Opinion of the European Committee of the Regions — A place-based approach to EU industrial policy

(2019/C 404/03)

Rapporteur : Jeannette BALJEU (NL/ALDE) Member of the Council of the Province of Zuid-Holland

POLICY RECOMMENDATIONS

THE EUROPEAN COMMITTEE OF THE REGIONS

Introduction

1. underlines that industry seen as the production of goods and services is a cornerstone of an innovative, sustainable and diversified economy that is capable of ensuring European competitiveness as well as quality jobs in the European Union;

2. reiterates its conviction that the European Commission and the Member States must harness all the potential of the EU Treaty in the area of industrial policy pursuant to Article 173 TFEU, particularly by opting to ‘take any useful initiative to promote coordination (of Member States in the area of industrial policy), in particular initiatives aiming at the establishment of guidelines and indicators, the organisation of exchange of best practice, and the preparation of the necessary elements for periodic monitoring and evaluation’, in cooperation with regional stakeholders;

3. stresses that industry is vitally important for European regions and cities and for the tens of millions of jobs it creates and by its nature operates in a global context where trade is an important driver of growth which brings both benefits and challenges;

4. considers that the special importance of small and medium-sized enterprises for value creation, innovation and jobs should be emphasised. SMEs in particular have a particular impact on the ability of industry to adapt to new demands in a flexible way, such as those arising from globalisation or digitalisation. The EU’s industrial policy must offer suitable ideas on how to maintain and create favourable conditions for these businesses in particular;

5. sees that the challenges and opportunities within industry are to become ‘fit for the future’ and maintain its crucial contribution to prosperity and employment, as well as to ensure sustainable development and the creation of a carbon neutral, circular economy;

6. stresses that there is a need for investment in innovative new technologies and digitalisation, in a carbon neutral and circular economy and in related skills across European regions to enhance Europe’s competitive advantage;

7. emphasises, therefore, that in order to respond quickly to shifting economic and industrial changes and to maintain a competitive global position, there is a need for a strategic vision for European industry rooted in a place-based approach;

8. believes a coordinated European approach is necessary in order to ensure that European industry is fit to handle global competition, and that this should also focus on improving the consistency of regulatory frameworks and standards, removing excessive and unnecessary regulatory and administrative burdens, facilitating pan-European collaboration and partnerships, ensuring competitive energy costs and providing suitable trade defence instruments both in traditional sectors such as steel and textiles, the chemical industry, agriculture and shipping as well as in emerging sectors. For example, a tariff on steel products urgently needs to be introduced in order to defend the European steel industry;

9. considers that the role of industrial policy is to provide an enabling framework that allows industry to boost its competitiveness, combining a mixture of horizontal and cross-sectoral place-based approaches and, where needed, targeted sector-specific measures in the whole value chain;

10. welcomes the Commission’s Communication Investing in a smart, innovative and sustainable Industry: A renewed EU Industrial Policy Strategy ( 1 ) and its emphasis on partnership with Member States, regions, cities and the private sector as an important step towards providing a tool to stimulate industrial competitiveness and innovation in Europe; welcomes the European Commission’s proposal for Cohesion policy post-2020 with its focus on strengthening cooperation between regional ecosystems in all parts of Europe, as well as strengthening the international and industrial dimension of Smart Specialisation;

11. notes that European industry should be supported through both economic and non-economic action and measures, in the latter case for example through policies on education and training or supporting research and innovation;

12. welcomes the Commission’s initiative in setting up a High Level Industrial Roundtable ‘Industry 2030’ in which the Committee of the Regions has observer status ( 2 )

13. welcomes the calls by the European Commission, the European Parliament and the Council to further develop a comprehensive EU industrial strategy with a focus on 2030 and beyond, including medium to long-term strategic objectives and indicators for industry, to be accompanied by an action plan with concrete measures;

14. stresses the need for a multi-level governance approach based on partnership and dialogue with Member States, local and regional authorities and stakeholders ( 3 )

15. calls for the inclusion of a strong territorial dimension respecting the principle of subsidiarity within this strategy; signals its willingness to support the Council and its Presidency in developing a more place-based industrial policy strategy;

16. believes that an EU industrial strategy should also include a detailed and evidence-based revision of EU rules on aid and merger control to ensure a level playing field at international level, in accordance with global trade policies and multilateral agreement. At the same time, this strategy should also include the investment and innovation potential of state aid and merger operations;

17. welcomes the paper from the European Political Strategy Centre ( 4 ) in which it proposes to find a new balance between openness and protection of the European market to create a more level global playing field, while shoring up industrial innovation and productivity at home;

