Opinion of the European Economic and Social Committee on Industrial Change in the Mechanical Engineering Sector
Date: 2005-05-11
Institutions: European Economic and Social Committee
Subjects: EU industrial policy, competitiveness, economic and social cohesion, economic development, industrial restructuring, research and development, technology

27.10.2005

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Official Journal of the European Union

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Opinion of the European Economic and Social Committee on Industrial Change in the Mechanical
Engineering Sector

(2005/C 267/02)

On 1 July 2004 the European Economic and Social Committee, acting under Rule 29(2) of its Rules of
Procedure, decided to draw up an opinion on Industrial change in the mechanical engineering sector.

The Consultative Commission on Industrial Change, which was responsible for preparing the Committee's
work on the subject, adopted its opinion on 27 April 2005. The rapporteur was Mr van Iersel and the co-
rapporteur was Mr Castañeda.

At its 417th plenary session, held on 11 and 12 May 2005 (meeting of 11 May 2005), the European
Economic and Social Committee adopted the following opinion by 211 votes to none with 4 abstentions.

Executive summary

clusters. All of this requires an active commitment on the part
of the European institutions, in particular the Commission.

Mechanical engineering is a sector in its own right but, as a
supplier of capital goods and common technologies used by
different industries, it acts also as a cross-fertiliser, causing a
knock-on effect on a much greater number of European
sectors. It is a key innovative industry and, as such, any Euro-
pean industrial policy must consider mechanical engineering a
strategic sector. The sector fits perfectly well into a concrete
programme of fixed objectives at regional, national and EU
the Lisbon agenda. This
level aimed at
requires both horizontal and sector-specific policies, as well as
an adequate mix of the two. Any such policies should help the
sector to excel not only across Europe but also worldwide.

the realisation of

There are a number of issues to be addressed in the ongoing
process of consultation and policy-making at EU level
(as
regards mechanical engineering), that will have a stimulating
effect on similar processes at national and regional level across
Europe. Among the specific conditions to be fulfilled at EU
level are: better lawmaking, including regulatory impact assess-
ment prior to regulation as well as a proper implementation
and enforcement of existing EU legislation; effective market
surveillance;
the establishment of a technology platform in
order to bridge the gap between research centres and universi-
ties and the industry; reducing the growing mismatch between
European funded R&D and the needs of this industry; a compe-
tition policy that favours development and innovation in SMEs;
improvement of access to financial markets and a trade policy
that guarantees freedom of access to investment
in third
country markets. Also of great importance is the adaptation of
skills to current standards.

A dialogue between the Commission and all stakeholders at EU
level on the implications for industry may set up a framework
beneficial for mechanical engineering in the EU and will contri-
bute to the promotion and development of strong regional

1. Introduction

1.1
The European Commission is developing a ‘new style’
industrial policy. This policy is based on three pillars: better
regulation, sector-specific approach and an integrated approach
at EU-level. It is linked directly both to the Lisbon Strategy and
to the current re-appraisal of
the manufacturing industry's
contribution to the European economy.

In a large number of sectors this revival of industrial
1.2
policy at EU-level
is warmly welcomed. The EESC supports
fully the principles of the ‘new style’ industrial policy (1), the
success of which will depend mainly upon an appropriate
combination of actions both at horizontal and sectoral level,
for the following reasons:

— industrial sectors differ considerably;

for bringing

— the sectoral level is, in a number of areas, the most appro-
representatives,
priate
together
including relevant social partners, government officials and
policymakers (Commission and national authorities), and
other important stakeholders such as customers, educa-
tional and training establishments, science and technology
institutes, as well as banks.

industry

1.3
There is general political agreement about the need for
Europe to meet the challenges of the future by becoming a
strong leader in a globalised world. Making the Lisbon agenda
a reality is, today more than ever, of major importance. Europe
should therefore not only combat its own perceived weaknesses
(as compared with its trade partners) but should also support

(1) Cf. EESC opinion on Fostering structural change: an industrial
policy for an enlarged Europe (COM(2004) 274 final, 21.4.2004),
adopted on 15.12.2004; rapporteur Mr van Iersel.

