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The composites industry and market are affected by the general trend currently sweeping the European economy: the relocation of certain activities to the East and the consolidation of other activities in Western Europe.
(Published on May 2005 – JEC Magazine #17)
The composite value chain – producers of raw materials and semi-products, distributors and processors – represents several tens of thousands of jobs throughout Europe. This figure is far from being trivial, even more so considering that the added value of our industry is high. The continual rise in the price of raw materials, combined with increasingly higher labour costs in Europe, particularly in Western Europe, could aggravate the current phenomenon which involves relocating certain activities towards geographical areas offering lower production costs.
A heterogeneous entity
Europe is no longer the homogenous entity it was several years ago. The European economic area now stretches from the Atlantic to the Ural Mountains and local conditions are extremely varied.
Therefore, even though the composites industry generally grew in Europe in 2004, and even though the trend for 2005 appears encouraging, results are contrasting. In the West, the traditional markets fulfilled their role very well and helped drive the market, even if certain sectors such as wind energy in Germany tend to be lagging.
In Eastern Europe, the composites market also expanded, taking advantage of favourable macroeconomic conditions, such as the rise in living standards of Eastern populations.
Russia’s situation has proved to be particularly good over the past 24 months, boasting a GDP (7.3% in 2003) capable of turning many finance ministers green with envy.
A TESTIMONIAL FROM GUSTAAF BOS, SECRETARY GENERAL, EUCIA – EUROPEAN COMPOSITES INDUSTRY ASSOCIATION
“In Europe, about 80% of all legislation affecting the composites industry is made at EU level. However, the European composites industry is by no means organised enough to defend itself. In the present European Union of 25 member states, there are too many countries where there is no national composites industry association to talk with local politicians or to convince the national delegates who attend EU meetings. The European Composites Industry Association (EuCIA) does not have enough support, either financially or otherwise. The only solution is to create strong national associations in all EU member states. These should join and strongly support the European association. Together, we need to lobby at EU and national level to obtain a European environmental and recycling legislation that does not hold back the composites industry.”
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Increasingly specialised activities
The disparity in growth between the different European countries has led to increasingly specialised activities in certain geographical areas. Western Europe is having trouble remaining competitive in all sectors and the current trend confirms the transfer of activities with low added value. High production costs partly explain this situation. The trend of turning to specialised activities or relocation results in stronger “poles of excellence”, which is also beneficial for Western Europe. Thus, large groups are led to consolidate certain activities or production sites, as Toray-Soficar did by increasing the capacity of its Abidos carbon fibre plant in France, or as Teijin Twaron recently announced it was going to do by increasing the production capacity of two sites in the Netherlands. It is clear that Western Europe can no longer afford activities with low or average added value. Wages are high and the regulations governing economic activities almost always raise production costs. In such a context, innovation and quality are the key to further growth.