Rediscovering old strengths

It’s not long ago that the service sector appeared to offer a genuine beacon of hope, promising more jobs, more growth and a better image – in short, a future. Industry, by contrast, was re­garded as obsolete: the smoking chimney stacks and mass-production plants associated with it did not suit the face of modern economies. A shift in attitude is becoming apparent, not only since Europe’s economic and financial crisis: the difficult years have made it only too obvious that Europe, as 
the European Commission has meanwhile warned, needs a robust manufacturing sector because the service industry cannot grow if there is no production. In the EU, however, industry has already downsized significantly, and is continuing its decline. The Commission is keen to counter this trend and in 2012 launched a strategy for re-industrialization. By 2020, the aim is to increase industry’s share of EU gross domestic product to 20%. Reinhard Bütikofer, Member of the European Parliament and its rapporteur on industrial policy, welcomes this development – under certain conditions.

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Mr. Bütikofer, we were always told that the service sector is the future. Is that suddenly no longer the case?

It was always wrong – just as it was wrong to get caught up in a misleading discussion of the “new” versus the “old” economy. The manufacturing and service sectors now­adays are increasingly interlinked, with some people even talking of “manu-services”. It’s important to preserve the various value-adding chains in Europe – once they are lost, it is very hard to reinstate them.

But does that mean Europe really needs full-scale re-industrialization?

First of all, Europe requires a common industrial policy whose aim should be to strengthen innovative capacity and competitiveness. Since the financial crisis began in 2008, Europe has lost almost 12% of its manufacturing industry. In Portugal, Italy and Spain, industry has collapsed by 20 to 30%. That’s why I believe it is perfectly feasible to talk about a need – not only in those countries – for re-industrialization.

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The European Commission’s latest Euro­pean Competitiveness Report gives little reason to hope that any reversal in this state of affairs might have already begun. Industry’s contribution to EU gross domestic product dropped from 15.6% in 2011 to 15.1% in 2012, taking it even further away from its 20% target figure. The European Commission has named four elements of a more efficient industrial policy to ensure that this target is achieved nonetheless: “investment in innovation”, “better market conditions”, “access to finance and capital” and “human resources and qualifications”.

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How can European policy help firmly establish these four elements?

The Commission and the Parliament have only limited power to drive forward industrial policy themselves, so it is up to the member states and regions to utilize all the European financing instruments and create a differentiated cluster policy. The European Commission can support them by helping the member states and regions to co­ordinate their activities and learn from one another. It can drive technologies forward through its research and innovation programmes. It must open up new financing options, above all for small and medium-sized businesses. It must further develop the single European market. Most import­antly, however, it must not allow misguided macroeconomic policy and tight-fisted budgetary policy to prevent it from promoting sustainable growth.

If all countries in Europe were to suddenly upscale their industrial activities, wouldn’t that have rather a negative impact on the competitiveness of the EU as a whole?

Not if Europe properly coordinates its activities – but otherwise yes. It’s a recipe for disaster if everyone does their own thing and competes with everyone else. Europe must work towards ensuring that successful branches of industry are secured, expanded and renewed, and that regions 
specialize and create symbioses. This will benefit Europe as a whole.

There are many different approaches 
to industrial policy in Europe, some of which have evolved as a result of longstanding economic policy traditions. How can these different approaches be reconciled?

I believe that an ecologically enlightened regulatory policy is the way forward. This meets with resistance from some people because of its ecological aspect, and from others because of its regulatory aspect. We should not be striving for theoretical vic­tories, however, but for practical successes. Above all, we need the right governance structures and we need to better utilize the instruments that are available.

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The individual European countries boast varying degrees of industrialization, not least on account of their different economic policy philosophies. In some states, industry’s contribution to the overall economy is traditionally low, while in others the crisis has further diminished the sector. According to the EU Competitiveness Report 2013, the manufacturing sector in France, the United Kingdom and Greece accounts for around 10% of gross domestic product, while the figures for the Czech Republic and Germany are nearly 25% and roughly 22% respectively.

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Germany has already achieved the EU’s 20% target for industry. Does that mean there’s no need to rethink the German model?

As Thomas Edison said, there is always a way to do it better, and this is no less true of Germany and its industry. For one thing, we are not taking sufficient advantage of the opportunities offered by digital networks. Innovation is one of the strengths of the German economy, but we are weak when it comes to what is known as “disruptive innovation”, which is when entirely new products, technologies or business models are used to shake up the status quo in a particular industrial sector.

Which areas do you see as offering 
opportunities for Germany in a more 
industrialized Europe?

The industrial revolution we are facing offers potential for virtually all sectors. It goes without saying that we should consolidate existing strengths in Germany. I see great opportunities for the mobility sector, for an increasingly green chemicals industry, for mechanical and plant engineering and for a proactive energy sector. The concept also presents opportunities for the primary industry – and it is the companies themselves which need to seize them.

Do today’s training standards meet 
the requirements of the industry of the 
future?

It is impossible to overestimate how much small and medium-sized “hidden cham­pions” profit from the qualifications of their employees. Europe is facing a shortage of engineers, however, and needs more people to study subjects such as mathematics, IT, science and technology. What is more, I am in favour of expanding the dual education system – partly because economies with such systems have proven themselves better able to weather a crisis. ▪