Vorstand EMB Mechanical engineering 30. september 2010 to 01.10.2010 Kerstin Warneke, FB Wirtschaft – Technologie – Umwelt, Maschinenbau Mechanical engineering

Vorstand

EMB Mechanical engineering 30. september 2010 to 01.10.2010

Kerstin Warneke, FB Wirtschaft – Technologie – Umwelt, Maschinenbau

Mechanical engineering in the EU 27The Crisis and Challenges of the future

Sources:

• IG Metall, FB Wirtschaft - Technologie – Umwelt

• Statistisches Bundesamt (Destatis)

• Eurostat

• Ifo-Institut (Ifo) Stand: 30.09.2010

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FB Wirtschaft-Technologie-Umwelt, Kerstin Warneke, Tel. 069-6693-2341 Folie 2

Background information about mechanical engineering

The crisis in 2009

The Pick-up in 2010

Future beyond 2011

Contents

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Background

information

about mechanical engineering in the EU

Part 1

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Part 0: Background information about mechanical engineering

two basic characteristics of mechanical engineering:

concentrated in the EU 27 in • Germany, • Italy, • France, • United Kingdom,• Spain

heterogenous branche• many different products• large-scale production in many cases not paying off• many small enterprises

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0,00,00,10,10,20,30,30,4

0,50,60,7

1,31,62,02,02,12,1

3,43,43,8

4,79,1

9,615,8

36,9

0,4

0,0CyprusLatvia

EstoniaLithania

LuxembourgBulgariaGreece

SlovakiaRomaniaSlovenia

IrelandPortugalHungaryNorway

Czech RepublicBelgium

PolandDenmark

FinlandAustria

NetherlandsSweden

SpainUnited Kingd.

FranceItaly

Germany

Source: Eurostat

Distribution of Gross Value Added in mechanical engineering in the EU 27 in 2007

fraction, figures as percentage

Part 1: Background information

Mechanical engineering is concentrated in the EU in Germany, Italy, F, UK, E

76 %

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Mechanical engineering consists of many small branches

Subbranches of mechanical engineering in the

EU 27gross value added in 2007, fraction as percentage

2,53,2

4,0

4,9

5,4

5,4

5,6

6,2

7,37,6

8,9

10,4

10,8

11,30,8

1,4

1,31,11,8

Manufacture of non-electric domestic appliances

Manufacture of furnaces and furnace burners

Manufacture of machinery for paper and paperboardproduction

Manufacture of machinery for metallurgy

Manufacture of machinery for textile, apparel andleather production

Manufacture of weapons and ammunition

Manufacture of machinery for food, beverage andtobacco processing

Manufacture of engines and turbines, except aircraft,vehicle and cycle engines

Manufacture of agricultural and forestry machinery

Manufacture of taps and valves

Manufacture of electric domestic appliances

Manufacture of machinery for mining, quarrying andconstruction

Manufacture of bearings, gears, gearing and drivingelements

Manufacture of pumps and compressors

Manufacture of non-domestic cooling and ventilationequipment

Manufacture of machine-tools (split into DK2941,DK2942 and DK2943 in NACE Rev.1.1)

Manufacture of lifting and handling equipment

Manufacture of other general purpose machineryn.e.c.

Manufacture of other special purpose machineryn.e.c.Quelle: Eurostat

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SME are typical for mechanical engineering

Number of Enterprises in mechanical engineering as percentage in 1997

86

14

96

5

92

8

90

10

97

3

up to 250 employees over 250 employees

Germany Italy France UK Spain

Source: Eurostat

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Policy for SME

The crisis in 2009

The Pick-up in 2010

Future beyond 2011

Contents

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The crisis in 2009

The Pick-up in 2010

Future beyond 2011

Contents

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Year 2009

worldwide financial and economic crisis• worldwide stop of investmens

mechanical engineering:

worldwide simultanous break-down of turnover and production

time-delayed decrease of employment

Part 2

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Worldwide GDP:The worldwide financial and economic crisis of 2009