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and develop its strengths. The engineering goods industry
provides substantial technological resources, as it owns the
technology present not only in its products but also in the
processes of its clients, which include the rest of manufacturing
industry and essential utilities such as energy, water, transport
and communications.

1.4 With the reactivation of the Lisbon agenda and today's
focus on growth and jobs, the Commission rightly emphasises
the core role of manufacturing industry, in particular of SMEs.
Accordingly, any European industrial policy must consider
mechanical engineering as a strategic sector, which, moreover,
is flourishing at the present time. Indeed, attention should not
only be focussed on sectors facing immediate challenges but
equal attention must also be paid to successful sectors.

1.4.1 Mechanical engineering is not only a sector in its own
right but, as a supplier of capital goods and common technolo-
gies used by different industries,
it acts as a cross-fertiliser
causing a knock-on effect to a much greater number of Euro-
pean sectors.

The mechanical engineering sector, as provider of
1.4.2
enabling technology to all other sectors of
the economy,
provides the fundamental industrial infrastructure underpinning
the European economy.

1.4.3 Moreover, mechanical engineering is one of the major
exporting sectors accounting for about 15 % of exports of EU
manufactured goods.

It

2.1.1 Mechanical engineering is a strategic industry: it is a
high added-value, knowledge-intensive sector which supplies all
other sectors of the economy with the machines, production
systems, components and associated services, as well as tech-
nology and knowledge they need.
is also considered an
important contribution to sustainable development because it
can result in more efficient production and, in this way, in the
decoupling of resource use from economic growth. Mechanical
engineering is not a homogeneous but a very diversified
industry which covers a wide range of sub-sectors, including:
lifting and handling equipment; machine tools; woodworking
machinery; non-domestic cooling and ventilation equipment;
pumps and compressors; machinery for mining, quarrying and
construction; bearings, gears, gearing and driving elements;
taps and valves, engines and turbines; agricultural and forestry
machinery; machinery for textile, apparel and leather produc-
tion; machinery for food, beverage and tobacco processing;
agricultural equipment; machinery for paper and paperboard
production; industrial furnaces and furnace burners; machinery
for metallurgy, etc.
there are the
In addition to all
common technologies, such as mechatronics, which combine
mechanical and electronic elements.

this,

2.1.2 Mechanical engineering provides not only the equip-
ment, but also the skills and knowledge for improving existing
processes and products and for developing new products in all
subsectors. This is of particular importance when viewed in the
context of the economic development of an enlarged Europe
and beyond.

1.5 Mechanical engineering has benefited considerably from
the internal market, which has provided European manufac-
turers with a substantial home base. However, while the sector
needs a proportionate level of coherent international standards
and European regulation, it is essential to maintain balance in
order to avoid any over-regulation that might hinder competi-
tiveness. At the same time, greater focus on the implementation
and enforcement of regulation is required.

2.1.3
European mechanical engineering is a world leader
with 41 % of global output, Europe is the world's largest
producer and exporter of machinery (EU 261,707 million in
2002), including complete plant exports. It is vital to maintain
such a leadership position, if Europe is to become the most
competitive knowledge-driven economy in the world.

There is a need for both horizontal and sector-specific

1.6
policies, as well as for an adequate mix of the two.

2. Strategic importance

The mechanical engineering sector plays a crucial role in

2.1
the European economy for a number of reasons:

2.1.4 Mechanical engineering is a major industry: it is not
only one of Europe's largest industrial sectors, accounting for
8 % of total manufacturing output, but also one of the largest
employers with some 140 000 companies (of which, 21 600
have more than 20 employees) providing some 2.49 million
people with, for the most part, highly qualified jobs. The strong
domestic European market that mechanical engineering enjoys
(2003: EU 15, EUR 285 bn; EU 25, EUR 305 bn) represents
70 % of production in the internal market and reinforces both
the competitive edge of
the industry and the stability of
employment in the sector. This industry is therefore essential
for attaining the Lisbon objectives.

