EUROPA - Introduction to the Mechanical and Electrical Engineering ...

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114 The high momentum of the new Member States engineering industries in foreign markets has been driven above all by exports of domestic appliances. They soared at an annual rate of 17% over the period under investigation, during the most recent years it even surpassed 20%. As compared to the EU-25 exports, domestic appliances reached a share of one tenth in 2004. On average for total engineering products the new Member States accounted for 4% in 2004. Lowest is the share for mechanical engineering. Figure 4.1 shows that the growth of the new Member States’ share of EU-25 exports has accelerated and suggests further gains in the years to come. The discrepancies in the development between the subsectors can partly be explained by particularities of the supply side. In domestic appliances the global players heavily invested in the new Member States in production capacities, and products are delivered into international markets directly. Most of the production is assemblage, and manufacturing depth is – compared with mechanical engineering – low and intra-sectoral division of labour is less important as was disclosed in the chapter on the intra European division of labour. For some product groups within electrical engineering, such as cables and wires, accumulators and batteries, the manufacturing depth is even lower. In these segments global players also play an important role. But many of these products are intermediary goods for the automotive industry that are further processed and assembled within the new Member States. Therefore electrical engineering does not show a similar rise as domestic appliances. These products are indirect exports not classified as engineering products. For mechanical engineering the situation is quite different. There is a strong intrasectoral division of labour and many companies of this sector of the new Member States are subcontractors. Many firms deliver parts and components to companies of the old EU-15 which – although predominantly medium-sized firms – have at their disposal global distribution channels. They can supply after-sales services, which are of importance in most markets for complex production machinery. This means that the advantages of the new Member States as a location for production are (in subsectors where after-sales-services are important) not adequately mirrored in exports. In other product areas the situation differs. Efficient distribution channels are not a necessary prerequisite for cross-border sales. In these areas the new Member States exploit their strength as a location for production and enjoy soaring exports. This is another explanation why mechanical engineering exports of the new Member States and the old EU-15 have become more dissimilar (as depicted in Figure 3.1).
115 Figure 4.1: Share of new Member States in EU-25 Exports 10% 9% 8% Mechanical engineering Electrical engineering Domestic appliances Total engineering 7% 6% 5% 4% 3% 2% 1% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: EUROSTAT; national statistical bureaus; VDMA; ZVEI; Calculation by the Ifo Institute. 4.2 Challenge from Emerging Countries To a certain extent global competition has changed since the early 1990s. Besides Taiwanese and Korean, suppliers, the Chinese have tapped into the European market in recent years. In interviews Czech machine tool manufacturers raised fears that it will only take a couple of years until tough price competition from these suppliers emerges, they are bigger and can exploit economies-of-scale in serial machinery. These developments are taken into account and the reason why a contribution carried out for the European Competitiveness Report 2004 have been updated by the application of most recent figures and are discussed here. Trade relations between Europe and China are characterized by a high growth momentum. The public is aware in particular of textile and clothing industries, which have been exposed to international competition for decades, and most of the production capacities
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Institute for Economic Research at
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I Table of Contents 1 Executive Sum
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III List of Tables Table 2.1: Key d
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V List of figures Figure 2.1: Engin
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VII Preliminary Remark The study re
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2 only economic efficiency data are
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4 1.2 Structural Changes in the New
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6 tigation between 1995 and 2004 Th
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8 currencies of the new Member Stat
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10 neurs associations, unions and t
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12 third sector comprises durable c
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14 duction. These discrepancies sug
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16 The differing patterns between t
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18 2.2 Investigation in the Enginee
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20 Table 2.5: Key data for NACE 29.
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22 downturn in value added in 1999,
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24 Labour productivity and unit lab
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26 Table 2.8: Key data for NACE 29.
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28 Hungarian patenting activity, bu
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30 modular conception to customized
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32 2.2.7 Non-domestic Cooling and V
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34 or spraying liquids or powders (
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36 2.2.9 Agricultural Tractors (NAC
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38 2.2.10 Other Agricultural Machin
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40 2.2.11 Machine Tools, Woodworkin
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42 Table 2.15: Key data for NACE 29
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46 This development is also in line
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50 has a trade balance deficit with
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52 While single-part production pre
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54 for the manufacture of products
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56 The manufacture of electrical do
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58 The manufacture of non-electric
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60 ing 37.5 W; other DC motors; DC
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62 2.2.21 Electrical Distribution a
Page 76 and 77: 64 higher than the average and they
Page 78 and 79: 66 Figure 2-23: Comparison of NACE
Page 80 and 81: 68 Table 2.27: Key data for NACE 31
Page 88 and 89: 76 manufacturing industries value a
Page 90 and 91: 78 There are important downstream l
Page 92 and 93: 80 vatization. This is why railway
Page 94 and 95: 82 tions in engineering reached 6.4
Page 96 and 97: 84 The capacities for high performa
Page 98 and 99: 86 The global original equipment ma
Page 100 and 101: 88 rates the sector “domestic app
Page 102 and 103: 90 for foreign investors. But some
Page 104 and 105: 92 CSM Tisovec a.s., another compan
Page 106 and 107: 94 EU-15 companies are of outstandi
Page 108 and 109: 96 Country experts assessed EU regu
Page 110 and 111: 98 The majority of the mechanical e
Page 112 and 113: 100 use of personal protective equi
Page 114 and 115: 102 3 Engineering Sectors in an Enl
Page 116 and 117: 104 economy. Most of the investment
Page 118 and 119: 106 Table3.3: Production of the new
Page 120 and 121: 108 Figure 3.1: The evolution of in
Page 122 and 123: 110 3.2.1 The Assessment of the Acq
Page 124 and 125: 112 the EU Services Directive will
Page 128 and 129: 116 have been relocated. These days
Page 130 and 131: 118 Up to now the Chinese deliverie
Page 132 and 133: 120 Table 4.3: Changes in the Price
Page 134 and 135: 122 4.4 Assessment of the Technolog
Page 136 and 137: 124 Table 4.6: Country Share of Eng
Page 138 and 139: 126 5 Conclusions 5.1 Final Assessm
Page 140 and 141: 128 sectors. Such a study should be
Page 143 and 144: 131 6 INFORMATION PROVIDER Czech Re
Page 145: 133 Mgr. Vlado Kalina Secretary Gen
Page 149 and 150: 1 1 Innovation Intensity - Use of I
Page 151 and 152: 3 In small countries and particular
Page 153: References 5 Griliches, Zvi (1990),
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