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Chapitre x _____________________
Industrial Electronics
Contents
1.
OVERVIEW OF SECTORAL TRENDS ................................................................................3
1.1. SECTOR PROFILE .................................................................................................................. 3
1.2. EMPLOYMENT: EUROPE STILL HOLDS SIGNIFICANT EMPLOYMENT .................................................. 6
2.
DISRUPTIVE TECHNOLOGIES AND STRATEGIES OF THE SECTOR ......................................7
2.1. GAME CHANGER TECHNOLOGIES............................................................................................. 7
2.2. STRATEGIES OF THE PLAYERS ................................................................................................ 11
3.
MAIN PLAYERS AND EMPLOYMENT IN EUROPE........................................................... 13
3.1. OVERVIEW OF THE MAIN COMPETITORS ................................................................................. 13
3.2. TRENDS FOR THE EMPLOYMENT IN EUROPE / SCENARIOS .......................................................... 15
LITERATURE..................................................................................................................................... 18
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1. Overview of sectoral trends
1.1. Sector profile
Global electronics industry is shaped by the rapid rise of China
The electronics industry is a broad economic sector that covers innovative cross-cutting and
technologies in the productive, industrial as well as consumer goods markets. With view on
the International Standard Industrial Classification (ISIC) around 30 different classes (4digit) are linked to the electronics industry, most of them with the classes 26 (electronic
and optical goods) and 27 (electronic equipment); further ISIC classes however linked to
production of audio, visual and data media, electronic tools, automotive electronics,
railways or medical equipment.
Against this it is not surprising that the electronic industry is one of largest industrial
sectors globally as well as in Europe with a global market/turnover of estimated 3.7 trillion
Euros in 2013 (source: ZVEI). Since 2003 the sector as a whole faced an average annual
growth of 6.5% which means that the market has doubled during this decade.
Electronics industry: Global market volume/turnover, trillion Euros
3,5
3,7
3,5
4,1*
3,9*
3,2
10,8%
15,6%
2011
2012
2013
2014
2015
2016
* forecast
Source: ZVEI, August 2015
In 2013, two thirds of the global electronic production was located in East Asia, 16% in
Europe (most of which in the EU, 11% in the U.S. and 3% in Latin America. With view on
market volumes (i.e. defined as production minus exports plus imports) around half of the
global market volume consists of Asia, Europe is accounting for around 20%, 16% in the U.S.
and 5% in Latin America (Gontermann 2012, p. 22).
However, the shares within the global production of electronic products in 2013 show that
Asia is contributing around 70% to the global industry output, while the shares of Europe
and the Americas is only 16% and 14%.
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While in the year 2000, the U.S. were the largest single producer of electronic products
(followed by Japan, China, South Korea and Germany), the ranking has changed since then
mainly due to the rapid increase of China as the leading producer of electronic products. In
2013, China by far has been the largest producer of electro-technical and electronic
products with a share within the global production of 47% (compared to 17.5% in 2002) while
the top-5 group still is comprised of the same countries as in 2000. However, compared to
2003, the share in global production of the U.S. as well as Japan has halved. The situation in
Germany has been more positive: In contrast for example to Japan that also experienced a
decrease in the total production volume, production in Germany between 2003 and 2012
grew by 1.9% per year (despite the 2009 crisis).
Regional shares in global electronic production, 2013
other Europe
3%
Global production:
3,525 billion €
EU
13%
Americas
14%
Asia
70%
Largest producers:
1. China (1,6 bn €, 47%)
2. USA (353 bn €, 10%)
3. Japan (268 bn €, 8%)
4. South Korea (216 bn €, 6%)
5. Germany (130 bn €, 4%)
Source: ZVEI, August 2015
During the last decade not only regional but also sub-sectoral shifts and changes have
characterised the global market for electronic products: As the following figures shows, in
2013, around 30% of the global market falls upon electronic components, that include also
semiconductors. It should be noted here that ten years ago, the leading position was held
by the segment of information and communication technologies that today accounts for
one quarter of the global market volume. These two leading segments are followed by
automation technology with 15%, domestic appliances (9%) and energy technologies and
entertainment electronics that have shares of 7% each.