18. considers that in order to meet the objectives of the Paris Agreement on the response to the threat of climate change ( 5 ) , industry will need to enact a far-reaching transformation, while ensuring that it remains competitive. The scale of the transformation facing both industry and society requires urgent action, a shared vision and integrated solutions among all stakeholders and at all policy levels, as only a multi-level approach can ensure that the stakeholders get on board with economic policy decisions of such magnitude;

19. supports the policy of a fair single market, associated by the European Commission with the presentation of an EU industrial policy, that responds to the challenge of the changing world of work in the framework of the European Pillar of Social Rights;

Message 1: A competitive European industry requires a combined approach in which a place-based regional policy is accompanied by inter-regional collaboration

20. underlines that the competitive advantages of regions are strongly linked to local industries, geographical assets, regional industrial innovation ecosystems, vocational and higher education institutions, and the available labour force and expertise;

21. underlines the importance of identifying, extracting and using European primary and secondary raw materials for site development and value chains of industry in the regions. A sustainable place-based approach must therefore look at exploitable, specific regional conditions and potential for development, as well as possible clustering synergies;

22. considers that a place-based approach should build on the potential of business and innovation ecosystems to drive industrial modernisation and develop territorial strategies for innovation and embeddedness, at regional, local, city or cross-border level;

23. notes that this requires well-functioning cooperation networks, such as macro-regional strategies, and clusters involving the key partners; emphasises also that inter-regional cooperation of these networks and clusters is crucial for developing synergies, exchange of experiences, peer learning and reaching critical mass in co-investment for deployment of innovation in industrial value chains across Europe; this inter-regional cooperation approach can only succeed by utilising digitalisation and the sharing of information;

24. underlines that regional and local governments and other organisations have a key role in actively establishing the necessary inter-regional and cross border collaborations;

25. stresses that sustainable collaboration between regions should go beyond ‘ad hoc initiatives’ and requires a structural framework for collaboration built on long-term commitment, based on the work already done in the existing Smart Specialisation Strategies, in the framework of the future Interregional innovation investments;

26. observes that information on regional activities in innovation, existing capacities (infrastructures, expertise) and circular economy potential is crucial. This existing data is often scattered and fragmented which limits their usefulness for regions; therefore encourages the European Commission to undertake a true evidence collection exercise taking into consideration the local and regional perspective on the EU strategy for industry;

27. recommends that the Commission enhance support for inter-regional and cross border collaboration, also within existing initiatives such as the Vanguard Initiative or Thematic Smart Specialisation partnerships that involve an increasing number of regions, in the context of a renewed place-based approach as proposed by the European Commission Cohesion policy proposals post-2020;

28. in the context of the post-2020 programming period, calls for strengthened EU support for regional eco-systems and clusters in the framework of Interregional Innovation Investments, building on the Smart Specialisation approach and enlarging and broadening existing initiatives such as the Smart Specialisation Platform on industrial modernisation and the pilot initiative on regions in industrial transition; also considers it important to develop instruments for implementing collaborative inter-regional industrial investment projects in close collaboration with regions and Smart Specialisation partnerships;

29. stresses that thematic smart specialisation platforms must be properly funded, as regions do not always have the resources they need to participate properly and in a structured way in these schemes;

30. calls on the Commission to further develop brokerage tools to identify and actively boost collaboration for Smart Specialisation Strategies to facilitate a continuous process in which regions identify the priority areas where collaboration is crucial in order to maintain European leadership;

31. recommends that the Commission encourage industrial innovation based on Smart Specialisation Strategies across all regions by facilitating specific support schemes in which well-developed regions can work together on concrete projects with less developed regions to their mutual advantage, as well as on collaborative projects between developed regions and relevant projects between less developed regions for mutual benefit;

Message 2: As major societal challenges often require collaboration between European regions, regional governments play a crucial role in mission-oriented initiatives and in bringing sectoral policies into practice

32. considers that a mission-oriented policy approach can be used as a tool to address major societal challenges and support the multi-governance approach, where the smart specialisation approach can help in aligning regional agendas and investments with EU priorities;

33. stresses that to address societal challenges, further investment in research and innovation is needed to support industrial excellence and exploit new opportunities, and that experimentation and risk-taking should be supported in the discovery process; the Committee encourages facilitating the diffusion of innovation and new technologies in industry;

