European steel users call on Commission to terminate safeguard measures on 30 June 2021

In response to today’s announcement by the European Commission that it will review the safeguard measures on steel, in place since 2018, a coalition of downstream users of steel is urging the Commission not to extend the measures beyond their expiry date this June.

in CLEPA, 26-02-2021


While the COVID-19 pandemic has severely impacted manufacturing activity across all sectors in Europe during 2020, production levels are now increasing and are expected to continue to do so as the economy recovers during 2021.

As a consequence, and since the second half of 2020, companies are facing surging prices for steel products and long delivery times because of an insufficient domestic supply. Due to the safeguard measures currently in place, reduced competition from third countries means that import alternatives aimed at easing cost and lead-time pressures on European manufacturers have been limited.

The possibility of extending the safeguard measures beyond June 2021 adds to the uncertainty and adverse market conditions that steel users are currently facing.

It is in the interest of downstream users to rely on a strong and competitive EU domestic steel industry. Excessive protection will only result in an uncompetitive European steel industry, to the detriment of downstream users and final consumers. Therefore, the steel safeguard measures should expire on 30 June 2021 as foreseen.

 

The coalition of EU trade associations representing the interests of downstream users of steel consists of ACEA, APPLiA, CECE, CEMA, CEMEP, CLEPA, Orgalim, and WindEurope.

 

2021.02.10 Joint PR-Review of Steel Safeguard Measures_vF

 

 

CLEPA welcomes the European Commission’s new trade strategy and is ready to continue to engage

CLEPA recognises that today’s communication confirms the EU’s growing attention for sustainability and level playing field. CLEPA will continue to play a constructive role ensuring that trade policy initiatives that aim to address legitimate concerns regarding level playing field, supply chains, human rights and sustainability are shaped effectively and do not result in counterproductive outcomes. It will be crucial to ensure that trade policy instruments do not circumvent or undermine the WTO. Instruments that could be perceived as protectionist should be carefully considered and trade partners should be consulted to avoid trade tensions and a spiral of retaliation measures. Trade in innovative and sustainable technologies will play a key role realising the objective of a sustainable and circular economy, highlighting the importance of a trade strategy that facilitates a global flow of goods and access to markets.

in CLEPA, 18-02-2021


CLEPA Secretary General Sigrid de Vries said: “CLEPA welcomes the European Commission’s new trade strategy and the clarity the communication provides on the core objectives of the EU’s trade policy. Europe’s automotive suppliers agree that an open trade regime is at the centre of Europe’s economic prosperity and competitiveness. Continued access to global markets and a stable, global trade environment will be crucial for our sector to recover from the current crisis and continue to invest to maintain our leading role as innovators in sustainable and safe mobility.   

The openness of the Single Market and Free Trade Agreements create opportunities for businesses across the world and help attract investments, creating jobs and strengthening Europe’s economic fabric. CLEPA will continue to support the Commission in its efforts to negotiate trade agreements with third countries and endorses ratification of concluded agreements, including the FTA with Mercosur. The Commission rightly pursues reform of the World Trade Organisation, as it will play a crucial role providing a secure and stable framework for international trade and investment.  This is particularly true for automotive suppliers who rely on an open and stable trade environment to fulfill a leading role in the global supply chain. The scale of the global market allows our industry to provide 1.7 million direct jobs in the EU alone and invest €30 billion a year in innovation.

CLEPA | Sheer dimension of chip shortages requires rethinking by industry and policy makers

The sheer dimension of the semiconductor shortage and the complexity of solving both short and long term issues requires rethinking of supply chain options by both industry and policy makers. It also signals how 2021 may well become a year of great volatility for manufacturing industries.

in CLEPA, by Sigrid de Vries, 17-02-2021


Many elements are coming together in the current semiconductor shortage in the automotive industry: from the fall-out of the COVID-19 crisis and the unpredictability of crisis recovery, to increased automotive demand for chips due to assisted-driving functions and electrification, to geopolitical and natural disaster ‘de-risking’, to competing demand from other sectors.

In the first wave of the pandemic, the automotive industry came to an almost complete standstill and had to dramatically adjust production volumes to fence off costs, with little to go on as regards timing and speed of the recovery. When demand then picked up rapidly, many were still wary on how solid the trend would be. The automotive supply chain for advanced chips is typically long and this added complexity: many actors need to align and sync their demand and supply.

Marked volatility may also hit sourcing of other key materials

In January 2021, the sector saw itself confronted with a large gap between ordered and produced vehicles, coupled with a higher demand for 2021 than scenarios foresaw and much lower stocks than usual. In addition, demand for electric vehicles started soaring driven by acceleration of the green transition, increasing pressure on semiconductor demand.

Industry and market watchers expect the disruptions to last well into the second half of the year, with great variety in who will be hit and for how long. Industry sources also warn that similar patterns may occur throughout 2021 in the sourcing of other materials needed to build cars as well as industrial goods and consumer products. A continued, marked volatility in demand, driven by uncertainty around the containment of the pandemic, regional variations, and difficulty to predict purchasing behaviour, may cause disturbance in the supply of essential resources. Logistics may be vulnerable too, with demand soaring in China taking away capacity from elsewhere.

