Enterprise and Industry Competitiveness of the European Graphic Industry Prospects for the EU Graphic Industry to respond to its structural and technological challenges ERA Annual Meeting September 2009 Jean-Pierre Haber 1
Forest-based and related industries in the EU F-BI = Production: 360 billion Added value: 120 billion Woodworking Industries 35 billion A.D. 7.5% of the total value-added in the manufacturing industries 9% of the employment in the manufacturing industries 3 million employees More than 340.000 companies Printing 41 billion 120 000 companies 900 000 employees Pulp and Paper and Converting 43 billion 2
Communication on Innovative and Sustainable Forest-based Industries in the EU 27 February 2008 3 3
F-BI Action Plan: 19 actions Access to raw materials (8 actions): increase supply (afforestation, reforestation, SFM, mobilisation), recovered raw materials (paper and wood), fight illegal logging, pay attention to different uses of biomass Climate change and environmental policy (4 actions) : harvested wood products in climate change, sectoral agreements, industries with risk of carbon leakage, pulp and paper BREF Innovation and R&D (4 actions): Forest-based Industries in research programs of MS, Industries and the Commission, cluster concept, SMEs, cohesion policy in disadvantaged regions. Trade and cooperation (2 actions): access to raw materials and elimination of tariff and non-tariff barriers. Communication and Information (1 action): multinational networks to examine long-term changes in forest-based industries 4
F-BI Priority actions for 2009 taking into account the current EU policy priorities Innovation and SMEs (action 15): competitiveness of SMEs in the printing sector: graphic action plan Competitiveness of forest-based industries in the framework of climate change and energy (actions 2, 8, 9 and 11): biomass for RES and FBI, Energy Intensive Industries, harvested wood products Illegal logging (action 5): additional incentives for private sector measures. Competitiveness aspects of waste policy and recovered material for the Forest-based Industries (action 3): recovered paper 5
Developments in the framework of environmental policy for the printing sector 1. Emissions Trading and Energy Intensive Industries with risk of carbon leakage Implementation of ETS Directive can lead to EU industries to move to other countries while not achieving the reduction of global CO2 emissions. Directive foresees that sectors under risk of carbon leakage should be identified in order to give them 100% free allocations based on benchmarks. Some printing and publishing under ETS But, according to preliminary results, below the thresholds (not at risk of carbon leakage) 2. Harvested Wood Products (HWP) Carbon storage in HWP can extend the carbon sequestration benefits provided by forests. Their role in mitigating climate change should be developed. Printed paper products included in the accounting (i.e. books) The EU is willing to consider accounting for the storage of carbon in wood products. 6
Environmental developments 3. Review of IPPC Adopted in December 2007. New name: "Directive on Industrial Emissions" Currently under discussion in Council and Parliament Six related Directives on industrial emissions are merged with the IPPC Directive (including the Solvents Directive) Installations for the Surface treatment using organic solvents, in particular for printing, coating, waterproofing, painting, cleaning or impregnating, with a an organic solvent consumption capacity of more than 150 kg per hour or more than 200 tonnes per year are included. Main changes: - The possibility for MS authorities to deviate from the BREF documents and take local conditions into account is reduced to explicit derogations in "specific cases" - the scope of the IPPC Directive is extended to include combustion installations between 20 and 50 MW 7
A new split in printing technologies Printing technologies 88% 12% Conventional printing (with master image carrier) Digital printing (with masterless image carrier) Screen Offset Flexo Gravure Inkjet Magneto graphy Laser 12% 44% 17% 12% Others 3% Credit Cards Scratch Cards Security apps Newspapers Books Directories Catalogues Magazines Security printing Packaging Labels Magazines Catalogues Books Direct mail addressing Listings Forms Books Direct mail Customisation Listings Forms Books Direct mail Customisation Brochures Book covers Study 2007 Competitiveness of the European Graphic Industry 8
70 000 Added value, costs of work and investments Apparent labour productivity - VA per capita ECONOMY AND STRUCTURE OF THE CHAIN 60 000 50 000 40 000 30 000 20 000 10 000 0 UK Benelux Average Fr It De Sp Investment per capita (k ) 7 6 5 4 3 2 1 0 Benelux It Average UK Fr Sp De labour cost(k ) 50 3 economic factors can illustrate the relative divergences of economic structure and of performance: The productivity (added value per capita) The cost of the work The investments often associated to an evolution of capacities but also to the innovation 40 30 20 10 0 Fr Benelux UK Average De It Sp Source : Intergraf The evolution of the European Graphic Industry Publication year 2007 9
