Industrial Policy Network18 April 2013, Copenhagen

Presentations and Minutes

Participants

Network members:

Jens Peter Christensen, Fin Krogh Jørgensen, Mika Kärkkäinen, Heidi Husari, Henrik Haapajärvi, Kari Mäkelä, Tone Tønnessen, Ola Asplund, Emma Tjärnback, Conny Nilsson, Jens Bundvad

External speakers:

Pernille Hagedorn Rasmussen, IDA

Peter Roulund, Amager Ressource Center

3

APPROVAL OF AGENDA

4

MINUTES IP NETWORK 31 JANUARY 2013

5

CURRENT ECONOMIC AND POLITICAL SITUATION

Manufacturing Production2005=100, OECD

JapanUnited States

Korea

GreeceSpain

LuxembourgItaly

FranceCanadaPortugalSweden

United KingdomFinland

DenmarkBelgium (dec 12)

NetherlandsIreland

GermanyHungary

MexicoNorway

Czech RepublicAustriaTurkeyPoland

Slovak Republic

0 20 40 60 80 100 120 140 160 180 200

Jan-2013

Jan-2011

Harmonised employment OECD - February 2013

Norway (Dec)AustriaIceland

GermanyLuxembourgNetherlands

Czech RepublicDenmarkUK (Dec)BelgiumFinland

SwedenSlovenia

Estonia (Jan)PolandFrance

EUHungary (Jan)

ItalyEuro Area

IrelandSlovak Republic

PortugalSpain

Greece (Dec)

0.0 5.0 10.0 15.0 20.0 25.0 30.0

Growth – September 2013Nordea

2010 2011 2012E 2013E 2014E

-1

0

1

2

3

4

5

6

7

DenmarkFinlandNorwaySwedenGermanyEuro-area

Growth – March 2013Nordea

2010 2011 2012 2013E 2014E

-1

0

1

2

3

4

5

6

7

DenmarkFinlandNorwaySwedenGermanyEuro

Unemployment Eurozone and USOECD

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

2

4

6

8

10

12

14

United States iEuro -15 countries

Interest ratesNordea

18.03.13 18.06.13 31.12.13 30.06.14 31.12.14

US 0.25 0.25 0.25 0.25 0.25

Japan 0.10 0.10 0.10 0.10 0.10

Euro Area 0.75 0.75 0.75 0.75 1.00

Denmark 0.30 0.30 0.50 0.60 1.00

Sweden 1.00 1.00 1.00 1.25 1.50

Norway 1.50 1.50 1.50 1.75 2.00

UK 0.50 0.50 0.50 0.50 0.50

Switzerland 0 0 0 0 0

Poland 3.25 3.25 3.25 4.50 4.50

Russia 8.25 8.25 8.00 8.00 8.00

China 6.00 6.00 6.25 6.50 6.50

India 7.75 7.75 8.00 8.00 8.00

Brazil 7.25 7.50 8.00 8.25 10.50

Nordic countries are safe havensNordea

13

NATIONAL SITUATION

Finland

Shift in government paradigm away from supporting industry to supporting all.

Real wage in´creaselast year 0.8

Exports 4,3 bill euro – decreasing – stagnating due to loss of Nokia production facilities

Exports and imports same level

GDP decreased 0,5 q to q last month 2012

Consumer confidence 10,2 ( long term average is 12,5)

Chemical industry has been growing (mainly oil products) – but may be stagnating

Metal sectors – except mechanical engineering is not doing well.

ICT UIL no decrease in employment of members

Tax cuts speculated on company taxation.

Denmark

Situation much the same as in other countries

Jobless growth – problem for centre left government.

Now negotiationg in parliament a growth plan

Proposal to lower the corporate tax to Swedish levels. Also looking at energy taxation.

Partly financed by reduced student aid and changes in social security

Lowering taxes on beer and alcohol.