During the last decade, in particular energy technologies, automation and domestic
appliances have experienced the strongest growth while the markets share of the ICT
segment degreased by more than 10%. The markets for automation and domestic
applications have more than doubled.
It should be noted also, that according to the German employer association of the
electronics industry, ZVEI, the automation market is expected to experience the strongest
growth during the coming years with market growth rates of 6-8% in sub-segments such as
electric drives, measuring and process technologies as well as switching devices.
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Shares in the global electronic market, 2013
Automation
15%
Electrotecnical
Components
30%
Energy
7%
Healthcare
3%
ICT
25%
Entertainment
7%
Light
4%
Domestic
Appliances
9%
Source: ZVEI, August 2015
With view on the shares of regions in global production segments, Asia today is dominating
the segments of components, ICT and entertainment electronics. In all of these segments
Asian producers have shares of around 4/5.
After most of most of the consumer electronics manufacturing has left Europe during the
last decades the European manufacturers still play a significant role in market segments
such as health care electronics (34% in 2013), automation (28%) and energy technologies
(27%). In Germany, the automation segment with a share in the overall electronics
production of 28% was by far the most important single segment in 2013.
These segments are also those that are key technological drivers of the digital
transformation of the whole industry. Electronic technology contributes to the accelerated
automatization and networking as well as to the internet of things. Thus, the electronics
industry both is facing technological innovations within the own industry as well as
functioning of an enabling technology for the digital transformation in other sectors.
According to the employer organisation Orgalime, the electrical, electronics and instrument
industry is among the largest industrial sectors in Europe with a turnover of more than €625
billion in 2014. The sector according to the definition of Orgalime employs more than 2.5
million people.
Industrial automation still a European strength
The convergence of the physical and the virtual worlds through Cyber-Physical-Systems
(CPS), and the consequent fusion of business processes and technical processes have set
the pace of the industrial control and factory automation concept. Industrial Control and
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Factory Automation brings lot of advantages such as improved efficiency and reduced costs
compared to conventional manufacturing processes. Such a network production capacity is
believed to change the way a factory works and create more opportunities in the future.
The industrial control and factory automation market is expected to reach USD 202.42
Billion by 2020 at a CAGR (Compound Annual Growth Rate) of 6.73% between 2015 to 2020.
Factors such as adoption of IoT, advancement in the M2M communication technology, and
increasing demand of robots in the industrial sector have resulted in a positive impact on
the industrial control and factory automation market.
Nearly 60% of the global automation market is concentrated in four countries: China in 2011
had a share of around 1/3, followed by the U.S. with 13.5%, Germany with 6.4% and Japan
with 6.3%. A similar picture emerges in regard to global production shares where China in
2011 held 34%, followed by the U.S. with 13%, Germany with 11% and Japan with 10% (figures
by ZVEI).
1.2. Employment: Europe still holds significant employment
In 2013, global employment in the electronics industry was estimated at 24 million workers.
Since 2003, the sector reported a global growth of around 9 million jobs of which most
have been created in China where the workforce in the sector since then has nearly tripled
and is reported to be around 14.5 million, more than half of the global workforce.
In contrast to China, employment in other world regions decreased, e.g. in the U.S., Japan
as well as in Europe. In the U.S., the sector experienced a loss of more nearly 440,000 jobs
during the decade after 2003 and in 2013 the workforce was reported to be around 1.2
million. Japan saw a less dramatic reduction in sectoral employment which went down by
around 181,000 since 2003 to 1 million in 2013.
Employment in the global electronics industry
Source: ZVEI 2014
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Employment in the European electronics industry since 1990s experienced a reduction of
employment due to the demise of whole sub-segments (e.g. mobile phone production,
home entertainment electronics), offshoring of more labour-intensive manufacturing to
lower cost countries as well as increased competition from South Eastern Asian producers.
Since 2000, the overall employment is reported to have decreased by around 400,000 from
4.2 million to 3.8 million in 2013.
Employment in the European electronics industry is concentrated mainly on five countries:
Germany, France, Italy, the UK and Spain. However, Germany by far is the largest player
with more than 840,000 employees in 2013 which is more than the total employment in the
four remaining countries (Italy: around 270,000; France: 240,000; UK: 200,000 and Spain
around 125,000; figures for the year 2010 according to Gontermann 2012).
