In 2007 Ifo launched together with ECORYS (Netherlands), IDEA Consult (Belgium), Cambridge Econometrics (England) and Danish Tecnological Institute (Denmark) a European consortium for the execution of sectoral studies. The European Commission concluded a framework contract to the consortium after a successful open tendering procedure. The contract covers a time period of four years. During that time about 40 sectoral studies are to be carried out. The assessment of competitiveness lays the foundation for further economic analysis. It is envisaged to identify explaining factors. The long- term perspectives for the European industries have to be revealed and measures for strengthening the competitiveness shall be recommended.
The Ifo Institute is in charge of the following sector studies within the European consortium:
Study on the Competitiveness of the European Gas Appliances Sector Study on the International Competitiveness of the Aerospace Industry
The consortium has designed a standardized model for the investigation in all industries which reveals the causality between globalization and structural changes in the European economy. This model uses the institutional environment as intermitting variable for the explanation of competitiveness and the adjustment processes of industries.
Cambridge Econometrics provides its sectoral disaggregated model for the European Economy, public statistics (Federal Statistical Bureau of Germany, Eurostat, OECD), expert interviews
Study on the Competitiveness of the European Gas Appliances Sector
Hans-Günther Vieweg und Michael Reinhard; in co-operation with G. Hay, Cambridge Econometrics, England, K. Rademaekers, ECORYS, the Netherlands, commissioned by the Directorate General Enterprise and Industry of the European Commission, July 2008 to August 2009.
The sector comprises small gas appliances that are used in private households and small residential buildings. In 1990 the market was extensively harmonised by the Gas Appliances Directive (GAD). It was one of the first directives based on the so-called “New Approach”. The particularity of this approach lies in safety requirements and prescriptive limits without any provision on how to reach them. The New Approach has proved its worth. It has fostered the free movement of products without limiting the leeway for innovative technological solutions.
However there are other directives that pertain to gas appliances that potentially hamper free movement in the Single Market. In this respect, above all the Building Products Directive (CPD), the Boiler Efficiency Directive (BED) and the Energy Performance of Buildings Directive (EPBD) must be mentioned. Primarily these directives affect appliances for heating, hot-water production and air conditioning that are installed in buildings. For instance, peripheral components of gas appliances, such as flue gas conduits, which have been approved in line with the GAD, additionally fall under the CPD.
Directives must be transposed into national law by member states. The national provisions are different, but the principle of mutual recognition ensures the free movement of products. However, there are areas of regulation that are exempt from this principle, such as the CPD, BED and the EPBD directives. Major regional differences within the EU in climate and conventions in the construction of buildings are reasons for the exemption from mutual recognition. As a consequence the transposition of the CPD into different national provisions has turned out to be a hindrance for the free movement of gas appliances and their ducts. In some member states the ducts have to meet requirements that are different from the country where the compliance of gas appliances with the GAD has been approved.
The BED and the EPBD are directives that set binding limit values for energy efficiency. However, member states are allowed to implement stricter limit values for energy efficiency. As a consequence the European limits have turned out to be minimal requirements only and the free movement is restricted if gas appliances only meet these values. But an even more problematic situation exists by the fact that the energy efficiency of gas appliances has to be evaluated by two different regimes. The energy efficiency assessment of gas appliances by the BED only takes the stand-alone product into account. The energy efficiency assessment by the EPBD regards gas appliances as part of a system, a building.
Until the early 1990s most companies of the European gas appliances sector were focused on national markets. During the past two decades a consolidation process has taken place. By mergers and acquisitions European production and sales networks have been created. The new Member States have been integrated in the European value chain, above all for the manufacture of mechanical parts and components. Close trade relations of the EU with Turkey exist. Many European manufacturers have invested to better access this big and strongly growing market and to use Turkey as a location for production.
