advantages of specific locations in particular regions for the manufacture or provision of a particular product or service;

33. calls for access to credit and its availability to be improved, supports the deployment of the SME Finance Forum, and highlights the need for banks and financial institutions to carry out their intermediary role responsibly and transparently, to improve links between the financial economy and the real economy;

34. calls for improvements to be made in the way financial markets operate by implementing effective measures and continuing the effort started in the EU to adequately regulate financial markets so as to tackle speculation and vulnerability of banking systems, with the aim of withstanding systemic risk, by making the system more balanced and stable, and improving confidence in order to support a healthier business environment;

35. advocates closer cooperation between the European Investment Bank and the EU's local and regional authorities to better support investment in R&D at local and regional level;

Towards smart, sustainable and inclusive growth – A new, ambitious industrial policy to lead the economy of the future

36. proposes that a competitiveness plan be defined and implemented at EU level which defines the EU framework for industrial policy;

37. underlines that competitiveness is not only a challenge for the business world – it is a challenge for the whole of society and all systems which interact in the process of economic development. Competitiveness affects people, universities, technology centres, health services, etc, as well as all sectors and productive activities;

38. supports the implementation of a holistic industrial policy, which brings together different policies that have an impact on competitiveness. This policy should also be applied at national, regional and local level. To make European industry more efficient and productive there is a need to ensure that the EU's position in terms of transport, social and consumer protection, financial intermediation, energy, the environment, the internal market and trade policies also improves, and that there is a concerted effort to focus on the competitiveness chain;

39. considers, therefore, that the new industrial policy should promote a cross-sectoral approach. Over the past few years there has been an increased use of all the systems that promote business cooperation through clusters or inter-cluster projects: one of the key objectives of these projects is to group together and organise all the activities in the value chain by initiative type, with this serving as an effective framework covering the entire value chain but without interfering with business decisions. Given that clusters are directly linked to the area in which they are based, it is important to take into account the prominent regional dimension of clusters in the process of developing the new industrial policy;

40. recalls that an increase in productivity – both in the manufacturing sector and in services to businesses – is required to ensure a return to growth and job creation;

41. highlights the important role of SMEs in the EU: two thirds of people employed in industry work in SMEs. EU public policies should therefore focus on the ‘think small first’ principle to deal specifically with the needs of SMEs, as they have a key impact on job creation and economic growth. We can only be competitive if our SMEs are competitive;

42. therefore calls for the communication to give a more prominent role to the stakeholders promoting local and regional economies, as they provide essential support services on the ground to enable SMEs to compete successfully;

43. recommends taking the necessary steps to ensure that the Small Business Act is implemented effectively, and welcomes the fact that the latest version of the Act prioritises smart regulation and SME access to finance;

44. agrees that there is a need to ensure that businesses can access the best services possible, as this has a significant impact on the quality of their products and services, and therefore their competitiveness. There is a need to promote measures that help to improve training and skills among service providers that work with businesses;

45. supports the implementation of measures that facilitate innovation and simplify business administration, particularly in SMEs, by reducing administrative and legislative burdens that affect the competitiveness of businesses, and ensuring that fitness checks are used in industrial policy and in other related fields;

46. given the impact and the regional dimension of industrial policy, highlights the need to adapt the objectives of European industrial policy to the different starting points, as this is essential to ensure that development is balanced and cohesive, and calls for the necessary coherence to be ensured between the communication under discussion and the two communications entitled Regional Policy contributing to smart growth in Europe 2020 (3) and Regional Policy contributing to sustainable growth in Europe 2020 (4);

47. agrees that progress needs to be made on smart specialisation to make industry more competitive, and calls on regional and local authorities to give impetus to their own innovative niches. Smart specialisation is the key link between the Communication on industrial policy and the Flagship Initiative Innovation Union;

48. considers there is a need to streamline the instruments used to foster clusters in the European Union, ensuring that there is a single approach focussed on growth and competitiveness that goes beyond the simple exchange of experiences and boosts specific joint or collaborative projects. The European Union is a key means of strengthening transnational cooperation to facilitate the development of world-class clusters;

49. points to the need to continue developing strategic projects at EU level which focus on specific issues and will have a real driver effect in terms of technology transfer and creating synergies, such as the industrial development of Green cars, Energy-efficient buildings, and Factories of the future. There is a need to take a long-term view and extend and deepen these sorts of initiatives which showcase the added value of the European Union;

50. considers that the public authorities could have a significant driver effect on business competitiveness through innovative public procurement. Criteria for public tendering should provide an incentive for contractors to innovate, by prioritising innovative and sustainable products and services. This would improve the quality and accessibility of public services. In this connection, additional administrative costs should certainly be avoided, precisely because it would otherwise no longer be attractive for SMEs to take part in public procurement;

51. urges the Member States and the competent regional or local authorities to promote a more entrepreneurial culture in European society, especially among young people. Education systems should develop training programmes which encourage entrepreneurship, risk-taking, leadership and creativity as key skills;

52. highlights the fact that it is essential to encourage people to develop the skills required for globalisation. Foreign languages are essential, as is a readiness to work in other countries and being open to people from different cultures;