Real growth of worldwide productionchange rate against previous year in percent

4,7

2,2

2,9

3,6

4,94,5

5,1 5,2

3,0

-0,6

00 01 02 03 04 05 06 07 08 09

Source: IWF, july 2010

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Effects on mechanical engineering in the EU 27

Mechanical Engineering 2008 2009

new order - 5,3 % - 30,3 %

production + 1,3 % - 26,0 %

turnover + 21,3% - 24,0 %

employment + 2,2% - 5,1 %

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Production of mechanical engineering in the EU 27 index, seasonally adjusted, 2005 = 100

80

85

90

95

100

105

110

115

120

125

20

00

Q1

20

01

Q1

20

02

Q1

20

03

Q1

20

04

Q1

20

05

Q1

20

06

Q1

20

07

Q1

20

08

Q1

20

09

Q1

Source: Eurostat

Production of mechanical engineering

peak to low: decrease -30%

122,3 (1. Qt. 08)

108,3 (2006)

-30%

85,6 (2. Qt. 09)

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all branches of mechanical engineering

Downturn hits … (change rates yoy)

all countries of the EU 27

-13,8

-17,5

-19,8

-21,2

-21,5

-22,6

-22,7

-26,0

-28,7

-30,7

-31,8

-33,1

-33,3

-34,1

-36,7

-36,9

-54,2

-13,6

-27,4

machinery for food, beverage and tobaccoprocessing

machinery for metallurgy

other general-purpose machinery n.e.c.

other taps and valves

other pumps and compressors

engines and turbines, except aircraft, vehicleand cycle engines

ovens, furnaces and furnace burners

non-domestic cooling and ventilationequipment

machinery and equipment

plastic and rubber machinery

other special-purpose machinery n.e.c.

lifting and handling equipment

agricultural and forestry machinery

bearings, gears, gearing and drivingelements

machinery for textile, apparel and leatherproduction

metal forming machinery and machine tools

fluid power equipment

machinery for mining, quarrying andconstruction

office machinery and equipment

Production in the branches of mechanical engineeringchange rate 2009 against 2008 as percentage

-1,6-3,7-3,9

-5,4-5,6

-9,6-10,4

-11,0-11,1-11,3

-12,6-13,4

-14,8-15,1-15,5

-16,7-18,6

-20,9-21,0

-21,5-22,2-22,7

-24,3-28,2

-30,7-35,9

-37,6-46,6

TurkeyCroatiaPoland

SloveniaItaly

MaltaSlovakia

LuxembourgHungary

FranceRomania

LatviaEstoniaAustriaCyprusFinland

Czech RepublicBulgaria

IrelandPortugalGreece

Euro areaNetherlands

SpainUK

SwedenDenmarkGermanyLithuania

Source: Eurostat

Downturn of Production in mechanical engineeringchange 2009 against 2008 in percentage

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Employment in mechanical engineering in the EU 27 index, seasonally adjusted , 2005 = 100

90

92

94

96

98

100

102

104

106

10820

07Q

3

2007

Q4

2008

Q1

2008

Q2

2008

Q3

2008

Q4

2009

Q1

2009

Q2

2009

Q3

2009

Q4

2010

Q1

2010

Q2

Source: Eurostat

Employment in mechanical engineering:

Decrease of production causes fall of employment

- 11 % (01/2010 to (03/2008)

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The crisis in 2009

The Pick- up in 2010

Future beyond 2011

Contents

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2010

turnover and production• strong growth but

• speed of growth goes down because recovery of europe mainly based on exports recovery in USA looses pace recovery in China looses pace, too

• still lower level than before crisis• growth not everywhere (country, sector)

employment• decrease

Part 3

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Worldwide Economic Activity (of 41 countries): slowdown