Aimed investments for certain industries

Infrastructure investmentsNo unemployed construction engineer

Tax deduction for people hiring people

Sweden

Central bargaining round 3 years 6,8%Part time pensionsTopping up parental leave from companies

Small signs of better times in companies

Uemeployment rate still high and increasingMaybe slow fall in 2014.Special problems with long time unemployment

Governmnt: economy will only really improve in 2015Bringing forward infrastructure investmentIncreasing education places – but not as many as they took away

Leading economists are now speaking for expansive monetary policy

Currency problem – for paper (warnings of 1500 people 7-8%)

Conflict between monetary and finance policy

Norway

Economic situation is overall positive

Activity goals are stagnating since last year.

Expectations for growth has been adjusted downwards.

Attempts to curb wage growth.2012 3% real wage increase – more than productivity can account for

Paper industry is in trouble. Next closure of largest unit (accounts for 25% of all Norwegian forestry)

Company taxation

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Netherlands 34,5 31,5 29,6 25,5 25,5 25,5 25,5 25 25 25

Ireland 12,5 12,5 12,5 12,5 12,5 12,5 12,5 12,5 12,5 12,5

UK 30 30 30 30 28 28 28 26 24 24

France 34,33 33,83 33,33 33,33 33,33 33,33 33,33 33,33 33,33 33,33

Sweden 28 28 28 28 28 26,3 26,3 26,3 26,3 22

Germany 38,29 38,31 38,34 38,36 29,51 29,44 29,41 29,37 29,48 29,48

Finland 29 26 26 26 26 26 26 26 24,5 24,5

Denmark 30 28 28 28 25 25 25 25 25 25

Estonia   24 23 22 21 21 21 21 21 21

EU-27, aritmeettinen keskiarvo

28,03 25,34 25,01 24,22 23,22 23,22 23,04 22,80 22,60 22,44

19

INTRODUCTION ON NATIONAL INDUSTRIAL POLICY INITIATIVES

20

NORWEGIAN INITIATIVES ON COMMUNITY FUND.

Community Fund - Norway

Initiative on state ownershipFellesforbundet’s initiativeNow supported ny NITO as well

Aim is balanced ownership situationState owned companies have 40% of shares in Oslo Stock exchange (60% of thest is Station)Foreign owned companies almost doubled in number since 2003Limited access to Private Capital in Norway.

New toolExisting investment in new companiesSupplement with fund for more maturebusinesses for saleFinanced by sale of existing, non strategic, commercial companies owned today to buy strategic companies

SocDem congress and LO congress (beginning of May)

Norwegian Community Fund

Debate

Finnish discussion on state ownership.

Finnish fund Solidium does not interfere with company running

Debate on possibly more ownership and more active guidelines

New Finnish budget start up money for SME’s

Sweden: No such debate, but willto keep Vattenfall and LKAB as state owned.

We should not be naive on chinese state capitalist investments

Will initiatives like the the Community fund be one answer on the question of short term profitability versus the desirable longer term view

23

IF METALL INDUSTRIAL POLICY INITIATIVES

Industrial policyIF Metall

IN Industripolitiska nätvekKöpenhamn 18 April 2013

Challenges for Swedish industry

InnovationInnovation is essential to industry competitiveness

Rapid growth in global R&D expenditures

Industrial R&D decreasing in Sweden

“Swedish paradox”

Innovative SMEs

IndustrinSysselsatta

CompetenceWeak interest among young people for tech-careers

Education investments in companies

Labour market matching

How are Swedish companies doing?

0%

2%

4%

6%

8%

10%

12%

14%

16%

0

10

20

30

40

50

60

70

80

2006 2007 2008 2009 2010 2011 2012

industrins investeringar, mdr kr, fasta priser investeringar som andel av produktion

0

2

4

6

8

10

12

14

16

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Medel Median

Profits

Produktion

Produktivitet Investments

-12-10

-8-6-4-202468

1012141618202224

Industri Tjänstebranscher

Production

Productivity

Wen everyone follows the same route:

Res

earc

h &

Innov

atio

n

Clusters

Production efficiency

How can we build sustaniable competitiveness?