34. stresses that regions have an important role in connecting, developing and supporting the regional innovation ecosystem, organising the mapping of available capacities, and involving different stakeholder groups in a true demand-driven and collaborative approach to setting industrial goals, therefore calls for regional representation in the governance of the mission orientated approach, including in the partnerships and mission boards;

35. recommends that the Commission set clear mid- and long-term goals in the mission-oriented policies and translate these into policies that are made operational in the Structural and Investment funds, Horizon Europe and Digital Europe;

36. recommends that local and regional authorities actively seek to lead some of these missions and to ensure that an inter-regional approach is created. This needs to be aligned with and facilitated by the available European instruments; therefore calls on the European Commission to ensure active involvement of regional stakeholders in the missions’ governance in the new Horizon Europe;

37. calls on the Commission to promote pilots in clusters of regions which allow for experimentation, following the IPCEI ( 6 ) -like approach but at a smaller scale in order to promote interregional cooperation;

Message 3: Regional and local authorities should ensure the availability of skills to support the transition of industry, facilitating industry-educational institutes collaboration, supported by a European strategy

38. observes that the rapidly-changing industrial transformation, energy transition, digitisation and the circular economy require the development of new interdisciplinary skills;

39. welcomes the efforts to coordinate different instruments at European level as seen in the New Skills Agenda for Europe, the Digital Education Action Plan and the Digital Skills Strategy;

40. stresses that there is an urgent need to anticipate, support and promote continuous skills development, re-education and re-skilling of the current workforce, particularly as far as digital skills are concerned;

41. recognises that the European industry workforce constitutes a large number of people who are trained via vocational training;

42. agrees that the benefits of industrial transformation need to be widely spread and that those who are at risk of losing out should have opportunities and be supported to adapt; in this regard, considers that policy initiatives need to give more priority to providing life-long learning opportunities for low-skilled workers in order to ensure that they have fair access to the new technological skills demanded by industry;

43. stresses the importance of active competence development of all professionals in working life throughout all industrial sectors, for this the CoR proposes developing effective concepts for European-wide use in sharing new knowledge, updating skills and developing individual capabilities in collaboration with employers and educational establishments;

44. considers, therefore, that a pan-European approach on skills policy is critical for the future competitiveness of European industry and much higher levels of investment in human capital are needed, in the educational and vocational training systems and lifelong learning and also within industry itself;

45. considers that entrepreneurial education, the promotion of business skills, peer learning and sharing of best practices should be further supported to enable industry players to adapt to the new business models and effectively collaborate in competitive European value chains;

46. recommends that the European Commission strengthen cross-regional educational programmes such as Erasmus+ with an emphasis on vocational training and enabling talent to move across Europe;

47. requests that the authorities responsible provide flexible resources for re-skilling at regional level and not at sectoral level and reiterates its call for the ESF+ to be covered by the Common Provisions Regulation (CPR) on common rules for cohesion policy post-2021, in order to ensure that all requirements concerning the partnership principle and the involvement of the regional level can be applied to the development of programmes under the ESF+;

48. recommends that regional and local authorities cooperate on common education and research agendas to translate common EU skills priorities and support cross-regional learning opportunities;

Message 4: European industry and governments need to show leadership in becoming more sustainable by taking action

49. considers that the EU is at the forefront of the global transition towards a carbon neutral and circular economy. European industry therefore needs to take the lead in contributing to mitigating climate change, meeting the goals of the Paris Agreement, conserving resources, preventing environmental degradation and responding to changing consumer expectations in the green economy;

50. underlines that the transition of companies into more sustainable and resource-efficient business models will both help the environment and provide competitive advantage, leading to innovation and the creation of new jobs and entrepreneurial opportunities;

51. underlines that it is crucial to inform industries and citizens of the advantages of new approaches such as the circular, carbon neutral and sharing economies. These new approaches require a shift in attitude both by the consumer (e.g. towards re-using, and re-cycling) and by industry, which needs to progressively adapt to new demands as part of long-term strategic planning;

52. considers that to make the transition to a sustainable industry Europe needs to capitalise on its leadership in all sectors and tackle increasing global competition in green production, bio-economy and clean energy technologies;

53. points out that the transition of a region to a circular and carbon neutral economy is a long-term project that can only be successful with a step-by-step approach, and in some cases radical renewal, that is framed by feasible, intermediate targets, without overburdening the population and sectors such as the automotive industry; special attention should be paid to strengthening the resilience of rural communities who are at risk of being left behind, when it comes to process of economic transition;

54. stresses that there are important barriers to overcome, including a lack of the right market signals and incentives for product design for a circular economy; high transition costs for companies; regulatory obstacles; inadequate consumer information; and poorly-functioning secondary raw materials markets;

