Musing about strategic value chains, or being fit for new paradigms – CLEPA Newsletter Editorial November 2019
With last week’s green light for the envisaged commissioners Thierry Breton (internal market) and Adina-Ioana Valean (transport), two key figures have entered stage. Both will be heavily involved in the transition of mobility and industry triggered by environmental needs, technological progress and anticipated new consumer demand and habits.
The hearings – or ‘grillings’ as some rather call it — in the European Parliament revealed a deep awareness of the complexity of the task ahead. Both commissioners-designate pledged to work with the two executive vice-presidents, Frans Timmermans (green deal) and Margrethe Vestager (digital age), as well as with the other commissioners destined to be closely involved with parts of the work: environment, taxation, employment, innovation, trade. There is a strong realisation that no one actor can deliver on their own.
Both Breton and Valean also emphasised the need for a strong industrial pillar to achieve the monumental challenges facing society such as decarbonising Europe’s economy by 2050, requiring the transport sector to reduce CO2 emissions by 90%. That same competitive industrial pillar is needed to maintain and claim leadership in high-tech, data-driven businesses and services that will power, amongst others, connected and automated mobility.
More on this you can find in the CLEPA vision paper on the future of mobility and industry, on which the association will hold a landmark event in Brussels on 4th December with industry CEOs and high-level politicians.
Ursula von der Leyen’s team is bound by the ambition to deliver fast
Ursula von der Leyen’s team is bound by the ambition to deliver fast: a law on climate and artificial intelligence in the first 100 days in office. The stakes are set on a renewed willingness for Europe to join forces and work together, because relying on national capacities is not enough to pull weight at the huge levels required. Europe, too, must reassert itself in the global arena where other powers seem intent to adjust the rules of the game.
Against this backdrop, it was interesting to see the report ‘Strengthening Strategic Value Chains for a Future-ready EU Industry’, published by the Strategic Forum for Important Projects of Common European Interest, an expert group set up by the European Commission in 2018 composed of member states, industry and the research community.
Like in the title of the report and name of the forum, many of today’s trigger words can be found in the paper itself: technological sovereignty, strategic autonomy, security, systemic presence.
The six ‘strategic value chains’ identified are connected, clean and autonomous vehicles; smart health, low-CO2 emission industry; hydrogen technologies and systems; industrial internet of things; and cybersecurity. These come on top of three, on which joint initiatives are already running: the European battery alliance, a joint undertaking on high-performance computing and a project of common interest on microelectronics.
Five of the six selected areas heavily involve the mobility industry
Many of the report’s conclusions mirror policy objectives laid out in Von der Leyen’s policy priorities: investment in deployment and adoption of technologies, pooling of public and private funding and other resources, prioritisation of research, education and skills, removing the remaining barriers to the Single Market and – perhaps ‘newest’ and most important of all: strategic cooperation at all levels due to the complexities and the importance of scale.
The recommendations in the report are carefully wrought and the underlying analysis is clearly invested in the daily realities of industries like the automotive supply sector. It is no coincidence that five of the six selected areas heavily involve the mobility industry, as do the already existing three. The automotive industry is system critical to the European economy and in the midst of the transition to climate neutrality and a data-driven economy.
As a consequence, automotive suppliers too are rethinking the architecture of the traditional value chain. Suppliers used to be organisers of a fairly vertical process of materials, parts, components and systems. Today, this traditional ‘chain’ no longer exists. Suppliers operate in an eco-system – a network of interdependent and interlinked actors — with increasingly diverse and numerous players, and with increasingly direct links to the ‘end-user’ as well, the individual or business using mobility to move from A to B.
Challenges around available and secure infrastructures, protection of critical technologies, access to raw materials and availability of skilled people add to the mix. And so do the global trade tensions and economic slowdown.
The search for new solutions preoccupies the minds of many these days
The most recent CLEPA Pulse Check amongst its member companies showed an almost unanimous expectation of a economic downturn, and 90% of respondents said to be undertaking specific measures to prepare for a more difficult business environment. To put this into perspective: European automotive suppliers hold an impressive 40% of global revenue in the sector. They are leading in many technologies and are well-placed to compete. Yet they are reassessing and repositioning, evaluating scale and market relevance, scouting for partnerships and burden sharing, fostering start-ups on the go.
“Seizing the opportunities of the ongoing transformation requires new approaches and new solutions”, says the foreword by outgoing Commissioner for internal market and industry, Elzbieta Bienkowska, writing with industrial policy in mind. It is the search for new solutions that preoccupies the minds of many these days. All with the aim to be fit for a world with new paradigms.
Sigrid de Vries, CLEPA Secretary General
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In: CLEPA News