Pro Industrial Luxembourg!

In the early 2000s, at the time of the digital revolution, some economists began to imagine developed countries without factories, advocating an accelerated transition to a knowledge-based economy. Based on the success of the finance and certain services sectors, some people imagined that Luxembourg would also lean towards these new activities and somewhat neglect the industrial sector in its public policies. The Grand Duchy would thus complete the evolution of its economy, which began at the end of the 1970s, from steelmaking to a finance and services-based economy. This would be a serious mistake. Luxembourg has a strong and dynamic industrial base on which a significant part of future growth depends.

Resistance to industry in the Grand Duchy

According to a Eurostat study from last June, Luxembourg’s specialisation in the services sector is not as strong as expected. Indeed, while services represent 80.7% of jobs in Luxembourg, compared with 74.0% in the European Union, this proportion is even higher in the United Kingdom (82.4%), Belgium (81.3%), and France (80.9%). More industrial countries such as Germany (24.2% of jobs in industry, in the broad sense) or Poland (31.3%), on the other hand, have a smaller share of jobs in services.

The manufacturing industry, in the strict sense of the term, employed some 33,000 people in Luxembourg in 2018, which represented 7.3% of total employment. This share was 12.9% in 2000 for 34,000 jobs. In absolute terms, employment in industry has been, therefore, rather stable over the last twenty years, despite the crisis of the 2010s. Its relative decline is mainly due to the significant growth of the economy in general and of certain sectors in particular. This stability is good compared to many of our European competitors. The number of employees in the industrial sector fell by just under 4% between 2006 and 2016 in Luxembourg, compared to 27% in Spain, 26% in the United Kingdom, 17% in Italy and 16% in France. International productivity gains in industry, compared to other sectors, are one of the causes of the decline in the number of jobs at European level. In Luxembourg, jobs in industry were created during this period, while others were eliminated. Factories continued to be established. Germany stands out with a 6% increase in employment, as does Slovakia with a positive trend of more than 19%. Over the same period, the increase in the added value in the sector was greater in Luxembourg than in Belgium, France or the United Kingdom. Luxembourg’s industrial fabric has been one of the most sustainable in Europe over the last decade and must remain so.

Industry as a driver of innovation

Industrial companies have a leading role in the Research Development Innovation (RDI) ecosystem, either directly or through significant spin-off effects. Luxembourg industry therefore makes up 63% of businesses’ R&D expenditure. The first edition of the Chamber of Commerce’s Economic Barometer confirms this preponderance, with 40% of industrial companies having recently carried out innovative projects compared to 28% of all companies. Moving closer to new technological frontiers is increasingly crucial to strengthening the competitiveness of economies, and industry is making progress in this direction. This sector is at the heart of the economic diversification strategy, which must orient the economy towards new growth niches and make it less dependent on the economic situation in a few sectors. Strengthening the industrial fabric through the development of RDI has the additional advantage of anchoring jobs more firmly in the region.

Some Luxembourg industrial sectors are successful both at home and on an international scale and have become world leaders. For example, in the metallurgical industry, ArcelorMittal has 9 sites across the country and a research and development centre located in Esch-sur-Alzette. ArcelorMittal is a world leader in the sector as a whole and one of the main producers of steel sheet piling, a source of innovation and sustainable development in today’s construction sector. In the satellite sector, SES is a world leader, with some 80 satellites in orbit. The Luxembourg AutoMobility Cluster brings together 50 companies, employing 10,000 people and representing a turnover of EUR 1.5 billion. In this field, the Goodyear Innovation Center Luxembourg employs more than 1,000 researchers from 41 different countries.

These few examples of companies or sectors dependent on innovation and technological transformation show that digitisation will also be key to success for industry. We are taking a major step forward with the joint creation of the Digital Innovation Hub Luxembourg (DIH-L) by the Ministry of the Economy, Luxinnovation, FEDIL, the Chamber of Commerce, and university partners such as the LIST and the University of Luxembourg. This unifying platform on a European scale will support companies, and in particular SMEs, in their digitisation projects and will focus on technologies related to Industry 4.0. This initiative can serve as a catalyst for the digital transformation of our industry.

New industrial projects

We must welcome new industrial projects based on the most modern production processes and technologies currently being established, as well as the already established companies developing new production capacities. In 2016, Faymonville, which specialises in vehicles adapted for exceptional transport operations, built a new production plant in Lentzweiler for EUR 15.5 million. The Ocsial group, which manufactures carbon nanotubes, has set up a research centre and production site in the Grand Duchy worth a total of EUR 100 million. More recently, and in line with the diversification strategy in the space sector, Euro-Composites has announced an investment programme worth EUR 160 million that will be used both to invest in R&D and to acquire new machines and expand its premises. This industrial group manufactures parts for satellite solar panels and robots. The modernisation of factories is most often combined with greater environmental efficiency. This is particularly the case for the panel manufacturer Kronospan, which has invested more than EUR 300 million in a sustainable production tool at the cutting edge of technology based on the circular economy, and more particularly on the use of recycled wood. The industry is already carrying out the Third Industrial Revolution (TIR), an initiative of the Ministry of the Economy, which the Chamber of Commerce has actively supported and implemented, along with other economic players, including from industry.