The Globalisation of Print Chinese Import penetration grows 75 Mio EUR in 1995 750 Mio EUR in 2007 POLAND PORTUGAL SWEDEN SLOVENIA SLOVAKIA AUSTRIA BELGIUM NETHERLANDS CYPRUS LUXEMBOURG ITALY LATVIA LITHUANIA IRELAND CZECH REPUBLIC GERMANY DENMARK ESTONIA HUNGARY SPAIN GREECE FINLAND FRANCE UNITED KINGDOM Study 2007 Competitiveness of the European Graphic Industry 10
Millions Imports of printed matter into selected European countries 1995-2006 (in EUR) 300 250 UNITED KINGDOM 200 150 UNITED KINGDOM 100 GERMANY GERMANY UNITED KINGDOM NETHERLANDS 50 GERMANY FRANCE SPAIN BELGIUM ITALY POLAND 0 POLAND 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Study 2007 Competitiveness of the European Graphic Industry 11
Categories of products affected by relocations Volume ordered Newspapers Printed trade materials Catalogues Children books Diaries Manuals of delocalized products Best Sellers books Magazines Books Short time limit Affected by relocations Long time limit Manufacturing time limit 12 Potentially affected by relocations
SWOT analyse of European Graphic Industry Strengths - Modern and efficient production tools - High quality products - Respect of environment Weaknesses - Average size too small - Overcapacity - Moderate international experience - Weak negotiation position Opportunities - Différentiation possible - Service-orientation grows - Multimédia communication Threats - China and Asian countries - Attraction of investments to low cost countries - Intense price war - R&D insufficient 13
Key points for understanding structural challenges Regulations considered as a current threats for competitiveness The lack of harmonization inside and outside the EU as a competition distortion factor Regulation as a competitive advantage in the future? Small sized, family owned and under capitalized enterprises Industrial overcapacities Profitability and financial structure are generally too weak to support substantial growth Industrial structure and economics Raw materials and machinery providers have a global position and could increase their control along the value chain Few economies of scale at the printers level Supply chain R&D issues doesn t seem to be determined by printers Technology in not the main driver for differentiation Technological choices could affect the relationships with customers and the way markets are approached Regulations Technology Challenges Clients & Products Growing concentration and globalization in most of the sectors Continuing pressure on prices New media sustaining the development of specific new markets and accelerating the transformation of the traditional markets Internationalization of majors customers benchmarking and increasing their pressures on their historic suppliers 14
Profile of the European Graphic Industry Sector which is dominated by small and micro companies Largely focussed on domestic market Dependant on trends in advertising Investments focus on equipment acquisition. R&D and other immaterial investments are more marginal Characterized by structural overcapacity Enormous pressure on prices Dependence on very large customers and suppliers Varying importance of foreign trade; deterioration of trade balance in most countries 15
Accompany the dynamic of the EU Graphic Industry Technological Development, Markets (Performance, Functionality, Applications) Internet Mobile TV Visions, Prognosis, Scenarios: Future of the Graphic Industry in 2 Decades Advertising Markets (global, continental, regional) Marketing Strategies Advertising Control, Media (Expenses, changes in media) Societal and social development (Information-, Communication- and User behaviour) OLED Radio Technological Development (Printing Technology) Digital printing Ink- Jet/Electrophotograph y Traditional Processes Printed Electronics RFID Effects/ Conclusions Print- and Media service providers tomorrow Product Requirements Online synergies Co-existence Print / Online Demographics Social Networks Virtual Worlds Security Prosperity User Requirements Appeal to all senses 16
Challenges of the EU Graphic Industry - Added value - No overinvestment Strategic Challenges Technological Challenges - Fundamental R&D - Innovating opening to multimedia International and European Challenges - Reduce distortion factors - Ensure a fair competition - Initiate niche markets a proactive communication to make graphic industry credible and attractive 17
Action plan for restoring the value chain of the graphic industry s products 1. Accompany the adaptation of the European printing industry to the global market challenges 2. Develop value added services to find a new growth basis 3. Invest in Human Resources and develop new skill for the industry 4. Stronger European reference within the industry 5. Coordinated increase in research and innovation efforts 6. Improving of the image and perception of the printing industry 18