53. proposes that the Communication should further integrate technology strategy and internationalisation strategy. The three concepts of innovation, technology and internationalisation inevitably feed into each other and are closely interlinked, and work needs to be done to formulate integrated policies;

54. calls for a sufficiently ambitious, focused approach to be taken on the next version of the strategy supporting the internationalisation of SMEs. This strategy should focus in particular on promoting cooperation and contacts between businesses, and setting up cross-sector links;

55. calls on the European Commission to ensure that the measures included in the Communication on Trade, Growth, and World Affairs – Trade Policy as a core component of the EU's 2020 strategy (5) are implemented effectively, especially as regards the negotiating agenda in international organisations, and the deepening of strategic partnerships. Taking action at EU level is crucial here in order to increase the influence of European industry in the world;

56. agrees with the European Commission on the strategic importance of competition policy for the competitiveness of EU industry and for undistorted competition in the single market. An environment which favours fair competition and creates a level playing field encourages businesses to improve and promotes private initiative. It is vital to ensure that this policy is properly implemented by the Member States together with local and regional authorities, and that it operates effectively;

57. emphasises, however, the new role of the public sector in seeking new forms of public-private cooperation to fund strategic infrastructure and large-scale investment in productive enterprises. Public-private cooperation should also be used to develop industrial policy, so that interests can be aligned and projects with a European dimension implemented, which will make public spending more efficient. Public-public cooperation involving different levels of government and public authorities will help to improve policy coordination and reduce inefficiency;

Industrial transformation: towards an industry based on innovation and knowledge

58. welcomes the vision of innovation as a central part of the Europe 2020 Strategy and its strategic positioning through the Flagship Initiative Innovation Union. The priority on smart growth wisely focuses on knowledge- and innovation-based growth as one of the three fundamental pillars of future economic growth in the EU;

59. underlines the importance of extending and strengthening the concept of innovation, highlighting the need for industry to combine experience-based innovation, or the DUI approach (Doing, Using and Interacting), with the STI approach (Science, Technology and Innovation), based on real scientific and technological expertise;

60. is disappointed that the Communication did not give greater emphasis to non-technological innovation as a source of competitive advantage. Real changes in business often come from innovation in business and organisational management in areas such as strategy, processes, marketing, industrial organisation and the relationship with providers. Supporting non-technological innovation has allowed a number of regions to make real progress in terms of competitiveness;

61. therefore proposes incorporating non-technological innovation indicators into the process of evaluating industrial policy;

62. maintains that innovation is based on knowledge and creativity, and that businesses should have systems for including and managing knowledge and creativity across all their activities;

63. is disappointed that the Communication does not highlight the key role that people will play in the new industrial policy: if the aim is indeed to lay down effective foundations for balanced, long-term growth, then people are essential. In a knowledge-based industry, only people can make change happen and secure competitive advantages for businesses;

64. considers that research at universities, and research and technology centres should, together with theoretical research, be more outward-looking and more in line with the needs of the market and the practical application of research findings;

65. considers that greater coordination between research and industry is required so that the regions can make progress in smart specialisation in the field of essential enabling technologies (such as nanotechnology, micro and nano electronics, industrial biotechnology, photonics, advanced materials and advanced manufacturing technologies), trans-national networks can be promoted, and cooperation strengthened at regional, national and international level;

66. highlights the fact that the growth of a European industry based on innovation and knowledge should inevitably result in European businesses obtaining a larger number of patents. It is particularly important that there is an effective, cheaper system in place to protect the intellectual property rights of businesses and inventors that provides greater legal protection against counterfeiting and piracy. It is therefore essential to simplify the procedure for obtaining patents, make it less expensive, and ensure that patents are automatically valid in all Member States, in line with the single European patent proposal;

67. points out that ICT has become a key factor in increasing the productivity of businesses, and therefore agrees that it is essential to promote the use of ICT in SMEs. Adapting to and incorporating ICT will give European businesses a competitive edge over competitors in third countries. ICT promotes collaborative working, the processing and exchange of information and ideas, and also provide more direct access to the market and clients;

68. emphasises that it is crucial to improve the relationship between different stakeholders and adopt the concept of regional ecosystems for innovation in regional development strategies. The idea of regional ecosystems for innovation involves developing networks and channels for exchanging knowledge, organisations which are firmly rooted in the local area, and flexible organisational models;

69. recommends developing an approach for the EU's next framework programme for research and technological development that focuses more on the needs of SMEs, which would promote their involvement in joint European projects;

70. calls on the European Commission to give greater emphasis to the regional dimension in the common strategic framework for research and development which will incorporate the framework programme and the CIP programme, and to extend the Regions of Knowledge pilot project, in order to strengthen the research potential of European regions through trans-national clusters;

71. highlights the need to develop a favourable environment for increasing private capital's commitment to productive investment related to innovation and R&D, which will mean strengthening financial arrangements such as venture capital and business angels;

72. calls for a more precise system of indicators and objectives that measures not only the percentage that businesses spend on R&D, but also aspects related to increasing competitiveness and productivity: in other words, a system that measures the results of R&D;