The Germany electronics industry was also able to manage structural change during the last
decade better than other EU countries: Since 1995 and 2010, real production grew on
average by 3.5% per year and the sectoral workforce in 2013 was higher than before the
2008 crisis. In contrast, only in France the electronics production between 1995 and 2010
reported a slight output increase by 0.7% per year, while the output contracted (in Spain by
1.5% on average per year, in the UK by 0.8% and in Italy by 3.2%, see Gantermann 2012, p. 45).
2. Disruptive technologies and strategies of the sector
2.1. Game changer technologies
The European electronics industry can expect a number of opportunities
The European electronics industry today – after the disappearance of most consumer
electronics production during the 1990s and first years of the 21st Century – today mainly
produces components and system solutions for other business, i.e. investment goods. This
market today accounts for 4/5 of the total turnover (Roland Berger 2014, p. 21). Key areas
where European producers still hold a global leading position are automation and energy
technology as well as medical technologies. At the same time the electronics technology is
a key driver of the automation and interconnectedness of working and social life and a
catalyst of the digital transformation of manufacturing.
Thus, the electronic industry in particular the segments mentioned above can benefit not
only as a supplier of hardware and software for the internet of things. In this regard the
sector has high growth potentials as it delivers the components for smart machines,
vehicles, domestic appliances, etc.
In the shape of digital power electronics, the industry also has in its hands one of the keys
to the efficient use of energy. New technologies have the potential to transform the entire
energy production. As soon as the idea of smart grids will be applied to an industry or
application field, there is a growing demand for smaller systems for energy production and
energy networks as well as the respective hard- and software solutions. New opportunities
to make power plants more efficient by analysing performance data are also emerging. By
no means least, decentralized power generation within a smart grid architecture creates
heavy demands in terms of flexibility and security. The circuits in smart power grids have to
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be switched within milliseconds, which in turn requires a high quality of service in the
corresponding communications networks. Especially in mobile communications, this plays
an important part in distinguishing between time-critical and non-time-critical traffic. For
this reason, ongoing development in the direction of the "tactile internet" and nextgeneration systems (5G) is of paramount importance, not only in the energy sector.
The following overview, taken from a study on next generation embedded systems,
provides an overview of main drivers of change and disruptive technologies in sectors and
market segments where industrial electronics plays a key role.
Drivers of structural change and game changing technologies in various sectors
Sector
Drivers
Disruptive technologies
Automotive,
logistics
Carbon footprint
Mobility
Consumer expectation changes
Automotive control devices
Infotainment devices
Transportation telematics
Smart charging, vehicle-to-grid
Energy
Carbon footprint/sustainability
Energy prices
Smart meters, grid sensors
Neighborhood/wide area networks
(wireless mesh, WiMAX)
Meter data and grid management systems
In-home displays, smart thermostats, smart
appliances
Home area networks
CRM systems, analytics and customer
portals
Health
Ageing population
Increasing costs
Prevalence of chronic disease /
changing life style
Labour shortages
Intelligent/connected medical devices
(glucometers, pulse oximeters, blood
pressure monitors)
Wide/home area networks
Care management systems (enables
remote care by clinicians)
Electronic medical record (EMR)/personal
health record (PHR) systems
Patient portals
Telepresence/video conferencing
Source: IDC 2012
Example automotive industry
Already today, as much as 25% for the vehicle cost is in embedded systems components
(hardware, software and services). The ratio is the fast growing as 80% of product
innovations are including embedded systems.
One of the main technological challenges of the future automotive production will be to
manage the increasing complexity which is driven by the increasing functional scope
encompassing functions. The typical car in Europe currently has about 65 MCU-based
systems, with high-end luxury vehicles having well over 100 MCUs according to JRCAUTO
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with more than 950 signal paths according to INTEL. In addition, the complexity of
embedded systems is growing due to the connectivity of systems and their interactions
which in return highly increase the cost of development (IDC 2012).
In order to cope with increased product differentiation and cost constraints the industry
focuses on modularity of components and high reuse across product lines, and on highly
controlled functional integration and concentration on innovation with novel functions.
