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Electrical, electronic and mechanical engineering sectors in the EU

Client

European Commission

Year

2020


In 2018, over 11 million employees and around 853,500 companies in the EU-27 plus the UK were part of the engineering industry (electronics, electrical and mechanical engineering sector). A total of 40 percent of all companies in the manufacturing industry in the EU were based in the technical engineering industries. This was shown in the “Study on the competitiveness of the EU engineering industries and the impact of digitalisation,” which was compiled by Prognos in collaboration with other partners on behalf of the Executive Agency for Small and Medium-sized Enterprises (EASME) and DG GROW of the European Commission.

Economic significance within the EU

In the year 2017, the technical engineering industries accounted for 3 percent of all companies and 8 percent of employed persons, 7 percent of revenue, 9 percent of value added and 2 percent of newly established companies in the EU economy as a whole. This sector’s revenue in 2017 was around 2,300 billion euros and it achieved value added of around 687 billion euros.

International competitiveness

In an international comparison, value added in the technical engineering industries grew faster in most countries in Asia than in the EU. In two of the most significant competitor countries – Japan and the USA – however, it grew at around the same speed. In total, the unit labour costs in the technical engineering sector in the EU remain significantly higher that those in the most significant competitor countries.

Since 2011, the export of technical products has seen better development than EU exports overall. If we consider the exports in countries outside of the EU, for the period 2013 to 2018, there is an average yearly growth of 5.7 percent for all technical products. Machinery makes up the majority (43 percent) of the technical products exported to non-EU countries. The EU has a high global market share in this sector.

Impact of digitalisation

The European engineering sector offers an important application field for digital implementation. In the manufacturing plants in various countries across Europe, globally digitalised productions centres have been created that collect large amounts of data and thus improve the efficiency of production.

One of the main findings of the study is that although the EU engineering industries remain innovative, in (digital) patents, however, they appear to be less dynamic than their global competitors. “Our analyses of digital patents have shown that innovations in the EU engineering industries concern digital technologies considerably less often than the large global competitors,” explained Prognos project manager Dr Jan-Philipp Kramer. Nevertheless, some European countries such as Sweden and Finland show particular strength in digital patents.

Future prospects

The possibility that different sectors of the value chain strengthen collaboration, offers opportunities for the EU engineering industries. An example of this is the close collaboration between automotive manufacturers and the producers of metal products in Europe. Furthermore, the European Green Deal and the EU Action Plan open up new opportunities for the Recycling Economy. Both initiatives encourage the development of clean technologies and could contribute to making Europe a world leader in the production of sustainable products, recycling, and the sustainable use of resources.

Methodology

The geographical area of investigation included EU-27 plus the United Kingdom and selected third countries: the USA, Japan, South Korea, and the BRIC-countries (Brazil, Russia, India and China). The investigated sectors include the electrical, electronic and mechanical engineering sectors in the EU (2-digit number code according to the Statistical Systematic of the Economic Sector in the European Union, NACE Rev. 2). The investigation period was 2008–2017, however, as far as possible, current data for 2020 was also included. In terms of the considerable effects of COVID-19 on the short to midterm competitiveness of the sector, the effects of the pandemic to date were evaluated.

The investigation “Study on the competitiveness of the EU engineering industries and the impact of digitalisation” for download (EU website)

A short summary of the study for download (in German, EU website)

Authors: Dr Jan-Philipp Kramer, Janosch Nellen, Andreas Sachs, Georg Klose

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Dr Jan-Philipp Kramer

Partner, Head of EU Services

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