AdvantageSweden

• Raw materials

• Labour Cost

• Economics of Scale

• Market Contact

• Quality

• Novel Technology

• Venture Capital

• Economic

• Transparency

• Infrastructure

• Education

• Social Welfare

What is our uniqueness?

Innovation, Education, VC, Energy, Infrastructure, etc.

Infrastructure, Education, etc.

Strategy, Education, Works organisation, etc.

Dialogogue w. Gov., Industry Day, etc

Industry, Government, Academia, Institutes, etc.

Research policy, Education policy, etc.

Fields of interest ARENAS:

National policymaking/lobbying

Local/regional cooperation

Inside Companies

PARTNERS

Industry Council (Industrirådet)

Other organisations

Social Democratic Party

Research& Innovation programmes

Venture Capital,

Infrastructure, Education, etc.

Strategy, Education, Works organisation, etc.

Vocational Training - Teknikcollege

Education Schemes for adapting to Structural Change

Apprenticeship Agreement

Integrated view on Productivity, Organisation & Works Environment

Three Major Themes

RESEARCH & INNOVATION

EDUCATION & COMPETENCE

WORKS ORGANISATION

EducationTeknikcollege

Lifelong Learning

Research & InnovationInnovation Infrastructure

Industry Research Institutes

Mobility

Innovation Purchase

DialogueMinistry of Education -

Ministry of Enterprise - Innovation Strategy

Ministry of Employment – Labour market policy

Industry DayAnnual Arrangement

IndustriavtaletIndustry AgreementSince 1997, revised 2011

12 Employers Associations5 Trade Unions

Bargaining Framework

Industrial Development

INDUSTRIRÅDET

Research&Innovation

Education&Competence

Energy&Environment

Gender Equality

Labour Market

Economic Board

Impartial Chairmen

Industry Day

Two systems working together

Academicpriorities

Commercialpriorities

Jointpriorities

Ingen känd

tillämpning

Möjlig framtida

tillämpning

Trolig framtida

tillämpning

Nära kommersiell

tillämpning

!Goverment~30 Bn

Industry~80 Bn

• Industrial Research Institutes

• Strategic Innovation Programs

• Innovative Public Purchasing

• Innovation infrastructure

• Mobility between Industry – Academia

• EU-funding

Key Issues for Innovation System

Research and Innovation for SustainabilityAutomation och industriella processer Bioraffinaderi, bioenergi och nya biomaterial Samhällsbyggnad e-Hälsa Energi ICT Internet och telekom Life Science Livskvalitet Massa, papper och förpackning Materialvetenskap Mobilitet Risk och säkerhet Produkt- och produktionsteknik Transport

Goverment

Industrial Research Institutes

Employee education levelManufacturing industry, 1993-2011

Källa: SCB 2011

Upper secondaryMax 2 years

Primary school Upper secondary3 years

Academic- 3 years

Academic> 3 years

Based on the concept of ”Lean Production”Adopted to Swedish context:

”Where do we stand, five years from now?”

Flagship InitiativeFactory Work of the Future

I. Companies sharing experience

II. Extracting learning to other companies

ISSUES:

Organization

Factory Worker of the Future

Competences

Tools for Competence

Automation: Man-Machine

Managing knowledge-based Industrial production

IF-Metall - Debate

Is the Nordic production efficiency – which is based on socual capital – under threat

Does clusters happen by themselves (nano-cluster – Finland)

Clusters cannot be made – but they can be strengthened

What are unions’ role in cluster formation

Qualified demand

Develop Nordic Prodction cultureTheme for NetworkPart of the public debatePossible project: are we really as good as we think

Research to market

Are Nordic business managers qualified enough?