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2.1.5 Mechanical engineering is a key innovative industry:
in Europe it is particularly strong in the area of customised
machinery and niche markets, which is of great importance to
the innovation capacity of all other sectors of the economy. It
is also vital to the capacity of all sectors of industry to provide
high added-value, thereby achieving a competitive advantage
that offsets any handicaps Europe may face in areas such as
labour costs. Mechanical engineering is a driver of innovation
and a pioneer, applying and integrating innovations into its
own products and processes. It should be borne in mind that
mechanical engineering is a link — very often the first– in a
value-creating chain: should one part of this chain fail, the
whole would suffer.

2.1.6 Mechanical engineering is an industry of entrepre-
neurs, dominated by SMEs (2) — which are to a great extent
family-owned — with all the attendant challenges faced by
those companies, many of which are also global businesses.
Mechanical engineering therefore epitomises the spirit of entre-
preneurship fundamental to realising the Lisbon objectives.

2.1.7
neering industry include the following:

Certain other characteristics of the mechanical engi-

— it is not a capital-intensive activity in comparison to other
manufacturing sectors but still employs highly qualified
personnel
tailor-made
in the design and production of
machines and industrial plants;

— its progress over the last decades is based on increasing
adaptability resulting from innovation, permitting an inte-
gration of various competitive components that is then
marketed worldwide;

— given the universal role of machinery in all production
processes, excellent reliability is a must in this sector, which
is inseparable from the commonly accepted image of a
strong European industrial tradition.

2.2 Mechanical engineering companies enjoy particularly
strong customer
relationships as production of goods by
machine is generally a complex process requiring advanced
engineering skills and continuous technical assistance and servi-
cing by the equipment manufacturer. It is an essential part of
the industrial fabric and a base for successful clusters, where
there is geographical proximity of manufacturing to end users
such as in Baden-Württemberg, Rheinland-Pfalz, Piemonte,

(2) Only 21,600 of these employ 20 persons or more, and only about

4,500 of these companies employ 100 or more people.

Lombardia, Rhone-Alp,
the UK Midlands and Eindhoven-
Aachen. These examples underline the often successful and
indispensable contribution made by regional and local authori-
ties.

2.3 Mechanical engineering plays a vital role in improving
the environment by producing equipment for the treatment
and processing of water, soil, air, waste and manure. It also
contributes to facilitating the use of renewable energy sources.

The mechanical engineering sector is a world leader,
2.4
underpinning European manufacturing and exports and, there-
fore, is one of Europe's strengths.

The introduction of measures to develop mechanical engi-
neering should help the sector to excel not only Europe-wide
but also worldwide.

A very good argument for enhanced support of the
2.5
sector is that provided by the emphasis the US Administration
has recently put on mechanical engineering. Countries such as
the USA are increasingly aware of the importance of manufac-
turing in general and of the mechanical engineering sector in
particular, to the economy and to national security (3).

3. What needs to be done at European level

3.1 Industrial change and innovation

3.1.1
Industrial change and innovation in production and
processing is the order of the day. Less sophisticated produc-
tion, requiring less highly qualified operating personnel,
is
being increasingly outsourced to other parts of the world. In
order to maintain and reinforce its position in the home
market as well as abroad, ongoing adaptation and innovation
in the sector is required. This should be a matter of concern for
all parties involved at regional, national and EU level.

3.1.2
The sector drew the attention of EU regulators as early
as 1994 who responded in the form of a Communication (4),
which was followed by a Council Resolution (5). Neither the
European Commission nor the Member States have shown
much inclination to implement the proposed follow-up to the
Communication and the Council Resolution. Such reticence
can hardly be viewed as a positive implementation of policy.