This reuse of technology relies on standards and communities such as AUTOSAR for
specifications, and Genivi for implementations. The future pathway innovation is to
concentrate on innovations for high level models of vehicle and implementation of stored/
imported process and development achievements on lower range of vehicle.
Car makers and their supply industry are already in the process of transformation and have
triggered large-scale programs, such as the in-vehicle introduction of the Internet Protocol
(IP) or highly automated and autonomous driving. Critical questions regarding future
market positions and control over restructured value chains are in particular:





Who will control the digital communications interface to the driver and vehicle
owner?
To whom does the data generated in and in relation to the vehicle belong?
Which software standards will become established in vehicles?
How will automated cars change our understanding of individual mobility and our
car purchasing behavior?
How can vehicles be given effective protection against cyber-attacks?
Example smart building technology
A Smart Building (SB) system is defined as a set of intelligent technologies that enable the
building owner/manager to measure, monitor, control, and optimize the operations and
maintenance of a building.
The primary focus of most SB systems is energy management. However, these systems
differ dramatically from conventional energy conservation efforts. According to the IDC
2012 study, the four principles of these next-generation systems are:




Automation: The sensor network and the controls with which it is connected are
highly automated. Thus, outside of the initial setting phase of the system, there is
little need for any human hand to physically turn things on or off;
Non-intrusion: Unlike earlier efforts to encourage energy conservation, smart
building systems focus on waste eradication as opposed to reducing comfort to
save energy;
Persistence: Smart buildings are adaptive and are in constant communication with
their sensors and the outside world. Thus they tend to have a very long period of
time during which energy savings persist;
High ROI: Building owners are traditionally hesitant to make capital investments in
their properties without the possibility of a high return on investment (ROI).
Payback periods for such capital equipment purchases must usually be kept below
two years in the buildings market. Most new smart building systems have an ROI
that is at or near that extremely high target.
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Traditional Building Automation Systems do little more than turn on and off machines at
preset intervals. The new generation of systems, which we refer to as SB systems, can
control subsystems on a finely calibrated scale and also respond to external feedbacks such
as wholesale electricity prices and weather forecasts. Just as the smart grid is changing the
way electricity is being delivered from the power plant to the meter, the SB will change
how we consume that energy, using less of it more efficiently.
IDC believes that smart building systems are an emerging high growth market that has
tremendous disruptive potential for the energy industries. IDC estimates that the SB
systems market will be growing at a 27% CAGR over the next five years (IDC 2012).
Internet of things and big data
Data can be referred to as the raw material of the 21st century. Indeed, the amount of data
available to businesses is expected to double every 1.2 years. A plant of the future will be
producing a huge amount of data that needs to be saved, processed and analysed. The
means employed to do this will significantly change. In France, 63% of plant managers
consider cyber security to be crucial to their competitiveness. Innovative methods to
handle big data and to tap the potential of cloud computing will create new ways to
leverage information.
While at the beginning of the 21st century connectivity was a feature of only the digital
world, in smart manufacturing and digitalised industry the digital and real worlds are
connected. Machines, workpieces, systems and human beings will constantly exchange
digital information via Internet protocol. This means physical things will be linked to their
data footprint.
Driven by the internet of things, sensors are increasingly being slotted into applications
above and beyond their uses to date. This development is opening up new data sources not
only in industrial machinery, but also at the interface to the customer – in vehicles, for
example, and in portable computers (smartphones, tablets and wearables).
Modern analytical technologies are allowing companies to crunch this data faster and in
greater detail than ever before. Drawing on traffic and requirements data, today's logistics
providers can adjust the routes for their transportation fleets in real time. Algorithms
enable mechanical engineering firms to predict possible machine outages. Hundreds of
data points help optimize numerous production workflows. The most important factors in
this context are access to data and the ability to analyse it. A data monopoly of the kind
Google has already achieved in many aspects of everyday life can quickly put other market
players at a disadvantage.