Source: Institut für Weltwirtschaft (IfW)

Real GDP

Climate-Index (right scale)

percentage index

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GDP: growing worldwide economy

Real growth of worldwide productionchange rate against previous year in percent

4,7

2,2

2,9

3,6

4,9

4,5

5,1 5,2

3,0

-0,6

4,64,3

00 01 02 03 04 05 06 07 08 09 10 11


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GDP: Biggest growth from countries like

China and India

Strongest growth in emerging marketschange rate against previous year in percent

-4,1

1,0 1,3

-2,4

3,32,9

-5,2

2,41,8

-3,2

2,6 2,4 2,5

6,86,4

2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011


Euro area USA Japan Industrial Emerging countries markets

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Effects on mechanical engineering in the EU 27

2008 2009 1. half 2010

new order - 5,3 % - 30,3 % + 25,0 %

production + 1,3 % - 26,0 % -

turnover + 21,3% - 24,0 % +3,8 %

employment + 2,2% - 5,1 % -10,7%

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Development of growth of New order is gaining speed quarter by quarter despite risks

New order in mechanical engineering in the EU 27 index, seasonally adjusted , 2005 = 100

50

60

70

80

90

100

110

120

130

140

150

20

00

M0

1

20

01

M0

1

20

02

M0

1

20

03

M0

1

20

04

M0

1

20

05

M0

1

20

06

M0

1

20

07

M0

1

20

08

M0

1

20

09

M0

1

20

10

M0

1

Source: Eurostat

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-0,5

-0,2

0,4

1,1

5,6

5,8

6,4

6,5

7,6

8,8

9,3

12,0

13,8

14,2

14,6

15,4

17,4

24,8

2,2

7,0

-3,5Greece

France

Ireland

Turkey

Poland

Czech Republic

Spain

Bulgaria

Latvia

Austria

Euro area

Netherlands

Germany

EU 27

Romania

Sweden

Estonia

Lithuania

Hungary

United Kingdom

Italy

New order in mechanical engineeringchange rate second quarter 2010 against first quarter 2010 as percentage

Source: EurostatRemark: For Italy 1. quarter of 2010 against 4. quarter of 2009

Development of growth of New order by country (02/2010) vs. (01/2010) nearly everywhere improvement

for Italy change rate 01/2010 against (04/2009)

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Production of mechanical engineering in the EU 27 index, seasonally adjusted, 2005 = 100

80

85

90

95

100

105

110

115

120

125

20

00

Q1

20

01

Q1

20

02

Q1

20

03

Q1

20

04

Q1

20

05

Q1

20

06

Q1

20

07

Q1

20

08

Q1

20

09

Q1

20

10

Q1

Source: Eurostat

Production of mechanical engineering: growing quickly (yoy), already +8,5% compared to crises,

but still low level

122,3 (1. Qt. 08)

-24%

92,5 (2. Qt. 10)

84,4 + 8,5%(3. Qt. 09)

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Development of growth of Production:growing quarterly, low speed

Growth of Production in mechanical engineering EU 27

seasonally adjusted, change rate as percentage against one quarter before

-20

-15

-10

-5

0

5

1020

07Q

3

2007

Q4

2008

Q1

2008

Q2

2008

Q3

2008

Q4

2009

Q1

2009

Q2

2009

Q3

2009

Q4

2010

Q1

2010

Q2

Source: Eurostat

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Productionis growing in comparison to last year

in many branches of mechanical engineering

-2,8

-2,4

-1,4

1,6

1,7

4,4

8,2

9,2

9,8

10,0

13,6

18,5

19,1

25,0

29,7

36,5

62,7

-5,0

9,3

ovens, furnaces and furnace burners

non-domestic cooling and ventilationequipment

metal forming machinery and machine tools

lifting and handling equipment

machinery for food, beverage and tobaccoprocessing

machinery for metallurgy

other general-purpose machinery n.e.c.

machinery and equipment

other special-purpose machinery n.e.c.

agricultural and forestry machinery

other taps and valves

engines and turbines, except aircraft, vehicleand cycle engines

bearings, gears, gearing and drivingelements

other pumps and compressors

office machinery and equipment (exceptcomputers and peripheral equipment)

machinery for mining, quarrying andconstruction

plastic and rubber machinery

fluid power equipment

textile, apparel and leather production

Production in the branches of mechanical engineeringchange rate 2. quarter 2010 against 2 quarter 2009 as percentage

at least in some important countries (Germany, Italy, UK)

Production in mechanical engineeringchange rate of the first half of 2010 against the first half of 2009 in

percentage

10,0

8,0

1,5

-0,8

-3,1

-9,9

UK

Italy

Germany

France

Poland

Spain

Source: Eurostat

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Employment in mechanical engineering in the EU 272005=100

111,6

108,6

106,2107,4

105,8

103,5

100,9100,0

100,8

103,6

105,9

100,6 100,9

94,6

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009Q2 2010Q2

Source: Eurostat

Employment of mechanical engineering is still going down (yoy)

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Growth of volume of working time in mechanical engineering

EU 27 seasonally adjusted, change rate as percentage against one quarter before

-6

-5

-4

-3

-2

-1

0

1

2

2007

Q3

2007

Q4

2008

Q1

2008

Q2

2008

Q3

2008

Q4

2009

Q1

2009

Q2

2009

Q3

2009

Q4

2010

Q1

2010

Q2

Source: Eurostat

Growth of employment in mechanical engineering EU 27

seasonally adjusted, change rate as percentage against one quarter before

-6

-5

-4

-3

-2

-1

0

1

2

200

7Q3

200

7Q4

200

8Q1

200

8Q2

200

8Q3

200

8Q4

200

9Q1

200

9Q2

200

9Q3

200

9Q4

201

0Q1

201

0Q2

Source: Eurostat

Development of growthVolume of working time and employment

negative development comes to an end

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Future beyond 2011

Part 4

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1. Change of climate:

2. Globalization:

4.1 Growing interdisziplinarity

4. Individualization of markets

3. Demographic change

1.3 Rising costs for resources and factors of production

2.1 competition with low cost countries

3.1 Lack of skilled workers

3.2 other goods are demanded

2.2 presence in foreign countries

2.3 developing countries grow with greater force than „old markets“

4.2 Shorter processing times

5. Reduction of public debts mean to less demand which means more competition, too

1.1 Other products 1.2 Other ways of production

Megatrends, that effect mechanical engineering

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Examples how employers may react as a result of the megatrends

2. Liqudity (more and more flexible)

3. Cluster

Cooperations1.1 lower wages

1. cut costs

5. Improve Public Appearance of enterprise

2.1 innovation

3.1 to gain skilled workers

3.2 spend money on workers

2.2 service abroad1.2 push more tasks on employees

1.3 longer working time and more flexible working time

1.4 more temporary work

1.5 employment of workers of low cost countries

4. tax reduction for enterprises

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What the megatrends mean for employees(and what this means unions)

1. higher flexibility:

2. higher physical fitness

4.1 job security 4. less security

3. higher productivity

1.3 knowledge is at every time up to date

1.4 interdisciplinary knowledge

1.5 to pay for the constant eduction on ones own

2.1 to be able to work longer

4.2 income security

5. higher pressure on wages because of low-cost competition

1.1 time flexibility1.2 geographic mobility

- New Working time modells, - against temporary employment, -minimum wages,

- save social standards, - make employers pay for education, …

Examples for Tasks for unions

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Reasons for a special

policy for SME

Part 5

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outside the enterprise

Characteristics of SME...

inside the enterprise

higher

local

dependency

(not typical for

mechanical

engineering)

can‘t survive a price competition

against large scale produciton

• worse access to qualified staff

• no / few personnel policy

• worse employee participation than in GU

• low innovative power

• few research and development

• worse access to money

• ……

lack of (good)

reputation in

other regions

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Possible tasks

1. Förderung von Kooperationen transparente finanzielle Förderung von der Gründung bis zur Erzeugung marktreifer Produkte ?

Reasons for a special policy for SME with regard to the supply side / the enterprise

Characteristis of SME

1. less innovations

less research and development

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Reasons for a special policy for SME in Germany

SME invest less than bigger enterprises in the future

Innovatoren sind Unternehmen, die innerhalb der letzten 3 Jahre zumindest ein Innovationsprojekt erfolgreich abgeschlossen haben. Es muss sich dabei nicht um eine Neuerfindung handeln.

Source: ZEW, Mannheim

industries wit a high proportion of research

other industries service sector with other services high proportion of skill-intensive work

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Reasons for a special policy for SME in Germany

Higher costs for innovations in SME

Innovationsintensität: Anteil des Umsatzes, den ein Unternehmen für Innovationen ausgibt


industries wit a high proportion of research

other industries service sector with other services high proportion of skill-intensive work

share of sales for innovations

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Innovations pay off less in SME


share of sales caused by new innovative products

reduction of costs caused by innovations of the production process

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Reasons for a special policy for SME

Investment in mechanical engineering in Germany

25 % spent money in research and development only every now and then

49 % don‘t do any research and development

Reason:

- not enough financial power

- innovations are more expensive for SME because of high share of fixed costs for innovative projects

- less profits through innovations

not in times of big changes high risk that SME realise too late what is going on

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Possible tasks

2. steuerliche Forschungsförderung speziell für KMU?

Reasons for a special policy for SME with regard to the supply side / the enterprise

Characteristis of SME

2. not enough equity capital / problems in financing

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Less equity capital in SME

27,8

20,8

24,3

27,3 28,0

total industry turnover lessthan 2 Mio. €

turnover 1 - 10 Mio. €

turnover 9 - 50 Mio. €

turnover 49 Mio. € and

above

Source: Deutsche Bundesbank

Equity capital in mechanical engineering in Germanyamount of equity capital as proportion of total asset in percentage

SME according toEuropean Commission

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Least equity capital in non-coporate SME

21,0

14,4

18,0 17,8

21,9

total industry turnover lessthan 2 Mio. €

turnover 1 - 10Mio. €

turnover 9 - 50Mio. €

turnover 49 Mio.€ and above

Source: Deutsche Bundesbank

SME according toEuropean Commission

Equity capital in non-corporate enterprises of mechanical engineering in Germany in 2007

amount of equity capital as proportion of total asset in percentage

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Possible tasks

• gaining of members

• more codetermination

• higher wage-rises according to productivity Tarifbindung der KMU erhöhen

• working time models according to the whishes of workers

Reasons for a special policy for sme

Characteristics of SME

4. worse working conditions

Examples:

• less co-determination und wrights to get informations

• compensation

• longer working time

• more flexibility

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Handlungsansätze

• Ausbau der betrieblichen Altersrente

• mehr Weiterbildungsanstrengungen in KMU

• Anspruch auf Mitsprache bei der Weiterbildung

• Vernetzung von Forschung und Bildung


Characteristika von SME

4. schlechtere Arbeitsbedingungen

Beispiele:

• Soziale Absicherung (Rente)

• Weiterbildung, Ausbildungsmöglichkeit der Beschäftigten

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Policy for the demand-side of the economy through the state

- monetary policy in favour of demand

- rise of wages according to productivity

- against austerity


Characteristics of SMEs

- depend to higher degree than big enterprises on the demand of the domestic market

Documents

Vorstand EMB Mechanical engineering 30. september 2010 to 01.10.2010 Kerstin Warneke, FB Wirtschaft – Technologie – Umwelt, Maschinenbau Mechanical engineering