(3) See: Manufacturing in America – US Dept of Commerce. A further
specific example of the strategic importance of Mechanical Engi-
neering is the provision included in the Fiscal Year 2004 USA
‘Defence Authorisation Act’, which provides an incentive to US-
defence contractors to use US-built machine tools in defence
contracts. This is due to the fact that it is felt as critical to maintain
an independent machine-tool capacity for defence, security and poli-
tical reasons.

(4) Communication from the Commission to the Council, Parliament
and Economic and Social Committee – Strengthening the competi-
tiveness of the European machinery construction industry (COM(94)
380 final of 25 October 1994).

(5) Council Resolution on the strengthening of the competitiveness of
the European mechanical engineering industry of 27 November
1995, published in OJ C 341 of 19 December 1995, pp. 1-2.

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This hesitant general attitude had changed under the last
Commission because of the priority placed on manufacturing
competitiveness in the framework of the Lisbon strategy. This
might have led to a favourable climate for genuine partnerships
at EU-level, which, hopefully, would have promoted positive
level, as
interaction between players at national and local
appropriate. Unfortunately,
to be
focusing today on a limited number of so-called flagship-
sectors, among which mechanical engineering is not included
at present.

the Commission seems

3.1.3
‘New style’ industrial policy aims at breaking through
the barriers that have characterised for so long the relationship
between public and private actors. The actors must be aware
that each of them is serving the common objectives. Such an
industrial policy aims at bringing together people and organisa-
tions to bridge gaps that, previously, have often prevented suffi-
cient innovation.

The wide variety of specialised and often high-tech
3.1.4
SMEs in the sector, places high demands on the organisation
and management of production processes. Contrary to certain
other sectors with a relatively small number of leading compa-
nies, specific instruments and approaches have to be foreseen.
One such specific approach, for example, might be the creation
of a Technology Platform for Manufacturing Enabling Industries
or the establishment of a particular programme which could
play an outstanding role in this regard (6). A substantial invest-
ment in R&D is required.

exclusively science-driven operating on a long term perspective,
but should also strive to achieve a balance by reserving funding
for applied research, which leads to innovative products.

3.1.8
The technology platform should contribute greatly to
a better understanding between research centres of all kinds
and the mechanical goods industry, which would,
in turn,
produce beneficial effects for similar fora in the Member States.

3.1.9
The presence of so many SMEs and mid-size compa-
nies in this sector emphasises the need for fewer constraints
and less administration and greater access to EU programmes.

Naturally,

large-scale industrial
the realisation of
3.1.10
projects requires R&D programmes to be focused on break-
through technologies. These have a knock-on effect on the
whole value chain. However,
it is important to achieve the
right balance of
funding between such major projects and
SMEs.

All this will also have a positive impact on national
3.1.11
programmes. In an environment dominated by interaction and
benchmarking, best practice must be taken into account.
Because of the overwhelming number of SMEs, national branch
organisations have to play an active role in this field.

A technology platform or specific programme should
3.1.5
draw on the reservoir of skills developed as a result of a long-
standing European tradition in mechanical engineering and
form an alliance of
for European research
the support
programmes,
industrial knowledge in the mechanical engi-
neering clusters and the strengths of specialised European
research institutes.

3.2 Industrial change and skills

3.1.6
Such programmes for mechanical engineering must
take into account the variety of subsectors and the interaction
between them, such as common innovations, the combination
of technologies and, consequently, the need to develop effective
knowledge circulation in production and business services.

3.1.7
The gap between research centres and universities on
the one hand, and the market sector on the other, needs to be
bridged. European R&D-programmes should certainly not be

(6) Inter

alia EESC opinion on Science

and Technology, CESE
1647/2004, rapporteur Prof. Wolf and complementary opinion on
Science and Technology , rapporteur Mr van Iersel.

3.2.1
There is a close interconnection between ‘new style’
industrial policies, innovation, creativity productivity and skills.