Data ownership, platforms and standardisation
It is still unclear who is entitled to the data that accumulates during production in a smart
factory. Is it the user, the manufacturer or the IT service provider? There are sound
arguments for all of these claims, and each would have far-reaching consequences for the
control of production processes, the coordination of logistic flows and maintenance cycles
as well as optimization on the shop floor. What if companies were to outsource the analysis
of their production data to the digital platform provider? This provider would obtain
superior data resources that would let it develop standards and value-added services. This
in turn would create new dependencies: It could be, for example, that some specialized
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manufacturers would find themselves in the unfortunate situation that a standardized
benchmark inadequately reflects the benefits that set their products apart from massmarket manufacturers.
Although there will naturally still be a need for excellent engineers even in this scenario,
their importance to the overall product will dwindle. Today's heavyweight industrial
champions could very quickly find themselves relegated to the status of suppliers to digital
platform providers, with all that this would entail for their vertical integration – and their
margins.
The biggest challenge is the standardization and virtualization of IT platforms in the context
of factory control, because this is where IT risks will find their way into production. We
don't need to go as far back as the pitched battle over video recorder systems in the late
1970s: Recent developments in information and communications technology (ICT) are
sufficient to underscore the tremendous importance of standards.
While Cisco in particular built absolutely everything around the Internet Protocol in the
1990s, European equipment manufacturers stood by their proprietary and closed – network
technology standards for corporate customers and telecom firms for the longest time.
Although it was less flexible, the open model ultimately won the day, as standardization
quite simply offered too many benefits. As a result, European ICT providers – companies
posting revenues in the tens of billions – gradually saw their competitiveness erode,
dissolved completely or were swallowed up by global rivals.
2.2. Strategies of the players
The digitalisation of industry will affect the electronics sector both as a sector that provides
the “hardware” of digitalised manufacturing as well as an user and applicant of new
technologies and solutions. Will it be a threat or an opportunity for European companies?
Both, as it turns out. Manufacturing companies in the traditional sense will surely remain in
the market. But established players will undoubtedly change their organizations, processes
and capabilities in whole or in part during the industrial revolution. And there will be new
competitors with radically new industrial business models.
As the Internet as a technology did not invent social networks, but social networks
developed thanks to the Internet, and enabled it to develop further, digitalised industry will
bring new functionalities that will change the rules of the game for the industry players.
Digitalised manufacturing brings more freedom and flexibility into the production process.
So it will become possible to create products tailored to segment-by-one customer needs at
relatively low marginal cost. Also distribution processes for spare parts or not too complex
customer goods might get easier, if nothing but data has to be transferred while the
physical production can be done locally.
This becomes visible in the broadening of 3D printer usage: The market for 3D printers and
related services rose to EUR 1.6 billion in 2012, and is estimated to rise to about EUR 4.4
billion annually by 2017. This approach can become a game changer if you think about
producing in a high- or a low-cost country. A 3D printing plant can become economically
viable and competitive in a high-cost country, by being less sensitive to labour cost while
still providing the proximity necessary for affordable personalization.
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Businesses will operate in dispersed locations, drawing on skills spread across their
substitutes. Groups of suppliers concentrated in small areas help ideas flow more freely as
the frontiers between the information and physical world are blurring. The challenge for
business lies in the assumption that the complexity of production and supply networks will
grow significantly.
In a more complex and intertwined manufacturing network, the roles of designers, physical
product suppliers and the interfaces with the customer (contractor) will change. The first
step is the fragmentation of the value chain. We have seen this before in monolithic
industries like music or the media: After fragmentation, countless small entrants have lower
barriers to entry. As business leaders rethink and restructure their value chains new
challenges in regard to cost and profit ownership arise.
It is not new news that traditional industry boundaries are becoming blurred, as are the
boundaries between industrial and non-industrial applications. Currently we experience an
even closer cooperation between traditional manufacturing companies and
IT/telecommunications/software firms. And there is a danger that the latter in some cases
become the new industry leaders. The most recent examples: Facebook is aquiring a stake
in the drones business and Internet giant Google is investing in new generation robotics,
autonomous vehicles, smart building or biotechnologies. It is very likely that in digitalised
manufacturing, the supplier hierarchies are likely to change.
Google’s industrial projects and investments (as of 2015)
Source: Roland Berger.