China has become an important supplier of domestic appliances run by gas. Portable gas appliances for leisure time and gastronomy from China are also of outstanding importance. However, with the exception of low-end appliances Chinese manufacturers are not directly involved in marketing. The big global players command the market with their well-known brand names although many goods are Chinese products.
The situation of the Japanese gas appliances sector in global markets is similar to other industries. Japanese firms enjoy a strong position in their domestic market without much foreign competition and command noteworthy market shares in the US. They are important suppliers of drives for small Combined Heat and Power production units (CHP) to European manufacturers of gas appliances. Moreover they sell complete CHPs in the European and US market.
Study on the International Competitiveness of the Aerospace Industry
Hans-Günther Vieweg and Herbert Hofmann; in co-operation with Chr. Kelders, A. Kuhlmann, Bauhaus Luftfahrt, Germany, D. Enu, Decision, France, V. Bilsen, IDEA, Belgium, S. Taaminen, ECORYS, the Netherlands, commissioned by the Directorate General Enterprise and Industry of the European Commission, January 2009 to December 2009,
The focus of the study is on civil aeronautics. The industry is understood as a pacemaker of far-reaching industrial innovations and draws the attention of policymakers. European industrial policy for the aerospace industry has been very successful. Airbus und Eurocopter have become leaders in the global market for large civil aircraft and civil helicopters before the US. In the segment of regional aircraft two manufacturers from Canada and Brazil are the dominant players. In business aviation and general aviation American manufacturers are leading.
Although Europe has been very successful with aircraft sales in recent years the analysis shows that the US aerospace industry has remained extraordinarily competitive. This is attributable to the big manufacturers in the value chain with their high potentials in system integration and risk sharing. These are abilities are important because new aircraft programmes have become ever bigger and riskier. These challenges can only be met if risks and funds for new programmes are taken not only by OEM manufacturers (manufacturer of final products): increasingly the risks are distributed in the value chain down to suppliers of 1st, 2nd and even 3rd Tier level. In this respect the European aerospace industry has a weakness and this explains why US companies have gained higher shares in the development and manufacturing of the A380 large civil aircraft than with preceding aircraft programmes.
The US government strives to maintain the lead in aircraft technology, exploiting the overlaps of the civil and military aerospace industry. Research and development projects of the space industry also provide useful results for the civil aircraft industry. In this respect the European civil aerospace industry has a disadvantage, because the military and space industry of the US are much bigger than their European counterparts. Moreover the US exploits its dominance in the global military market to ease the access of Boeing to foreign countries via political relations.
The market for civil aircraft is in a major phase of change. New suppliers are about to enter the market for regional aircraft. Up to now Japan has only been involved as supplier in the value chain for the US aircraft industry but not as an OEM manufacturer. Mitsubishi is about to launch a regional aircraft. The Russian Sukhoi and the Chinese AVIC will also enter the market in coming years. The traditional manufacturers from Canada and Brazil are confronting this challenge by newly designed aircraft that incorporate the latest technology and offer more seats than their present planes. With these new products, they are entering the market of large civil aircraft that has only been served by the duopoly of Boeing and Airbus.
The competition in the market segment of the small Airbus, A320, will become tougher. The decision of Airbus to delay the replacement of the successful but no longer technological leading aircraft adds to the challenge that competitors about to enter this market segment with newly developed aircraft. In particular the German aerospace industry is affected because it commands a large share of the European production of A320.
Electronically published by the Directorate General Enterprise and Industry of the European Commission:
Vieweg, Hans-Günther and Herbert Hofmann (et al.), 2009, Competitiveness of the EU Aerospace industry (with focus on Aeronautics industry), Within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054, Final Report, Directorate-General Enterprise & Industry. Download: Full Report (PDF, 5 MB) | Summary (PDF, 143 KB)
Vieweg, Hans-Günther and Michael Reinhard (et al.), 2009, Study on the Competitiveness of the EU Gas Appliances Sector, Within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054, Final Report, Directorate-General Enterprise & Industry. Download: Full Report (PDF, 1,5 MB)
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