Nowadays young people are less inclined to study and
3.2.2
to work in the technical
industries, a phenomenon that has
partly to do with an outdated image of industry. This calls for
action focusing on new technologies by industry itself,
supported by a cultural drive on the part of national and Com-
munity media, with a view to altering public perception. Good
communication between companies and the public, particularly
with youngsters, is crucial. A change of mentality and approach
is needed to reverse current trends. Increased awareness of the
reality of mechanical engineering is needed. This concerns the
overall process of technology, business services, the chains of
inter-related technologies, processing, marketing, internationali-
sation, etc. The better
these inter-relations and exciting
processes are presented, the more it will foster interest amongst
the general public and young people in particular.

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themselves.

3.2.3
All improvements begin with innovative and challen-
ging educational systems. Up-to-date modules have to be
Industry must be
devised, also in companies
institutes,
encouraged to cooperate closely with educational
higher
training
and vocational
centres. Direct participation of managers in relevant educa-
tional programmes must be encouraged and, in return, teachers
must be offered the opportunity of interaction with industry.
Schools should be encouraged to exhibit at (international) busi-
ness fairs.

education establishments,

3.2.4
Business parks and technology parks around technical
universities should be set up or developed more actively.
Successful examples such as Cambridge University, Eindhoven,
Aachen and others are to be highlighted.

Due to rapidly developing product and service cycles,
3.2.5
life-long learning and,
flexibility
towards change, must become common practice in companies.

consequently,

employee

3.2.6
Effective coordination between industry (management,
trade unions, staff) and educational establishments at all levels
will reinforce regional specialties and, consequently, promote
the formation and development of strong regional clusters.
This coordination would be largely regional not only because
of
the enormous number of companies involved, but also
because of the impact of regional specialities and differing
cultures.

3.2.7
Dialogue between social partners on industrial impli-
cations at EU-level can lead to beneficial results. Illustrative
examples, comparisons and benchmarks at EU-level may
deliver a welcome framework and may set or reinforce the
trend for national and regional programmes. A very nice illus-
is that
tration of a dialogue creating such a framework,
conducted by the WEM-EMF ad-hoc Working Group in
2003 (7). It would be useful to measure the results of the wide
variety of initiatives and to make an evaluation of best practices
as this may foster dynamism in other regions.

3.2.8
This process can be deepened, notably with the parti-
cipation of the new Member States, and may be extended to
include the participation of educational establishments.

3.2.9
Although the mobility of engineers and engineering
technicians within the EU still leaves much to be desired, the
Bologna process and the growing convergence among the

curricula of European engineering universities, vocational
training centres and professional bodies of engineers is leading
towards a European labour market in engineering skills.

3.3 Framework conditions

The framework conditions in which businesses operate are
extremely important. They include the following:

3.3.1 T h e i nt e r na l ma r ke t

The internal market should guarantee harmonised access to the
EU-EEA market and therefore increase European competitive-
ness. Unfortunately, the internal market for products is not yet
fully achieved and the following shortcomings need to be
addressed in particular:

3.3.1.1 Regulations

— Better law-making is an essential prerequisite for all compa-

nies but particularly for SMEs.

— Legislation should be used only when it is really necessary,
that is to say, on the basis of a detailed impact assessment,
including a full consultation of stakeholders.

— Legislation should be kept simple, with as few administra-
tive burdens as possible. This applies especially to SMEs,
which comprise the overwhelming majority of European
mechanical engineering companies (8). Unfortunately it is all
too often the case that EU regulators, in spite of their good
intentions, overlook the high level of unnecessary adminis-
trative burden arising from regulation.

— Regulatory impact assessment is essential: it should be used
by all EU — and national institutions, not only in the initial
proposal but throughout the legislative process and ex-post,
for a certain period following application of the legislation.
This would permit an evaluation of the degree of success in
achieving policy objectives.