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3. Main players and employment in Europe
3.1. Overview of the main competitors
In contrast to all other ICT sectors, European producers are still playing a strong role in the
industrial electronics market. This is particularly striking in the industrial automation sector,
where three out of the top-5 global leaders are located in Europe, i.e. Siemens, ABB and
Schneider-Electric.
10 global leaders in industrial automation (Turnover, Mio USD, 2013, global employment, 2014)
Siemens
Germany
12.7
340,000
ABB
Switzerland
11.1
140,000
Emerson
U.S.
8.9
115,000
Rockwell Automation
U.S.
6.1
22,000
Schneider Electric
France
5.7
170,000
General Electric
U.S.
3.7
301,000 (2011)
Mitsubishi Electric
Japan
3.6
107,000 (2010)
Danaher
U.S.
3.4
71,000
Yokogawa Electric
Japan
3.4
20,000
Honeywell
U.S.
3.3
132,000 (2011)
Sources : Ranking and turnover: MarketsandMarkets; employment figures: own research.
The strong role of European manufacturers and providers of industrial electronics is even
more evident when the dynamic market of industrial robotics is looked at. In the context of
strong global industrial automation trends, the market has experienced strong growth
rates. In 2014, the number of sold industrial robotics increased by more than ¼ against the
previous year.
According to the Chinese business portal china.org.cn the top-10 producers of industrial
robotics are dominated by European and Japanese companies, with only one company on
the list located in the U.S.:
Top 10 industrial robotic companies in the world 2015 by region and rank
Europe
ABB (1), Coma (9), Kuka (3), Stäubli (7)
Japan
Yaskawa Electric (2), Fanuc (4), Kawasaki (5), Epson (6), Nachi Fujikoshi (8)
U.S.
Adept Technology (10)
Source : China.org.cn, 17.09.2015
European producers of industrial electronics components, systems and solutions not only in
the field of industrial automation but also in other fields have been able to profit from the
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general trends of digitalisation of manufacturing and further trends such the growing
interest in smart energy solutions in buildings, providing technologies and services for
building automation, smart houses or electricity/grid management and control.
A joint feature of the major players in Europe has been the reorganisation of business
models and corporate strategies towards core competences and future markets where
strong growth in the future is expected. At the same time companies have disinvested in
divisions and segments where either business conditions has worsened or where the
company is not or no longer playing a leading role. Prominent examples here are Siemens,
ABB or Schneider Electric:
Siemens in recent years not only has emerged as the most important provider of solutions
for smart manufacturing but also focussed the business consequently on the entire value
chain around electricity and energy (production, transforming, and applications/smart
grids). The company also is a global leader in growth markets such as medical technologies,
smart building solutions. At the same time the company has left markets that are no longer
regarded as falling within core competences or where the market conditions have
worsened, e.g. large household appliances and solar energy technologies.
Based on a smaller portfolio of products and services, also ABB and Schneider-Electric have
emerged as major players in crucial and strategic segments of digitalisation.
Schneider Electric, in the core business fields of energy management (low and medium
voltage energy providing solutions from grids to final user applications) and industrial
automation, management and control of machines and systems in manufacturing,
infrastructure and buildings during the last decade has been able to strengthen its strong
market position and global technological leadership in energy management and
automation by a consequent focusing on the digitalisation trend. In this context Schneider
Electric has also entered new business such as the segment of cooling of IT data centres.
This is also illustrated by a number of acquisitions by which the company has gained
additional IT and software competences and technological know-how such as the
acquisitions such as American Power Conversion, APC (2007), parts of Arevas energy
transmission and distribution business in 2010 (affecting 22,000 employees), the French
building management software developer Vizelia in 2010 and further service and IT
providers in the field of smart grids and building automation such as Summit Energy (U.S.)
or Telvent (Spain) in 2011. In 2014 Schneider-Electric took over the UK multinational
engineering and information technology firm Invensys with 9,800 employees.
Schneider Electric is also cooperating with global software giants such as IBM and Cisco in
the field of expanding the business of building management automation.
Schneider Electric in fields such as low-voltage and building automation, medium voltage
distribution and smart grids as well as process automation is not only competing on the
global market with Siemens and mainly U.S. companies (such as Eaton, Legrand, General
Electric, Rockwell and Emerson) but also with Swiss-based ABB.