37

SUSTAINABLE ENERGY IN DENMARK

Peter Roulund, Head of Secretariat, Amager Ressource Center

IndustriAll SWP

Work Programme 2013-2016

European Parliament and council activities

Industrial Policy Opinion of CCMI

ETS and Climate policy

Reach

Next IPC-meeting

Summer school

Discussion on IA-E working program

Active labour market policiesShould we use bilateral contacts

We should focus on four main action points

Several specific points for changesSectoral policies – EU policies and mention coordinationFight for the sustainable modernisation ways of EuropesFight for equitable European introduction of environmental measures

Question marks on a couple of points European OHS standardsWhat guidelines on demographic guidelines

Reach

Proposal on the table for an IA-E response to commission

Deadline for comments 7 May 2013

Circulated to the IN Work Environment Network and Industrial Policy Network for comments

If there are comments we will try to formulate joint Nordic position

IPC – premeeting

15 May 9.00 Batiment Jean Monnet

42

EU-QUESTIONS

43

EURO CRISIS

Real GDP developmentOECD

2009 2010 2011 2012 2013 2014

-6.0

-4.0

-2.0

0.0

2.0

4.0

Japan

United States

Euro area

Total OECD

Long term interest ratesECB

Mar

/08

May

/08

Jul/0

8

Sep/0

8

Nov/0

8

Jan/

09

Mar

/09

May

/09

Jul/0

9

Sep/0

9

Nov/0

9

Jan/

10

Mar

/10

May

/10

Jul/1

0

Sep/1

0

Nov/1

0

Jan/

11

Mar

/11

May

/11

Jul/1

1

Sep/1

1

Nov/1

1

Jan/

12

Mar

/12

May

/12

Jul/1

2

Sep/1

2

Nov/1

2

Jan/

13

Mar

/13

0

5

10

15

20

25

30

35

Germany

Spain

Finland

France

Greece

Ireland

Italy

Portugal

Denmark

Latvia

Sweden

Unit labour costsNordea

Cyprus

Crisis partly a run-off from Greek haircutCypriot bank loans to Greek borrowers worth 160% of GDP

First solutionTargeting Russian accountsDid not exempt accounts below 100.000 €

Second solutionMerging banksTax rises and privatisations40% of accounts above 100.000 transferred to shares.Losses for larger accounts – also Russian

Score on a scale from 0-10:Technical value: 5Artistic value: 0

The situation remains uncertain

Cyprus

And...

Austerity vs Growth – ETUC 2010

Austerity

Austerity on a European scale, will bring the economy close to economic stagnation

Austerity will undermine Europe’s industrial basis. International business relocate industrial investment Dynamic demand emerging economies

Austerity will kill potential short and long term growth Persistent unemployment, in combination with precarious work practices, will downgrade human capital. Persistent economic depression will harm the incentive to invest Productivity and innovation will suffer as a result of this.

Austerity will prolong the sovereign debt crisis.Impact of the cuts on the deficit will be offset by the economy’s depression: High social spending – Low tax revenues

New debt added to a stagnating nominal GDP, the ratio of public debt to GDP will continue to shoot up.

Austerity vs Growth – ETUC 2010

Austerity

Securing economic recovery and transforming recovery into self sustaining growth should come first.

Falling deficits are to follow afterwards and mainly automatically through renewal of economic dynamism

Stimulus will Boost economic activity and jobs, thereby preventing cyclical unemployment becoming Provide the opportunity to invest in infrastructure, networks, research and development and strengthen Europe’s industrial basis

a straightforward fiscal stimulus in Europe is impossible at national level

Europe as political actor – not schoolmaster

Persistent stimulus Investing in the European economyTransnational electricity grids, developing green energy, transnational infrastructure

Austerity vs Growth – ETUC 2010

Public debt as percentage of GDP

Euro Area GDPNordea

Commission predictions of Greek growth

What comes first?

Markets will have to understand that democratic decisions come first. Market receptions later.

Steffen Kampeter, state secretary German ministry of finances on Hardtalk

55

GREEN PAPER "A 2030 FRAMEWORK FOR CLIMATE AND ENERGY POLICIES"

Green Paper -2030 framework for energy policy

Pernille Hagedorn-Rasmussen

IDA

2030…why start now?

