The most essential instrument for increasing the European industrial competitiveness is the single market made of 500 million consumers, 220 million employees and 20 million entrepreneurs. One of four jobs in the private sector of the EU is in the processing industry and at least one of four in related services that depend on the industry as supplier or customer. 80% of the total private research sector and development efforts are developed within the industry and this represents an innovation drive and a solution supplier for the problems communities are confronted with.
The economic crisis has redirected attention to the essential importance of a strong, varied and competitive industrial processing value chain. The EU approaches new integrated industrial policies and strategies to stimulate the economy by ensuring a thriving world-class industrial base.
The business environment has radically changed in the past decade creating new problems and opportunities for the industrial sector which requires a strong political support to help the industry take advantage of these opportunities. Currently, the European industry competes with China, India, Brazil and other emerging economies. Therefore, the development of all industrial sectors and competence play an important role in increasing international competitiveness. And there is a high level of optimism as regards the EU industry’s capacity to meet the challenges and the requirements which determine the pursuit of economic development. Until the outburst of the economic crisis, the European industry has managed to successfully preserve its world trade share over the last decade coping with the strong pressure of new competition.
Although remarkable progress has been made, most EU countries are still confronted with problems on the business environment regulations which should be approached by launching new initiatives for supporting competitiveness, especially for the SMEs.
As long as the EU relies on developing a sustainable economy, innovation will play a very important role since innovation excellency is required to meet the challenges of world competition and it is the motor of efficient productivity and improved performance. EU’s plans for an economy with low carbon dioxide emissions by 2015 emphasize technological improvement solutions and structural changes in industrial systems, especially in the transport and energy sectors that are essential in stimulating innovation, supporting growth and consolidating the market.
“The challenge consists in reaching the objective on delivering an intelligent transport using efficient resources, environment protection, safety for passengers and last but not least an improvement in the economic and social environments. To reach the set targets, Europe needs to create an environment that would favour industry and products will have important benefits in he international market”, declared in a interview Liam Breslin, Head of Transport Surface Transport Research & Innovation DG – European Commission. Therefore, the transport industry plays a vital role in elaborating new solutions for developing a society based on sustainable mobility.
Over the past years, the railway industry has recorded significant growth: the latest railway projects implemented, as well as railway network modernisation and extension plans have triggered increasing orders on all segments worldwide. According to UNIFE, in 2007, the worldwide industrial railway market was estimated at over EUR 120 Billion, while the annual growth share is estimated at 2-2.5%. Central and Eastern Europe, with an annual market of around EUR 5 Billion, represents 6% of the overall global railway industry and this region is expected to grow by 4.1%, the most dynamic segments being the rolling stock and control systems whose growth exceeds 6.7% and 3.3% respectively.
Globally, Western Europe is the dominating market with around 35%, followed by NAFTA – North American Free Trade Agreement – (24%) and Asia/Pacific (21%).
Overall, these regions represent 80% of the market and the rolling stock segment has the highest share, followed by services and infrastructure. Due to the long-term improvement of the economic climate and of the business environment, a growth exceeding the average of the markets in the Asia/Pacific, CIS, Eastern Europe and America is expected, while NAFTA, Western Europe and Africa/Middle East are expected to grow by 1.9-2.7%.
China encourages private investors
The Chinese market has a growing importance for the European railway industry, especially since Chinese-European relationships are currently in a transformation process. Starting with 2008, Europe has been the market with the fastest growth of Chinese investments. In the railway segment, works are heading towards a significant growth, especially due to the positive signs of Chinese authorities. If so far, several foreign railway companies have been forced to transfer technology to contract projects in China, the authorities now plan to open the access of private companies. According to a press release of the Chinese Ministry of Railways (of May 2012), China plans to open its railway industry to private investments to a large scale. “Private investors will be encouraged to tender for contracts to support the railway sector which is currently confronted with very high debts and corruption, while subsidiaries will be permitted to list shares for investments in railway industry companies”.
Alstom, GE, Bombardier and Kawasaki Heavy are some of the foreign companies which have submitted offers for investment projects on railway expansion, but in some cases they are limited in supplying components.
The document details the transaction centres of the Chinese railway projects subordinated to the ministry. According to it, 18 offices would be closed. Construction projects in the administration of railway offices will enter the local market as two lots starting this summer. Also, the project stipulates the fact that all railway projects should enter local markets and this will require authorisations. Also, China is interested to collaborate so as to increase the railway industry. For example, rolling stock manufacturer CNR Changchun Railway Vehicles (subsidiary of China CNR Corp.) plans to double annual export income by up to USD 1 Billion over the next five years, “producing technology on the international market being the next step towards bigger efforts to explore foreign markets”, declared the general manager of the company, Lu Xiwei. “As rolling stock industry develops rapidly, Chinese products could exceed 30% of the global market competing industrial giants such as Siemens and Alstom”, he said.
Also, European railway companies are more and more interested in launching their solutions in the Chinese market. For example, in July, Ansaldo STS signed a strategic agreement with CNR Dalian and with General Resources Company (Taiwan) for granting the license for an innovative power supply catenary free solution (TramWave®). Through this agreement, Ansaldo STS consolidates its presence in a high-value and rapid-growing market.
In July, Bombardier Transportation signed a technical license agreement with CSR Puzhen, a subsidiary of China South Locomotive & Rolling Stock Corporation Ltd (CSR).
Under the agreement, Bombardier will provide CSR Puzhen with a ten-year license for the manufacturing and sale of low-floor trams in China. The agreement includes all necessary documents and staff training and assistance in successfully manufacturing the trams.
It is estimated that the Chinese market of tram networks will know a strong growth given the rising demand for public transport and significant investments planned by the Chinese Government.
As the Chinese state wants to double rail transport infrastructure investments in the second half of the year, (compared to the first half, EUR 18.9 Billion), railway companies will definitely benefit from new opportunities.
Industrial relationships between EU and Japan are uncertain
Japan also becomes a reference point for European companies although the accessibility level in this market is extremely low and “has remained a constant source of worries for the European industry, especially since Japanese suppliers have benefited from the opening of the European market”, shows the annual report of UNIFE (2011). At the end of 2011, the association has discussed the possibility to open the market to European manufactu-rers, but this requires time and negotiations to be beneficial. The two markets record significant differences regarding tender procedures and safety approaches.
The problems of the railway sector remain unsolved between the EU and Japan within the recast of the WTO Agreement on public procurement and the elaboration of a potential Free Trade Agreement. At the end of 2011, due to intense negotiations, the two parties involved agreed to elaborate an exchange of letters on railway transport. The accession of European companies in the Japanese market needs a transparent legislative framework on tender procedures and, if the situation is not solved, EC could present a report on using the instruments on a reciprocity basis, which means that the Japanese suppliers could be excluded from the European market in case the Japanese market remains closed to European companies. “EU should have a say and remain firm in relationship with Japan. It is time to clear the situation: if restrictions are not raised, Japanese suppliers should no longer tender in the EU”, declared Brian Simpson, Chairman of TRAN and President of Rail Forum Europe at the beginning of 2012 during a reunion with MEPs and railway institutions.
Although Europe has opened public procurement markets, most third countries have not done the same and protectionist policies have rapidly developed outside the EU. To approach this stringent problem, “EC could develop new instruments to encourage the mechanism of free markets and to permit adopting specific restrictive measures for concerned markets”, believes Anders Jessen, Head of the Unit in charge of Public Procurement at DG Trade.
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