ABB during the last years has strongly focussed its business strategy on the core fields of
industrial automation/robotics and low voltage products. These segments are also
reporting the strongest growth rates within the ABB group, while in other business
divisions the market has been increasingly difficult and turnover as well as employment has
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decreased. In particular the energy technology division (that employs around one third of
the total ABB workforce) in 2014 was facing a strong decline, resulting in speculations of a
disinvestment and sale in autumn 2015.
At the same time ABB has been very successful in the field of industrial automation and
robotics. ABB currently is the world leader in industrial robotics and amongst the most
innovative providers of the new generation of collaborative robotics, profiting also of a
long tradition or R&D in this field. ABB Robotics employs a workforce of about 4,600
globally, has installed more industrial robotics than any other competitor and is also leading
in research and development. The company has R&D sites in Sweden, the Czech Republic,
Norway, Mexico, Japan, the U.S. and China. In 2015 ABB presented YuMi (stands for «you
and me»), the most advanced collaborative, dual arm, small parts assembly robot solution
that includes flexible hands, parts feeding systems, camera-based part location and stateof-the-art robot control for the next generation ‘human friendly’, collaborative robots
generation in manufacturing.
A further strategic business field where ABB has focused investments and R&D resources is
building technology and management, e.g. via its subsidiary Busch-Jäger, a leading
Germany company in the smart building segment. Similar to Schneider Electric (its main
competitor in the European market), ABB has focussed during the last years strongly on the
development of IT and software know-how and competences.
In 2015, ABB, together with Bosch and Cisco Systems have announced the formation of an
international joint venture (mozaiq operations) to develop and operate an open-software
platform for smart homes. According to ABB, the joint venture «fits perfectly with ABB’s
strategy to leverage the expanding opportunities of the Internet of Things, Services and
People for consumers and companies alike».
3.2. Trends for the employment in Europe / scenarios
Underlying hypothesis
The European electronics industry since the 1990s has experienced a strong trend of
restructuring that has been characterised by offshoring of large parts of the production,
the emergence of new competitors in the consumer electronics segments and a significant
reduction in employment.
On the other hand, our sector study shows that in the investment good markets such as
industrial automation, energy technology or embedded electronics, European players not
only have been able to maintain a strong position but – as the company examples illustrate
– expand and increase a leading role within the global market. European companies in this
context are amongst the main players and technology providers of the internet of things,
smart manufacturing/building management and smart energy grids.
It t is very likely that also in the coming years, the electronics sector will be characterised on
the one hand by employment losses and decreasing employment in consumer product
markets while in those markets and segments that are closely related to digitalisation of
manufacturing in general, smart technologies and applications that respond to major
challenges such as the need to green the economy and increase energy efficiency,
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European companies will be amongst the leading actors and will be able to also increase
employment in Europe. Examples in this context are particularly smart grids, industrial
robotics and automation as well as energy technologies.
At the same time, according to experts as well as company representatives, the most
important challenge in the medium term will be to adjust to the strong trends towards
digitalisation and ”softwarisation” of manufacturing. While thanks to the technological
leadership and strong innovative capacity of the industrial electronics sector, the risk to
become ‘Ubered’ (e.g. sidelined by totally new business models) is relatively low, the major
risk the sector is facing is stronger role of global software and IT giants as a result of the
emergence of big data, internet of things, interconnectivity and the new quality of
producer-consumer interfaces.
Against this, the largest threat European industrial electronics producers and providers are
facing in the medium run is that they become transformed from end users and controllers
of the respective value chains (e.g. automotive/power drives technologies, energy grids and
management, building automation) into simple suppliers of hardware because they have
lost.
To sum up, with view on the industrial electronics of “embedded electronics” sector, there
is a large potential for growth, also given the diversity of the sector.
At the same time, perhaps much more than in other ICT segments, the market is
undergoing a rapid transformation and restructuring due to digitalisation and an increasing
role of IT and software related for manufacturing (embedded software, internet of things,
big data, smart x, automation control and programming, etc.)