— Existing EU legislation should be implemented and enforced
properly:
the Commission should improve its follow-up
and ensure harmonised implementation. All relevant parties
should be encouraged to engage in and to monitor imple-
mentation and proper enforcement.

(7) Ad-hoc Working Group of The Employers' Organisation of the
Metal Trades in Europe and The European Metalworkers' Federation,
‘Major outcome from the exchange of national examples’, January
2003.

(8) Example:

the REACH proposal on chemical products and the
proposed Directive on Eco-design of Energy-Using Products, which
in their present form are difficult for companies to manage

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— All

regulations

issued by different directives must be
harmonised and all manufacturing definitions referred to in
directives must be uniform.

— Additional national requirements should be avoided. There
is far too much product-requirement divergence between
Member States and this is further reinforced by divergences
is commonly
in transpositions. Such ‘goldplating’, as it
know, only leads to fragmentation of the internal market
and therefore undermines the competitive edge.

ment, to liberalise business services and to phase out import
tariffs on engineering products under condition of reciprocity.

Regarding business services, the main objective would be to
ensure freedom from interference in the provision of products
and allied services.

3.3.1.2 Market surveillance

3.3.3 Comp e ti ti on p oli cy

Improved market surveillance is crucial: in Europe it is insuffi-
cient at present and creates an unlevel playing field (9). Customs
authorities should therefore increase their controls and be
provided with the necessary ways and means to guarantee that
products may not be placed on the market unless they
conform to all applicable rules.

Control of engineering products at EU borders should also be
tightened in order to combat counterfeiting, which is a serious
and growing problem that affects as much as 5 % of equipment
sold in the EU. It is not satisfactory that Member States should
only act when there is an accident.

it

It

that

their

is also essential

is therefore important

If the EU is to become the most dynamic worldwide economy,
it is not only important that new technologies be developed,
rapid dissemination be
but
promoted significantly.
to create
appropriate framework conditions at the level of competition
policy, to facilitate the transfer of technology to third parties.
When an innovative technology is developed — and mechan-
ical engineering in Europe is often specialised in niche markets
— the use of market thresholds, as favoured by European
competition authorities for the purpose of determining specific
anti-competitive effects, is inappropriate.

Given that market surveillance is undertaken by national autho-
rities according to differing criteria, harmonisation is required.
This could be achieved by the Commission issuing a market-
surveillance guide for all Member States.

3.3.4 T a x e s a nd fi na nc i ng

3.3.2 T r a de

The main objective is to achieve market access for European
companies without undermining Europe's own standards in the
internal market. With EUR 129 billion worth of machines and
equipment exported, the EU is the leader of the world mechan-
ical equipment market. Freedom of access to and investment in
third-country markets is thus of vital
importance for the
mechanical engineering industry.

Another important issue is the liberalisation of the global trade
in engineering products and services (including many in the
internal market). European mechanical engineering has been a
frontrunner in terms of dismantling tariff and non-tariff barriers
to trade in the Uruguay round and in the Doha round. The
Commission should continue its multilateral, regional and bilat-
eral trade talks in order to push for the elimination of technical
barriers to trade, to liberalise outward investment and establish-

(9) For instance, in the context of construction equipment (and other
machines), there have been many cases which show the existence of
a ‘grey market’ with machines imported from third countries, which
are CE-marked and have a declaration of conformity but are NOT
in conformity with European regulations. There are also abundant
cases of machines which neither bear a CE marking nor are in
conformity and are nevertheless placed on the European market
with total
In order to guarantee a level playing field
between European manufacturers and others from third countries,
this should be avoided.

impunity.

Taxation levels are generally very high in the European Union.
Besides the fact that a decrease in corporate tax is most useful
in a capital goods environment, other measures such as invest-
ment tax credits will provide a positive incentive.