Building on EU strengths and new opportunities to develop a more responsible, sustainable model for the future

73. considers that the EU should play to the strengths it has developed to boost the competitiveness of European industry: we have a strong base in science and technology, world-class universities, and a well-qualified, specialised workforce; we have created a single market that eliminates barriers to trade and the free movement of workers; strong clusters and cooperation networks have been established, and the EU has pioneered the implementation of green solutions;

74. points out that despite the progress achieved since the single market was set up, the potential of the single market to promote sustainable and inclusive growth has not been fully exploited. The single market is the EU's economic driving force: completing the single market is essential to support the growth and competitiveness of European industry;

75. calls on the European Commission and the Member States to eliminate the obstacles and weaknesses that are hampering the growth potential of the single market, while acknowledging that the Services Directive has made progress on eliminating some of the barriers that exist in the single market to the provision of services and the right to establishment in another Member State. The European Commission should continue working along these lines, and involving the local and regional authorities, as they are key actors in the services market;

76. considers that the ageing population, climate change and protecting the environment are three of the main challenges that the EU will face over the next few years;

77. points out, therefore, that sustainability should been seen as a key opportunity for the future of European industry: it is quite clear that it will help to create more - and new - jobs and businesses which are innovative and competitive;

78. welcomes the European Commission's intention to improve the links and consistency between environmental ambitions and industrial policy objectives, in the transition towards the more efficient management of resources across industry. Industry must rationalise its use of strategic energy resources and primary materials, given that they are becoming increasingly scarce and expensive. This process should be based on the efficient use of resources, recycling, and the use of alternative materials;

79. would recall the need to strengthen the green economy – because of the need to use energy efficiently, and especially because of the growing awareness that more eco-innovation is required. Innovative economic activities therefore need to be developed, from renewable energy to new materials, in order to contribute to a low-carbon economy;

80. considers there is a need, however, for Member States and competent regional and local authorities to encourage people to become more responsible, ethical and selective consumers. For businesses, this will mean growing demands in terms of quality, information and transparency. Consumers therefore play an important role in the process of boosting the competitive potential of businesses and the adoption of responsible policies;

81. welcomes the fact that the Communication highlights corporate social responsibility (CSR) as a factor which also enhances the competitiveness and the leading role of our industry at international level;

82. underlines the fact that the local and regional authorities understand the specific circumstances in their area and have the powers to communicate new values and promote CSR. The European Commission should continue promoting this concept and supporting local and regional authorities, as they are responsible for promoting CSR on the ground. It is therefore essential to apply the principle of subsidiarity and manage policies from the level of governance which is most effective and closest to individual citizens;

83. calls for new management models to be used in businesses. These models should increase staff involvement as a key way of making all industrial processes more efficient and competitive, and ensuring that working conditions do not become more unstable given the context of industrial change;

84. points out however that there is also a parallel need to promote flexibility within industry. The different interest groups have to react and adapt to the changing economic environment, which means ensuring that production is organised to cater for fluctuations in demand and changes in technology;

85. calls for greater flexibility in the labour markets in Member States which should be achieved through social dialogue and accompanied by robust social protection systems. Greater flexibility will support economic growth and social cohesion by providing more and better jobs. The regulation of the labour markets should cater for the transition between periods of unemployment and periods of employment by guaranteeing financial security and providing training and re-skilling options to make people more employable;

Local and regional authorities as strategic partners in boosting European industry

86. reiterates the fact that the EU's local and regional authorities play a key role in boosting industrial policy and economic development, given their position on the ground and their grassroots knowledge of the structure of industry and the problems affecting businesses;

87. calls on the European Commission and the Member States, together with local and regional authorities, to improve cooperation and ensure a holistic approach in designing an ambitious, competitiveness-focused industrial policy that exploits synergies with the rest of the Europe 2020 flagship initiatives;

88. urges the European Commission to improve the conditions and the governance of industrial policy by giving a greater role to European local and regional authorities in shaping and implementing industrial policy. Local and regional authorities are key players in economic development as they are closest to the reality on the ground for businesses and have responsibilities – and sometimes even legislative powers – in the field of industrial policy, which is why a bottom-up policy approach is ideal in this area;

89. invites the Member States and local and regional authorities to establish territorial pacts at national level to jointly formulate and implement the National Reform Programmes (NRP) and evaluate their progress together. This should coordinate and focus their efforts and political agendas on the Europe 2020 Strategy objectives and have a major impact on achieving these objectives;

90. highlights the role of local and regional authorities in improving territorial cohesion and reducing economic and social disparities: local and regional authorities are central in developing a grassroots approach which helps to ensure that industrial policy is firmly embedded at territorial level in Europe.

Brussels, 11 October 2011. The President of the Committee of the Regions Mercedes BRESSO

(1) COM(2010) 614 final.

(2) Stakeholders promoting the economy: regional development agencies, local development agencies, centres for technology and research, training centres, universities and job services.

(3) COM(2010) 553 final.

(4) COM(2011) 17 final.

(5) COM(2010) 612.