Other projects also come to mind, including the new automated factory from tobacco manufacturer Heintz van Landewyck; Luxlait’s brand new warehouse in Bissen; SEO’s wind farms; and ENOVOS’ solar farms in the crucial energy sector. Industrial companies also change over time, as shown by Accumalux, which evolved from producing explosive powder to the manufacture of plastic moulds, particularly for batteries, and which, in 2018, inaugurated the Parcluxite business park, a 65 hectare site dedicated to innovation and high-tech. Another similar example is Contern’s recent national logistics activity zone, which is also located in Contern. And finally, there is the Paul Wurth Incub, which provides essential support for young innovative companies in Industry 4.0, robotics and artificial intelligence, EnergyTech, or so-called intelligent engineering and application processes.

These are just a few of the projects that show that Luxembourg’s industrial fabric is regenerating and innovating as factories and production processes are modernising by applying the most recent technologies and innovations.

Pro-industrial environment: A necessity!

If we need industry, industry itself also needs an apt environment in which to develop. Even with success, certain shortcomings in policies to attract and support industrial projects cannot be overlooked. Luxembourg cannot remain attractive if certain industrial projects become the subject of public debate. Beyond extreme cases (see my post from end of May 2018), much progress can still be made to speed up the excessively complex process and delays for obtaining building permits and related authorisations. Out of the industrial companies surveyed as part of the Economic Barometer, 38% of them said that administrative procedures and formalities have become more complex over the past 12 months (only 2% of respondents believe they have become simpler).

I am equally concerned about the apparent imbalance between the economic and environmental aspects of industrial establishments. In June 1999, Luxembourg adopted an ambitious law on classified establishments and environmental protection procedures (commodo/incommodo procedures). This law states that the authorisations of classified establishments take into account ‘best available techniques’ in order to promote sustainable development. It is a fact that today our industrial fabric uses the best available technologies in terms of environmental protection. It is equally true that administrative and regulatory constraints, which are constantly increasing, are sometimes inconsistent and counterproductive, often very complex and too demanding to meet the objectives to be achieved.

They are thus beginning to affect the attractiveness of Luxembourg’s industry and the development potential of local industrial companies. We must consider productivity and profitability criteria when determining environmental and climatic constraints. If these are necessary, the overabundance of constraints, without taking into account the effects on cost competitiveness, can only jeopardise the industrial sector, which is particularly exposed to international competition. We must return to a fair balance in this matter, through a national policy that is consistent with the relevant European policies. Wanting to go further than the European directives will not contribute to better protecting the planet, but only to degrading our attractiveness and competitiveness. Progress in this area must be made at European level, from the common market to the common rules.

Skilled labour: A major challenge

The development of talent, whether trained in Luxembourg or recruited from abroad, is another important issue for the success of our industry. The 2019 edition of the survey ‘The Qualifications of Tomorrow in the Industry’, whose partners are FEDIL, the Chamber of Commerce, the Ministry of Education, Children and Youth, the Ministry of Higher Education and Research, and ADEM, indicates that industrial companies plan several thousand new hires over the next two years, fairly evenly distributed between replacements and job creation. While those with technician (DT) and professional aptitude (DAP) diplomas remain the most sought-after, industrial companies are increasingly focusing their recruitment on engineers, who are essential to the deployment of Industry 4.0. The Chamber of Commerce is committed to developing the industrial training offer, in particular in smart technologies, robotics, automation or smart energies, but also for the plastics industry. The interventions of the Chamber of Commerce teams and entrepreneurs as part of the School-Business Relationship Programme or the ‘Hello Future’ awareness campaigns raise awareness for young people of the jobs of the future and the skills required for tomorrow’s economy. Industry is also one of the key areas of the ‘Talent Attraction’ strategy implemented in 2019 by Luxembourg. I am extremely pleased to see this programme already taking off, especially at a time when attracting talent is at the heart of business development issues, and when we can make progress in this area, whether it is for Luxembourg’s reputation abroad, the sharing of best practices in our companies, or facilitating the administration and paperwork for talent arriving from abroad.

This is how we must support transformation, by building an ecosystem capable of enabling this transition to the industry of tomorrow. In concrete terms, we must meet the labour needs of these companies through training and attracting talent, reinforcing public research activities in areas that are strategic for Luxembourg industry, increasing partnerships, particularly in the form of public-private partnerships, in order to accelerate technology transfers and gain in flexibility to meet the organisational and production challenges of each company. The High Committee for Industry (Le Haut Comité pour l’Industrie) has an essential role to play in this respect. It must be reactivated and take its full place in the development of the country’s industrial strategy. This is also the case for the TIR working groups that are directly relevant to the sector. The participation of all stakeholders in defining the TIR was recognised by all as one of the most important, if not the most important, achievements of this ambitious project.

It is not a step backwards, but rather a continuation of listening to those who are the industry, who will provide the appropriate solutions for this key sector when provided with a competitive environment and technological change. This is what our neighbours have clearly understood, with the creation this July of a Regional Industry Committee for the Grand Est Region (Comité région industrie du Grand Est).

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