The unmistakable trend, however, is that automotive demand for semiconductors will continue to grow big time due to the increasing share of automated and assisted driving technologies to keep drivers comfortable and safe, as well as the electrification of vehicles with the required sophisticated management of battery performance and other electronics.

Automotive demand for semiconductors will continue to grow big time

On average, a vehicle today already contains around a hundred advanced semiconductors chips, a steep increase compared to only a decade ago, but the value of semiconductor content of electrified vehicles can be up to three times higher. Expert estimations hold that electronics and semiconductor materials could represent up to 45% of the value of a car by 2030.

Automotive supplies are already heavily invested in vehicle electronics, covering the wide range of applications from on-board comfort and infotainment systems to active-safety features to battery and wider powertrain management. With activity and employment rapidly diminishing in combustion engine based technology, the expansion into ‘digital’ offers substantial opportunities.

Whereas the European semiconductor ecosystem currently provides employment for 200,000 people, McKinsey estimated in 2019 that under the right conditions, the automotive industry alone could create 400,000 European jobs related to electronic and software components for vehicles. Currently, 1.7 million people are employed by the automotive suppliers in Europe, on top of the 1.2 by vehicle manufacturers.

However, the investments needed amount to billions of euros and the return in both revenue and employment levels is years off in comparison to the impact of the restructuring costs and R&D efforts made in the here and now. In this light, the semiconductor events not just underline the attention required for the diversification and resilience of the supply chain. They also raise strategic questions for Europe.

Questions that the European Commission will try to partly address through a Microelectronics Alliance for Europe, to be launched next month, in analogy to the earlier established European Battery Alliance. The German and French governments are also looking to increasing industrial activity in this field, as voiced in a joint statement this week, notable through the IPCEI instrument (Important Project of Common European Interest), and argue that the European Recovery and Resilience Funds should be used for this.

Focus should be on R&I and market demand, rather than on subsidies and reshoring

The European Commission will look at both manufacturing options as well as strategic R&I, and this is the right approach. Both aspects need careful consideration. Successful industries do not result from subsidies and government intervention towards reshoring, but follow market demand and concrete business cases. The focus on R&I will be critical, as will the availability and strengthening of digital skills and competence throughout education and employment in Europe.

The key challenge will be to secure advanced semiconductor development and production in Europe, sharing base technology between players while allowing enough space for diversification, on a scale to profitably supply a home market as well as players abroad. The Commission has rightly identified automotive as one of four sectors to focus on. Automotive globally is responsible for around 10% of semiconductor demand, yet in Europe for 37%: there will be no successful European semiconductor strategy in which automotive won’t play a key role.

European semiconductor strategy cannot be successful without a key role for automotive

The future semiconductor strategy is connected to the wider question of how to ensure that EU industry as a whole captures business and employment opportunities in electronics, software and artificial intelligence and secure its future relevance. In this light, also the upcoming Digital Decade Strategy of the Commission and the review of the EU Industrial policy will need careful calibration. The many strategies and initiatives must be coherent and mutually reinforcing.

A successful industrial strategy will have to rely on the long game of supporting R&I investment, standard setting and improving Europe’s role in artificial intelligence research, skills as well as its attractiveness for international talent. The automotive sector has the potential to serve as an essential bridgehead for the wider European industrial base to capture opportunities of an increasingly digital economy.

Sigrid de Vries

CLEPA Secretary General

 

Automotive suppliers raise red flag over border closures and intensified inspections

The implementation of border controls between the German and the Czech and Austrian border crossings risk to create disturbances in automotive industry production plants soon.

in CLEPA, 15-02-2021


Sigrid de Vries, CLEPA Secretary General highlights: “Europe’s automotive suppliers are concerned about recent announcements on border closures and intensified inspections. These measures result in disruption at Europe’s internal borders and critical delays in the supply chain. The Single Market is an important achievement of the European Union. Defending its integrity is a priority, specifically with regards to the freedom of movement of goods and workers. Parts stuck at the border could disrupt our Just in Time supply chains, interrupt production and put the sector’s performance and jobs at risk”.

in CLEPA, 15-02-2021


While health and safety are paramount, and industry itself has taken numerous measures to keep up highest standards, it is also important to safeguard the integrity of the internal market. “EU governments must respect their commitment agreed during the January Council to keep borders open”, says de Vries.

“Transport of goods should be exempt from border closures and Member States should ensure the alignment of their border control measures to support the functioning of the Single Market. If controls at the border crossings are intensified, Member States should respect their commitment to prioritise freight transport, as done successfully during the first wave through the introduction of ‘Green Lanes‘ with easily applicable rules. It is important to note that COVID-test requirements for professional truck drivers could undermine corridors for goods and risk disrupting supply chains, as shown by the example of Dover in December, where long queues to test truck drivers resulted in significant disruption, while almost all truck drivers tested negative for the virus. Only by setting up a practical test practice that can ensure the protection of the workers while guaranteeing the supply of goods would keep the automotive supply chain working”.