• Energy Investments are long term• Long term planning gives

companies clear guidance• UN negotiations are expected to

close an agreement by the end of 2015

The green paper states 4 important facts

1. To get EU on the track of 80-95% by 2050 must the target be 40% reduction in 2030

2. High shares of renewables, energy efficiency and smarter energy is necessary to reach the 2050 targets

3. The energy roadmap 2050 –EU shows that 30% renewable is needed to reach the long term targets

4. Significant investment is needed to modernize the European energy system – decarbonizing or not

22 questions from the Commission

• A general question• Targets • Instruments • Competitiveness and security of

supply• Capacity and distributional aspects

The consultation will be open for until

2 July.

Relevant Q for this group (a)

1. Which lessons from the 2020 framework and the present state of the EU energy system are most important when designing policies for 2030?

2. Which targets for 2030 would be most effective in driving the objectives of climate and energy policy? At what level should they apply (EU, Member States, or sectoral), and to what extent should they be legally binding?

3. How can targets reflect better the economic viability and the changing degree of maturity of technologies in the 2030 framework?

4. How should progress be assessed for other aspects of EU energy policy, such as security of supply, which may not be captured by the headline targets?

Relevant Q for this group (b)

• Are changes necessary to other policy instruments and how they interact with one another, including between the EU and national levels?

• Which measures could be envisaged to make further energy savings most cost-effectively?

• How can EU research and innovation policies best support the achievement of the 2030 framework?

• Which elements of the framework for climate and energy policies could be strengthened to better promote job creation, growth and competitiveness?

Relevant Q for this group (c)

• What evidence is there for carbon leakage under the current framework and can this be quantified? How could this problem be addressed in the 2030 framework?

• How can the EU increase the innovation capacity of manufacturing industry?• How can the EU best exploit the development of indigenous conventional and

unconventional energy sources within the EU to contribute to reduced energy prices and import dependency?

• Are new financing instruments or arrangements required to support the new 2030 framework?

Greenbook - discussion

We should contribute to European response

If that response is not good enough we can send in our own comments

Henrik has undertaken to make a draft -15 June

Emissions Trading System – Back-loading of certificates

Backloading

EP reject backloading

Environmental Council (18 June) can choose to stall – German swing vote

Election - German and European – makes things murky

What is the Nordic positionETS system in generalBackloading

Different opinions:Stability of structure of the systemStability of the effect of the system

Status on communication on Industrial Policy October 2012

Report under way from Industrial policy committee of the Parliament, Reinhard Bütikofer (Green)

HearingsNGO’sIndustryUnions

Support from everybody…

Crisis and industry – short report from working group

Report from first meeting of working group

Options for actions

Crisis and Industry – discussion 1

On Euro-crisisHenrik:

No Euro-bondsNo bail-out system for countries or for the banksSolidarity through EU budgetCurrency union must be supplemented by banking unionEurobonds belongs in a finance union

On InnovationOla and Emma

Rather than prototyping we should be building demonstration unitsProductivity increases also part of research to marketSkills in knowing what you are buying - innovation inprocurement rules

On Stimulating companies innovation

Subsidising companies who employ developers?

Innovatons to the market

Investments in innovations should bring jobs

We cannot target public procurement on

Contribute to European response

If that is not good enough we can send in out own comments

Henrik has undertaken to make a draft -15 June

Crisis and Industry – discussion 2

On Stimulating companies innovationSubsidising companies who employ developers?Innovatons to the marketInvestments in innovations should bring jobsWe cannot target public procurement on innovative sectors due to internal market.

Working program for the IP network 2013-15

Out of the Crisis

Turn around for Nordic industry – no more jobless growth

Develop Nordic Prodction cultureTheme for NetworkPart of the public debateSocial CapitalPossible project: are we really as good as we think

Sustainability

Innovationresearch to market

Traditional industry as vehicle of innovation

Role of qualified demandLong term view of investments

Industry linked services

SME’s and the financisal system

Energy policy

Globalisation

Support for social dialogue – compepetiveness

IA-E – IPC

Study trip IP network

Political discussions

How will this help the network in its work?

What do we do?

Small working group combine Heidi’s and Tone’s proposal

Ready for Pre-meeting IPC in Luxemburg

72

TRAVELLERS’ TALES

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AOB