55. believes that pan-European and inter-regional collaboration has an important role to play in helping regions develop a strategic approach to realising the potential of the circular and carbon neutral economy;

56. supports the idea of using strategic public procurement as a tool to boost innovation as is recognised by the European Commission in its action plan for the Circular Economy in 2015 ( 7 ) , and in the relevant public procurement directives, but considers that the complexity of the rules often encourages risk aversion by regional and local authorities;

57. recommends that regional and local governments adopt a multi-sectoral, cross-sectoral economic development perspective, integrating waste and environmental management into an integral circular economy approach;

58. calls on regions and cities to fully exploit the possibilities of Cohesion policy post-2020 to deploy innovative solutions that address the climate and circular economy transition;

59. calls for a holistic, coordinated multi-level governance approach in order to ensure the necessary coherence between different policy instruments and action at different levels. The transition to low carbon and circular economy should take into account the whole value chain and manufacturing industry at large as well as small and medium-sized companies and start-ups;

60. calls on the Commission to further support the development of joint strategies in specific fields, such as hydrogen and synthetic fuels, and to support the market adoption of more sustainable technologies;

Message 5: Regional innovation-oriented strategic public/private partnerships are crucial to enhance the uptake of new technologies by industry

61. observes that innovation is difficult, especially for start-ups and SMEs, as the adoption of new technologies is often accompanied by high investments and requires expertise, and underlines that a digital transition gap still exists across sectors and regions in Europe;

62. considers that collaboration between industry, research organisations and regional governments is important for the valorisation of industrial innovations;

63. appreciates Digital Innovation Hubs (DIHs), the EC-testbeds, and Technology infrastructures as examples of strategic innovation-oriented public/private partnerships;

64. supports the focus of the Smart Specialisation Strategies post-2020 which addresses the bottlenecks to diffusion of new ideas to companies;

65. supports the 281 EU Digital Innovation Hubs, as part of the Digital Europe programme (DEP) to enhance interregional collaboration;

66. underlines that to ensure that industry can easily access the existing cutting-edge technologies and infrastructure across Europe, collaboration among these public/private partnerships at pan-EU level should be established; these resources should also be made more visible, and the economic means needed to incorporate them should be provided;

67. considers that there is a further need for a coordinated overall strategy, as well as a strategy to enhance regional collaboration at operational level;

68. stresses, to increase the impact of DIHs, that a DIH should not be separate institute operating on its own and competing with the others, but formed as a core element within a network, the coordination of which may involve several stakeholders, such as universities, research centres, innovation centres etc.;

69. recommends that regional governments should be involved in the selection and the operationalisation of European DIHs in the upcoming DEP;

70. recommends that local and regional authorities promote sustainability and innovation through procurement, supporting smart cities and other relevant initiatives, and connecting the different players from industry, research and educational institutes;

71. recommends involving regions in the establishment of a sustainable collaboration approach between public/private partnerships in areas other than digitisation (including other experimental and testing facilities). This involvement should include establishing a comprehensive overview of activities in the regions and an assessment of their complementarity;

72. stresses that a comprehensive strategy needs to be developed to collect, systematise and disseminate information on available infrastructure and innovation capacities throughout Europe;

73. stresses the increasing importance of artificial intelligence (AI) in the European industrial policy and the leading role of the European Union in this regard by representing 32 % of AI research institutions worldwide. Recalls against this background its own position on AI expressed in its opinion of 6 February 2019 and also endorses the recommendations by the European Parliament ( 8 )

74. welcomes the invitation from the European Council to the Commission to present, by the end of 2019, a long-term vision with concrete steps for the EU’s industrial future;

Brussels, 26 June 2019. The President of the European Committee of the Regions Karl-Heinz LAMBERTZ

(1) COM(2017) 479 final.

(2) Commission Decision C(2017) 8565 of 15/12/2017 setting up the High Level Industrial Roundtable ‘Industry 2030’.

(3) Conclusions on a renewed EU Industrial Policy Strategy, Competitiveness Council, 30 November 2017 (705/17).

(4) EU Industrial Policy after Siemens-Alstom: finding a new balance between openness and protection, European Commission, March 2019.

(5) United Nations (2015).

(6) Important projects of common European interest.

(7) Closing the loop — An EU action plan for the Circular Economy (COM(2015) 614 final).

(8) European Parliament resolution of 12 February 2019 on a comprehensive artificial intelligence and robotics (2018/2088(INI)).