The international automotive industry is in full swing. The green car is high on the agenda of the new industrial policy, mainly because of the climate objectives. As the car industry is one of the main sectors in Europe, this is also a major aspect of the EU2020 strategy and a European action plan for clean energy efficient vehicles is in preparation. The car industry also has a major role in the Flemish industrial web and represents a considerable part of export in our region. Just like the other European countries and regions, Flanders is facing the challenge of realising a transition of the existing automotive industry. This industry is being confronted by a variety of global challenges that (will) seriously reform the sector. This offers good opportunities for Flanders.
Findings
- The automotive industry is a major economic sector for Flanders (in terms of employment, added value and export).
- The automotive industry is typically O&O intensive (the private business investments in O&O are on average 4% of turnover), but not (yet) in Flanders.
- The main (mega) trends for the automotive industry as they are described internationally are equally relevant to Flanders.
- In Flanders we are being confronted by the fact that we do not have coherent value chains in the automotive industry and that only a limited number of Flemish automotive companies individually meet the profile of a spearhead company (strong individual growth, O&O intensive, major export capacity).
Recommendations
Departing from these findings for the Flemish automotive industry, the IDG poses that the challenge for the sector and the policymakers lies in determining how/where Flanders will differentiate itself and can make a difference in an extremely international and globalised automotive market. The fact that there is no coherent automotive value chain in Flanders is a very important observation. It forces the Flemish government to pursue a very different policy than regions or countries (e.g. Germany and France) that do have coherent value chains. The IDG also determined that it is unrealistic to assume that Flanders will have such coherent value chains in the automotive sector in the future. The emphasis should lie on reinforcing the advantages present and using the available knowledge base.
1. For this purpose, the Automotive innovation directing group wants to propose a new policy approach that focuses on stimulating the innovation activity of the automotive industry in Flanders. This new approach is situated on three levels:
- (1) Reinforcing spearhead companies
The Flemish policy should first and foremost mainly focus on reinforcing Flemish spearhead companies, take them to the absolute top and keep them there by offering maximum support through the standard O&O policy and innovation stimulating surrounding social factors. Spearhead companies are companies that individually succeed in making a difference on a global level in their specialisation. Typical of spearhead companies are their strong growth figures, that they are O&O intensive, have enough export capacity and create major added value for Flanders, but always with a leading product, service or process (cf. 'unique selling (technology) proposition').
- (2) Supporting individual companies to play a part in international value chains:
The policy should also support individual companies that currently do not necessarily meet the profile of spearhead companies, but can play a part in international value chains because of their competencies/niches. On this level, the policy should focus on opening up the value chain approach to the international perspective and supporting the individual participants in joining these international value chains. Through a limited own contribution they can then make use of the scale size present and therefore benefit from a leverage within these forms of cooperation.
- (3) Creating scale size and focus on the level of underlying competencies:
Scale size and focus should be sought on the level of the underlying competencies that could also form the breeding ground for the development of new players (spin-offs) or new activities. Crucial underlying competencies for the Flemish automotive industry are:
- Manufacturing
- Materials
- Mechatronics
- Communication
The aim is to set up applied competency development and advancement within these horizontal competency domains that are attuned to their use in the vertical automotive pillar. The applicationorientation is a crucial aspect; after all, the aim cannot be purely (theoretic) generic competency advancement. This approach seeks more scale size and focus on the level of the underlying (horizontal) competencies that are decisive in the long run for the vertical automotive industry, but can also be used by other (vertical) sectors (cf. spillover effects). This will create a breeding ground for the development of new players (spin-offs) or new activities, but also for attracting foreign investors. The policy should anticipate this and further channel this method of application.
With Flanders' Drive, Flanders has developed a competency pool concerning the vertical 'automotive' subject. Flanders also has competency pools (such as FMTC for mechatronics, PlasticVision for plastics processing and SLC for composites) and strategic research centres (SRC, particularly SIM, IMEC and IBBT) that are active in the underlying horizontal generic competencies. Extremely important horizontal competencies are also strongly present in the universities and colleges, which interact with these competency pools and SRCs. SIM is starting up a SRC in the area of material research and the centre of research is still situated in the universities. The competencies developed are, however, not sufficiently used in the automotive industry. There are current cooperation projects between Flanders' Drive and these other participants but merely on an ad hoc basis. There is a need for more structured and focused cooperation, with an agenda for applied competency development that is specifically geared towards the automotive industry and a conversion to the various competency areas. It is self-evident that this applied focused competency development should be based on and interact with a sufficiently strong basis of scientific knowledge generated at the universities.
Realising uniformity of aims and guarding 'enthusiasm for application' in this new approach is crucial. After all, one of the underlying objectives is generating scale size, counteracting fragmentation and avoiding duplication without the creation of new structures or instruments. The basic point is that scale size and focus should be sought on a level of competencies that is unique to Flanders. In the framework of the evaluation and preparation of a new management agreement for Flanders' DRIVE, it can be examined how this uniformity of guidance can best be put into practice.
2. The innovation directing group also notes that the majority of the government's O&O investments should continue to go to so-called 'hard' O&O initiatives. The government can and should play a major role in rolling out new mobility concepts (test beds, infrastructure) but only on condition that these have the starting point of developing competencies and expertise of and for Flemish players.
3. The innovation directing group points out the urgency and urges that this policy framework should be implemented fast and action should also be taken ASAP. The competition in the automotive sector is global and other countries and regions have already finished their action plans and have even started to realise them.
4. The success of the approach will partly be determined by the strength of the flanking (economic) government policy, in keeping with the innovation policy. In this regard, the Automotive innovation directing group refers to the activities and discussions as part of the States General of Industry and the preparation of a White Paper "A New Industrial Policy for Flanders" (NIP).