Action plan for restoring the value chain of the graphic industry s products 1. Accompany the dynamic of the European printing industry in a global market a) Ensure a culture of partnership within the sector - encourage the formation of groups or alliances as a counterweight to suppliers, customers or agencies - develop partnership with the chain of complementary services (paper, publishing, advertising industry) - complementary strategies tailored to the size of the enterprise and the market being served: proximity or specialisation for small businesses and internationalisation or integration for the others - organize regular meetings of young leaders in print at European level - work with Enterprise Europe Network of the where possible 19
Graphic action plan 1. Accompanying the dynamic of the European printing industry in a global market b) Better direction of production costs, in particular: - find room for manoeuvre to make a difference in the enterprises industrial organisation: flexibility, customer proximity, tool optimisation - targeted investment without excess capacity - save energy and raw materials - promote best practice in management and operational performance (data base) 20
Graphic action plan 1. Accompanying the dynamic of the European printing industry in a global market c. Monitor the economic flows with CHINA - monitor border control in order to assess if it can be guaranteed that printed products imported into the EU satisfy European standards and legislation - ensure the work of market surveillance authorities is carried out at national level in order to make sure that no toxic components are contained in imported printed products - follow-up of the project with Vienna University on the examination of printed products imported from China - better information on social and tax issues in China - apply legislation to fight against counterfeits and make sure that European manufacturers ensure their copyright in Asia. 21
Graphic action plan 1. Accompanying the adaptation of the European printing industry in a global market d) Economic Forecast report on the economical and technical development of the graphical sector, including forecast for the 2 next years 22
Graphic action plan 2. Developing services with strong added value for customers - adopt a service-oriented approach to meet customers needs (management service brokers) - integrate new marketing, design, sales management, strategic planning: print management - find new sources of growth, especially with electronic documents, etc. 23
Graphic action plan 3. Invest in Human Resources and develop new skill for the printing industry a) follow-up of the European Study launched by DG Employment on future skills needed in the printing industry b) ensure the offer of appropriate courses for printers - mapping of graphic schools - available courses for managers, engineers and technicians c) invest in human resources for the future: schools and universities to be more focused on printed related subjects d) promote social dialogue and cooperation with all stakeholders at European and National level 24
Graphic action plan 4. Stronger European reference standardisation and harmonisation a) exploiting the profession s standardisation efforts, particularly in the areas of health, safety, security and environment - promotion of a innovating printing standards compliant - discuss the need of European charter of printed products b) intensify actions towards greater harmonisation of rules within the EU and towards reducing distortion factors 25
Graphic action plan 5. Coordinated increase in research and innovation efforts a) Research and development - Close association with the FBI technological platform as part of the 7th framework programme - Foster a network of European researchers with Iarigai b) Innovation - Develop innovation linked to Internet technology, market strategy and new societal model - Develop less energy intensive equipment - Develop activities on carbon footprint 26
6. Improving of the image and perception of the printing industry a) Information Graphic action plan Information on importance of different media for advertising Provide info on future markets and technologies such as development of e-paper and the global internet development look at educational programmes at national level and involving publishers and other related associations, informing the young generation that printing is a future oriented job b) Communication Co-operation with other actors in the print value chain Proximity actions, local economical animation Promotion campaign Events 27
F-BI: a Global communication strategy Attractiveness Recognition Give importance to innovation Sustainable management: CSR practices Employment Targets Enterprises Media Institutions Civil society Citizens Young people Basic actions Increasing proximity - partnership school-company - local economic animation Best practices disseminated Permanent posting Symphony Promotion campaign Framework support Label «opportunities for generations» Events 28
Thank you for your attention! http://ec.europa.eu/enterprise/forest_based/index_en.html 29