Investment needs along industrial value chains in Europe - Linking with the Juncker Plan

The Green Team of IDEA Consult is in the final stages of completing the ‘Study on investment needs along industrial value chains'. Since the global economic crisis in 2010, the European industry has been slow to recover, which is in part due to weak investments. This study uses a value chain approach to identify specific investment needs, financing gaps and other obstacles to investment, as well as potential solutions to increase investments in the modernisation of industrial value chains. The analysis was conducted through a series of case studies on industrial value chains. IDEA Consult analysed the high-end metal powders market for additive manufacturing and co-engineering and inter value chain reuse and recycling in the fabricated metal product sectors.

One of the outcomes of the study is that the selected industrial value chains benefit from coordinated and synchronised investments in order to increase the impact of the investments, for instance in the form of investment platforms. These coordinated investments link well with the Juncker Plan, also known as the ‘Investment Plan for Europe', which aims to unlock over €315 billion of investment over three years and deliver a targeted boost to economic sectors that create jobs and spur growth. The Juncker Plan is driver of the European Fund for Strategic Investment (EFSI) and specifically aims to finance projects with a higher risk profile, in order to maximize the impact of public spending and unlocking private investments. Funding is aimed at companies with less than 3,000 employees, including Small and Medium-sized Enterprises (SMEs) and is geared towards viable projects that have a real added value for the European economy. Finally, the Juncker Plan aims to create an investment friendly environment by removing barriers.

Five in-depth case studies were carried out for specific high growth segments of industries with strong inter-industry value added linkages. At an aggregate level these industries, with strong value added industry linkages include:

• food, beverages and tobacco products,
• motor vehicles, trailers and semi-trailers,
• rubbers and plastic products,
• fabricated metal products and
• machinery & equipment.

IDEA Consult carried out the case studies on ‘fabricated metal products', an industry with a strong domestic value added component, and ‘machinery & equipment' an industry which has both strong domestic and international value added creation. Zooming into the value chains, for fabricated metal products, investment needs were identified with relation to Best Environmental Management Practices (BEMPs) through co-engineering and open innovation as well as improved waste reuse and recycling in the area of metal coatings. For the machinery & equipment sector, the value chain of Additive Manufacturing was selected. This was further specified to the Additive Manufacturing value chain using high-end metal powders. Investment needs were found in the improvement of metal powder atomisation and sieving techniques and better printing techniques with possibly wider grain size distributions through improved 3D printers. Improving the coordination among the different stakeholders across the additive manufacturing value chain was found to be an essential step in accomplishing the modernisation of the value chain.

IDEA Consult proposed policy recommendations on the implementation of coordinated investment solutions that help to overcome the obstacles to the identified investment needs.