While European manufacturers still are holding strong positions in global markets such as
industrial automation, energy, medical or automotive technologies, not only competitors
from East Asia are catching-up but also the software and internet giants have emerged as
new and powerful actors in the market
This means that the future is extremely uncertain and will depend very much on the
regulatory and industrial policy framework at European level
‘Business as usual’ versus’ desired state scenario’
From this analysis the strong message is arising that with view on the coming years there
will be no scenario that could be described as ‘business as usual’.
Instead, there is a strong need for an active industrial policy that support the electronics
industry as a strategic sector and enabler of digitalisation not only of the whole
manufacturing industry but also many other sectors in our economy.
With view on the estimated total workforce of 3.8 million jobs in the European electronics
sector, ‘business as usual’ would most likely mean:
 That the sector in those countries with still a significant workforce in electronics that
until today have experienced quite strong job losses, the employment reduction will
continue and even accelerate during the decade to come (i.e. Spain, Italy, the UK as
well as France)
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 Employment slightly might increase only in Germany (on a moderate pace) as well as
in countries that host high quality and white collar jobs in the electronics industry
(e.g. Austria, Sweden)
Thus, looking at the EU as a total, the ‘business as usual scenario’ would mean a further
reduction of jobs in the industrial electronics sector in the coming years – given the
increasing competences and competitiveness of non-European providers as well as the
strong trends of digitalisation and automation, this job reduction might happen even in an
accelerated pace.
What would then be the ‘desired state’ scenario then?
This would be a scenario where the potentials and strengths of European industrial
electronics manufacturers and providers of integrated solutions are strongly backed by an
active industrial policy.
Europe's governments can play an important part in helping European industry to become
more competitive. In many areas, companies on the old continent already lag a long way
behind the U.S. and Asian rivals, to some extent because their governments has resolutely
promoted many elements of the digital future.
Bloomberg columnist Mark Buchanan, for example, points to the government subsidies
that Apple has enjoyed for years: "Every one of the most important technologies in Apple's
smart products, including the iPhone and iPad, were developed elsewhere and largely
thanks to state funding."
It is not advocated that Europe follow suit and build up central structures: We are saying
that companies and governments must find a European solution. A regulatory framework is
needed that allows Europe's diversity and its industrial capabilities to be translated into
competitive advantages. It is also important to coordinate European activities and speak
with one voice when representing Europe's common interests on the international stage.
This in particular is important with view on defining industrial and other standards.
Rather than chasing the unrealistic goal of boosting manufacturing's share within the GDP
in Europe from currently 15% to 20% by 2020, the EU should focus on providing an
supportive and enabling framework for the manufacturing sector. Reaching the 20% goal in
Europe would mean that countries such as the UK, Italy, Spain or France, which for decades
have been shutting down their industries and are now between 10-15% marks, would have
to re-establish manufacturing on a huge scale, resulting in the creation of millions of
additional jobs in manufacturing in less than five years.
If the 20% objective is going to be achieved in the future, it is rather likely that is will be
achieved under the conditions of a digitalised manufacturing environment. Products that
currently are manufactured in China will not return to European sites. The goal should be
however, that they will be manufactured by European robots or machines which are
designed and programmed by European engineers. Opportunities for new and additional
jobs in Europe will be not so much in assembly plants but perhaps – if the conditions are
right – by working in design, engineering and software centres, laboratories, control
centres of plant networks and other functions in the “driving seat” of global value chains of
industrial electronics.
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This would be a ‘desired state scenario that however requires much more pro-active
industrial policy as well as employment policy/skills development measures that is the case
currently.
Literature
ZVEI 2014: Die Elektronikindustrie weltweit. Branchenstruktur und Entwicklung,
Zentralverband Elektrotechnik- und Elektronikindustrie e.V., Frankfurt a.M.
ZVEI 2015: Die globale Elektronikindustrie – Daten, Zahlen und Fakten, Zentralverband
Elektrotechnik- und Elektronikindustrie e.V., Frankfurt a.M.
Gontermann, A. 2012: Die deutsche Elektronikindustrie im globalen Vergleich, IFOSchnelldienst 18/2012.
Roland Berger 2015: Analysen zur Studie “Die digitale Transformation der Industrie“,
17.3.2015.
IDC 2012: Final Study Report: Design of Future Embedded Systems (SMART 2009/0063), IDC
France, Paris.
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