3.3.5 B a nki ng

In some countries, such as,

The role of financial institutions is often overlooked but they
play a major role in carrying out industrial policy objectives by
either accepting or rejecting risk and through their degree of
accessibility.
it would appear,
Germany and France, practices are more stimulating than they
are in others. The EESC is in favour of introducing this aspect
to the industrial policy arena, especially in this sector, of such
significance to SMEs. This could lead to improved practices
across Europe. Other aspects, such as the Basel II provisions are
increasingly hampering access to the finance required for
innovative
in research for the development of
investment
products or for the growth of businesses in general.

3.4 Ongoing analyses and dialogue between all parties
involved, in particular the social partners, on industrial implica-
tions at EU-level (as well as at national and regional levels) will
certainly provide impetus to these processes.

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4. Recommendations

4.1
The EESC is of the opinion that, when devising indus-
trial policy, words must be followed by deeds. The so-called
cost of ‘non-Europe’ could be especially high in mechanical
engineering when one considers that this sector is, in spite of
its leading role and its important core competences, facing a
number of challenges that are not only cyclical, but also struc-
tural. These need to be addressed and consideration of the
following points is vital in this respect:

4.2
This sector fits perfectly well into a concrete programme
of fixing objectives at regional, national and EU level aimed at
the implementation of the Lisbon agenda.

In the view of the EESC the significance of the EU

4.3
commitment would be twofold:

— an overall agenda is to be set for a qualitative reinforcement
of the performance of mechanical engineering in Europe,
and

— specific

conditions have

to be

concerning regulations, R&D,
others.

fulfilled at EU level
trade, benchmarking and

Responsibility for this is shared by the Commission
4.3.1
and the Competitiveness Council,
in close cooperation with
representatives of the sector. Regular meetings between the
sector, including relevant social partners and the Commission,
are desirable. To that end, the organisation of the EU's policy
support
in particular in the Enterprise and
Industry Directorate General, should take due account of the
requirements of the mechanical engineering sector.

infrastructures,

The EESC also pleads in favour of ensuring the
4.3.2
Commission has sufficient practical knowledge of and expertise
in the mechanical engineering sector.

4.4
The EESC is of the opinion that special attention should
be paid to this sector at EU level because of the overwhelming
number of SMEs it contains.
the following
aspects merit particular emphasis:

In this regard,

As regards

4.4.1
the growing
mismatch between European-funded R&D and the needs of the
mechanical engineering industry should be addressed and

research and innovation,

Brussels, 11 May 2005.

company participation should be made easier in order to
match the ambitious goal of increasing competitiveness with
equally ambitious financial means in the corresponding items
of the EU budget. Most of the companies are SMEs and mid-
range companies and, at present, European industrial research
projects address them inadequately and make company partici-
pation difficult.

The regulatory framework conditions in the EU need
4.4.2
to be improved in consultation with the sector, as over-regu-
lation and the growing weight of bureaucracy are jeopardising
instead of stimulating dynamic entrepreneurship.

4.4.3 Market surveillance should be stepped up, with a view
to ensuring a level playing field between European companies
and also between European manufacturers and imports from
third countries.

4.4.4
be improved.

Access to financial markets for these companies has to

4.4.5
freedom of access to and investment in third country markets.

Trade relations with third countries must guarantee

4.4.6
and innovation and technology in SMEs.

Competition policy should favour the development

4.4.7
A discussion at EU level between social partners and
the Commission on improving output, skills and educational
training systems may create a helpful framework for concrete
realisation of similar dialogues in the Member States, especially
at regional level.

4.5
As an industry in transition, mechanical engineering is
evolving rapidly from an industry focused on products to a
‘value/access provider’,
integrating an ever-increasing service
content and providing total solutions to its customers. This
major challenge, which is key to maintaining sustainable
growth and a strong position on world markets, has to be met
by appropriate EU policies.

The EESC hopes that the Commission will take its recommen-
dations into account as well as all the appropriate measures,
leading Europe to what, according to its President Mr Barroso,
is one of its Commission's main priorities, namely making the
Lisbon Strategy a reality.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND