Featured Image

International News From the Field: Europe

Today we attempt to assess the European economies and their main challenges – apart from the Ukrainian war zone in Eastern Europe. Two areas of concern have emerged: energy sourcing and maintaining manufacturing levels in the face of changing demand.
Apr 29, 2022

Presently, there are two main areas of concern for the Central and Western European economies: sourcing of energy; and maintaining the current level of manufacturing when needs for products are rapidly changing, especially in automotive and defense sectors. The energy dilemma is, of course, about the urgency to become free from the dependence on Russia as a supplier.

The conundrum of toxic dependence on cheaper Russian sources of fossil fuel-generated energy has abruptly hit most European countries. This has caused a real struggle to the top five such users: Germany’s annual expenditure is over $43 billion; the Netherlands spends $35 billion; Italy, $20 billion; Poland, $16 billion; France, $15 billion. For Germany and Italy, the cost covers most of the gas demand; for the Netherlands, Poland, and France, the cost resolves the problem area of oil.

These numbers are staggeringly high. First, this situation continues to give Russia flexibility in its war efforts. Secondly, it takes time and money to replace the now-volatile source, with the prime task of creating a new infrastructure to absorb non-Russian supplies, which will cause increased and faster spending on renewable sources or a turn toward to the nuclear option. The uninterrupted supply to households and individual consumers, as well as to industries such as manufacturing, may be in peril – something that prosperous Europe has not experienced for quite some time.

In manufacturing, the main challenges to Europe are offered by China as the top nation in terms of manufacturing output, as well as by the United States’ continuing manufacturing resurgence. The recent global pandemic halt was significant but has largely been overcome. It seems that the leading manufacturing nations continue to lead.

In terms of the overall manufacturing environment, the U.K. and Switzerland are proportionally on par with the United States, Japan, and Canada. The main six nations of the European Union in terms of manufacturing contribution by percentage are Spain, Portugal, Romania, France, Germany, and Poland. These were the same countries pre-COVID, and they account for over 35% of the total manufacturing production within the EU. But due to erratic supplies chains and the rising cost of energy, production requires much more effort and investment to stay afloat. The highest percentage of the workforce employed in manufacturing is in Poland, Germany, and Italy. Surprisingly, in this respect, these three countries lead globally, before Turkey and South Korea.

In previous articles, the renewable energy and defense sectors were pointed out as areas of concentrated activity. A third is automotive. In December 2021, for the first time, Europeans bought more electric cars than diesel, which was once the most popular option. The demand for EV is soaring, and manufacturers are responding to talk of this sector exploding.

In March 2022, Tesla officially began making cars at the gigafactory near Berlin, with a goal of producing 500,000 vehicles per year. It took Tesla only two years to build the factory, and in the meantime, all competitors in Germany (and not only there) rushed to prepare for it. For now, Tesla will make all components in-house, but new specialized EV component manufacturers are constantly appearing, with batteries as the most publicized new product in many countries.

The number of other components for EV vehicles is rising, such as connectors linking miles of cables in cars, and they are becoming more and more complex. Even the notorious shortage of semiconductors works in favor of EV as manufacturers tailor their priorities for future needs, hence a departure from “old” car building. Moreover, the development of autonomous cars also makes EV a natural option.

Worth noticing as EV goes mainstream: According to the European Association of Automotive Suppliers (CLEPA), up to 500,000 jobs could be lost at automotive suppliers within the next 15-18 years, while only about 226,000 new jobs would be created by the growth in EV components.

The above points out where marketing efforts of suppliers of manufacturing technologies could be most fruitful. Supporting the development of the present style of manufacturing still has serious potential. However, increasing automation to help restructuring industries and implementing innovative technologies should be seen as inevitable steps to efficiency and reducing excessive dependence on the manual workforce.

PicturePicture
Author
Hubert Sawicki
Head of AMT European Office
Recent international News
Geopolitical, supply chain, and COVID disruptions seem insufficient to stop European markets. Many growth opportunities are appearing, especially for those who adapted to digitalization and automation. For more industry intel and other tidbits, read on.
A cocktail of risks threatens Europe’s growth: the war in Ukraine, the energy crisis, the tightening of interest rates, and high inflation. Despite these challenges, there is cautious optimism for 2023. For more industry intel and other tidbits, read on.
This week, we focus on Europe – but with a sentimental overtone. After 17 years as AMT’s man in Europe, Hubert Sawicki will retire at the end of 2022. The following is a reminiscent overview of that period, as well as a link to his personal farewell.
The war in Ukraine continues to impact global markets. EU countries closely coordinate actions to tackle rising prices and supply scarcity. Could this produce economic momentum for Central and Eastern Europe? For more updates and other tidbits, read on.
Europe’s automotive sector has long been the main industrial contributor to European prosperity. Despite recent setbacks, the continent's electrification is moving full steam ahead with major investments and strategies. For more industry intel, read on.
Similar News
undefined
International
By Fred Qian | Mar 22, 2023

China’s economy is rebounding despite some economic headwinds. While conservative growth is targeted for 5% for 2023, strong industrial production recorded in January and February shows promise. For more industry intel and other tidbits, read on.

4 min
undefined
Technology
By Stephen LaMarca | Mar 03, 2023

3D-printed metal FUEL valves. I want robots and automation. Renaissance man(ufacturing). Advanced metrology; still no turn signal. Ultrasonic holographic bioprinting.

5 min
undefined
International
By Arun Mahajan | Mar 08, 2023

India's rise to become the world’s third-largest economy by the turn of the decade appears inevitable. Its agriculture and agriculture-based industries are rising stars along with automotive and defense. For more industry intel and other tidbits, read on.

5 min