of Photonics Technologies: the European Perspective The Leverage Effect

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The Leverage Effect of Photonics Technologies: the European Perspective 5.3 Economic drivers Economic growth is a crucial driving factor for industry and describes the overall economic situation of a country or a region and its growth or decline. The overall economic situation impacts customer demand, but also the private resources that are available for research, development and innovation. The present economic conditions (especially in the EU and the US) during the recession had a negative impact on most industries, including the photonics industry. However, many areas of photonics have remained stable through the recession especially those focused on the research and life sciences markets. The following implications are relevant for the Photonics industry: ■ Governmental investments in research and public demand are under pressure, e.g. to support development and implementation of green technologies, in which photonics plays a major role. Growth in these areas may be jeopardised by reductions in public spending, as some sectors such as photovoltaics are heavily dependent on government funding. ■ Economic uncertainty leads to reduction of employment stability and a delayed consumer spending on luxury and/or high technology goods. As photonics is often used as the enabling technology in many products (e.g. 3D displays) or manufacturing processes, demand could well be suppressed if consumers opt for cheaper and less advanced products or delay upgrading/ replacing goods such as consumer electronics. ■ Access to human capital in a time of recession is good, but can be critical after economic growth is back on track. In the photonics industry the availability of high quality personnel is crucial. 124 / 190 Business investments are usually funded by external sources. It is clear that this access to financial capital is crucial to the survival of companies. In the present recession, this access to financial capital is a problem, especially for SMEs. Both public and private funding now are under pressure, as governments and banks both are struggling to get the financial position in order. An essential element here is that rising countries like China and India are willing to support business development
The Leverage Effect of Photonics Technologies: the European Perspective and access to financial capital is strong. This has strong implications for the photonics industry: ■ The photonics industry can be characterized as a high tech sector, where relatively large investments are needed to further develop the industry. Some parts of the industry are mature sectors, where the impact of photonics to the industry is still in its early stages, in need of financial capital. ■ As an important competitor, the easy access to financial capital in China can lead to pressure on the competitiveness of the European industry. Thus, photonics relies heavily on the access to finance used to support innovation and development, both within the photonics industry, but especially in the industries enabled by photonics. Globalisation is not only about increase in markets. It is also about the continuing integration of economies, cultures, societies, politics, transport, communication and crime. This globalization changes the economic structure of our society, offering new opportunities but also threats. The brain drain of human resources is a good example of this two edged sword, leading to new high quality personnel from China and emigration of graduates, highly relevant for photonics research. But also the inter-connectivity of the economies creates challenges like international crime and security risks, because of their global dependencies (e.g. the present economic crisis). The photonics industry will be faced with various effects from this globalisation: ■ The brain drain is a high risk for the European photonics industry, as it is depending on high quality personnel. This demands organisational adjustments to secure availability of highly skilled personnel. ■ Already, photonics research and industry are highly globalized and the value chain analysis shows weak chain linkages. New business models are needed, organizing the use of low cost personnel and global knowledge (e.g. off shoring and open innovation). ■ Next to these new structures, globalisation also is accompanied by the need for high quality communication infrastructures, leading to new demand for photonic products. One of the most important production factors for industry are human resources, in particular highly qualified personnel: engineers and technicians as well as, researchers. Various reports show that the fu- 125 / 190
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