European Economic and Social Committee consultative commission on industrial change The global financial crisis and industrial changes in the main European manufacturing and services sectors Patrizio Bianchi Impact of the actual economic downturn on Member States interventions in industry Bruxelles, 6 February 2009

General situation and developments State peculiarities Sectorial specificities Impact on – investments (R&D) - company relocation -- employment levels - international trade Policy actions -to support industries - to maintain the SMarket aquis - to sustain jobs and incomes QUESTIONS:

financial crisis and industrial downturn The crisis arose in the summer of 2007 the market for U.S. real estate loans, having rapidly expanded to every sector of finance and the whole world, has struck in recent months the real economy, influencing the choices of consumption, investment and production. The dynamics of the product in major economies has worsened; affected time of crises, including the emerging countries (Bank of Italy, Monthly Bullettin, Jan 2009) this is true, but the recession is also a result of the adjustment process of globalization Financial, structural and sustainibility crisis

1. Globalization has been an extraordinary expansion of the extent of the market 2. Emerging countries enter the global market changing both supply and demand of market goods 3. pushing every national industry to adjust their production organizations to the new global market context 4. Financial crisis has struck industries in the stage of structural readjustment How deep and how long is the crisis?

the American industry is suffering from many years of a deep internal crisis, the investment went toward the financial sector and real estate, and into sectors based on military applications. The case dell'automotive

Production is highly concentrated in coastal areas and in Guangdong. crisis took the Chinese industry (Guangdong) in the phase of strategic repositioning and relocation of production to the western provinces, but this strategy failed The risk is a strong social tension

Europe the crisis hits Europe after a long period of growth at very low rates all European countries were implementing structural adjustment processes to production and services with higher added value with a relocation of production impacts of the crisis are differentiated because of exposure of the country to the international financial market, the internal public debt, the structure of the industry, the capacity to invest in R & D; Germany case

Industrial cases 1. Automotive sector: new markets – new industries and overcapacity, new goods and environmental pressure, M&A and the entire subcontracting innovation process 2. Textile and fashion: textile and garment vs. FAD trends; networks of production and distribution; quality and branding strategies 3. Pharmaceutical industries: minor direct impacts, but the risks for long-term research, a worldwide relocation of research and production,and a need to redefine the model of public regulation 4. Energy sector: developing and leverage technology to shift away from oil dependance, but also new technology for housing, urban planning, environmental management

Strategy elements financial crisis has highlighted the structural problems of industry and the limits of sustainability related to globalization: it was decided to expand to the whole world the same pattern of production and consumption first operating only in the advanced countries the crisis is a powerful challenge to rethink the model of public regulation and production strategies of firms This unprecedented crisis will reshape the industry in the world and the companies that successfully manage this change will be the leaders of the future Regenerate the competitive advantages: Knowledge and human resources, Networks and small firms, fundamental research and diffusive technology, new public goods and social responsability

Policies The first industrial policy is to restore the idea that production, work and learning are the true wealth of nations The countries must move together, and we must strengthen common action to prevent the push to reduce the Single Markets aquis: we need of more Europe Strengthening the Lisbon Strategy and remember that the new demand is for public goods, such as health, environment, education, urban quality; these public goods are also the most powerful technological driver Small and medium enterprises, coop activities, social works: strategies for creating jobs and solidariety, we need to have more sense of Community.

PROF.PATRIZIO BIANCHI Full Professor of Applied Economics President of the University of Ferrara President of the Foundation of the Conference of the Italian University Rectors Honorary Professor South China University of Technology Recent publications: - High technology, productivity and networks: a systemic approach to the development of SMEs (con R.Sugden e D.Parrilli), Palgrave-Macmillan, Londra, International Handbook of Industrial Policy (con S.Labory), E.Elgar Pu., Londra, The Economic Importance of Intangible Assets (con S.Labory), Ashgate Pu., 2004, Londra - Technology, Information and Market Dynamics, Topics in Advanced Industrial Organization (con L.Lambertini), E.Elgar Pu., Londra, 2003